Page 165 - Marketing Management

142 PART 3 CONNECTING WITH CUSTOMERS

Feedback from members of its
Mermaid Club has helped Chicken
of the Sea improve its marketing
and customer appeal.

to take out more insurance than they need. With such levels of trust, USAA enjoys high customer
loyalty and significant cross-selling opportunities. 85

DEVELOPING LOYALTY PROGRAMS Frequency programs (FPs) are designed to reward
customers who buy frequently and in substantial amounts. 86 They can help build long-term
loyalty with high CLV customers, creating cross-selling opportunities in the process. Pioneered by
the airlines, hotels, and credit card companies, FPs now exist in many other industries. Most
87
supermarket chains offer price club cards that grant discounts on certain items.
Typically, the first company to introduce a FP in an industry gains the most benefit, especially if
competitors are slow to respond.After competitors react, FPs can become a financial burden to all the
offering companies, but some companies are more efficient and creative in managing them. Some FPs
generate rewards in a way that locks customers in and creates significant costs to switching. FPs can
also produce a psychological boost and a feeling of being special and elite that customers value. 88
Club membership programs can be open to everyone who purchases a product or service, or
limited to an affinity group or those willing to pay a small fee. Although open clubs are good for
building a database or snagging customers from competitors, limited-membership clubs are
more powerful long-term loyalty builders. Fees and membership conditions prevent those with
only a fleeting interest in a company’s products from joining. These clubs attract and keep those
customers responsible for the largest portion of business. Apple has a highly successful club.

Apple Apple encourages owners of its computers to form local Apple-user
Apple groups. By 2009, there were over 700, ranging in size from fewer than 30 members to
over 1,000. The groups provide Apple owners with opportunities to learn more about their
computers, share ideas, and get product discounts. They sponsor special activities and
events and perform community service. A visit to Apple’s Web site will help a customer find
a nearby user group. 89