Customer loyalty

Before reading The Mismanagement of Customer Loyalty, I shared the viewpoint of many others that the best customers are the loyal ones. Loyal customers should be less price sensitive, and their continuing purchasing behavior will generate profit. But as pointed out in the article, the association between loyalty and profitability was weak to moderate at best. As it can be costly to keep loyal customers, we need to understand the patterns of buying behavior for our customers. By doing so, we can identify which loyal customer to keep, and which one to let go. Two models, RFM and event-history modeling, were discussed. Event-history modeling is based on three simple pieces of information: (1) When did the customer buy for the last time? (2) When did she purchase last? (3) When did she purchase in between? This model is particularly good at predicting how quickly a customer’s purchasing activity will drop off. According to the Choosing a Loyalty Strategy matrix, there are four different segments of customers, they are strangers, butterflies, true friends and barnacles. It is important for marketers to understand the needs of each and treat them accordingly.

In an academic library setting, we view our customers as either strangers or true friends. Customers who never use our resources and/or services are strangers and customers that use our resources and/or services are true friends. As a result, marketing efforts is solely targeted to strangers in order to get them to utilize our resources or services. I think we need to rethink our loyalty strategy.