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The importance of customer loyalty

Categories: Customer LoyaltyEbay

eBay is the world’s largest personal online trading community and their main web site can be found at www. ebay. com or the UK one can be accessed at www. ebay. co. uk. There are many people in the world that can categorically say that eBay has changed their life. “That’s the kind of customer fervour the eBay Army, nearly 50 million strong, has for the online auction site, which has pioneered a cultural and economic shift in how Americans shop.

They’re so faithful that 5,500 of them, twice as many as expected, filled eBay’s first Star Trek-like convention.

So faithful that 90% of them won’t consider doing business elsewhere. So faithful that they don’t see themselves ‘bidding’ for items, as much as ‘winning’ them. And so smitten that they refer to Meg Whitman, eBay’s billionaire CEO, as simply ‘Meg. ‘”(www. usatoday. com) The site offers its members a forum for feedback enabling members to keep a track record of the person with whom they’re trading.

Also there are discussion forums and chat rooms which again bring about reassurance and a greater sense of interaction for individual members.

Members can view the seller records or leave feedback of their own about other traders whom they have traded with. eBay traders also have an ‘about me’ page where all information regarding their eBay account is stored. Here they can quickly and easily access all items they are bidding on or selling, all items they have won, or lost, their current feedback rating and personal preferences; the list is endless.

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There are numerous time saving actions that can be utilised by eBay members due to the impeccable site design and company structure.

It is these innovations such as ‘item watching,’ ‘advanced search’ and ‘buy it now’ why eBay is steaming ahead in the Internet auction business, seemingly impossible to catch. What’s more after eBay’s $1. 5 billion takeover of the world’s number one online payment service provider PayPal, simplicity and speed of payment can also be added to the ongoing list of eBay service improving innovations. In contrast to eBay, Cheapairlines. com is a full- service travel web site offering a wide range of travel- related services in an attempt to satisfy the needs of its customers and their website can be found at www.

cheapairlines. com. The name of the service sounds appealing, because it denotes that the site contains deeply discounted airfare, however the flight search results is a little slow taking around 15-20 seconds to load and many potential customers would have left to visit one of the many other travel services on the web by the time it has loaded. Many customers first impression of the web site is that it looks professional, but it doesn’t carry through on its promise. Many of the site features are very badly implemented and the usability of the site is poor. Cheapairlines.

com does offer a wide range of travel services, but much of this site is flawed, from the search functions to the dismal appearance of the site itself. Starting with the flight search function, it can be rather sloppy and a little frustrating. You cannot quickly switch your dates or make other simple modifications to your flight preference. You have to go back to the main screen, press reset, and start over. The hotel search is the weakest part of the site. The main reason is because of the extremely limited number of cities that you can search for lodging.

If you enter a city that doesn’t exist in the Cheapairlines. com database, it will sometimes display a nearby city if one exists, or it will tell you that there are no matches available. This is pretty useless and is certainly an aspect of the site, which will deter potential customers. Customer service lines are only open from 9-6 Monday through Friday. This may be fine for a local bank or maybe even a car wash, but for a cheap airlines website where travel is likely to be booked possibly a few days in advance of the departure date it doesn’t exactly thrill.

Within the FAQ’s of the web site there is a notice about fares possibly fluctuating because rates aren’t actually locked until ‘processed by an agent’. This is very poor for an online travel booking service and this along with the many other deterrents of the site will certainly not impress customers, leaving them liable to look elsewhere or at best not return for a second booking. E-commerce founders often thought the Internet would never fully exploit customer loyalty due to the simplicity for a user to hop from site to site in search of the best deals.

“Customers these days are smarter, leaner, more price conscious, have a downsized morale and are hit on by more competitors. ” (Gitomer, 1998: 36). Because of this, as the Internet has evolved, online shoppers do have tendencies to favour certain websites and that’s why cultivating loyal customers is a wise move. The only way to sustain profitable growth is to make sure you know who your best customers are. Acquiring new customers on the Internet can be very expensive and the necessary investment takes a long time to recoup, hence keeping them is surely a priority.

While a growing business needs to constantly capture new customers, the focus and priority should be on pleasing your existing customer base. Companies that fail to nurture and retain their customer base ultimately fail. Organisations will also spend twice as much to get new customers, as they will in maintaining their existing customer base. They will also be limited in their ability to attract new customers if they can’t hold onto and satisfy their existing customers.

The bottom line is that one of the key components in marketing and business growth is to spend the majority of your time and effort nurturing customer relationships, so that you get business from existing customers. “Once you realise that satisfaction is the lowest level of acceptable service, you at once understand the power of loyalty. ” (Gitomer, 1998: 269). Jeff Bezos, the president of Amazon. com famously stated, “If you have an unhappy customer on the Internet, he doesn’t tell his 6 friends, he tells his 6,000 friends. ” (Sterne, 1996: 21).

Basically when you have one unsatisfied customer, he/she is not the only person who is unlikely to purchase from your company again. In reality that one customer is at the top of the pyramid, and by the time the news reaches the bottom of the pyramid, assuming the news stops travelling, hundreds, if not thousands of people will have formed a negative opinion on your company. Along with strong management, discipline and a good business plan, there is now sufficient evidence to prove that customer satisfactory is one of the key assets to a company’s success.

Although founders often thought the Internet would never fully exploit customer loyalty, companies now recognise that online shoppers do have tendencies to favour certain websites and that’s why it is essential to captivate and win over existing customers, after all the customers perception of good or bad service is the measure of your success or failure. in attempt to make them loyal customers. After all in order for an organisation to survive and expand it is crucial that a profit is made. To make profit businesses must sell their products and services at a greater cost than it costs to provide them.

The profit as such does not come from the products or services being sold, they are simply parts of the equation that form it. The actual profit comes from whoever is prepared to pay more for the product or service than it actually costs to provide it. Ultimately, this is the customer. No profit results in no business, no customers’ results in no profit and no customers results in no business. Essentially customers are the business hence customer loyalty is priceless, however it is only credited by satisfied customers.


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