The relationship between profitability and loyalty seems to be much weaker than expected and also weaker than the proponents of customer loyalty programs claim(‘The Mismanagement of Customer Loyalty’ (2002). According to this paper of Reinartz, Werner and V. Kumar, there’s is no evidence to suggest that loyal customers necessarily are cheaper to serve, less price sensitive or are effective in bringing in new business. So, in light of their findings many companies have to reevaluate the way they manage customer loyalty programs. Companies have to find ways to measure the relationship between loyalty and profitability. Hereafter the company can place their customers into the Choosing a Loyalty Strategy Matrix, to apply strategies to the different segments.
Concluding the article, there is no one right way to make loyalty profitable! An example of a company that is tries to achieve loyal and profitable customers in a good way, we think, is Agradi(www.agradi.nl).
Agradi is specialized in goods for pets, especially for agriculture and the were the best online shop in 2011 in the Netherlands. They use an efficient site, but don’t loose the personal contact. Also they try involve customer by the use of social media. Concluding, Agradi is successful because they combine traditional marketing, Worth-of-Mouth marketing and they use the social media.
Virtual communities makes it possible to change segments of customers into communities of customers. In that way their arises social capital. Virtual communities arises and exists because of voluntarism, reciprocity and social trust.
An example of an active virtual community is IMDb, the Internet Movie Database that started in 1990 and is bought by Amazon in 1998 (www.imdb.com). You can find on IMBd information about movies, actors, etc. Also it’s possible to at ratings/grades and reviews to the website. Furthermore they have very active members, for instance by using the forum on the website.
(Mini-case presentation team 4, afternoon)