Dr Brian Monger
Reasons Why Buyers Are Loyal
There are several reasons why buyers are loyal to specific products, brands, or stores.
Achievement of Satisfaction
The basic ingredient in all buyer loyalty is perceived satisfaction with the firm’s store, product, or brand. No buyer is likely to consider seriously repeating purchases when there is no real benefit. At least this is true when the buyer has meaningful alternatives; that is to say, they are not faced with a monopoly such as a public utility.
Satisfaction can be based on certain aspects of the firm’s store, brand, or product.” The customer may have a strong feeling for the salespeople or the store’s atmosphere. Satisfaction may relate to the brands carried, the line of products, or the prices. It may be the availability of such services as credit, returns, delivery, or warranty. Obviously, satisfaction does not have to apply to every aspect of the business for customers to be loyal. The brand image may be so satisfying that the customer overlooks poor salesperson performance, or low prices may create sufficient satisfaction to offset a narrow product line. The point is that loyalty depends on an overall favorable assessment of the business.
Image of Superiority
Perhaps the underlying reason for all buyer loyalty is an image of superiority the customer associates with a brand, product, or store. This image is more than simple satisfaction. There may be several products, brands, or stores that can provide essential satisfaction, but the buyer perceives one product, brand, or store to be superior to any others. This image can be so strong that it precludes, at least in the short run, even the desire to test the market periodically for a possibly better solution. Of course, sooner or later nearly every buyer re-evaluates the original decision to purchase. But in the short run, an image of superiority is the most powerful single factor causing the buyer to remain loyal to a particular product, brand, or store.
Buyer inertia is not the most important foundation for loyalty, but it can be critical in conjunction with other factors. Buyer inertia means that there is no compelling reason to seek out an alternative product or store. It is simply easier for the buyer to continue purchasing the same product or brand or visiting the same store than it is to change.12 Inertia has to be overcome in nearly every decision. If inertia is coupled with an image of superiority, the buyer is very unlikely to make any new decision. Inertia can often be overcome if the buyer finds out about some new product, brand, or store without having to make any effort. For example, one sees a startling new product advertised while watching television, or a friend informs one of an outstanding new store that has just opened.
Tendency to Conform
Buyer conformity is closely associated with inertia. Conformity means that if the image of the product, brand, or store is compatible with what the buyer’s friends and associates deem to be satisfactory, the buyer may develop loyalty in order to be like these people. The individual may not want to question the judgment of associates. Then too, it may mean something to a circle of friends to be observed using the product in question or visiting the proper store. A buyer may develop loyalty to a product or brand that is not personally considered the best because of the necessity to conform. There are executives, for example, who own a London Fog coat or a Rolex watch because of the image it conveys to their associates.
Avoidance of Risk
Loyalty can aid the buyer in reducing or avoiding risk. When buyers remain loyal to a product, brand, or store they avoid the possibility of being wrong. In other words, one way to avoid the risk of dissatisfaction from a new product, brand, or store is to remain with a familiar product, brand, or store. The essential considerations for the buyer where risk is concerned are (1) how strong is the perception that there is a risk, and (2) how important is it to avoid the risk of being wrong. Of course, these two considerations vary greatly among individuals. There is evidence that customer loyalty is greater among persons who perceive considerable risk in brand, product, or store selection but who have already found a satisfactory solution to their problem.
Simplify Buyer Decisions
At any given time, the average buyer is faced with a vast array of product, brand, and store decisions. The number of alternatives available to satisfy even the simplest of problems can be tremendous. For example, a medium-sized grocery store can carry 15,000 to 25,000 separate items. The possible combinations can be staggering. How can the buyer make reasonable decisions under these circumstances? Even if the person could come to a logical conclusions, who has time to give proper consideration to the issue?
Loyalty can help the buyer in these and similar decision situations; it simplifies future decisions. Loyalty reduces the number of decisions that the buyer has to make. Loyalty assumes that it is not efficient to solve the same problem repeatedly. If the buyer knows she or he can rely on the taste of Coke or the quality of David Jones products, then the decisions related to buying soft drinks and clothing have been greatly simplified. There is evidence that buyers try to avoid extended problem solving. About 60 percent of buyers consider themselves likely to “try to stick to their purchase decisions.”
Buyer loyalty can result from conditions in the market. For example, if there are no alternatives in the market, the buyer must either be loyal or go without. Municipal services, such as garbage collection, electricity, and street repairs, are handled as monopolies, and buyers have no choice in their purchase. The buyer may even have to pay whether the service is desired or not.
Contractual arrangements can lead to loyalty. If the buyer purchases a service agreement on a new refrigerator, that person is forced to continue repairs from the company that sold the agreement. This contract greatly reduces the buyer’s ability to shop around for repair service.
The trade-in can also aid in creating customer loyalty. Some tire dealers will reduce the cost of new tires based on the usable tread left on tires being traded in. The dealer does this only on the firm’s own brands. Thus the buyer must make repeat purchases from the same dealer to obtain the discount.
Market isolation can aid in creating loyal customers. No store ever had more loyal customers than the general store. It was typically located in a rural area with no near competitors. Many customers had no choice but to frequent the general store. Even today in many small towns there may not be more than one store of a type; buyers are considerably restricted in their choice. It can be difficult and time-consuming to travel to nearby cities to seek out alternatives. Many buyers find it simpler to trade with the local merchant.