Most management approaches view marketing basically as the aspect of direct promotion of products to the clients. However, ensuring the stability of the market for a company’s products or services goes beyond the traditional strategies involving product promotion and covers the place of the customers in organizational success especially in terms of sales. Due to their crucial place in influencing product sales and the general return on investment, the customers deserve a careful treatment. The form of treatment, in terms of motivation or reward is not only meant to enhance their satisfaction but also ensure that the individuals are retained within the business circles. Aldrich and D.A (2008) notes that relationship marketing shifts perspective from the products, which is the usual point of focus, to the clients who actually play the most crucial role in determining sales. In order to utmost retention, there is the need to install the right approaches which would go a long way in establishing the loyalty of the customers. Such strategies may include offering discounts for specific purchases made and giving rewards to client who show consistency in their desire for the company’s products and services (Baker, 2007). With reference to the concepts of relationship market, this report highlights and outlines a revised edition of Coco Republic’s loyalty scheme. Despite its otherwise successful marketing strategies, the organization has lately registered a lapse in the stability of its customer base. This could be attributed to the ineffectiveness of some of the relationship marketing strategies installed by the business entity (Bauer, 2007). This report therefore outlines the new structure of a loyalty scheme that can be implemented within the business in a bid to revive customer commitment, satisfaction and retention.
As a crucial starting point, it would be important for the loyalty scheme to be structured in consideration of the fact that Coco republic has a market based served by a variety of clients. The scheme shall therefore be such that the value of discounted offered for specific purchases and to specific clients remains entirely dependent on the particular segment to which the client belongs. Being a leading furniture and design brand in Australia, the company serves a variety of customers through the supply of products which range from normal household furniture to office and perhaps hotel facilities. At the same time, Coco republic does interior design for clients not only on contractual arrangement but also on permanent alliances especially with customers whose loyalty levels have become unquestionable. The customers at Coco can therefore be segmented and rewarded based on a variety of factors (Boissevain, 2004).
To begin with, the segmentation flows along the line of length of existence and indication of consistency in seeking services from the organization. As a result, the business comprises long term customers for instance those who remain consistent customers from the beginning to the end of the year without switching allegiance. This segment also comprises the clients who may not necessary be regular purchasers but show a considerably level of loyalty by maintaining close ties and recommending new customers to the company in addition to coming for return services after long periods which may be years. On the other hand, there is the segment comprising the short term customers. This category involves the individuals who come to Coco republic for one time purchases and only remain linked to the business entity on the basis of after sale relations who may include maintenance, replacement or repair. With reference to the two segments above, a loyalty scheme which is effectively adjacent to the elements of the segments can be recommended. For instance, the company offers a 15% discount for every total purchase over $50 made by regular customers. This scheme could be readjusted such that the discount is raised for the customers in the long term customer segment (Chesbrough, 2003). On the other hand, the short term customers could be subjected to lesser but consistent discount. For instance, a 15% discount for any one time purchase of furniture amounting to over $100. It would also be a vital step to monitor the value that such strategies would add to the company in order to minimize the incurrence of losses (Yilmaz, 2011). This therefore implies that a loyalty program embraced by a business organization should serve within the perfect balance between adequate customer satisfactions and proper return on investment.
The other segment of customer at Coco republic could be deduced from the quantity or size of purchases. While there exists the crop of clients who make colossal purchases either biannually or at the end of every financial year, there is the segment characterized by lower purchasers (Cox, 2007). The loyalty programs set aside for each of these segments vary with reference to the amount of purchase. For these segments, a 25% off on the total amount of purchases made could be effective for the retention of the large scale buyers. On the other hand, the company would still reward the small value purchasers but this time using lower rates. For instance, the customers can be treated to a 5% off on the total value of goods purchased (Cram, 2008).
In a nut shell, the customer segments at Coco could be summarized into a total of about four divisions. the first division comprises the Coco Republic retail which basically involves the low value purchasers and short term clients. The other division is the Coco Republic Interior design. This division is characterized by long term and high value customers some of whom have maintained long and close ties with the business. The third division is the Coco Republic property styling which equally has a number of long serving company customers. The last division summarizing customer segmentation at the organization is the Coco Republic Design School. This is a rather long term strategy in which most of the customers actually double as the company’s employees (Freeman, 2010). In this platform, the employees are empowered, trained and exposed on key work responsibilities. The school also has a few external customers and the scheme established for this category is majorly aimed at enhancing sustainable loyalty.
The proposed loyalty scheme shall not only be meant for the sustainability of the already existing base of customers, it shall equally be used to establish loyalty among customers who have exhibited no loyalty over the past couple of years. In order to come up with the most effective loyalty program, it would be crucial to perform a company analysis in order to deduce the possible frustrations and hence the challenges which tend to act as obstacles to customer retention. As revealed by Galbraith (2009), Coco Republic as a business entity has never been keen on uplifting its relationship marketing strategies. Due to the relatively low levels of effective customer relations, some of the clients have opted for alternative purchase points. This challenge could be associated with the lack of a stable base of loyalty procedures which in turn leads to low retention capabilities by the business organization. Furthermore, the pricing policies at Coco have in one way or the other operated against the company’s goodwill and core objective to succeed in terms of returns. Consequently, some of the customers have opted to buy furniture and order for interior design services from companies characterized by better prices.
With reference to the challenges mentioned above, the proposed loyalty scheme shall capture and adequately address the client needs irrespective of the segment in which they fall. The structure shall involve the incorporation of the recent advancement in technology hence the emergence of ecommerce. The proposal advocates for the use of cards for transactions as opposed to the direct cash purchases. The use of cards would enable the clients to receive the benefits associated with the point schemes in addition to other offers (Guseman, 2008). Furthermore, the structure of the scheme shall be intended at minimizing organizational costs of marketing apart from ensuring the stability of the company’s market base. By considering the relevant factors, the following components are proposed for incorporation into the structure:
By comparing the proposed structure to the current level of sales at Coco Republic, it would be possible to note that this approach is most likely to be accompanied by value addition to the organization. The loyalty scheme caters for each of the categories of customers as highlighted by Coco’s organizational structure. The implementation of the new strategy would lead to a higher customer retention rate. According to Kotler (2004), the retention rate of a business is basically the percentage of customers who are there at the beginning of the year who still remain the businesses’ customers at the end of the year. With the introduction of the annual rewards scheme where consistent and committed customers shall be subjected to rewards and discounts, the number of customers remaining loyal to Coco Republic is likely to increase. A high retention rate equals high turnover which eventually culminates in the addition of value to the company. With reference to the current retention records at the company, the implementation of the new scheme is likely to elevate the customer retention rate by 20%. Since the retention rate is directly proportional to sales, there is likely to be an increase in sales and hence adding value to the organization.
Before working on strategies of retaining customers, it would be a crucial strategy for Coco Republic to come up with approaches on acquiring more members into its customer data base (Kotler, 2009). To begin with, the organization could use the design school as one of the avenues through which vital information about the company products and services could be passed to both the learners and other stakeholders. The stakeholders are then supposed to act as ambassadors of good will, spreading the company’s mission and vision to the members of the public in addition to sensitizing them on the available new offers.
Secondly, the company could harness the online platforms in order to spread more information with regard to products and services offered in addition to their prices. The fact that the organization already has a website is an added advantage. This avenue could be made to be more user friendly and interactive hence the website visitors are able to obtain as much information as possible about the strategies at Coco. In a bid to lure new clients, the company could use the online platforms to introduce and market offers and rewards specially reserved for the newcomers within the customer fraternity. For instance, the new customer can be subjected to discounts on their first 5 purchases (Mitchell, 2008). The discount is meant to increase as the customer retains its loyalty to the company. This strategy would not only enable the company to acquire new customers but also ensure that the acquired ones are retained.
In addition to the use of online media, the company could also apply various promotional mixes for instance variations in product prices and positioning in a bid to adequately fit the client needs and preferences. A flexible pricing system would play a crucial role in minimizing customer migration which may perhaps be triggered by the encroachment of competitors offering the same products and services at affordable rates (Noordhoff, 2011). Furthermore, acquisition of members could be greatly enhanced through direct advertisement of the company’s products and services as well as the discounts being offered for the various categories of customers. This strategy would involve avenues such as newspapers, television, radio and billboards just to mention but few (Ring, 2002). This approach would go a long way in giving more information regarding the company’s loyalty program to the members of the public. The customers eventually acquired are included into the company’s data base as the retention strategies are implementing in a bid to enhance their loyalty.
Conclusion
The place of the customer in the success of any business organization cannot go unmentioned. The clients plays pivotal role in influencing sales and the overall organizational performance. It is therefore necessary for business organizations to put in place the right measures that would ensure customer loyalty and retention. These strategies may involve the use of rewards, offering free services discounts and after sale services especially for a recognized group of committed clients (Wilson, 2000). When the right treatment is accorded to the customers by a company, their loyalty is enhanced despite the emergence of competitors. Implementing the scheme proposed above would be pivotal in reviving the Coco Republic’s lost glory. Through a more stable customer base, the company will probably hit new levels in terms of organizational performance indicated by good return on investment.
References
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