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Customer loyalty strategies for promoting informal sales revenue (II)

Customer loyalty strategies for promoting informal sales revenue (II)

The scarcity of a product in circulation is linked to limited knowledge of the product, restricting the customer’s scope for bargaining.

By the law of demand and supply, an inverse relationship exists between the availability or supply of a product and its price, other things being equal. Higher product prices leave little room for customers to enjoy flexible negotiation terms with respect to the item they seek to purchase.

When a product is scarce, customers will be opportune to only slim chances at negotiation, and this undesirable feature can lead to reduced overall satisfaction of customers.

While it is known that specific markets deliberately foster product scarcity to promote interest in particular products, these efforts may sometimes yield unattractive results as customers may seek alternatives or halt their demand. When bargain satisfaction is lost due to product scarcity, customer loyalty may be affected, and future sales revenue will be lost.

For example, hoarding of the US dollars due to speculative reasons creates an artificial scarcity for the currency. This pushes the price of the dollar high, thus, depreciating the naira. One alternative the Nigerian government has explored to mitigate unfavourable trade relations with one of its major trading partners – China, is the currency swap agreement.

This agreement necessitates the exchange or swap of a certain amount of the Chinese yuan for an agreed amount of the Nigerian naira, usually at a fixed exchange rate. With this, there would be no need for the intermediating naira-dollar-yuan conversion in the trading process, which wastes time and is obviously more costly.

Already, China’s planned e-yuan is promised to overtake the dollar in global financial market dominance, and this may be a real threat to the greenback as a global product, if China becomes successful.

To increase customer’s chances of maintaining high bargaining satisfaction, product availability has to be prioritised. When products are scarce, prices are shot up, making it uneasy for retailers or sellers to bend their pricing rules in favour of their customers.

Read also: Customer loyalty strategies for promoting informal sales revenue (I)

When this occurs, customers will be less motivated to pursue a bargain and drop off products that seem too expensive for their wallets. At this rate, sales will reduce due to diverted loyalty in favour of alternative services or products that are more pocket friendly. If the scarcity of the initially desired product linger for too long, a new market may be created for the alternative and the loss to the initial market may be irrecoverable.

High product quality is another reason customer’s satisfaction at bargain points may be guaranteed. When products are designed to meet the dynamic needs of customers, satisfaction from bargaining at purchase and the use of such products are derived. With revealed satisfaction obtained, customers are attracted towards a repurchase, which yields increased sales and revenue to the seller over time. Hence, ensuring that products sold are of the highest maintained quality is crucial to securing brand or customer loyalty.

Furthermore, when customers exhibit similar preferences, opinions, and traits as the sellers or retailers, that is, when customers identify with the retailers, they tend to enjoy higher bargaining satisfaction in their pricing experiences. For instance, if a customer prefers purchasing goods in traffic due to the possibility that he will get a cheaper bargain than he would in a shopping mall with fixed price tags, he would enjoy a better bargaining session with the traffic salesperson and probably secure a reasonable, fair price bargain for the product he is buying.

In the end, the customer’s satisfaction with the price gain will attract a comeback or a bias towards off-shelf purchases in the future. For this reason, one may find it not so surprising to find people of high net worth patronising sellers who advertise their wares in major traffic spots across the country.

The more a customer repurchases a product, the greater knowledge such customer will accrue towards his bargaining strategies. Like a backward iteration strategy in gaming analysis, past experiences in bargain or pricing situations enhance the customer with requisite knowledge about best prices, suppliers, discounts, sales promos, other products, retailers, and so on, which allows the customer to make better purchase decisions in the future.

Hence, with increased repurchase frequency, there is a greater tendency towards increased customer bargain satisfaction, improving loyalty and sales volume.

Therefore, efforts towards more intense customer and trade promotion programmes to boost repurchase behaviour among customers should be prioritised by business firms who wish to secure repeated and long-lasting patronage. When this is certain, increased sales will be experienced, and business profitability will be a non-negotiable outcome.