July 10, 2006, 12:00 AM

Pricing and product quality create loyal customers, report says

When it comes to creating loyal customers, loyalty programs don’t really matter, according to a new study from Forrester Research Inc.

Paul Demery

Managing Editor, B2B E-commerce

When it comes to creating loyal customers, loyalty programs don’t really matter, according to a new study from Forrester Research Inc.

In a survey of 10,000 households, only 7% of consumers said that loyalty programs were extremely important, and 14% said they are very important in creating loyalty, Forrester found. In contrast, almost 70% of consumers said that both low prices and high-quality products drive loyalty.

But retailers don’t need to offer both to gain loyal consumers. Instead, retailers should focus on their core brand values to meet consumer expectations, Forrester said.

For example, catalogers such as Eddie Bauer, Lands’ End an L.L. Bean should focus on the core tenets of their brands-high-quality products and rich selection-and the trust-based relationships they’ve built with consumers over time, the report said.

Some retailers, such as Williams-Sonoma and Dell, should focus on product quality, while others, such as Payless Shoes and Wal-Mart should emphasize low prices, convenience and product selection, according to Forrester.

Retailers should “offer services and experiences that support the brand’s core value proposition, whether it’s saving time or money or offering fashion or culinary expertise,” the report said.

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