The Truth About Patronage in Business

In using the word patronage, I remember when I was younger how it was mainly used to describe the frequenters of the local watering holes and not spread to other buyers of good or services. In trying to debate this topic in this article, we realize that patronage in any industry is not an easy subject to bring to the forefront as it purely is dependent on more than one feeling at a time.

With the growth of the Ugandan population, there has been an increased interest in the quality of the products and services offered as a result of the maturing of the markets that we play in. It’s not enough to look at the competitor’s clients because it is constantly being done. Case in point; Stanbic Bank’s customers are always being poached by all other banking institutions. It is more important for Stanbic Bank’s marketers to focus on their own existing customers as their own existing base.

This is nowadays termed as defensive marketing. It is realised that it is better to collect data and analytics that will provide evidence and backing to guide you to keep your current clients contented. This contentment is termed as satisfaction….

As a business owner, the understanding of the client should be broadened to include all parties that contribute towards building perceptions and expectations. Considering a case for a school, a customer is more than just the student admitted to the school. The parents, guardians, the community and their peers all become customers.

Funny how this feeling of satisfaction may not have one generic definition, but most if not all definitions mean the same thing. However, the clients’ perception and having their basic expectations being met are key functions to their satisfaction.

patronageWhat should be communicated in this here attempt to speak the truth about patronage is that customer satisfaction always guarantees a repeat purchase. This then can lead to loyalty being derived. The ability to satisfy consumers remains one of the greatest task for any firm to achieve as customer needs and expectation are changing at all time. Customer satisfaction can be experienced in a variety of situations and connected to both goods and services. It is a highly personal assessment that is greatly affected by customer expectations and perceptions which are expressed in the following items.

  1. Value to Customer

The concept of customer value has its origin in equity theory, which consists of the ratio of the consumers’ outcome to that of the service provider’s input. It has also been looked at that customer value is a perception of trade-off between what customers give up (price, sacrifice) and what the customer receives (utility, quality, benefits).

Many people use price as a measure of wealth, value and quality. Because of the nature of the contractual agreement to use a product in the future, consumers are more conscious of cost of keeping or using the network and not price of initial buying.

How a customer values a product can thus lead to greater patronage for any specific product or service.

  1. Brand Image/Reputation

A brand is defined as any name, term, sign, symbol, or design, or combination of these that identifies the maker/seller of the product or service and differentiates it from competitors. The level of brand awareness, image, identity, association, and reputation are very important in customer choice/patronage. Brand image as defined by Phillip Kotler is the perception about a brand as reflected by what is held in a consumer’s memory. Brand awareness is the ability to identify the brand under different conditions, as reflected by their brand recognition or recall performance, consumer’s brand recognition and ability to confirm prior exposure to the brand when given a brand as a cue. Brand awareness and image are mostly achieved through marketing communication and promotion.

In short, everything that has to do with the touch point between the brand and the customers.

 Ideally, for an organization to achieve brand reputation it must have huge brand equity. Brand equity is the added value endowed to product and service which is reflected in how a consumer feels, thinks, and acts with respect to the brand. The stronger a customer feels about a brand, the more he or she is recognised as a patron of that brand.

  1. Loyalty

Loyalty should not however be mistaken with “Locked-In” customers or even frequent customers. Consider a loyal customer to Samsung products but only buys the items probably once in a year or two. A locked-in customer on the other hand is one who is afraid to leave MTN. The customer is as old as business. Peter Drucker said “The sole purpose of every business is to create a customer” He also opined that the only economic and social justification existence of any business existence is to create customer satisfaction.

 Experience however indicates that defining and measuring patronage is extremely difficult.

It has however been expressed through customer loyalty; where loyalty is defined in terms of willingness and personal initiative for the customer to select the preferred service or product based on their own perceptions.

Before value can be realized, that input must be integrated with other resources, some of which are also obtained through the market and some of which are privately (e.g., personal, friends, family) or publically (e.g., government) provided. Thus, value creation is always an interactive process that takes place in the context of a unique set of multiple exchange relationships. Hence, value creation is mutual and reciprocal (i.e., service is exchanged for service), almost by definition. That is, not only does a firm provide inputs for the customer’s value-creating activities but the customer does the same for the firm, though usually at least partly indirectly, through payment of some money.

But customers co-create value with firms in additional ways, such as by enhancing brand and relationship equity for the firm, either directly through their purchasing or indirectly, through influencing the attitudes, the making of meanings, and the behaviour of others toward the firm.

Whereas we appreciate that patronage is a driver to business success, it comes at a cost. Creating customer value, brand promotion and building a loyal customer base costs the business resources. It is therefore important to segment the market so as to identify the high value customers to be turned into patrons.

After all is said and done, providing value to customers is still critical in order to create patrons.

By Edmund Kamugisha

Edmund Kamugisha Edmund is the Engagement Director at BLEGSCOPE®, and has 9+ years of management       consultancy experience notably in MSMEs, FMCG companies and in the service industry. You can    follow him on twitter: @edmokmg

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