Customer loyalty

Customer Loyalty

Loyalty is the cause and effect of value (Reichhled, 1996). The importance of customer loyalty is proved by this statistic: Compared to the revenue a somewhat-loyal customer generates, a loyal customer contributes 260% the annual revenue.

Customer loyalty is a composite of a number of qualities. It is driven by customer satisfaction and involves a determination by the customer to make a sustained investment. It is reflected by a willingness to recommend the company to others and a commitment to the company demonstrated by a resistance to switching. (Prus & Randall, 1995).

The conceptualization of the loyalty construct has changed over time. Previously, the focus was brand loyalty with respect to tangible goods (Cunningham, 1956; Day, 1969; Kostecki, 1994; Tucker, 1964). Focusing on service as opposed to brand loyalty has broadened the spectrum of analysis (Oliver (1999)) & (Dick & Basu, 1994). Customers, at different stages of customer loyalty will demand differentiated intangible offerings such as the level of service (Palmeret al., 2000;Knox and Walker, 2001;Rowley, 2005). It is an accepted fact that customer loyalty is a function of the interaction between expectations and actual experience (Dahlsten (2003)). The component of service quality becomes significant in the context of service as it provides a new channel to retain customers (Oliveret al., 1997).(Sethet al.(2005)research concludes that there exists a �direct positive link� between these 2 variables that form the basis for our study. The managerial implication service loyalty is clearly shown in a paper by (Crosby and Johnson, 2006), who suggest that managers must realign their processes and focus on the customer experience. Consequently, the criteria have continued to expand, to include service loyalty.

Oliver, R.L. (1999), "Whence consumer loyalty?",Journal of Marketing, Vol. 63 pp.33-44.
REICHHELD FREDERICK F., "Loyalty-based management", Harvard Business Review, March-April 1993, pp. 64-73
PRUS AMANDA AND BRANDT RANDALL D., "Understanding your customers", Marketing Tools Magazine, July-August 1995
Dick, A.S., Basu, K. (1994), "Customer loyalty: toward an integrated conceptual framework",Journal of the Academy of Marketing Science, Vol. 22 pp.99-113.
Dahlsten, F. (2003), "Avoiding the customer satisfaction rut",MIT Sloan Management Review, Summer, pp.73-7.
Seth, A., Momaya, K., Gupta, H.M. (2005), "An exploratory investigation of customer loyalty and retention in cellular mobile communication",Journal of Services Research: Special Issue, December, pp.173-85.
Crosby, L., Johnson, S. (2004), "The three Ms of customer loyalty",Marketing Management, July/August, pp.12-13.

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