The Concept of customer loyalty

The increasing competition has forced every seller in the market to reconsider their views on customers. Gone are the days when customers were simple and attracting them to the firm was child’s play. Today the customers are to be treated like kings and must be provided with all that they expect the firm to provide. The firms face double challenges of attracting the customers as well as retaining them. The competition in the marketplace offers the consumers with an opportunity to select from wide variety of similar offerings; so achieving customer loyalty is extremely difficult.

Customer loyalty has been defined by Oliver (1997) as, “A deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behaviour.” (Oliver, 1999 cited in Pohl, 2006) The definition provided by Oliver lays stress on the situational influences and marketing efforts which cause customers to switch over. A loyal customer is one who is not influenced by these factors and makes repeated purchases from the same seller or brand.

Dick and Basu (1994) have emphasized another aspect of the customer loyalty and suggest that customer loyalty is a combination of behaviours and attitudes. Dick and Basu have provided that a loyal customer is one who not only makes repeated purchases from the seller but also has a positive attitude towards the seller or the brand. Thus anyone who makes repeated purchases from the firm but does not have a positive attitude towards it cannot be termed as a ‘loyal customer.’ It is because such customers will only benefit the firm by regular purchases but will not spread positive word-of-mouth for the firm. (Dick & Basu, 1994 cited in Allen et al, 2002)

Chiang (1998) & Gronholdt (2000) provide the features of customer loyalty. They have mentioned four features in this regard: 1. Intention to repurchase, 2. Willingness of recommending to others, 3. Tolerance of price fluctuation, and 4. Intention of purchasing other products from the same company. These four features together define a loyal customer. (Chiang, 1998 & Gronholdt, 2000 cited in Liu, 2008)

Customers’ loyalty starts with customers’ satisfaction. This is well reflected in the following statement of Rai, “Gaining high levels of customer satisfaction is very important to a business because satisfied customers are most likely to be loyal and to make repeat orders and to use a wide range of services offered by a business.”(Rai, 2008)

References:

  • Pohl, U. (2006).  Type and Timing of Rewards as Influencing Factors on the Value Perception of a Customer Loyalty Program. Auflage.
  • Rai, A.K. (2008). Customer Relationship Management: Concepts and Cases. New Delhi: PHI Learning Private Limited.
  • Allen, D.R. & Wilburn, M. (2002). Linking Customer and Employee Satisfaction to the Bottom Line. Library of Congress.
  • Liu, Y.C. (2008). An analysis of Service Quality, Customer Satisfaction and Customer Loyalty of Commercial Swim Clubs in Taiwan. 

Ankita Agarwal

Analyst at Project Guru
Ankita is working with the editorial board of Project Guru as a Research Analyst and Writer. With Masters in Commerce and Business Studies, Ankita learned much of what she knows about management through experience. She has previously worked in various financial institutions like Birla Global, HDFC Ltd. and Citi Financial. She is self-motivated and writes for the Knowledge Tank section of Project Guru. She has authored more than 80 articles so far in Human Resources Management, Strategic Management, Finance and Marketing. She likes to pen her thoughts about the latest issues gripping these areas across the world.
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