CUSTOMER LOYALTY

Customer Loyalty



Customer Loyalty

Introduction

Customer loyalty refers to the willingness of a consumer to repeatedly purchase the same product or service. Customer loyalty is a valuable commodity for companies, particularly those that have high customer acquisition costs. However, companies must be careful to cultivate customer loyalty so that they can be assured that it is active loyalty to their product, rather than inertia that is the motivation for repeat purchases (Schmidt & Schoeler, 2005).

Management researcher Funk (2001) has provided a typology of CLPs. According to Berman, CLPs can be divided into four main types. The first type of CLP offers discounts to the loyalty program customers when they purchase product of that organization, regardless of any previous purchase history.

Thesis Statement

This paper disucssed about customer loyalty and its importance with customer relationship management.

Discussion

There are three distinct viewpoints are evident, with different implications for marketing and customer relationship management.

Loyalty as Primarily an Attitude

The strength of attitude to a brand (expressed in terms of people saying they like the brand, feel committed to it, will recommend it to others and have positive beliefs and feelings about it) is seen as the key predictor of its purchase and repeat purchase. These attitudes are formed through a process of cognitive learning. The appeal of this viewpoint is that if consumers have such strong attitudes, they will not only continue to buy the brand but recommend it to others, go out of their way to buy it (despite situational influences and the efforts of marketers to induce switching behavior), and not be susceptible to negative information about the brand. One step on from this is to see strong attitudes developing into a relationship between consumer and brand. Implicit in this view is that over time, consumers have a small number of preferred brands in each product category (a consideration set), which come to be bought exclusively ('monogamous behavior') (Liu, 2007).

Loyalty as Primarily Buyer Behavior

Loyalty is defined mainly with reference to the pattern of past purchases, with only secondary regard to underlying consumer motivations or commitment to a brand. Behavioural measures of loyalty include repeat buying, duplicate buying and share of category requirements. Evidence shows that few consumers are exclusive or 100 per cent loyal ('monogamous behavior'), but nor are they completely indifferent to the range of brands on offer ('promiscuous behavior'). Rather, most consumers are loyal to a portfolio of brands in a category ('polygamous behavior'). ...