Customer Loyalty and Banks

Customer Loyalty and Banks

Introduction

A customer is said to be a loyal if he or she buy off you more often without checking around the price. Loyal customers turn out to be profitable for the company as they also recommend the services to their family and peers. Thus, they play very important role in bringing new customers to the organisation. (Jamal et.al, 2002)has explained loyalty as the customer's attitude towards the company. Customer loyalty is based on two main ideas: The first assumption is a drop in consumer loyalty. They would have used the crisis to challenge their habits, to reuse their "purchasing power" and they would become more "zappers" than ever. Customer loyalty is today at the forefront of companies. The recent awareness of the importance of within the context of global competition more open which makes the acquisition of new customers difficult and expensive (Anderson, 1973).

Discussion

Marketing has faced many difficulties in the banking sector and competitive breakthroughs have not been easy to achieve. Banking has been undergoing a revolution since the abolition of controls and apart from size there is little to differentiate banking institutions from one another (Johnson & Fornell, 1991). The adoption and implementation of the marketing concept by banking institutions have been slow but profitable in many countries while in many other ones they are still product-oriented. Nevertheless, the traditional product-oriented banks are becoming increasingly customer-oriented focusing more and more on customer loyalty.

In retail banking the quality of the banking products and the value of customer associated service (a package of experiences and expectations that get mixed together in the bank customer's mind) are at a premium and more and more banking institutions are recognizing the importance of value-added products and consumer relationships grounded on loyalty. In today's highly competitive, complex and dynamic environment the very slight differences which exist in financial services and products together with an increasingly demanding customer had led to a great transformation of the banking institutions (Johnson et.al, 1996). Many innovations have modified the retail banking businesses, mainly due to new forms of commercialization and distribution of banking services. Customers are becoming ever more demanding, and in most markets they have more options to choose from than ever before. At the same time perceived 'switching barriers', the inconveniences of changing supplier, are being reduced. A good illustration of the effect of these changes is in the financial market, where the growth of internet and telephone banking has presented consumers with a breadth of new alternatives at the same time as measures are being taken to ease traditional switching barriers such as the transfer of standing orders and direct debits.

Different markets show very different customer loyalty profiles. The Leadership Factor's experience has shown that, for example, in some manufacturing sectors customers may have very little choice over which supplier to use. This can lead to complacency and the feeling that customer loyalty is irrelevant since they have no option but to come ...