How do you define and explain customer loyalty? What is the evidence? How can marketers use consumer loyalty?
.... This compartmentalises the consumer’s attitude, motivations and evaluations into a secondary peripheral role. In contrast to attitude, revealed behaviour has accumulated significant empirical evidence that supports its theories. Uncles et al (1994) reveals that purchase patterns data has been collected ‘across dozens of product categories and for many diverse countries’. The evidence indicates that consumers have divided loyalties and are loyal to a portfolio of brands in a given service or product category, hence being named polygamous, in comparison to monogamous or promiscuous (Uncles et al., 2003). Once a product or service has supplied a satisfactory performance and becomes part of the consumer’s portfolio, repeat purchase can be seen as habit or a measure of convenience. The time is not spent and the effort is not made to seek alternatives when the product or service at hand is providing satisfaction to that consumer, producing the phrase ‘satisficing behaviour’(Doyle ,2002). If the availability, accessibility of that product is not there or satisfaction decreases, another functionally similar or substitute is selected from the portfolio. However, with repeat purchases a level of weak commitment can be established towards a product or service within their portfolio. Those that proclaim attitudes drive behaviour invoke that behaviour merely reflects happenstance, and even the combined measures of revealed behaviour and satisfaction may not probe deeply enough for us to be sure there is true loyalty (Uncles et al., 2003). Thirdly, there is the ‘contingency approach’, which envisages the relationship between attitude and behaviour to be arbitrated by a set of contingency variables. Such variables include the individuals current circumstances (budget effects, time pressure), characteristics (desire for variety, habit, need to conform, tolerance for risk), and the purchase situation (availability, promotions/deals, particular use occasion)(Uncles et al, 2003). This directive would, therefore, presume that repeated satisfaction alongside a weak commitment would be substantially affected by the relevant contingency variables in producing the consumer’s purchase of a product or use of a particular service. The paradigm for any given marketer is to determine where their marketing strategy should be directed, which inevitably is indicative of the service or product they provide. There have been extensive theories and models to define ‘consumer loyalty’ as mentioned; hence the applications from the conclusions made will have a substantial outcome on the marketing strategy adopted by the company and the subsequent effect by the consumer in purchasing. The need for segmentation is not doubted in order for the marketer to define the strategy to be employed to reach their target market. The attitudinal approach has been acknowledged by Dabholkar (1999) to be useful under circumstances where the consumer is making an important or risky decision, but held less applicable to the purchasing of low-risk, frequently bought brands, impulse buying or variety seeking. For high-risk and non-frequently bought or used services there would logically be the want for high retention and patronage. As satisfaction has not been deemed a dominant force in creating retention, to acquire ‘true loyalty’ customers have to be highly satisfied or delighted by the company’s service or product. The attitudinally driven behaviour approach applies principally, but not exclusively, to service industries, for example auto/home/life insurance and credit cards. In the fields of advertising and brand equity research this approach receives much conceptual support (e.g. Aaker, 1996; De Chernatony and McDonald, 1998; Keller, 1998)(Uncles et al., 2004). According to Doyle (2002), studies have shown that customers that rate themselves ‘highly satisfied’ are six times more likely to buy again from the company than those that are just ‘satisfied’. Bain’s experience in the UK and USA is that a 5 percent increase in the retention rate increases customer profits by between 20 and 85 percent. Therefore those marketers promoting high risk, infrequently bought products or services should strive to segment their customers into those potential ‘true loyals’ in order to deliver a consistently high service/product to retain them. By concentrating on these ‘true loyals’ and increasing patronage there would be significant snowball effects in recommendation. Virgin Airways discovered that on average passengers who were delighted by the experience on their flights told four others (Doyle, 2002). Coupled to this Ahluwalia et al. (1999) have shown that attitudinally-loyal customers are much less susceptible to negative information about the product/service than non-loyal customers. However the marketer must also discern if the true loyals will be worth keeping in terms of profit, or will their infrequent buying or use of service limit profitable gain. Also, where loyalty to a brand is increased, the revenue-stream from loyal customers becomes more predictable and can become considerable over time - as analyses of cases such as Federal Express, Pizza Hut franchises, and Cadillac dealerships have shown (Uncles et al, 2002).The attitudinal approach is also ideally suited to loyalty programs, inducing rise in the loyalty ladder through incentives, promotions, and persuasive advertising. The behavioural concept supports polygamy, therefore for those markets involving low risk and frequently bought or used services should strive to attain, maintain and secure their share of the consumers portfolio. Here it is assumed that consumers tend to view advertising and other forms of marketing communication more as publicity that sustains awareness and offers reinforcement, rather than as highly persuasive information that fundamentally changes their attitudes and/or levels of commitment (Uncles et al, 2002). Marketers therefore could maintain share loyalty by avoid...