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Customer Loyalty Essay

2225 words - 9 pages

The Customer loyalty has been a major and unanimously acknowledged as a valuable asset in competitive markets according to Srivastava, Shervani, & Fahey, 2000. As a result, it becomes more important to give power to in loyalty panel particularly when the consumers faces very low switching or moving cost to other product or service, because they are not locked in by a contract (Shapiro & Vivian, 2000). It is also become important in competitive markets due to availability of more lucrative and easily available options. The concept of customer loyalty has been around and present throughout in all parts/activities of numerous industries in the past decade (Lewis, 1997). The development of loyalty includes building and supporting a relationship with a customer, which leads to the repetitive purchase of products or services over a given period of time. A loyal customer base also permits companies to offer their expertise and skills to other business matters (Gefen, 2002; Rowley & Dawes, 2000). In order to understand what drives customer loyalty or how your business defines customer loyalty we can look at the behavioral aspect of it. Customers can show their loyalty in a number of ways. They can prefer to stay with a firm, whether this persistence is distinct as a relationship or not, or they can increase the number of purchases, or they can do both (Reinartz & Kumar, 2003; Rowley & Dawes, 2000). The purpose of this research is to link loyalty to the up-and-coming theories of CRM (Macintosh & Lockshin, 1997) or as the key element, of effective CRM. Although some authors, such as Dick & Basu (1994), have different view of each element of it and make a distinction between brand loyalty, store loyalty, sales people loyalty, product and service loyalty, and so on, in this study the idea of loyalty will be considered as the combination of all these types. Various authors, such as Evans & Laskin (1994), calculated the impact of CRM on customer loyalty, but have not made any distinction between different types of loyalty. They have simply specified that their concept of loyalty go past the idea of industrial loyalty. As a result, the variable chosen to measure the effectiveness of CRM in this study is customer loyalty.
Looking into the previous decade many firms refocused to adopt a customer focus view most often through a formal program of customer relationship management (CRM) for example Brown 2000, Kalakota and Robinson, 1999 earlier by Peppers and Rogers, 1997. Latest expansion in information technology has enabled the tool for marketing managers to create a new generation of CRM tactics. One such tactic that thousands of firms have measured and which many have adopted is to establish a customer loyalty program. If we look around for example, we can see such programs/schemes run by many companies for example in US airlines and hotels, Japanese retailing, UK grocery stores, French banks, German car companies, US universities, Italian fashion stores,...

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