Customer Loyalty

Seminar paper from the year 2004 in the subject Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media, grade: 1,0, Australian Catholic University, Brisbane, 13 entries in the bibliography, language: English, abstract: The aim of this report is to provide an idea of what loyalty is how it can be achieved and why it is important for businesses. This report focuses on brand and store loyalty. Furthermore it points out what customer satisfaction is and what it means to a business. It analyses the relation between customer satisfaction and customer loyalty, using customer satisfaction in the telecommunication sector as an example. Loyalty is the regular repurchase of a brand or from a store, based on a commitment towards the specific brand or store (Neal, Quester & Hawkins 2002). A reason why marketers try to achieve customer loyalty is positive word-of-mouth advertising. A loyal customer is much more likely to practice positive word-of-mouth advertising than a merely satisfied customer (Schiffman, Bednall, Cowley, O'Cass, Watson & Kanuk 2001). Moreover, loyal customer are much less price-sensitive than switchers and thereby offer the company the possibility to sell their products at a higher price (Lawson , Tidwell, Rainbird, Loudon and Della Bitta 1996). Still, the main reason why it is important for marketers to achieve their customer's loyalty is the enormous difference between the costs of keeping a loyal customer and gaining a new one (Clopton, Stoddard & Clay 2001). Therefore, satisfaction, meaning that the performance of a product matches a customer's expectations towards it, is the main aim of marketing (Neal, Quester & Hawkins 2002) as it is fundamental to achieve customer loyalty (Hamilton 1997). However, a satisfied customer is not necessarily a loyal customer (Shrake 1999). Information for this paper was obtained from several 'Consumer Behaviour' books as well as from journal articles which partly provided empirical and research information.