Developing Customer Loyalty

Provides consumer terrorists with an opportunistic platform to perform.

...The Internet

This level deserves special emphasis.

Advocates

Affect evokes feelings related to the object under consideration. Including: 1. Emotion 2. Moods 3. Primary affect 4. Satisfaction

Affective Antecedents

1. Cognitive 2. Affective 3. Conative

Antecedents

Concurs that this is conceptually similar to the notion of inertia, in that a consumer perceives little differentiation amongst brands, undertaking repeat purchase due to deals or situational cues such as familiarity

Assael (1992)

Express that behaviour is not sufficient enough to exclusively explain loyalty.

Attitudinal...Dick and Basu (1994)

Highly prized and the Holy Grail as it equates to actual sales.

Ball et al. (2003)

Explains that attitudes comprise cognitive elements, as an individual must form an opinion before evaluating.

Baron et al. (2010)

Explains that at a first glance, loyalty is a behavioural concept as it is viewed in terms of actual purchase behaviour and is measured by proportions or patterns of purchase behaviour.

Behavioural...Baron et al. (2010)

Concludes that attitudinal loyalty is strategically more important, as it displays higher-levels of trust and emotional commitment.

Bowen (2003)

Refers to informational determinants, including brand retrievability

Cognitive Antecedents

Is a behavioural disposition, referring to how one acts on thoughts and feelings. 1. Switching costs 2. Sunk costs

Conative Antecedents

Warns that although both-models agree that satisfaction leads to loyalty, there should not be confusion that loyalty is always based on positive attitude or satisfaction.

Critique...Hassan (1996)

Hard and Low dimensions

Customer Loyalty Drivers

Involving relationships with 'their' brand, and in return receive psychological reassurance and a sense of belonging.

Customers seek what...

Behavioural and Attitudinal

Defining Loyalty

Cross clarify the previously discussed concept of relative attitude, and repeat patronage and distinguish between 4 conditions

Dick and Basu (1994)

Explain that accessibility may be viewed in terms of a continuum, ranging from irretrievable to a well-learned attitude, which will activate automatically upon a brand's presence.

Dick and Basu (1994)

Sunk costs are costs that have already been incurred, and are not recoverable

Dick and Basu (1994)

Switching costs are not exclusively economical, psychological situations e.g. store layout change may push consumers to switch.

Dick and Basu (1994)

Warn that this is a serious concern for marketers, as creating even higher relative attitude is both expensive and unlikely to alter latent loyalty. Therefore, organisations should remove barriers such as inconvenient locations and sporadic opening hours

Dick and Basu (1994)

Echoes this, claiming consumer loyalty is a result of the bond between an individuals relative attitude and repeat patronage, again mediated by social norms and situational influences/experiences

Egan (2011)

Emphasises the need for cooperation to maintain future relationships, as consumers expect the company to study and tailor information accordingly

Egan (2011)

Defines emotion as intense short-lived states of arousal and reactions to specific stimuli

Emotion...Cardon et al. (2008)

States 'programme loyalty' is driven by economic incentives, appealing to rational customers. Where as , 'company loyalty' is more emotional in nature driven by the nature of the relationship between customer and company.

Evanschitzky et al. (2012)

States that if a company cannot economically justify a RM approach, they should adopt a TM strategy

Evanschitzky et al. (2012)

Increase the likelihood of repeat patronage, to illustrate a pre-paid gym membership

Example

Hoarding of a product e.g. Cream Egg's before they are gone post-Easter

Future Expectation

GE have created value in their final customers through the introduction of an innovative cell-centre, moving them from the 'buyer' level to the 'advocate'

General Electric

Both TM and RM are polar opposites yet remain on a continuum, with firms positioning themselves at varying degrees of relational complexity

Gronroos (1994)

Believe that loyalty is built on hard dimensions which are prime drivers for product choice

Hard Dimensions... Fredericks and Salter (1998)

25x more expensive to acquire than to retain customers

Harvard Business Review (2014)

Everyone has their 'price' and a consumers' positive experience many only 'enhance' short-term loyalty

Hassan (1996)

Explain that 'consumer terrorists' are far more committed and effective at creating negative W-O-M than advocates.

However, Jones and Sasser (1995)

States that the demise of traditional mass-marketing is somewhat premature

However, Kottler (1997)

States that there is an evolving certification of customer retention and relationship economics to develop 'defensive strategies'

However, Storbacka et al. (1994)

Warns that both company and programme loyalty are conceptually different constructs, and should be managed separately.

However... Evanschitzky et al. (2012)

Ryanair were voted the 'most hated' airline, yet achieved 36% profits annually

In 2006...

Accessibility, confidence and clarify also plays a role

In addition...

Historically, traditional marketing has focused on creating new customers and luring dissatisfied customers from competition using 'offensive strategies'

Introduction (Relationship Vs. Transactional)

Dimension who conclude that the measurement of brand-loyalty should be composite (both behavioural and attitudinal)

Jacoby and Chestnut (1978)

Investment required to alter satisfied customers to completely satisfies is not justified. Thus, one should target those least satisfied.

Jones and Sasser (1995)

Fortifies this notion of copy cats, as many schemes are introduced for defensive reasons, not proactive

Khan (1998)

Customer Lifetime Value (CLV) model indicates that it is not always economically beneficial to increase consumers positions on the ladder.

Kumar and Shah (2004)

Christopher et al. (1993) different stages of relationship development.

Ladder of Loyalty

State that in collectivist cultures e.g. Asia, W-O-M information is a frequent trusted source. This is because commercials 'inform' where as personal sources 'legitimise' products.

Laroche et al. (2005)

High relative attitude, low repeat patroange

Latent Loyalty

True/Spurious/Latent/No

Loyalty Typologies

Generate spurious loyalty through manipulation of situational factors including favourable shelf location

Management should...

Are defined as less intensive reactions to general stimuli

Moods

Include programmes including competing companies e.g. Nectar. However, they are ineffective as users become loyal to the scheme not the companies involved.

Multi Store loyalty programmes

Low relative attitude and low repeat patronage

No Loyalty

Expresses that the cost of data-collection frequently outweighs any advantage, as many organisations fail to capitalise on the obtained information.

O'Malley (1998)

Loyalty is defined as deeply held commitment to consistently purchase in the future, despite situational influences and switching costs

Oliver (1999)

RM places high importance on customer loyalty as reducing defection rates remains critical to retention

Parry-Lowther (2017)

Schemes may temporarily alter behaviour, but once a competitor launches a similar scheme the same problem arises.

Path Breaking

Advocate this, as consumer expectations are evolving faster than firms capabilities to improve customer service.

Payne and Frow (2013)

Explain that it has evolved as a 'rock face' as it takes considerable time and effort to progress the ladder.

Payne and Frow (2013)

Express that potential customers view customers commentary on social media as a more trusted source than directly from the company.

Payne and Frow (2013)

Illustrate that organisations generally allow referrals to happen, rather than proactively developing marketing activities and social-media processes to leverage the power of advocacy.

Payne and Frow (2013)

Strengthen this argument, as there may be hostages (switching costs and monopolistic)

Payne and Frow (2013)

Believe it is almost impossible to gain loyalty in FMCG markets as they are dictated by low-price based competition

Pressey and Matthews (1998)

Shows that PA is psychological in nature, such as evoking affect through fragrant aromas in stores

Primary Affect...Zajonc (1980)

The relationship between satisfaction and loyalty is non liner, as 60-80% of lost customers stated they were satisfied despite switching, making it highly complex to understand.

Reicheld et al. (2000)

Sainsbury's claimed they would not follow Tesco's clubcard, yet reversed that decision 12 months later.

Sainsburys Vs. Tesco

Is a customers post-purchase response, and many companies treat consumer satisfaction as a ' pre requisite' for consumer loyalty

Satisfaction

Propose that softer dimensions affect attitude in a decisive manner.

Soft Dimensions... Dick and Basu (1994)

Illustrated through low-relative attitude and high repeat patronage

Spurious Loyalty

This can be illustrated through the streetwear brand Supreme, who have a strong cult following and community surrounding the brand, products also sell out within seconds after release.

Supreme

Flyer Miles the second most used currency after the US dollar, illustrating the incredible potential value of loyalty programmes

The Economist (2002)

1. Emotion 2. Satisfaction

These include...

1. Money 2. Convenience 3. Reliability 4. Safety 5. Functionality

These include...

Most prefferable

True Loyalty

Defines this as 'polygamous' loyalty, as people purchase alternatives for different occasions.

Uncles and Dowling (1997)

Reminisce that in the 1970s suppliers formed close relationships with customers they believed to be better and vice-versa, creating a win-win arrangement

Uncles and Dowling (1997)

Expand beyond the core product, and invest more into interactive marketing for long-term benefits

What must RM firms do?

Because companies including McDonald's and Ryanair have successfully used standardised and repetitive approaches

Why?

Found significant differences between satisfied and completely satisfied customers e.g. completely satisfied customers are 6x more likely to repurchase.

Xerox