Abstract

This article attempts a qualitative review of the concept of customer loyalty and companies’ need to comprehend the character of customer loyalty in order to find a sound fit between their customer loyalty schemes and the prevailing nature of loyalty among customers. It suggests the mechanics of engendering customer loyalty by deliberating upon the concepts and dynamics of customer satisfaction and emotional attachment, the factors primarily responsible for promoting customer loyalty. A quantitative framework to assess customer loyalty to assess customer loyalty comprehensively through measurement of its antecedents and outcomes has also been proposed and discussed.

Introduction

Customer loyalty, the “holy grail” of marketing, has long been regarded as a business question of immense importance. The seemingly intangible, yet commercial merits of customer loyalty have placed it at a significantly strategic position in almost every organisation that faces a business environment characterised by hyper competitive pressures due to supply substantially surpassing demand, loosening of customer bonds and higher probability of corporate failures. Hence, customer loyalty continues to remain elusive for most marketers as even the most carefully designed customer centric measures, popularly known as loyalty programmes, have merely managed to retain customers at a superficial level. We submit that loyalty programmes have largely failed in building loyalty, as they are based on the fundamentally flawed premise of reward for retention being the driver for loyalty. Customer loyalty has been monopolised by various promotional schemes devised to offer benefits to the customers through revisiting the same company, recommending the same brand and repurchasing the same product over time. But instead of infusing loyalty among customers, these loyalty programmes and schemes have merely ensured the customers’ patronage till they receive a relatively more tempting offer from another company. So, this model of infusing loyalty among customers was not exceptionally effective as temptation could not form the basis of loyalty. A relationship developed on the basis of temptation is predisposed to get shaky once greater benefits are spotted elsewhere. Marketers mostly have been erring in internalising and implementing the very essence of customer loyalty by considering it merely as successful retention. The general mechanisms of much celebrated customer loyalty programmes are evidence of such short sightedness where behavioural patterns, desirable for obvious reasons, are encouraged without taking into account the underlying and understated affective and cognitive processes. At the same time, the world has also been witness to several brands with cult status whose customers require no loyalty points to revere and religiously pursue them. These brands could create such a committed following that preference for the brand became strong enough among their customers to ensure an obstinate price insensitivity and a keen sense of affiliation with the brand.