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Customer Loyalty

Article Index
Customer Loyalty
Expert Opinion
Research Data
Measure and Evaluate
Example Cases
Summary
References

Page 1 of 7

Customer loyalty refers to the tendency of customers to stay with a certain business or product brand over another when seeking to meet a particular need.

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The Stage

Improved Customer Loyalty is often the aim of programmes designed to encourage customers to choose to buy from companies more frequently than they might do otherwise. Loyalty programmes also seek to improve customer retention and to increase the "life time value" of a customer. Customers may express high satisfaction levels in a survey; however this may not necessarily translate into loyalty. In essence loyalty is demonstrated by the behaviour of customers. Customer loyalty may be described using three categories i.e.:

Transactional loyalty; which may be measured by noting changes in the buying behaviour of customers e.g. (responses to cross-selling or up-selling, repeat purchasing behaviour, persistency)

Perceptual loyalty; which may be measured by recording customer attitudes and opinions e.g. (customer satisfaction surveys, customer awareness recordings)

Complex loyalty; which is a combination of transactional and perceptual loyalty e.g. the Lifetime Value (the commercial value of a customer over time) and Brand value (the strength of communications and general consumer awareness).

Behavioural models can be developed from data collected during purchasing interactions with customers. These models can help to determine a customer's loyalty status, and provide an opportunity to react as necessary to any changes detected.

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