Customer loyalty

 Customer loyalty can be said to have occurred if people choose to use a particular shop or buy one particular product, rather than use other shops or buy products made by other companies. 

Customers exhibit customer loyalty when they consistently purchase a certain product or brand over an extended period of time. As an example, many customers stick to a certain travel operator due to the positive experiences they have had with their products and services.

Customer loyalty is the key objective of customer relationship management and describes the loyalty which is established between a customer and companies, persons, products or brands. The individual market segments should be targeted in terms of developing customer loyalty.

Types of Loyalty

To understand customer loyalty one must recognize there are different types and degrees of loyalty.  There is monogamous loyalty and there is polygamous.  There are also behavioral and attitudinal aspects.  A look at these concepts will clarify what “customer loyalty” really is, and this is important because having a solid understanding of the concept is critical if one hopes to design a reward program where loyalty enhancement is the primary objective.

Four different reasons for loyalty should be promoted:

• psychological;
• economic;
• technical/functional;
• contractual.

·         Example

·         Psychological

Customers might also develop a sense of loyalty to a certain person working for a company.  People can build up a good relationship with a bank advisor they have known for several years and who has always fulfilled their expectations.  The fact that people develop a sense of loyalty can be described as a psychological reason to stick to a specific product.

·         Economic

In business-to-business markets, it might also be possible that customer loyalty results from the fact that switching to another company would lead to the company facing economic disadvantages. In this case, loyalty is based on economic grounds.

Technical/ functional

Furthermore, it might be possible that a company adjusted and adapted its technical procedures to a particular supplier and a change would cause immense technical problems, thus, technical or functional reasons are the grounds for customer loyalty.

Contractual

A contractual reason for loyalty exists if a customer is bound to the company for a certain period of time due to a contractual agreement and for legal reasons. [1]

·         Loyalty is an old-fashioned word traditionally used to describe fidelity and enthusiastic devotion to a country, a cause, or an individual. It has also been used in a business context, to describe a customer’s willingness to continue patronising a firm over the long term, preferably on an exclusive basis, and recommending the firm’s products to friends and associates (Lovelock and Wirtz 2011).