IND301A Industry Consulting Project Management

Literature Review

Customer Loyalty 

According to Blut et al. (2014), the customer loyalty can be both considered as behavioral tendency and attitudinal tendency so that a favor is done to particular brand over others. It is caused due to enhanced customer satisfaction towards the service of the brand over its competitors (Blut et al. 2014)). The customer loyalty helps in the greater spending on the products or the services, which gives positive experience for the customers and which in turn compels them to attract more consumers.

As opined by Lee and Workman (2015), there are several kinds of brand loyalty such as monogamous, polygamous, attitudinal and behavioral. The polygamous loyalty belongs to the modern day customers as they try to incline towards a number of brands and not a single brand. Romaniuk and Nenycz-Thiel (2013) defined behavioral loyalty as the one in which the persons made the maximum purchases in a particular product category from a particular supplier. The attitudinal loyalty focuses on the degree of the psychological commitment to the brand.

Customer Retention

Goetsch and Davis (2014) identified that the customer retention can be defined as the set of activities that the modern day organizations undertake for the purpose of decreasing the customer defection rates. The goal of retaining the customers is to hold back the maximum number of customers through the process of customer loyalty and initiatives of brand loyalty (Goetsch and Davis 2014).

Han and Hyun (2015) defines that there are several benefits of customer retention. This involves that the company need not spend extra money on new customer acquisition and this would enable the organization to increase their profit margins. It is easy to capitalize on the experience of the existing customers than to determine the same from new customers (Han and Hyun 2015). A brand having a pool of loyal customers would be having more brand recognition and this would lead to greater revenue generation. Nas?r (2017) argues that there is approximately 60% probability of converting an existing customer to repeat customers with the help of different tactics.

Causes of customer defection

Peppers and Rogers (2016) commented that there are several causes that leads the customers to switch from one brand to the other. One of the most important reasons is the price factor. When the customers find a different brand with low prices, then there is a tendency of shifting to that brand. There may be additional deals, discounts that attract the customers and compel them to switch the brand. The next cause is the inconvenience faced by the customers. An unfavorable location of the business entity may hinder the customer arrival (Peppers and Rogers 2016). If the customers find that they have to travel great distances to avail the service, then they would not be interested in the product or service.

Heath (2014) states that the customers are demotivated when they witness product failures and this may prevent the customers from availing the services of the company. There may be ethical problems associated with the organization. If the company has issues concerned with fairness and it does not deal the customer complaints in an effective manner, then the customers would not be loyal to the particular brand (Heath 2014).

Importance of customer retention

Fullerton (2014) opined that customer retention is one of the most important strategies for driving the sales and revenues of the company. It is important to find out the actual cost of the customer defection and eliminate it. The customer retention helps in the identification as well as exploration of the several sales opportunities. There may be friends or relatives of the existing customers, who would be interested in the service of the company. The positive word of mouth would enable the company to increase their revenue and their overall profit percentages. Viio and Grönroos (2014) agree that the company would be beneficial if it shares a mutual constructive relationship with its customers. This would help the company in making positive brand image and hence improve the company visibility. It is also important to rectify the policies and the processes within the company. The regular interaction with the customers would also make the company aware of the needs of the target markets.

Strategies for ensuring customer loyalty

There are several strategies for improving the customer loyalty. Haumann et al. (2014) agrees that it is important for the customers to know the offerings of the company. It is important to set customer expectations in the right manner. It is important for the organizations to create trust factor with the customers. The organization must focus on implementing anticipatory service, which would allow the company to reduce the instances of problem occurrence (Zeynal Eidiani and Yazdanpanah 2014). A high level of automation is required in the modern world organization, which would enhance the customer satisfaction levels.

References

Blut, M., Beatty, S.E., Evanschitzky, H. and Brock, C., 2014. The impact of service characteristics on the switching costs–customer loyalty link. Journal of Retailing, 90(2), pp.275-290.

Fullerton, G., 2014. The moderating effect of normative commitment on the service quality-customer retention relationship. European Journal of Marketing, 48(3/4), pp.657-673.

Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Han, H. and Hyun, S.S., 2015. Customer retention in the medical tourism industry: Impact of quality, satisfaction, trust, and price reasonableness. Tourism Management, 46, pp.20-29.

Haumann, T., Quaiser, B., Wieseke, J. and Rese, M., 2014. Footprints in the sands of time: A comparative analysis of the effectiveness of customer satisfaction and customer–company identification over time. Journal of Marketing, 78(6), pp.78-102.

Heath, J., 2014. Morality, competition, and the firm: The market failures approach to business ethics. Oxford University Press.

Lee, S.H. and Workman, J.E., 2015. Determinants of brand loyalty: self-construal, self-expressive brands, and brand attachment. International Journal of Fashion Design, Technology and Education, 8(1), pp.12-20.

Nas?r, S., 2017. Customer Retention Strategies and Customer Loyalty. In Advertising and Branding: Concepts, Methodologies, Tools, and Applications (pp. 1178-1201). IGI Global.

Peppers, D. and Rogers, M., 2016. Managing Customer Experience and Relationships: A Strategic Framework. John Wiley & Sons.

Romaniuk, J. and Nenycz-Thiel, M., 2013. Behavioral brand loyalty and consumer brand associations. Journal of Business Research, 66(1), pp.67-72.

Viio, P. and Grönroos, C., 2014. Value-based sales process adaptation in business relationships. Industrial Marketing Management, 43(6), pp.1085-1095.

Zeynal, H., Eidiani, M. and Yazdanpanah, D., 2014, May. Intelligent substation automation systems for robust operation of smart grids. In Innovative Smart Grid Technologies-Asia (ISGT Asia), 2014 IEEE (pp. 786-790). IEEE.