This document discusses customer loyalty from three perspectives: attitudinal and behavioral components of loyalty, factors that affect customer loyalty, and perspectives of customer loyalty. It defines customer loyalty as a commitment to a brand based on favorable attitudes and repeat purchases. Key factors that influence loyalty include customer satisfaction, emotional bonding, trust, habit, and history with a company. Loyalty can be demonstrated through attitudes, behaviors, or a desire to maintain a relationship. Competitive offerings, variety-seeking, low involvement, and insufficient marketing can lessen customer loyalty over time.

1. Customer Loyalty

2. Customer Loyalty
I. Perspectives of customer loyalty
II. Factor that affect customer loyalty
III. Attitudinal and behavioral components
of loyalty

3. I. Perspectives of
customer loyalty (1/2)
 customer loyalty—a customer’s
commitment or attachment to a brand,
store, manufacturer, service provider, or
other entity based on favorable attitudes
and behavioral responses, such as
repeat purchases

4. I. Perspectives of
customer loyalty (2/2)
1-1 Brand loyalty as behavior
1-2 Customer loyalty as attitude
1-3 Relationship commitment

5. 1-1 Brand loyalty as
behavior(1/3)
 behavioral approach to brand loyalty—
assesses how consistent customers are
in repurchasing brands and is measured
by the proportion of purchases – the
number of times the most frequently
purchased brand is purchased divided by
the total number of times the product
category is purchased

6. 1-1 Brand loyalty as
behavior(2/3)
 Researchers view a brand loyalty
continuum and classify customers from
complete undivided loyalty to completer
brand indifference
 Customers can also be classified into
different categories based on the
sequence of their brand switching
 Exhibit 5.1: Variations in Behavioral Brand
Loyalty

7. 1-1 Brand loyalty as
behavior(3/3)
 undivided loyalty—the behavior of a customer who always selects
the same brand
 occasional switcher—usually selects the same brand over time but
may want a change of pace now and then, or may face an out-of
stock situation
 switched loyalty—a customer who has experienced a change of
heart, or a change of brand
 divided loyalty—a customer who is loyal to more than one brand
 indifference—the customer who sees no distinctions between
brands or who could care less which brand is purchased
 A strict behavioral definition of loyalty does not attempt to
understand why the behavior is occurring, nor does it distinguish
between loyal behavior and behavioral inertia
 Exhibit 5.2: Loyalty versus Inertia

8. 1-2 Customer loyalty as an
attitude
 attitudinal approach to customer loyalty—takes
the view that loyalty involves much more than
repeat purchase behavior and must also
include a favorable preference or commitment
that has been expressed over time
 inertial loyalty—also called spurious loyalty,
indicates that behavior appears to be “bogus”
because there is no strong attitudinal influence
 latent loyalty—customers have strong attitudes
but repeat purchase is low

9. 1-3 Relationship
commitment
 Relationship commitment—a desire to
keep a valued relationship that endures
over time
 Exhibit 5.3: Transactional/Relational
Continuum

10. II. Factor that affect
customer loyalty
 Some fundamental components that are
expected to affect customer loyalty
 Exhibit 5.4: What Affects Customer Loyalty?

11. II. Factor that affect
customer loyalty
2-1 Customer satisfaction
2-2 Emotional bonding
2-3 Trust
2-4 Choice reduction and habit
2-5 History with the company

12. 2-1 Customer satisfaction
 customer satisfaction—influenced not only by the
overall performance of a brand, company, or
experience, but also by how well the actual
performance meets or exceeds expectations
 Exhibit 5.5: Confirmation/Disconfirmation of Expectations
Determines Disatisfaction/Satisfaction/Delight
 delightful surprises—situations where customers
receive fulfillment that exceeds the satisfaction of
unexpected needs or wants
 zone of tolerance—a range where expectations (and
satisfaction) vary from what customer’s hope to receive
and what is minimally acceptable to unacceptable
performance

13. 2-2 Emotional bonding
 brand affect—an affinity with the brand or
an attachment to an organization, which
means the customer likes the
organization which can be an
instantaneous response

14. 2-3 Trust
 trust—one party has confidence that he
or she can rely on the other exchange
partner; or, the willingness of the
customer to rely on the organization or
brand to perform its stated function which
reduces uncerstainty/risk and is viewed
as a carefully thought out process

15. 2-4 Choice reduction and
habit
 choice reduction—a natural tendency to reduce
choices to a manageable set that may be three or
fewer options for many people
 habitual choices—based on an accumulation of
experiences over time that result in positive or
rewarding outcomes
 switching cost—the costs associated with change to
the unfamiliar, the untried, or the new which may
include time, money, or personal risk
 perceived risk—customer uncertainty about the
consequences of making a purchase which may
include performance or social risks

16. 2-5 History with the
company
 intergenerational influences—within-
family transmission of information, beliefs,
and resources from one generation to the
next

17. III. Attitudinal and
behavioral components of
loyalty
3-1 Loyalty as one-to-one relationships
3-2 Factors that may lessen customer
loyalty

18. 3-1 Loyalty as one-to-one
relationships
 multi-faceted loyalty—emphasizes that loyalty is more than a
repetition of a behavior where customers can exhibit loyalty to
price, the brand, the company, other customers, or to a place to
name a few potential options
 Exhibit 5.6: Loyalty and Organizational Options
 Exhibit 5.7: Loyalty and CRM System Guidelines
 recognition—implies a personal greeting that is based on
knowledge of the past history of interactions
 cultivation—implies meaningful interactions between the
organization and the customer, similar to the courtship phase prior
to marriage
 development—implies that customers have a clear image for the
organization and all of its services or brands which defines the
relationship or the strength of the tie with customers

19. 3-2 Factors that may
lessen customer loyalty
3-2-1 Competitive parity
3-2-2 Variety-seeking behavior
3-2-3 Low involvement
3-2-4 Low share of voice

20. 3-2-1 Competitive parity
 High competitive parity—the offerings of
different organizations are not
differentiated and if customers perceive
that brands are identical, perceived risk is
low and there is a greater tendency for
brand switching

21. 3-2-2 Variety-seeking
behavior
 high variety seeking behavior—occurs
when people become bored and have a
need for a new experience because of
declining benefits associated with repeat
patronage or because they feel
energized by the prospect of having a
new experience

22. 3-2-3 Low involvement
 low involvement—a low level of personal
relevance or perceived importance of a
product or service for the customer which
can lead to higher levels of deal
proneness and price sensitivity

23. 3-2-4 Low share of voice
 low share of voice—a brand’s, store’s, or
organization’s relative promotional
expenditures; where problems occur with
insufficient share of voice to provide a
clear picture of the organization to the
target base