Customer and customer loyalty have an increasing importance in today’s competitive world. The companies follow customer share intelligence instead of market share intelligence. The most used method for this is information technology based customer relationship management.
In this paper it is examined the factors that affect this loyalty, the place of information technology based customer relationship management variables such as club cards, calling centers and web sites under KIPA and MIGROS examples.
After a brief discussion of loyalty behavior and the variables which affect the customer loyalty in positive and negative ways were given in Chapter I, Chapter II explains the customer loyalty in retail sector with some examples.
1. CUSTOMER LOYALTY
1. 1. Loyalty Behavior in Competitive World
According to Richard L. Oliver, loyalty is “A deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future despite situational influences and marketing efforts having the potential to cause switching behavior.” (Oliver, 1997)
In 1978, Jacoby and Chestnut, formed the psychological meanings of loyalty for separating it from behavior meanings (such as buying again). According to them, buying continuously is not an indicator of loyalty, for this reason they separated the continuous buying behavior from loyalty. After this, they analysed the customer beliefs, feelings and traditional customer behavior. Due to them, if there is a true loyalty, then the three decision levels should be seen while choosing the company;
1. The classifications for the company’s qualities should be chosen against the competitive alternatives. 2. This information must certainly be connected to the affective preference to the company. 3. When the customer compares the alternatives with the company, he should show a high tendency for buying the product/service from the company.
Don Peppers and Martha Rogers define loyal customers as the people who are so pleased with the organization’s products and services that they do not consider purchasing comparable products elsewhere. (www.onetoone.com) The loyal customer buys more, provides valuable input and refers to other customers. They shop frequently and their choices are more expensive or they buy improved products more. They are more profitable than other customers. Also loyal customers cost less to service and are less price sensitive. They act like a representative of the products or the company.
If the loyalty of the customers is increased, a beneficial flywheel kicks in, supported by: (Anton, 1996, p. 11)
• Increased purchases of the existing product
• Cross-purchases of the company’s other products
• Price premium due to appreciation of the company’s added-value services • Reduced operating cost because of familiarity with the company’s service system • Positive word-of-mouth in terms of referring other customers to the company.
Customer loyalty is the feeling of connection to the product or service. This feeling can show itself at many different behaviour of the customer. The last measure of loyalty is the buying share, but there are alternative measures also. These can be summarized in three major groups: (Jones&Sasser in Altıntaş, 2000)
1.1.1. Anew buying tendency: In any period of customer relationships, it is possible for asking the customers if they are going to get into anew buying tendency or not. The answer they will give, obtains important profits however it shows the future behavior basically. This tendency is the main evidence of the customer’s behavior in the future. 1.1.2. Primary behavior: The company can reach to some data of the customers at the sector and existent anew buying behavior can be measured in five categories: recency, frequency, amount, staying period and being a...
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