Customer Loyalty
1.0 Introduction
The term “customer loyalty” is indisputably one of the most widely studied subjects by researchers in the world, intensively evolving over the years. According to past reviews, loyalty has been defined as a repeat purchase that is a result of a preference, attitude or market share. However, according to Uncles, Dowling and Hammond’s (2003) review of literature, there is no universally agreed definition (Jacoby and Chestnut, 1978; Dick and Basu, 1994; Oliver, 1999). Therefore, to truly understand customer loyalty, it is necessary to recognize that there are different types and measures which are discussed in this report. Before a relationship with a customer can develop, loyalty must be present (Mcllroy and Barnett, 2000). Before loyalty can be formed, several factors known as the antecedents of loyalty must be initiated (Dick and Basu, 1994). The understanding of the formation of loyalty and the linkage to its antecedents is critical in improving customer relationships (Benett, Kennedy, and Coote, 2000). Consequently, service quality, satisfaction, trust and commitment will be highlighted as constituents. Furthermore, in the age of intense competition and increased customer expectation, building long-term loyalty with customers is seen as an effective means of growth and profitability (Uncles et. al, 2003). Numerous benefits are associated with achieving customer loyalty and as a result, the main focus for businesses today is to retain loyal customers (Mcllroy and Barnett, 2000; Uncles et al., 2003; Rowley, 2005). Therefore, it is noted that the best way to achieve repeat business is through customer loyalty programs. The primary motive behind a loyalty program is rewarding customers for their repeat purchase behaviour (Mcllroy and Barnett, 2000, Uncles et. al, 2003). Followed by that emphasis, Tesco Clubcard will be used as an example in this report to illustrate the effectiveness of loyalty programs and how it has been influenced by its
The term “customer loyalty” is indisputably one of the most widely studied subjects by researchers in the world, intensively evolving over the years. According to past reviews, loyalty has been defined as a repeat purchase that is a result of a preference, attitude or market share. However, according to Uncles, Dowling and Hammond’s (2003) review of literature, there is no universally agreed definition (Jacoby and Chestnut, 1978; Dick and Basu, 1994; Oliver, 1999). Therefore, to truly understand customer loyalty, it is necessary to recognize that there are different types and measures which are discussed in this report. Before a relationship with a customer can develop, loyalty must be present (Mcllroy and Barnett, 2000). Before loyalty can be formed, several factors known as the antecedents of loyalty must be initiated (Dick and Basu, 1994). The understanding of the formation of loyalty and the linkage to its antecedents is critical in improving customer relationships (Benett, Kennedy, and Coote, 2000). Consequently, service quality, satisfaction, trust and commitment will be highlighted as constituents. Furthermore, in the age of intense competition and increased customer expectation, building long-term loyalty with customers is seen as an effective means of growth and profitability (Uncles et. al, 2003). Numerous benefits are associated with achieving customer loyalty and as a result, the main focus for businesses today is to retain loyal customers (Mcllroy and Barnett, 2000; Uncles et al., 2003; Rowley, 2005). Therefore, it is noted that the best way to achieve repeat business is through customer loyalty programs. The primary motive behind a loyalty program is rewarding customers for their repeat purchase behaviour (Mcllroy and Barnett, 2000, Uncles et. al, 2003). Followed by that emphasis, Tesco Clubcard will be used as an example in this report to illustrate the effectiveness of loyalty programs and how it has been influenced by its