The Relationship Between Customer Loyalty and Customer Satisfaction
The relationship between customer loyalty and customer satisfaction
John T. Bowen
University of Nevada, Las Vegas, Nevada, USA
Shiang-Lih Chen
University of Nevada, Las Vegas, Nevada, USA
Keywords
Customer loyalty,
Customer satisfaction,
Database marketing, Hotels
Abstract
Develops and implements a method for hotels to identify attributes that willincrease customerloyalty. Otherhotels can replicate the methodology used in this study. The study makes the uses of the hotel’s database to draw samples for both focus groups and a mail survey. Based on 564 completed surveys from hotelguests, the authors found the relationship between customer satisfaction and customer loyalty was non-linear.
The authors use the data to develop internal benchmarks for the hotel based on scores that were representative of loyal customers.Thestudy makes use of the hotel’s database to draw samples for both focus groups and a mail survey.
InternationalJournal of
Contemporary Hospitality
Management
13/5[2001]213.217
# MCB University Press
[ISSN 0959-6119]
Introduction
It is commonly known that there is a positive relationship between customer loyalty and profitability. Reichheld and Sasser(1990) found that whenacompany retainsjust5 percent more ofits customers, profits increase by 25 percent to 125 percent. Their study caught the attention of both practitioners and researchers, arousing a great interest in customer loyalty. Gould(1995) helped consolidate the interest in loyalty through his research that supported Reichheld and
Sasser’s work. Today, marketers are seeking information onhowto build customerloyalty.
Theincreasedprofitfrom loyalty comes from reducedmarketingcosts, increasedsales and reduced operational costs. Loyal customers are less likely to switch because of price and they make more purchases than similarnon-loyal customers(Reichheld and
John T. Bowen
University of Nevada, Las Vegas, Nevada, USA
Shiang-Lih Chen
University of Nevada, Las Vegas, Nevada, USA
Keywords
Customer loyalty,
Customer satisfaction,
Database marketing, Hotels
Abstract
Develops and implements a method for hotels to identify attributes that willincrease customerloyalty. Otherhotels can replicate the methodology used in this study. The study makes the uses of the hotel’s database to draw samples for both focus groups and a mail survey. Based on 564 completed surveys from hotelguests, the authors found the relationship between customer satisfaction and customer loyalty was non-linear.
The authors use the data to develop internal benchmarks for the hotel based on scores that were representative of loyal customers.Thestudy makes use of the hotel’s database to draw samples for both focus groups and a mail survey.
InternationalJournal of
Contemporary Hospitality
Management
13/5[2001]213.217
# MCB University Press
[ISSN 0959-6119]
Introduction
It is commonly known that there is a positive relationship between customer loyalty and profitability. Reichheld and Sasser(1990) found that whenacompany retainsjust5 percent more ofits customers, profits increase by 25 percent to 125 percent. Their study caught the attention of both practitioners and researchers, arousing a great interest in customer loyalty. Gould(1995) helped consolidate the interest in loyalty through his research that supported Reichheld and
Sasser’s work. Today, marketers are seeking information onhowto build customerloyalty.
Theincreasedprofitfrom loyalty comes from reducedmarketingcosts, increasedsales and reduced operational costs. Loyal customers are less likely to switch because of price and they make more purchases than similarnon-loyal customers(Reichheld and
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