What Is the Most Effective Strategy for Building Customer Loyalty?

What is the most effective strategy for building customer loyalty in business-to-business (B2B) relationships?

In today’s highly competitive business environment, the remarkable increase in the number of companies is becoming a problem. Due to this situation and also diversity in customer demand, business people are required to contemplate how to establish strategies to gain new potential customers or to maintain existing customers. Caceres and Paparoidamis (2007) identify that the cost of acquiring new customers is considerably greater than the cost of retaining existing customers. It could be said that it takes less money to keep your current customers happy than to attract new ones. Therefore, most firms’ programs have heavily focused on customer retention or, in other words, the management of customer loyalty. A significant amount of research asserts that recognition of factors that influence customer loyalty is fundamental for firms. Particular elements proposed in this essay include customer satisfaction, customer service, and word-of-mouth. This essay argues that it is essential for a company to consider how these factors work inter-dependently to create customer loyalty. It will discuss the important elements that influence customer loyalty in business-to-business (B2B) relationships and also look at their relative effectiveness. Finally, it will prove that the individual factors cannot be evaluated in isolation and only operate effectively as a whole.

Firstly, customer satisfaction may appear to be an important and crucial component in maintaining customers over a long period of time. White and Yanamandram (2007) clearly define customer satisfaction as a fulfillment of a customer’s wishes or expectations of a purchase. In other words, the customer will be satisfied when they are able to get what they want. It is likely to be one key factor in measuring customer loyalty. According to Naumann, Williams and Khan (2009), customer satisfaction might be

References: Bolton, R., N., Smith, A., K., & Wagner, J. (2003). Striking the right balance. Journal of Service Research, 5(4), 271-291. Caceres, R. C. & Paparoidamis, N. G. (2005). Service quality, relationship satisfaction, trust, commitment and business-to-business loyalty. European Journal of Marketing, 41(7/8), 836-867. Capraro, A. J., Broniarczyk, S., & Srivastava, R. K. (2003). Factors influencing the likelihood of customer defection: the role of consumer knowledge. Journal Of The Academy Of Marketing Science, 31(2), 164-175. Cater, B., & Cater, T. (2009). Emotional and rational motivations for customer loyalty in business-to-business professional services. The Service Industries Journal, 29(8), 1151-1169. Gil-Saura, I., Frasquet-Deltoro, M., & Cervera-Taulet, A. (2009). The value of B2B relationships. Industrial Management & Data Systems. 109(5), 593-609. Lacey, R. & Morgan, R. M. (2009). Customer advocacy and the impact of B2B loyalty programs. Journal of Business & Industrial Marketing. 24(1), 3-13. Molinari, L. K., Abratt, R., & Dion, P. (2008). Satisfaction, quality and value and effects on repurchase and positive word-of-mouth behavioral intentions in a B2B services context. Journal of Services Marketing, 22(5), 363-373. Naumann, E., Haverila, M., Khan, M. S., & Williams, P. (2010). Understanding the causes of defection among satisfied B2B service customers. Journal of Marketing Management, 26(9-10), 878-900. Naumann, E., Williams, P., & Khan, M. S. (2009). Customer satisfaction and loyalty in B2B services: directions for future research. The Marketing Review, 9(4), 319-333. Paulssen, M. & Birk, M. M. (2007). Satisfaction and repurchase behavior in a business-to-business setting: Investigating the moderating effect of manufacturer, company and demographic characteristics. Industrial Marketing Management, 36, 983-997. White, L., & Yanamandram, V. (2007). A model of customer retention of dissatisfied business services customers. Marketing Service Quality, 17(3), 298-316. Yim, C. K., Tse, D. K., & Chan, K. W. (2008). Strengthening customer loyalty through intimacy and passion: roles of customer-firm affection and customer-staff relationships in services. Journal of Marketing Research, 45, 741-756.