Best practice report: Customer Loyalty 2

January 2, 2014 by BPIR.com Limited

Survey and Research

Customer Loyalty and Relationship Quality
A  study  examined  how  relationship  quality  might lead to customer loyalty for younger consumers. [11] (Figure 5, see below, offers an explanation of relationship quality, service quality and customer loyalty.) The study measured the relationship quality exhibited by a service organisation and whether positive behavioural or attitudinal outcomes were achieved. It also examined the importance of service quality  in  connection  with  building  both  relation- ship quality and customer loyalty. Data was collected from a survey of 257 young consumers, aged 18-31, in Hong Kong. The study revealed that:

  1. Service quality did not lead to customer loyalty for young consumers.
  2. Five of six parameters of customer loyalty showed a strong relationship between relationship quality and customer loyalty.
  3. The direct effect of service quality on loyalty was found to be insignificant, but service quality had a direct influence on relationship quality, which in turn had a direct influence on customer loyalty

Customer Experience Management A Priority
In a 2013 Oracle corporation survey of customer experience management, respondents gave answers in the following percentages:

  • 81% were willing to pay a premium for a superior customer experience
  • 89% switched brands after poor customer experiences
  • 20% of organisations reported annual percentage revenue losses due to poor customer experience management
  • 93% of executives said that improving customer experience is one of their top-three business priorities
  • 18% expected to increase spending on customer experience technology over the next two years. [10]

Poor Processes Affect Customer Loyalty
In a 2013 IDC global survey of customer loyalty commissioned by Ricoh, respondents that had experienced ineffective document-driven processes reported the following:

  • 70% said they would be less likely to do business with that company in future
  • 60% said they would probably switch to a different company
  • More than 30% said they would write negative reviews about their experience in online forums
  • More than 60% of organisations surveyed reported that maximizing the effectiveness and efficiency of their customer-facing processes would be likely to improve revenue by an average of 10.1%
  • 56% of organisations reported spending one day or less reviewing processes; just over one-third of the respondents agreed this was not enough time. [7]

Customer Loyalty and Retention
A survey on the subject of customer loyalty management and practices received 92 responses from organisations in the United States:

  • 44% measured retention through the use of technology and 56% through other means (such as surveys or sales revenue)
  • 97% of the organisations believed customer loyalty was very important, but only 27% actually measured it
  • 73% of sales came from existing customers
  • more than 50% retained customers for six years or more
  • 96% said their top five customers had purchased from the competition during the last three years when they had expected to receive the order. [12]

Web Site Innovation and Perceived Service Quality
A 2012 study examined consumer perceptions of the influence of website innovation on service quality, trust, loyalty and word-of-mouth recommendations toward that website. Responses were analysed from 370 Australian e-retail customers. The results revealed that the perception of an innovative experience on an e-retail website led to more positive perceptions of overall e-service quality, higher levels of trust, website loyalty and positive word-of-mouth behaviour. Perceived web site-service innovation:

  • had a strong, positive impact on consumer’s evaluations of the overall e-service quality
  • facilitated the development of trust in the e-retailer’s website
  • led to consumers showing stronger levels of website loyalty, and
  • led to consumers being more likely to tell others about the site and to recommend it. [13]

E-Commerce and Developing Customer Loyalty
The role of trust in shaping e-commerce relationships was investigated using a survey of 420 business students from a large university in the United States. The study recorded the following key factors associated with growing customer loyalty:

  1. Trust and the associated contributing components of competence, goodwill, and integrity were very important.
  2. A shared belief in the integrity, competence, and goodwill of web vendors positively affected consumer trust.
  3. Both satisfaction and value were particularly important aspects associated with one-time or short-term transactions.
  4. While satisfaction was an important short-term attribute, value had a longer-term impact on customer loyalty.
  5. A positive relationship existed between loyalty and word of mouth: loyal customers engaged more strongly in word-of-mouth referrals. [14]
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