The Importance Of Loyalty

Customers have varying degrees of loyalty to a brand. On one end there is no loyalty towards a brand, resulting in few repeated purchases. But on the other end customers can have true loyalty, meaning that they have a high attitude towards the brand and continue to purchase from that brand (Dick & Basu, 1994). From the point of view of producers, it is desirable to enhance customer loyalty, as it is far more costly for a firm to attract new customers than retaining them. Companies try to improve customer loyalty by interacting with customers, developing loyalty programs, and creating institutional ties. (Kotler & Keller, 2012). However, loyalty programs also create switching costs for customers such that they stay with their current supplier. (Lam, Shankar, Erramilli, & Murthy, 2004). In other words, one could argue that loyalty is only a means to make consumers more dependent on supplier.
To begin with, lasting consumer loyalty occurs when the perceived value of a product consistently exceeds the expectations of the costumer. In order to keep exceeding the expectations of the cust...