Customer Commitment and Loyalty - Research Paper Example

Customer Commitment and Loyalty: Increasing and Measuring Commitment The increasing competition and availability of alternative products and services in the market is on one hand producing advantages and ease for the customer but posing a threat to the success of businesses on the other. A number of businesses are now exposed to threats on the basis of two factors i.e. price and quality. If the companies opt to reduce price they generally compromise on the quality and if they choose to provide high quality products to the customers, they normally fail in providing cheaper products due to the high and expensive material used in the manufacturing. Hence, these two factors and their management create a complex phenomenon for the management. Customers are exposed to so many products with different prices and qualities that they are getting more and more involve in thinking critically about the minor factors before making decisions. These complicated decision making factors also take part in the business-to-business sales. Knowing the difficulties of the existing business environment it is difficult to grab the attention of the customers towards a particular product. Today’s business market is fast growing and every product is either imitated or provided to the customer with some changes in short time periods. Hence, it is difficult to achieve customer loyalty and commitment to a particular product. This paper aims to analyze the ways and procedures which may help in increasing customers’ loyalty and commitment to the products. Keeping the discussion on track of customer loyalty and commitment the paper discusses types of commitment and the ways to measure customers’ commitment. The importance of customers’ loyalty and commitment is no longer a new area of research. The companies are now more motivated and impatient to use ways which may develop customer satisfaction and loyalty. Retaining customers is more likely to indicate future success of the business. The goodwill of the firm is also associated with the satisfaction of its customers. In today’s competitive market, however, it is difficult to satisfy customers and win their commitment. The key is to provide an offer which suits best to the customers’ needs and the customer gets convinced that no other company or product can be better than the one offered. This kind of offer helps in achieving customer satisfaction and in turn loyalty and commitment. Instrumental commitment refers to this higher level customer satisfaction which meets all his demands and requirements. For instance, the availability of a product when needed, on the price that customers are willing to pay and the quality that is rewarded by the customers helps creating customer loyalty (Buttle, 2008). Examples of such products which meet all these phenomena are lays, Pepsi, coca-cola etc. It should be noted that their success lies on many factors including the standardization of the quality throughout the world. The changing market structures and increasing new products in the market is on one hand creating a good to the customers by providing them with alternatives but on the other hand, they will insecure by the inconsistency or inappropriateness of quality and services. Hence, there are certain customers who value the brand and service for their consistent relationship with the company and move ahead with the products they offer. In case of bankers or doctors, people are often conscious. They refer to them as ‘my doctor’ or ‘my banker’. This association in their words is not limited to the communication patterns but show their emotional attachment and satisfaction with the person or business. This relational commitment of customers can be achieved by the employees who go beyond the rules or are specifically trained to build strong relationships with the customers (Buttle, 2008). The employees may be trained and educated to enhance their communication and behavioural skills and build such emotional or friendly relationships with the customers. Value based commitment arises when a customer is satisfied with the business or product because his values are respected by the business. The values of the customers, however, are not limited to a single belief but it changes from customer to customer. Customers’ values may involve there environmental consciousness, protection, religious views, cultural norms and so on (Spetiri & Dion, 2004). An example of this type of commitment is achieved by manufacturers who tend to be against killing animals for leather and provide products using other materials. Similarly cultural or religious restrictions also provide a way to acquire employee commitment. For instance, in Muslim countries drinks and food which are non alcoholic and have been promoted with this label are more appreciated. Even in non-Muslim countries products with the inscription of Halal or the label of the product being non-alcoholic are more likely to be selected by the Muslim population. Hence, from this point of view, we may increase customer satisfaction and loyalty by taking their values into account. The values of the targeted population and their culture carry an important part in retaining them. Their trust and faith in the product’s quality and genuineness of the promises that a business makes play a vital role in achieving customer’s loyalty and commitment. Research proves that customer’s values effect their attitudes and create purchase intentions and this is the key to the ultimate purchase. This hierarchical relationship emphasizes on the importance of customer values and their perceptions (Follows & Jobber, 2000). Measurement is an important factor of the success of any business or activity. However, measuring the loyalty and commitment of customers is not measured by a rigid criteria of measuring tool. It requires tactical planning and managerial involvement in measuring the customers’ loyalty. There are different ways to do this including the calculation of customer retention rate, revenue growth, reduction of costs, surveys, reduced customer complaints (Vroman, Reichheld and Teal, 1996) and increased positive feedbacks using feedback forms etc. Hence, there are many different ways to measure customer loyalty but there is a need to carefully design a pattern of measuring it as there are many other factors which affect the attitudes of customers. In order to measure customer satisfaction and in turn his loyalty, Apostle Model is a valuable tool. This model separates the customers in to 4 segments according to their level of satisfaction. The customers are asked to rate the service or product on a scale of 1 to 10 i.e. to get knowledge about their overall experience with the business and find out if the customer intends to use the particular product or service again or not. This knowledge about the customer’s attitude allows the management to change or maintain the quality of their product or service. Moreover, this model allows the management understand their weaknesses and overcome them to satisfy customers and retain them in the future (Jones and Sasser, 1995). Bibliography: Jones, Thomas O, and W Earl Sasser Jr. 1995. "WHY SATISFIED CUSTOMERS DEFECT". Harvard Business Review. 73 (6): 88. Scott B. Follows, and David Jobber. 2000. "Environmentally responsible purchase behaviour: a test of a consumer model". European Journal of Marketing. 34 (5/6): 723-746. Buttle, Francis. 2008. Customer Relationship Management Concepts and Technologies. Burlington: Elsevier. http://www.UCM.eblib.com/EBLWeb/patron?target=patron&extendedid=P_365586_0&. Vroman, H. William, Frederick F. Reichheld, and Thomas Teal. 1996. "Review of The Loyalty Effect: The Hidden Force behind Growth, Profits, and Lasting Value". The Academy of Management Executive (1993-2005). 10 (1): 88-90. Spiteri, Joseph M, and Paul A Dion. 2004. "Customer value, overall satisfaction, end-user loyalty, and market performance in detail intensive industries". Industrial Marketing Management. 33 (8): 675. Read More