Customer's Commitment and its Importance - Literature review Example

s’ Commitment and its Importance Modern age has made things grow fast and processes got more economical and shorter than ever. Businesses these days have used the latest technologies and amplified their profits. By cutting costs and using technological advancements many businesses have reached to a point where the way to reduce prices may end up creating no good to the business. The buyers have been given with a large variety of goods at different prices. People opt for the type of good which suits their requirements. Due to increased competition and globalized market, customers have so many choices that it has become difficult to attain customer loyalty and commitment. At one point they go for one product and the other time they go for the other. Some people are in the search of quality, others require cheap goods and some others go for the name and prestige of the products they consume. Hence, there are different criterions of every consumer. In such a market where customers have endless choices and different attitudes it becomes quite difficult to retain them. Of course, there is a strong link between customer commitment and a firm’s profitability. Hence, customer commitment is becoming an increasingly known and widespread concept in the business world. Entrepreneurs are trying to retain and attract more consumers to increase their profits. The retention of customer does not only help in attaining the targeted profits of the firm but also ensure the long term success of the firm. Commitment of the customers and their regular purchase direct towards their satisfaction with the company’s performance (Prospectus Strategy Consultants, and FT Financial Publishing, 1998). Hence, the ultimate success of the company becomes certain. Knowing its importance, many researchers have been carried out to identify the possible ways of increasing customer commitment and loyalty. Some of those recommended steps to enjoy the benefits of increased customer loyalty and commitment are discusses in this paper. In addition, the paper discusses the types and ways to measure customer loyalty. Customers have certain needs and expectations which are at times being ignored by the companies. In order to get special attention from the customers, the firm should always be ready to change the products’ designs, tastes, materials, places, processes and so on. The resistance to change and management of that change is an important aspect in gaining customer loyalty. It is, however, not an easy task. It requires time to listen to the customer, analyze their expectations and provide them with satisfactory feedback for their queries. Change in products or services, however, require a more closer look to the firm’s personal goals and the customer’s expectations. If the customers’ demands are in line with the ethical, moral and social values of the firm the firm needs to consider the expectations of the customers. In addition, proper care of customers’ needs and requirements also make a good impression of the firm and the customers’ get motivated to do business with the firm again (Soni et. Al., 1996). Knowing the fast growing market of every product, companies have been trying to attract more customers. They gave less attention to the customers that they lose and rather placed more emphasis on capturing new customers. However, an observable fact here is to identify if the business is growing as it was expected to be? The business is running with the same pace from the beginning of it till the end. No or less customers are found which appreciate the business of products for its distinct designation. Companies were, hence, running on the basis of one time buyers who are less likely to do business with the company again in future. The ignorant behaviours of the companies have led to this consumer attitude. Customers want their expectations to be met. They expect an individual attention, moral sympathy and some motivation from the company for the consumer. Companies lacked in providing this environment to the consumer. Customer loyalty and commitment are achieved when these emotional and psychological expectations of the customers are met. Special discounts on regular purchases, bulk purchase discounts, loyalty cards, membership cards and other schemes are valuable in persuading the customers to deal with the same company again and again. Customer satisfaction is the key to customer commitment and loyalty. Customer dissatisfaction is hence the phase which needs to be understood and tackled by the company. The dissatisfaction usually arises as a result of the gaps that exist between the customer and the company’s satisfaction criteria. This ‘satisfaction gap’ needs to be fixed in order to attain customer loyalty, commitment and retention. The most important of these problematic gaps lie in the problem of promotional campaigns. Marketers often provide an exaggerated picture of what the company actually offers. The TV advertisements, internet marketing and banners often carry messages which provide an overwhelmingly overstated quality or outcome of their products. Such marketing messages grab the attention of the customers and they often get trapped and purchase the product. However, this exaggerated picture is not an ideal marketing technique as it gains the company with one time buyers who remain dissatisfied and often spread their feelings about the product. A single dissatisfied customer can end up creating great losses for the business. Hence, while marketing there is a need to keep the actual outcome of the product closer to what is being exposed in marketing campaign. The promotional gap can be fixed by keeping in view the actual and the marketing result of the products (Brown et. Al, 1995). Once customers get what they expected of the product, they trust the company and are more motivated to try other products of the same company. Another factor that poses a threat to the customer satisfaction and loyalty is the understanding gap between managers and customers. Manager must have knowledge of what the customers’ needs and demands are. Knowing them, companies may end up meeting customers’ priorities and winning customer trust and satisfaction (andaleeb, 1996). There are many types of commitment i.e. attitudinal commitment, cognitive commitment, and social commitment and so on. Attitudinal commitment is linked to the thoughts, intentions and the way the related parties perceive their relationship to be. Attitudinal commitment refers to the intention of both the parties to stay in the relationship. This type of commitment calls for a flexible attitude from both the parties. However, it is important to notice that companies need to follow a track which leads to customer satisfaction through psychological paths by meeting demands, expectations and respect the beliefs of customers about their current relationship (Bateman and Strasser 1984; Mowdey, 1979). This type of commitment exists between close personal relationships as well as the links between companies and other businesses. On the other hand, cognitive commitment refers to the customer loyalty which is based on tangible or intangible benefits of the customers. This school of thought sees commitment as a give and take situation where customers are given discounts, packages and offers and in turn companies retain customers (Anderson & Weitz 1989). Social and moral commitment refers to the social and moral values which are shared by the company and the customers. Customers give priority to the companies who share common beliefs, cultural values and ethical considerations. This type of commitment hence requires carefully constructed company structure and core beliefs (Wiener, 1982). Keeping a track of consumer purchasing habits, repeated sales to the customers, success of loyalty cards and records of membership cards and schemes are some of the ways to assess consumer satisfaction and loyalty to the company. Surveys and comment cards are also expensive but useful means of knowing customer attitudes towards the product or service which is being offered (Mowdey, 1979). References: Bateman TS, and S Strasser. 1984. "A longitudinal analysis of the antecedents of organizational commitment".Academy of Management Journal. Academy of Management. 27 (1): 95-112. Mowday, Richard T. 1979. "The Measurement of Organizational Commitment". Journal of Vocational Behavior. 14 (2): 224-47. Anderson, Erin, and Barton Weitz. 1989. "Determinants of Continuity in Conventional Industrial Channel Dyads".Marketing Science. 8 (4): 310-323. Wiener, Yoash. 1982. "Commitment in Organizations: A Normative View". Academy of Management Review. 7 (3): 418-428. Brown, James R, Robert F Lusch, and Carolyn Y Nicholson. 1995. "Power and Relationship Commitment: Their Impact on Marketing Channel Member Performance". Journal of Retailing. 71 (4): 363. Soni, Praveen K., David T. Wilson, and Michael J. OKeefe. 1996. Beyond customer satisfaction: customer commitment. ISBM report, no. 23-1. University Park, P.A.: Institute for the Study of Business Markets, Pennsylvania State University. Prospectus Strategy Consultants, and FT Financial Publishing. 1998. Customer loyalty and retention: building sustainable relationships. Financial Times Finance management reports. London: Financial Times Finance. Andaleeb, Syed Saad. 1996. "An Experimental Investigation of Satisfaction and Commitment in Marketing Channels: The Role of Trust and Dependence". Journal of Retailing. 72 (1): 77. Read More