Dimensions Of Customer Loyalty - Separating Friends From Well Wishers by Baloglu - Article Example

Name: Course: Tutor: Institution: City and State: Date: Introduction Baloglu s 2002, Dimensions of customer loyalty: separating friends from well wishers, Cornell hotel and restaurant administration quarterly: 43,1. P47-55. Seyhmus Baloglu holds the position of associate professor at William F. Harrah College of Hotel Administration at University Of Nevada. The purpose of this research is the determining the nature of loyalty demonstrated by frequent buyers. This seeks to determine whether loyalty program members are loyal to the company or only appear loyal as they aim to take advantage of the premiums and benefits offered. The research questions addressed are the distinction between true loyalty of customers and the appearance of loyalty, and the consequences of different kinds of loyalty. It addresses the two major types of loyalty; behavioral and attitudinal loyalty to identify the truly loyal customers hence devise strategies to focus on the rather than waste resources on those who demonstrate behavioral loyalty (Baloglu 2002 p.47). The article analyses behavioral and attitudinal loyalty in order to distinguish between the two and identify the associated antecedents and consequences. Summary The study made use of both quantitative and quantitative methods of data analysis and used a questionnaire as the data collection instrument. The data analysis involved the use of SPSS Version 10.0 in discriminate analysis, cluster analysis, and multivariate analysis of variance. It used a proportion of visit measure calculated as a ration of number of visits made to the casino to which customers feel loyal to the number of visits spent in casinos in general. This measures the purchase frequency of one brand in relation to the others within a similar product category. This helps identify the level of repeat patronage of one brand in comparison to other brands hence enable ranking in relation to behavioral loyalty. Qualitative measures distinguished loyalty related intentions of players at the casino to eliminate the significance of time spent at the casino not playing any game. This emerged from the amount of positive recommendations uttered by customers indicating their level of cooperation. The measure of attitudinal loyalty on the other hand uses qualitative measures of commitment or emotional attachment, switching cost, and trust (Baloglu 2002 p.53). The commitment-trust theory assists in the examination correlation between commitment and trust. The researcher used cooperation and word-of-mouth to measure behavioral outcomes. The cluster analysis involved the segmentation of the respondents according to attitudinal and behavioral loyalty and clusters1 demonstrated characteristics of truly loyal customers (Cahill 2006 p.43). Cluster2 had characteristics of the appearance of loyalty by exhibiting high behavioral loyalty characteristics and low attitudinal loyalty. Cluster3 on the other hand had low loyalty characteristics with low attitudinal and behavioral loyalty. The population in the study involves slot club members created by the sponsors of the research with a selected sample of 1500 attendants of the casino in three months prior to the study. The study area was the Las Vegas with respondents derived from the area to show their attendance patterns of the casino (Baloglu 2002 p.51). Findings The results indicated that majority of the population were female above 55 years, retired, married and college degree holders. They frequented the casino for pleasure, entertainment, and monetary gain. Their favorite games involved machines like video poker and quarter slot machine. The truly loyal customers indicated an attendance of 89% while spuriously loyal customers had an attendance of 95% and low loyalty customers 48%. Both the truly and spuriously loyal customers indicated a similar weekly attendance at the casino of 2.9 and 3.0 visits respectively and the low loyalty customers also indicated a low attendance rate of 1.8. The truly loyal customers spent more hours per visit than the other groups at 4.4 hours, spuriously loyal ones spent 3.0 hours while the low loyalty customers spent the least hours of 2.9 hours (Baloglu 2002 p.55). The antecedents involved the measurement in relation to switching costs with those of truly loyal customers at 5.6, spuriously loyal at 4.4 and low loyalty customers at 3.4. Truly loyal customers had a positive image of the casino and an overall positive experience. In analyzing consequences of loyalty, truly loyal individuals had a 6.4 likelihood of spreading positive word of mouth information while spuriously loyal and low loyalty had scores of 4.6 and 4.4 respectively. Truly loyal customers have a high level of cooperation than the other groups at 5.8 while the others have a likelihood of 3.9 and 3.5 respectively. Truly loyal customers are less likely to look for alternative casinos and spend more on buffet, gift shops, steak restaurants, coffee shops, and on special events than the other groups. Truly loyal customers were 55 years and above and more likely to play on slot machines in comparison to others. Both spuriously and truly loyal customers demonstrated high behavioral loyalty but truly loyal ones exhibited both behavioral and attitudinal (Hayes 2008 p.69). They also spent more money on the casino’s products and more time during their numerous visits. Analysis The results indicate obvious differences between the cluster groups and prove the importance of distinguishing the truly loyal customers from other groups. The spuriously loyal individuals may visit the casino due to convenience and hence prone to competitive offers since their loyalty lies in the frequency program rather than the brand. They may therefore leave the casino after collecting attached financial benefits and are vulnerable to better offers. The results also indicate that the spuriously loyal customers are important to the business since they form the largest membership of 44% hence the need to maintain them. They amount of time they spend in the casino is substantial and almost equals time spent by truly loyal customers (HBR 2013 p.32). Their visits on the other hand are more than those of truly loyal clients are and the likelihood of positive word of mouth feedback falls slightly below the truly loyal. This indicates that the spuriously loyal customers are very important to the operation of the casino and it cannot afford to lose them. The main difference between these ‘well wishers’ and truly loyal patrons is the presence of attitudinal loyalty. This therefore calls for the perfection of strategies that develop attitudinal loyalty to transform the ‘well wishers’ into truly loyal customers who are the most important to the casino due to their unshakeable loyalty (Straub 2002 p.133). Importance The significance of this study is the distinction of customers in relation to the type and level of loyalty hence enable the formulation of necessary strategies. It offers information on the improvement of customer loyalty to ensure their long-term commitment to the brand and company in general. It shifts from the basic measurement of loyalty in terms of the behaviour of customers who may only appear loyal but are not (Gurski 2014 p.146). It explores the importance of attitudinal loyalty and the need to develop it among current customers. Its use of quantitative data analysis indicates a high likelihood of accuracy in its findings and low level of biasness. The reliability and validity tests done on the questionnaire eliminate biasness and ensured data collected using the instrument significantly contributed to the answering of the research questions. Limitations The study however demonstrated various limitations that might have affected its effectiveness in data collection and analysis. The study assumed the similarity of the respondents engaged while the only sure similarity was the demographics. The other characteristics of age, gender, occupation played a minimal role in the choosing of respondents, which may have an impact on the loyalty of customers. The study results also covered the Las Vegas market of the casino and there may be a problem relating to other markets of the casino due to the difference in the lifestyles of residents (Bell & Patterson 2007 p.123). The study further raises questions since it only focuses on three dimensions of loyalty rather than the identified four types. It ignores the presence of latent loyalty where customers can have high favorable attitude and still have low patronage (Butscher 2002 p.111). Time constraint may have been the cause of this limitation since the research took duration of three months. Lessons Learnt The major lesson from this article is that loyalty comes in different forms of attitudes and behaviour. The strongest loyalty lies in attitudinal loyalty as customers displaying this quality are loyal to the brand and the company. However, most customers only possess behavioral loyalty since their interest lies in the financial gains associated with a frequency patronage hence they easily jump for better offers (Griffin 2000 p.55). A businessperson should therefore devise ways to transform behavioral loyalty into attitudinal loyalty for long-term customer relations. Conclusion Attitudinal loyalty is an asset to the business and the secret to the development and maintenance of customer loyalty in the end. It is also a source of competitive advantage since it protects the client base from influence by competitors through attractive offers (Brandi 2001 p.78). The business should therefore identify the customers with behavioral loyalty and translate that into attitudinal loyalty. Coincidentally, most customers have behavioral loyalty hence demonstrating the importance of this transformation. The study also offers as a challenge for future studies in the determination of the optimum level of loyalty and the relationship between profitability and levels of loyalty. The study illustrates the importance of time spent in the casino as a measure of the level of behavioral loyalty and future studies could use this concept in testing the same concept to restaurants and hotels. References Baloglu S (2002). Dimensions Of Customer Loyalty: Separating Friends From Well Wishers, Cornell Hotel And Restaurant Administration Quarterly: 43,1. Pg47 Bell C B, Patterson J R (2007). Customer Loyalty Guaranteed: Create, Lead And Sustain, Routledge. Brandi J (2001). Building Customer Loyalty: 21 Essential Elements In Action. Oxford, UK. Butscher S A (2002). Customer Loyalty Programmes And Clubs, Mcgraw Hill, Boston. Cahill D L (2006). Customer Loyalty In Third Party Logistics Relationships, Mcgraw Hill, Boston. Griffin J (2000). Customer Loyalty: How To Earn It, How To Keep It, Australia: Pearson Australia Gurski D (2014). Customer Experiences Affect Customer Loyalty: An Empirical Model, Spon Press, New York Harvard Business Review (2013). Harvard Business Review on Increasing Customer Loyalty, Francis & Group. Hayes B E (2008). Measuring Customer Satisfaction and Loyalty: Survey Design. Wiley, Chichester. Straub G (2002). Marketing Events as a Supportive Tool for Customer Loyalty. Oxford, UK. Read More