Relationship marketing and customer loyalty

relationship marketing and customer loyalty

Abstract: This paper examines relationship marketing and customer loyalty from the approach of customer service using some selected companies in Nigeria as. Marketing Intelligence & Planning Relationship marketing and customer loyalty Nelson Oly Ndubisi Article information: To cite this document: Nelson Oly Ndubisi . Purpose – To examine the impact of relationship marketing strategy on customer loyalty. Design/methodology/approach – A questionnaire derived from previous.

Mutual Benefit The two main components of relationship marketing -- personalization and regular, periodic communication -- strive to increase customer satisfaction. One of the effects of relationship marketing is mutual benefit. The customer receives something of value through regular, personalized communication. A business hopefully increases long-term sales and profitability. For example, a grocery store discount card tracks purchase behavior.

relationship marketing and customer loyalty

In exchange for allowing the grocery store access to his spending habits, a customer may receive volume discounts and individual pricing on frequently purchased items. The additional savings may prompt the customer to shop at the store more often. Retention A satisfied customer is more likely to remain loyal to a company.

This becomes part of your brand. According to the journal, "Management Science," brand loyalty allows you flexibility in setting prices. This can improve your profit margin, because you do not have to attract customers on the basis of bargain pricing.

The Impact of a Relationship Marketing Strategy on Customer Loyalty

Instead, customers return to you because they have a relationship with you. Salespeople Loyalty Customers can become attached to specific salespeople. While you run the risk of losing the salesperson and having to rebuild the relationship with the customer, this kind of loyalty can increase sales dramatically.

In the marketing literature, Moorman et al.

This implies a higher level of obligation to make a relationship succeed and to make it mutually satisfying and beneficial Gundlach et al. Since, commitment is higher among individuals who believe that they receive more value from a relationship, highly committed customers should be willing to reciprocate effort on behalf of a firm due to past benefits received Mowday et al.

In this context, communication refers to the ability to provide timely and trustworthy information.

relationship marketing and customer loyalty

Today, there is a new view of communications as an interactive dialogue between the company and its customers, which takes place during the pre-selling, selling, consuming and post-consuming stages Anderson and Narus, Communication in relationship marketing means keeping in touch with valued customers, providing timely and trustworthy information on service and service changes, and communicating proactively if a delivery problem occurs.

Communications also tell dissatisfied customers what the organisation is doing to rectify the causes of dissatisfaction. When there is effective communication between an organisation and its customers, a better relationship will result and customers will be more loyal. Ndubisi and Chan found a significant relationship between conflict handling and customer loyalty, indirectly through trust and perceived relationship quality. The ability of the product or service provider to Relationship handle conflict well will also directly influence customer loyalty.

The Impact of a Relationship Marketing Strategy on Customer Loyalty | Your Business

All 20 banks in the city were invited to participate in the survey; 15 accepted the invitation. The sampling frame thus consisted of the customers of the volunteer banks only.

relationship marketing and customer loyalty

Systematic quasi-random sampling selected every second customer to enter the bank on each day of the survey, starting with the first to come through the doors at start of business, at 9.

This sampling method was chosen because it permits analysis of possible selection bias or error Sher and Trull, In the questionnaire completed by customers, items to measure the construct dimensions were adapted from previous studies: Churchill and Surprenant for the trust dimension, Morgan and Hunt for communication, commitment and conflict handling, and Bloemer et al.

The eventual total of 20 items and 19 questions related to the five dimensions as follows: Conflict The research framework, Handling with p-values MIP the bank offers personalized services to meet customer need; 25,1 the bank is flexible when its services are changed; and the bank is flexible in serving my needs.

Results Demographic data show that a slight majority of respondents were female: Just less than three quarters 73 per cent were under 40 years of age. Graduates accounted for 43 per cent of all respondents.

Almost half 42 per cent had been with their current bank for 11 years or more, 39 per cent for between 6 and 10 years, and only one in five 19 per cent had been customers for 5 years or less.

The Impact of a Relationship Marketing Strategy on Customer Loyalty |

Loyalty is thus the starting point for relationship marketing, or at least inertia. The internal consistency of the research instrument was tested by reliability analysis. The descriptive statistics of the variables and reliability estimates are shown in Table I.

relationship marketing and customer loyalty

Therefore, and given the representativeness of marketing and the sample, it is fair to conclude that Malaysian bank customers tend to be loyal if the bank is: The positive sign of the estimates shows that the greater the extent of these underpinnings, the higher the level of customer loyalty.

To sum up the findings: Implications Theoretically, the outcome of this research provides empirical evidence for the influence on customer loyalty of four underpinnings of relationship marketing: This study adds value to the literature by empirically linking a more comprehensive list of determinants to the dependent variable. It builds on past studies in this area, which had either investigated an incomplete list of potential underpinnings Ndubisi, ; Wong and Sohal, or related them to relationship quality Wong and Sohal, and customer satisfaction Ndubisi and Chan, without taking into account the ultimate goal of any service provider, which is to build loyal customers.

relationship marketing and customer loyalty

As for the practical implications of the study, a first conclusion is that banks wishing to retain and develop loyal customers should be trustworthy and committed to the service ethic, should communicate timely and accurately, and must resolve conflicts in a manner that will eliminate unnecessary loss and inconvenience to customers.

It has been suggested Ndubisi, that loyal customers are valuable communicators of favourable word-of-mouth about organisations or products to which they feel loyal. As evangelists, they can attract new customers for the organisation and may even increase their own consumption collectively to the benefit of its sales, revenue and profit. Loyalists can also serve as useful sources of new product ideas.

How to create loyal customers

Variables Beta coefficients t-value p-value Constant 3. Banks should recognise the potency of service commitment in keeping loyal customers, and act accordingly. They must show genuine commitment to customer relations, not lip service. Loyalty can be nurtured by providing timely and reliable information, for example about the uses and benefits of new banking services or about the status of transactions.

It can also be reinforced by the provision of honest information on what the bank is doing about existing problems and what it does to forestall potential ones. Lastly, customers tend to be loyal to banks that handle customer complaints which will always happen, regardless and other conflicts satisfactorily.