Customer Loyalty

We believe that loyal customers are satisfied but the opposite is not always true.

Jackson (1985), Sewell and Brown (1990), Cannie and Caplin (1991), Reicheld (1993; 1994; 1996), Dick and Basu (1994), Fredericks and Salter (1995), McKenna (1997), Spekman (1998), Peppers and Rogers (2004) underline the importance of Customer Loyalty – beyond Customer Satisfaction.

Reicheld (1993) notes:

“The primary mission of a loyalty based company is to deliver superior value to customers. Success or failure in this mission can be clearly measured by customer loyalty (best quantified by retention rate or share of purchase or both). 

Customer loyalty has three second-order effects:

·       Revenue grows as a result of repeat purchases and referrals

·       Costs decline as a result of lower acquisition expenses and from the efficiencies of serving experienced customers

·       Employee retention increases because job pride and satisfaction increase, in turn creating a loop that reinforces customer loyalty and further reducing costs as hiring and training costs shrink and productivity rises”