Customer Loyalty

An executive summary for managers and executive readers can be found at the end of this article

Customer loyalty and customer loyalty programs

Mark D. Uncles

Professor of Marketing, School of Marketing, University of New South Wales, Sydney, Australia

Grahame R. Dowling Kathy Hammond

Professor of Marketing, Australian Graduate School of Management, University of New South Wales, Sydney, Australia Assistant Professor of Marketing, London Business School, London, UK

Keywords Relationship marketing, Customer loyalty, Consumer behaviour Abstract Customer loyalty presents a paradox. Many see it as primarily an attitudebased phenomenon that can be influenced significantly by customer relationship management initiatives such as the increasingly popular loyalty and affinity programs. However, empirical research shows that loyalty in competitive repeat-purchase markets is shaped more by the passive acceptance of brands than by strongly-held attitudes about them. From this perspective, the demand-enhancing potential of loyalty programs is more limited than might be hoped. Reviews three different perspectives on loyalty, and relates these to a framework for understanding customer loyalty that encompasses customer brand commitment, customer brand acceptance and customer brand buying. Uses this framework to analyze the demand-side potential of loyalty programs. Discusses where these programs might work and where they are unlikely to succeed on any large scale. Provides a checklist for marketers.

New generation of CRM tactics created

1. Introduction The past decade has seen many firms (re)adopt a customer focus ± often through a formal program of customer relationship management (CRM) (e.g. Brown, 2000; Kalakota and Robinson, 1999; Peppers and Rogers, 1997). Recent advances in information technology have provided the tools for marketing managers to create a new generation of CRM tactics. One such tactic that thousands of firms have considered, and which many...