The Loyalty Business Model
The loyalty business model focuses on increasing customer and stakeholder loyalty to achieve corporate objectives. It posits that delivering quality products or services leads to customer satisfaction, loyalty, and ultimately, profitability.
Service Quality Model
A more detailed version of the loyalty business model, the service quality model, explores the relationship between recent customer experiences, overall perceived quality, and customer loyalty. It suggests that a single negative experience may not significantly impact loyalty if the customer's overall perception of quality remains high. However, the model also highlights the importance of "bonds" such as contracts, technological dependence, and social connections, which can act as exit barriers and strengthen business relationships.
Customer Loyalty and Profitability
Customer loyalty is influenced by the strength of the business relationship, perceived alternatives, and critical episodes. Keeping existing customers is typically more cost-effective than acquiring new ones, as loyal customers tend to make repeat purchases, provide free word-of-mouth promotion, and purchase additional products.
Expanded Models
Extensions of the loyalty business model have included employee loyalty, supplier loyalty, and broader stakeholder loyalty. The satisfaction-profit-chain model links improved performance to customer satisfaction, loyalty, and financial outcomes. The commitment-loyalty model emphasizes the importance of customer commitment as a driver of loyalty.
Data Collection
Loyalty data is typically collected through questionnaires using multi-item measurement scales. Historical trends and lifestyle information can also assist in developing customer retention strategies and understanding customer needs.