Customer Loyalty

23046 Words Sep 8th, 2010 93 Pages
Background and Aims
1.0 Introduction

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This study explores the impact of relationship marketing on customer loyalty in banking context. In particular, it will discuss the significance and influence of the underpinnings of the relationship marketing such as trust, commitment, conflict handling, values and empathy on customers’ loyalty in the banking sector. This chapter contains; (1) Background of The Study, (2) Problem Statement, (3) Specific Objectives of This Study, (4) Research Question, (5) Theoretical Framework, (6) Hypothesis, and (7) Significant of the Study.

Part one (1) Background of The Study will describe about the background and theories which related to this research. Part Two (2), Problem Statement discusses the
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It is generally recognized that there are linkages between service quality, customer satisfaction and loyalty Caruana, (2002). However Oliver (1999) stated that the suggestion that satisfaction generates loyalty in erroneous, with between 65% and 85% of satisfied customers defecting to other suppliers. There have been a number of studies that have looked at the antecedents of loyalty, including value, levels of functional and emotional risk, and brand reputation, trust, effect and preference. A number of studies by various researchers (Caruana, 2002; Oliver, 1999) have contributed to the understanding of the relationship between the consumer and provider.

Higher levels of customer loyalty in service organizations initiate a series of economic effects in a business system. Revenues and market share grow as loyal customers commit to the organization, become repeat customers, and recommend the organization to others. Reichheld & Sasser (1990) conducted their studies across 14 industries in the United States and found that a 5% increase in customer retention leads to an increase in profit of between 25% to 95%.

Keaveney (1995) argued that losing a regular customer is a loss from the higher margin part of an organization customer-base. Customer loyalty also leads to lower costs

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of retention compared to the costs of attracting new customers. In addition,

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