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Customer Loyality Essay

4060 words - 17 pages



Prepared by
Meguellati Achour
Pn. Nor Pujawati Md. Said
Dr. Ali Boerhannueddin


Service quality, switching barriers, and brand image are the major antecedents of customer loyalty, and loyal customers may buy more, accept higher prices and have a positive word-of-mouth effect. Also we know that the cost of selling to new customers is much higher than the cost of selling to existing customers, also the cost of attract new customers is much higher than the cost protect existing customers ten times. Although ...view middle of the document...

They may know other locations, and they may be willing to travel far for a bargain.

A critical issue for the continued success of organizations is its capability to retain its current customers and make them loyal to its brands (Dekimpe et al., 1997). Loyal customers build businesses by buying more, paying premium prices, and providing new referrals through positive word of mouth over time (Ganesh et al., 2000). Loyalty research in services is an important area to study (Gremler, 1995). In fact, companies in telecommunications are losing 2-4 percent of their customers monthly; disloyal customers can amount to millions of lost revenue and profit. For example 20% of customers of the mobile phone operator orange defect each year and, on average it cost orange £256 in 1996 to recruit each new customer, reflecting the cost of introductory offers, subsidized phones and advertising. With almost a million customers, therefore, reducing the churn rate from 20% to 10% would bring about annual savings of over £25 million (Palmer, 1998). In the same way, studies conducted in the financial services industry show that increasing customer retention (or customer loyalty) by 5 percent could lead to 25-75 percent profit growth (Chan et al., 2001, p. 5):

Especially in telecommunications services, it is frequently pointed out that once customers have been acquired and connected to the telecommunications network of a particular operator; their long-term relations with the focal operator are of greater importance to the success of the company in competitive markets than they are in other industry sectors (Gerpott et al., 2001). In case of Malaysia many studies have done about customer loyalty in several services. According to Nilson (2007) reported that in study applied on a sample 220 bank customers in Malaysia. Multiple regression analysis assessed the impact on customer loyalty of four key constructs of relationship marketing (trust, commitment, communication and conflict handling). The findings of this study – The four variables have a significant effect and predict a good proportion of the variance in customer loyalty. Moreover, they are significantly related to one another.

Also Chang Ee Ling and Ernest (2009) in study - Satisfaction and Loyalty: Customer Perceptions of Malaysian Telecommunication Service Providers- by utilizing a two-part research method. The first part utilized an in-depth interview method to obtain variables used in the second part of the study. The second part consisted of a questionnaire distributed to 125 respondents. A factor analysis is also carried out. Findings indicate that important variables for satisfaction included, supporting services, product (handy, reliable coverage, friends and family lines) and promotional efforts of the firm; while for loyalty, they refer to convenience, services, satisfaction and cost. The findings indicate that telecommunication service providers should look beyond price wars to keep...

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