Loyalty mirrors human relationships - or does it?

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By: Wise Marketer Staff |

Posted on April 22, 2010

Loyalty mirrors human relationships - or does it?

Imagine a car dealership where telling a salesperson that you're 'just looking' would allow you to do just that, or an online retailer offering you price cuts or free shipping to improve its relationship with you. That's what shopping experiences could be like if more retailers acted upon the findings of a Kansas State University marketing professor and his research collaborators.

Swinder Janda is the Paul Edgerley Distinguished Chair in Global Business at K-State. Some of his recent research has looked at how businesses can cultivate and keep loyal customers. In a study to be published this year in the Service Industries Journal, Janda and collaborator Hong-Youl Ha of South Korea's Kangwon National University explored how relationships between businesses and customers mirror human relationships.

"I want a close relationship with my wife, but I may not want a close relationship with a salesperson at a car dealership, for instance," Janda explained. He was not surprised to find that, in order to create a relationship, consumers have to perceive it will pay off, monetarily or otherwise.

Janda, Ha and collaborator Sang-Kyu Park of Kangwon National University published a study in the International Marketing Review in 2009 that found promotional events designed to counter customers' negative attitudes can significantly enhance the customers' likelihood to engage in a long-term relationship with the business.

For a car dealership, Janda said this could mean promotions that focus on encouraging buyers to use the option of communicating with salespeople via e-mail. This also could mean not focusing on a hard-sell approach but rather on providing relevant information such as the availability of rebates for the customer.

"It is important for companies to understand this, because there may be different types of customers who may seek different types of relationships with the business," Janda said. "It may thus be important to create different marketing approaches for different groups based on the type of relationship those groups are seeking with the company."

In order for online retailers to enhance customer loyalty and create return shoppers, they have to focus on enhancing customer perceptions of their trustworthiness. For example, this could be accomplished by associating with the Better Business Bureau or by providing assurance that personal and credit card information is secure.

Janda, Ha and Siva Muthaly have also conducted research that will appear this year in the European Journal of Marketing, showing that it takes more than satisfaction with a product for customers to return to a retail web site.

The trio suggest that, irrespective of current satisfaction levels, online retailers should use positive reinforcement like providing customers with discount offers on future purchases or free merchandise to increase probability of future site visits. In fact, in 2003, Janda published research showing that customers judge an online retailer not just by the quality of the product purchased but also by factors like whether the Web site loads quickly and the frequency of pop-up windows.

"One of the things often overlooked - and it's critical in online service quality - is when an online retailer says your product will arrive in a certain number of days, do you actually get it in time? Do you get the right colour? Those are the kinds of things companies constantly need to focus on to get customers to come back," Janda warned.

And with the prevalence of social media, Janda believes that it is more important now than ever for companies to implement systems that are geared toward managing unsatisfied customers. As an example, he points to the more than 8 million views for a YouTube video entitled 'United Breaks Guitars' which was posted by a single dissatisfied United Airlines customer.

"With social networking, it's very easy for one dissatisfied customer to post on his or her blog or Facebook page that a company messed up," Janda said. "I think we can expect to see more companies taking the time and the money and the energy to understand customers - and the experience they're having - and constantly modifying that experience."

More Info: 

http://www.k-state.edu