Customer Loyalty In Relationship Marketing

Customer loyalty is a central goal of relationship marketing, supported by numerous claims of how organisations can benefit from having loyal customers. Customer loyalty has been connected to customer profitability due to reasons such as lower marketing costs, possibilities for cross-selling, and premium pricing. Loyal customers are also more likely to become advocates of the organisation, spreading positive word-of-mouth (Reichheld and Sasser 1990, Narayandas 1998).

Customer loyalty is not only a goal of relationship marketing; it is also conceptually closely related to the concept of relationships. Like customer loyalty, relationships have been conceptualised as having a behavioural and an attitudinal dimension.

2.3.1 Behavioural Dimension of a Relationship

The basis for all marketing relationships is some form of exchange. Odekerken-Schröder (1999), defines exchange as “a product/service, financial, information, and/or social exchange between a buyer and a seller” and the term exchange itself signifies “giving of one thing and receiving of another in its place” (The Oxford Desk Dictionary and Thesaurus).

Traditionally marketing exchange was viewed as series of discrete transactions aimed at making a profit. In the 1980s this view was challenged by MacNeil (1980), and Dwyer et al. (1987), who introduced a

Discrete transactions come into question only rarely, e.g. when a customer of another bank occasionally visits a competing bank to pay a bill or exchange currency. In such contexts, the existence of a contract can be used to determine when a relationship exists. In retail banking, the signing of a contract is without doubt when the relationship officially begins, which could be considered the behavioural sign that a relationship has been formed. There are, however, also attitudinal aspects of when a relationship