A Framework for Identifying and Determining the Value of
Truly Loyal Customers to Service Providers in a B2C Context
Gary J. Salegna, Department of Management and Quantitative Methods, Illinois State University
Stephen A. Goodwin, Department of Marketing, Illinois State University
ABSTRACT
In this article, a framework is presented for separating truly loyal customers to a service provider from those that
may simply be retained or minimally satisfied. A Satisfaction-Emotional Commitment and Exclusivity (SEE) Matrix is
developed to articulate the argument. Included within the overall framework is a matrix for determining the value of
truly loyal customers (the CV Matrix), as well as other customer loyalty segments. It is posited that the framework has
important implications for how service organizations manage and build customer loyalty.
INTRODUCTION
In recent years, customer loyalty has become increasingly important to organizations as they strive to achieve
high levels of product and/or service quality, customer satisfaction and repeat patronage. Within the context of B2C
Service organizations, focused research on customer loyalty to a service provider, however, is underrepresented in the
research literature, compared to product/brand loyalty per se (Bloemer, De Ruyter, and Wetzels 1999; Javalgi, Martin,
and Young 2006). This is surprising since the service sector is growing in importance in virtually all economies of the
world, and increased customer loyalty is frequently cited as the most important predictor of long-term profitability (e.g.,
Deming 1986, McCaslin 2001).
Following Fisk et. al., we state up front that a service provider represents an organization whose activities fall
mainly within the service sector, including health care services, financial services, professional services (e.g., legal),
educational services, hospitality/travel/tourism services, sports/arts/entertainment services, telecommunications
services, rental/leasing services, personal services (e.g., hairstyling), retail services, repair/maintenance services (e.g.,
lawn care; auto repair), governmental services (e.g., police service), and nonprofit services (e.g., religions; museums)
(Fisk, Grove, and John 2004; Krajewski and Ritzman 2002). By using the term service loyalty, the reference point of
focus in this article is to the loyalty a personal or household consumer has towards a service provider. This is in contrast
to the concept of brand loyalty, which typically refers to the loyalty a consumer displays towards a particular brand (e.g.,
Gillette Fusion razor blades), regardless of where that brand is purchased (e.g., Wal-Mart or K-Mart). A consumer can
have brand loyalty without having loyalty towards a particular service provider. For example, consumers may be loyal
to the Nissan brand, but not to a particular Nissan dealership either for product purchase or product servicing after
purchase. For an expanded discussion on the differences between service provider loyalty and product/brand loyalty see
Salegna and Goodwin (2008) and Javalgi, Martin and Young (2006).
There continues to be some disagreement on what the definition and latent constructs of loyalty are in the
customer loyalty literature, or how to measure it (e.g., Grisaffe 2001). The majority of early marketing studies defined
loyalty as primarily a behavioral construct: the frequency of purchases, when given a choice, would be an indicator of a
customer’s loyalty to an organization or to a brand/product. A widely accepted definition of brand loyalty was
presented by Jacoby and Chestnut (1978, p. 80-81) where they stated that six conditions must be met. Brand loyalty is
defined as “(1) the biased (i.e., nonrandom), (2) behavioral response (i.e., purchase), (3) expressed over time, (4) by
some decision-making unit, (5) with respect to one or more alternative brands out of a set of such brands, and (6) is a
function of psychological (decision-making, evaluative) processes.” Over 20 years later, Oliver (1999, p. 43) stated,
"Past researchers had assumed that loyalty could be described sufficiently by patterns of repeat purchase behavior. This
notion was put to rest when multibrand and attitude-based models were proposed, which led to the now popular
cognitive-affective-conative representation of brand commitment.”
While some scholars acknowledge the attitudinal dimension of loyalty (e.g., Jacoby and Kyner1973; McMullan
and Gilmore 2003; Oliver 1999), the term loyalty continues by many textbook writers and empirical researchers to be
defined, and operationalized in many studies, as only repeat purchase intent. However, the other two attitudinal
dimensions (cognitive and affective processes; Fishbein and Ajzen 1975) could strongly impact current and more
importantly future consumer behavior, which may be impossible to understand and difficult to predict without
knowledge of these processes.
It is posited that if loyalty is defined as incorporating an attitudinal dimension, then the measurement of customer
loyalty toward a service provider must include the likelihood that a customer will stay with an organization in the future,
as opposed to measuring loyalty based solely on past customer patronage. Furthermore, for true customer loyalty to
occur there must also exist a psychological dimension that includes satisfaction and emotional commitment to an
organization (Yu and Dean 2001). The importance of emotions on loyalty has been articulated in the literature since the
1960s, but it has not been until recently that scholars have incorporated the attitudinal constructs of loyalty, including
the cognitive and affective processes, into research studies on service loyalty (Bloemer et al. 1999).
Against this backdrop, a conceptual framework is presented in this article for identifying, and measuring, the
value of customers who are truly loyal towards a service provider. Based on this framework, service organizations can
take proactive steps to manage customer loyalty. In addition, service firms can use this framework to implement loyalty
development and service recovery strategies based on a customer’s loyalty (or lack thereof) and profitability to the
organization. The conceptual framework for loyalty to a service provider presented in this article utilizes the following
definition: “True loyalty to a service provider is the consumer’s strong desire to interact/do business with a
particular service organization, resulting from high customer satisfaction, emotional commitment, and sustained
repeat purchase behavior (demonstrating high exclusivity).” (See Salegna and Goodwin 2005 for additional
perspective on this definition; see also Han, Kwortnik and Wang 2008 for an extension of the conceptual model
developed by Salegna and Goodwin 2005).
A matrix is presented next that allows service organizations to separate truly loyal customers from other customer
loyalty segments.
SATISFACTION, EMOTIONAL COMMITMENT AND EXCLUSIVITY (SEE) MATRIX
Certainly, there have been attempts in the literature to develop classification categories for loyalty. In perhaps the
mostly frequently cited, Dick and Basu (1994) stated that loyalty has two dimensions: relative attitude and repeat
patronage behavior. They identified four loyalty categories: loyalty (positive relative attitude, high repeat patronage),
latent loyalty (positive relative attitude, but low repeat patronage), spurious loyalty (high repeat patronage, low relative
attitude), and no loyalty (low on both dimensions). The high patronage of spurious loyal customers is explained by
factors such as habitual buying, financial incentives, convenience, lack of alternatives, etc. This framework was
recently cited in a case study involving customers of a casino (Baloglu 2002).
A potential point of confusion with Dick and Basu’s matrix is that all of their categories use the term loyalty. This
can be problematic since a dissatisfied customer, who is nevertheless a repeat customer, would be classified as loyal
using a behavioral-based definition of loyalty. This may occur whenever choices are few, and the customer has little
alternative but to tolerate mediocre or poor service (e.g., local phone, airlines, health care, etc.). Indeed, this is the case
with Hirschman’s (1970) definition of loyalty with poor train service. In addition, a customer who patronizes an
organization out of convenience may also be classified as “loyal” using the common definition of this term from the
literature. Other situations cited from the literature include habitual buying, avoiding risk, loyalty programs, unique
product or service solution, high switching barriers, and financial incentives (e.g., Craig 2000; Khatibi, Ismail, and
Thyagarajan 2002). In all of these situations, there is not a strong emotional commitment between the customer and the
organization. Therefore, there is a high risk that customers will leave, and possibly not return if a superior alternative is
presented.
The model presented in this article expands upon Dick and Basu’s (1994) seminal work by replacing their
dimension of “relative attitude” with satisfaction and emotional commitment. True loyalty, as it is defined in this article,
does not exist unless high levels of satisfaction and relationship (emotional) commitment are present. True loyalty is an
indicator of virtually guaranteed future customer behavior, inferring a customer’s highest level of desire to continue to
conduct future business with a service organization. This implies that two people who frequent an establishment with
the same commitment to exclusivity can have different loyalty towards that service provider because of different levels
of satisfaction and/or emotional commitment.
Dimensions in the Satisfaction, Emotional Commitment and Exclusivity (SEE) Matrix
The Satisfaction, Emotional Commitment and Exclusivity (SEE) Matrix shown in Figure 1 has two dimensions:
Degree of Exclusivity; and Satisfaction & Emotional Commitment. The degree of exclusivity refers to a particular
organization being the “first choice” of a customer whenever a purchase decision involves this organization’s services.
Therefore, this construct captures the intention as well as the degree to which a customer frequents a particular
organization (measure of behavior) compared to others, whenever a decision is made to make a purchase.
If a target organization were the customer’s only choice, then total exclusivity would exist. However, a more
common occurrence is where a customer may prefer organizations A or B, at the exclusion of other alternatives. For
example, most consumers do not frequent just one restaurant (even among similar types of restaurants), but given a
choice customers may have a few predominant restaurants that they frequent on a regular basis. The larger the pool of
alternatives, without a differentiating weight given to preference, the weaker exclusivity becomes. For simplicity, two
levels of exclusivity, low and high, are included in this dimension. Defining the behavioral dimension as “degree of
exclusivity,” versus repeat patronage, is another point of difference between our model and that of Dick and Basu
(1994).
This difference is significant for two reasons: 1) exclusivity implies an emotional commitment (i.e., it is not just a
behavior-based phenomenon) and 2) because low repeat patronage can consist of “high” or “low” exclusivity. Dick and
Basu (1994) refer to customers with high attitude and low repeat patronage as latently loyal. In our model, if these
same customers exhibited high exclusivity (regardless of repeat purchase frequency), coupled with high satisfaction and
emotional commitment, they would be considered truly loyal. Likewise, customers exhibiting high repeat patronage,
without exclusivity or emotional commitment, would not be considered “truly loyal” based on our definition and model
for loyalty to service providers. To illustrate this point, consider the following example: if a consumer uses the same
accountant/CPA but only to do their taxes once every year, this consumer would be demonstrating high exclusivity and
could have high satisfaction and emotional commitment, especially over time. Therefore, absolute frequency of
patronage is neither a necessary nor sufficient condition for true loyalty.
The other dimension measures the customers’ combined level of satisfaction and emotional commitment (aspects
of attitude) with the service provider. Three conditions are examined: dissatisfied and no emotional commitment;
satisfied and no emotional commitment; and highly satisfied with emotional commitment present. The condition of
dissatisfied with emotional commitment is not likely, since satisfaction is a prerequisite for emotional commitment. So
this condition is omitted from the matrix.
No Loyalty: Dissatisfied & No Emotional Commitment, Low Exclusivity
The dissatisfied customers in this category are by definition not very happy, but still frequent the target
organization; therefore, service providers should not simply give up on these customers. Perhaps a consumer’s choice in
this situation involves choosing the least undesirable alternative, in a situation where few desirable alternatives exist.
An opportunity presents itself here to win the increased business of these customers by changing their attitude, thus
their level of satisfaction, towards the service provider. At the same time though, it may cost too much, and require too
much of an organization’s resources to satisfy customers who are dissatisfied or even have a low level of satisfaction.
High
High Potential
Loyalty:
Satisfied and
High Exclusivity
Low
Degree of Exclusivity (Behavioral)
Low Potential
Loyalty:
Retained
for now
No Attitudinal
Or Behavioral
Loyalty
Moderate
Potential Loyalty:
Satisfied
True Loyalty
High Potential
Loyalty:
Highly Satisfied
and Emotionally
Committed
Dissatisfied/No EC Satisfied/ No EC Highly Satisfied & EC
Satisfaction and Emotional Commitment (Attitudinal)
Figure 1: Satisfaction, Emotional Commitment and Exclusivity (SEE) Matrix
No Loyalty: Dissatisfied & No Emotional Commitment, Low Exclusivity
The dissatisfied customers in this category are by definition not very happy, but still frequent the target
organization; therefore, service providers should not simply give up on these customers. Perhaps a consumer’s choice in
this situation involves choosing the least undesirable alternative, in a situation where few desirable alternatives exist.
An opportunity presents itself here to win the increased business of these customers by changing their attitude, thus
their level of satisfaction, towards the service provider. At the same time though, it may cost too much, and require too
much of an organization’s resources to satisfy customers who are dissatisfied or even have a low level of satisfaction.
Low Potential Loyalty (Retained): Dissatisfied & No Emotional Commitment, High Exclusivity
These customers currently frequent the target organization on a regular basis, yet they are not satisfied. As
previously mentioned, there could be various reasons for customer retention given a lack of satisfaction, ranging from
convenience to limited choice. Whatever the reason for the low level of satisfaction, these customers represent a major
risk to the future profitability of the target organization, since given other choices these customers are likely to frequent
the target organization less or leave. Few monopolies exist today where customers have no choice; therefore, it is
unlikely that companies can sustain a competitive advantage with a strategy focused on customer retention, rather than a
strategy, which attempts to build customer satisfaction and loyalty.
Moderate and High Potential Loyalty: Low Exclusivity
The customers in these two segments represent a great opportunity to an organization. These are satisfied
customers, but lack emotional commitment and/or do not routinely select the target organization as a first choice (i.e.,
low exclusivity). An opportunity exists to increase profits, if the organization can win over these customers to choose
the target organization more frequently.
High Potential Loyalty: Satisfied & No Emotional Commitment, High Exclusivity
These customers are satisfied and may frequent the organization regularly, but do not have any emotional
commitment towards the service provider. In some cases, organizations may be assuming the existence of an attitudinal
dimension of loyalty based on observed behavior that in fact was never present. The point not to be lost here is that
customers, who are considered to have high "loyalty" based on satisfaction, may never have actually been loyal, and
their continued patronage cannot be taken for granted. It has been found that even for relatively low contact services,
such as car repair, the way a customer is treated is important in determining loyalty beyond satisfaction (Mittal and
Lassar 1998).
Most organizations have customers that are at least moderately satisfied, and it has been reported that about 85%
of customers of all business would be classified as “satisfied” (Keiningham, et al. 2005). However, the relationship
between satisfaction and loyalty is neither linear, nor direct. Reichheld (1996) referred to this as the “satisfaction trap,”
and he found that about 60 to 80 percent of customers said that they were “satisfied” or “very satisfied” just prior to
defecting. Therefore, satisfaction by itself does not provide a good indicator of repeat purchase intent. Satisfaction is
best viewed as an “order qualifier” which is a necessary precondition for loyalty, but may not lead to customer loyalty if
emotional commitment is absent.
True Loyalty: Highly Satisfied with Emotional Commitment, and High Exclusivity
These customers typically represent the most stable contribution to profits for an organization. Based on the
conceptual model and definition of service loyalty presented earlier, customers within this segment are considered truly
loyal given that emotional commitment, high satisfaction and exclusivity are present. Berman (2005) argues that
customer “delight” is necessary to create true customer loyalty, and this is only accomplished by creating unique
customer experiences that surprise the customer, exceeding their preconceived expectations. We concur, and we state
that high customer satisfaction and exclusivity are preconditions for increasing emotional commitment, which only
happens over time.
IMPLICATIONS OF THE SEE MATRIX
There are important implications for marketing and operations personnel in understanding the categories in the
SEE Matrix. An objective in using this matrix, beyond identifying truly loyal customers, is to create marketing and
operations strategies that will move customers from being satisfied or retained toward becoming truly loyal. Indeed,
truly loyal customers are critical to the continued profitability of a service organization, compared to customers who are
merely satisfied. Identifying truly loyal customers requires making the distinction between behavioral and attitudinal loyalty.
Marketing can use this information to group different customer segments (based on demographics such as age,
sex, income, etc.). This framework may also provide implications for developing complaint handling and service
recovery plans, involving the operations side, for different customer groups in the case of service failure. An
organization also needs to know why customers are "satisfied or dissatisfied”, their “level of emotional commitment”
and reasons for their "degree of exclusivity" in repeat purchase decisions involving the target organization.
Another benefit to using this matrix would be for organizations to identify different customer segments and use
this information to proactively maintain and build customer loyalty. Reichheld and Sasser (1990) found that when a
company retained just 5% more of its customers, profits increased from 25 to 125%. It has been mentioned that the
reason why some loyalty programs do not work (e.g., frequent flier miles, cards offering free meals, etc.) is because
they do not create a strong emotional bond or relationship between the customer and organization. The following
hypothetical example illustrates this point.
Allstate stresses personal customer intimacy through their agency relationship with customers. Consider a
situation where a person's house burned down and their Allstate agent immediately "comforted" the customer and
assured them that they would get a check very quickly. The customer received a check for over $300,000 and shortly
afterward invested a large sum of money in other investment vehicles with the agent because he said that the agent had
been very good to him and he trusted his advice. Thus, an emotional bond had developed between this agent and the
customer.
Next, a matrix is presented for measuring customer value for different categories of customers.
CUSTOMER VALUE (CV) MATRIX
The Customer Value (CV) Matrix shown in Figure 2 has two dimensions: relative purchase frequency and relative
profit per transaction. We define these dimensions as being relative (that is, compared to the expected purchase
frequency and profit per transaction in a given industry). For example, purchasing a new automobile every 3 years from
High
High Profit/Transaction:
Low
Relative Profit Per Transaction
a dealership would be considered high in relative purchase frequency, yet not frequent in the absolute sense. Likewise,
if one purchases a cup of coffee at Starbucks once a month that would be considered low on relative purchase frequency.
Accordingly, the profit per transaction is to be considered in the context of the industry analyzed, and therefore is also a
relative dimension in classifying customer behavior in this matrix.
Concerning the purchase-frequency dimension, the literature for the most part has not made a distinction between
proactive loyalty and situational loyalty determined by the frequency of repeat purchase. By proactive loyalty, we refer
to when a consumer makes frequent purchases, and situational loyalty is when a customer only frequents an
organization for a special occasion (McMullan and Gilmore 2003). An example of this would be flowers: one can be
exclusive to a particular nursery, have high satisfaction and possibly even emotional commitment, but frequent the
nursery only once or twice per year representing little total revenue to the organization. These groups of “loyal”
customers would be represented in different cells in this matrix. However, situational loyal customers taken together
may make a substantial contribution to the bottom line of an organization.
The percent of truly loyal customers, as well as the other customer segments represented in Figure 1 can be
estimated for each cell in the CV matrix. Therefore, the CV Matrix can help to determine the value of customer loyalty,
and has strategic implications for how an organization manages their truly loyal customers, and other customer groups.
Low Purchase Frequency
Customers
High Profit/Transaction:
High Purchase Frequency
Customers
Low Profit/Transaction:
Low Profit/Transaction:
Low Purchase Frequency
Customers
High Purchase Frequency
Customers
Low High
Relative Purchase Frequency
Figure 2: Customer Value (CV) Matrix
High Profit per Transaction, Low Purchase Frequency
These customers represent a great opportunity to the organization. The organization must determine the attributes
that are of interest to these customers, in an attempt that they may frequent the organization more and spend more
money. Research has noted that the attributes that are important to one customer segment may be of little interest to
another (Mittal and Katrichis 2000). However, the nature of the transaction in some cases may prohibit more frequent
purchases. For example, a customer who buys a new automobile once every 7 to 10 years from the same dealership
would fall in this category, assuming that profit was substantial. These customers, taken together, also make a
substantial contribution to profitability.
High Profit per Transaction, High Purchase Frequency
Organizations should want to determine what keeps these customers in this category loyal; they represent the
greatest profit to the organization. While all customers should be treated as being important (Reinartz and Kumar 2003),
these customers especially should be rewarded for their loyalty. Notably, rewards do not always need to be tangible; a
personalized approach to service for these customers may mean a lot more than simply monetary incentives. In fact,
given that many current loyalty development programs miss their mark, it is possible that organizations could save
money by strategically implementing such “intangible” programs.
Low Profit per Transaction, Low Purchase Frequency
Some of these customers may be loyal, but overall they represent a small individual contribution to the overall
profitability of an organization. These customers may have low needs and could have made the same purchase from the
same seller for years. Obviously if the organization can find a way to attract these customers more often, or to increase
their spending they may represent more profit to the organization over time. It would be especially important for
organizations to determine the attributes that are important to this customer segment. In addition, while this group as a
whole may not make a significant direct contribution to the profitability of an organization, their positive word of mouth
could have a strong secondary impact on profitability.
Low Profit per Transaction, High Purchase Frequency
Customers who frequently purchase relatively low price items from an organization on a regular basis will be
profitable as long as profit margins are positive. For some organizations (e.g., Wal-Mart) the majority of their
customers may fall into this category. The challenge for organizations with predominantly this type of customer base is
to keep their loyal customers from defecting to a competitor. For example, retailers who compete on price, rather than
quality of service, have a lesser degree of employee-customer contact, and as such do not build as strong a relationship
with their customers. If customers are exposed to alternatives that represent an equal or better value in the future, they
may be more inclined to switch than customers that feel a greater degree of attachment to an organization.
Notably, not all customers are loyal who frequent an organization on a regular basis. Customers who frequent an
organization on a regular basis, and have been with a retailer the longest do not necessarily even represent the greatest
profit to an organization. These customers may be bargain seekers, and only frequent the organization due to price
promotions. In these cases, the continuation of such programs may be encouraging bargain hunting shopping, rather
than creating loyalty. [As we have argued elsewhere (Salegna and Goodwin 2006), the use of the word “loyalty” in
these situations is really a misnomer (as it is with most loyalty cards), because what it really is fostering is repeat
business (behavioral), without attitudinal commitment being present.] Since the goal of many of these programs is to
create customer loyalty, it would have to be concluded that the majority of these programs have failed (e.g., Bhatty,
Skinkle, and Spalding 2001). Ironically, Craig (2000) reports that firms in the airline industry, which have among the
best structured loyalty development programs, also have the most dissatisfied customers.
CUSTOMER RELATIONSHIP MANAGEMENT IMPLICATIONS
The information from the CV Matrix encourages service organizations to determine the profitability for each of
the customer groups identified in Figure 1. Of particular interest would be the percentage of customers in each cell of
the CV matrix that are loyal, compared to the other groups. For example, if a service provider has a low percentage of
its truly loyal customers in the High Profit/Transaction – High Purchase Frequency category they are at risk of losing a
lot of revenue if a large number of non-loyal customers in this category defect. This type of information would be
important for any service organization to know in order to implement a proactive strategy to build customer loyalty
among its high profit and regular customers.
The CV Matrix also has implications for a service provider’s incentive programs to reward loyal behavior and
their service recovery strategies for dealing with loyal customers (and others) when service failure occurs, and it will. If
businesses perceive loyalty as one-way (customer to organization), then they may not focus on important customer
relationship management activities, believing that these activities and programs are unnecessary. For example, many
salespeople do not make an intentional effort to build customer relationships that extend beyond the business
transaction. While this type of organizational behavior may occur in part due to ignorance about what they believe
drives customer loyalty and profits; organizations may suffer severe consequences due to their lack of understanding
regarding the nature of customer loyalty.
Zeithaml et al. (1996) found that a good recovery plan, after service failure, might actually improve customer
loyalty. However, in the same study, it was found that the customers with the highest loyalty intentions were the ones
that did not experience any service problems. Keaveney (1995) found that the two major reasons why customers switch
were due to service failure, followed by poor service treatment. Mattila (2001) found that high relational customers,
indicating higher relationship involvement, were more likely to forgive service failures. Magi (2003) also found that a
person’s preference for social interaction can moderate the effects of satisfaction, and can help to protect a store from
losing customers due to reduced levels of satisfaction. Therefore, it appears that creating a social bond with customers
can reduce the risk of losing customers when service failure occurs.
Even those customers considered “loyal” due to their level of satisfaction and emotional commitment, may leave
an organization if they perceive a competitor to offer more value. If the customer tries the competitor, and their level of
satisfaction declines with the former organization, then emotional commitment is likely to be affected as well; and may
eventually result in reduced purchase frequency, or even defection. Therefore, it is important to understand that loyalty
really implies “conditional loyalty”, and puts an obligation on the relationship partner to keep the relationship together.
In one study, it was found that a customer can be loyal to a person within an organization, but this loyalty may not be
transferable to the organization itself or a new employee if the contact person within the organization is moved or leaves
the organization. In this study (Perrien, Paridis, and Banting 1995), it was found that account manager turnover was the
most frequent reason why businesses switched their commercial bank accounts.
What most organizations have not done is to create a memorable experience for their customers. Companies that
build customer loyalty by creating memorable customer experiences are the ones that truly have differentiated
themselves today from the mountains of companies touting their loyalty cards. The emotional bonds between
companies and their customers are not easily imitated or severed, and this truly can give an organization a competitive
advantage. Many successful loyalty programs provide their customers with “soft” benefits through personalization and
preferential treatment that have an emotional impact on the customer, which goes far beyond what a point or frequency
based loyalty card program can achieve (Hennig-Tharau et al. 2002). This approach may also provide the means of
creating loyal customers among those who are not currently loyal customers, as suggested by Salegna and Goodwin
(2008).
There is also great disconnect between what companies feel that they are delivering to their customers, and how
customers perceive what they are getting. In a study by Bain & Company it was found that 80 percent of companies
believed that they delivered a “superior experience” to their customers, however, customers rated only 8% of the same
companies as delivering a superior experience (as reported in Barnes 2006). Companies that have a high percentage of
their loyal customers who make infrequent purchases need to refocus their loyalty programs, and if possible, reach out
in a more personalized way to those customers receptive of developing closer relationships.
CONCLUSION
This article examines the construct of customer loyalty to service providers, and a conceptual framework is
presented for determining customers who are truly loyal (versus retained, merely satisfied or indifferent customer
groups), and measuring their value to the organization. The term loyalty, as traditionally used, implies that the efforts of
one party are enough to maintain a relationship, when in fact, a relationship resulting from a social transaction (leading
to a social bond), requires both parties to work at maintaining the relationship. True loyalty is closely tied to the
feelings of affiliation and personal connection that customers form with an organization and its employees. This
framework also has useful implications for service recovery, and loyalty development programs that organizations may
select from depending on the customer segment.
Service Provider Loyalty is a relevant concept, and the proposed conceptual framework presented in this article
adds structure to the issues associated with this concept. Defining loyalty as a multidimensional construct, consisting of
exclusivity, satisfaction and emotional commitment perhaps raises more questions than can be answered in one article.
For instance, some of the underlying assumptions could be challenged. As an example, it has been assumed that the
presence of emotional commitment is enough to make the presence of loyalty possible, but the stronger the emotional
bond, the less chance a customer is likely to dissolve the relationship in the future ( as suggested by Hocutt 1998).
However, following this logic to its conclusion, there is no such thing as a guaranteed state of perpetual customer
loyalty. Scholars should explore this issue to articulate more fully for service providers the relationship between
satisfaction, emotional commitment and loyalty of its customers. This also has important implications for increasing
brand loyalty, and further empirical research should be conducted in this area. In addition, the synergistic effect of
various loyalty development programs on customer loyalty to a service organization, as defined in this article, is an area
ripe for further research.
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