The Relationship Between Customer Loyalty And Stickiness: The right mix for organizations

Recently, the future of marketing trends have been spotlighted by scientific studies, wondering if the generally known concept of marketing is still sufficient to secure business success in the current competitive environment. Organizations seeking long-term competitive advantage, must identify and satisfy customer's demands better than competitors.

The positive relationship between customer satisfaction and profitability is common across industries, and this relationship forms the cornerstone of the marketing concept. Firms should always be consistent in meeting customers’ needs, desires and request. Applying such mindset, firms should expect positive effect on the profitability in the long term as a result of increasing customer satisfaction.

Also companies are struggling with the introduction of new technologies and value added services through continuous innovations, which directly lead to the churn phenomenon. Under such a situation, protecting the existing customer base and retaining the existing customer loyalty appear to be crucial competitive advantage.

To get more loyal customers, companies need to identify the influence of the perceived benefits on their customers, which can lead to more loyal customers . With properly designed satisfaction research, the obtained results will support firms in making critical decisions, which are important to build long-term relationships with its customers. As a result companies will be rewarded with the loyalty of its customers and highly competitive performance and profitability level.

Customer satisfaction is a key enabler that creates customer stickiness and loyalty. Satisfied customers tend to stay longer with the organization, leading to (a) reduced customer churn rates, (b) increased referrals to new customers from increasing numbers of satisfied customers, (c) reduced fire-fighting and troubleshooting efforts for retaining customers. When customers are content with the service, they are highly inclined to share their experiences with potential customers and spread a good word-of-mouth.

Quantifying and understanding customer stickiness has already yielded significant strategic insight in real situations. For instance, standard metrics for loyalty, based on stated ‘favorite brand’, may point at a specific segment as a demographic group with high levels of brand loyalty. However, quantifying the stickiness in this group may tell a completely different story, revealing that seemingly high levels of loyalty could be the result of effective recruitment initiatives, high consumer churn and volatility. High churn may seem acceptable while the inflow of new consumers matches the outflow, but for established brands, that inflow may be too easily interrupted by external factors. In essence, quantifying and understanding sticky consumers delivers new insights for growth, both for a single brand and for a portfolio of brands

In conclusion, Loyalty is a psychological outcome, while stickiness is a behavioral outcome. Often customers are retained by a product, service or even brand for long periods but without developing relationship. On the other hand, a customer may not purchase frequently from a firm, even though he or she may feel something of a relationships towards that firm. Psychologically loyal customers may not purchase from a service provider because some circumstances could prevent them. The difference between loyalty and stickiness can be explained by the level of the consumer’s commitment to the brand. Because of commitment, the consumer may repurchase the same brand the next time he or she needs to buy the product again. Spuriously loyal consumers are not committed to the specific brand; therefore, they may or may not repurchase it again.