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Customer Loyalty

This article covers meaning & process of Customer Loyalty from marketing perspective

Published by MBA Skool Team in Marketing and Strategy Terms Last Updated: November 03, 2023Read time:

What is Customer Loyalty?

Customer loyalty refers to a situation where a customer develops a long standing preference or loyalty towards a particular product or service. Customer loyalty is reflected in the repeated purchases the customer makes of a particular product and his favorable nature towards a product or service. Customer loyalty also helps to market the product positively in the customer's close friend and family circle.

Measuring Customer Loyalty

Customer loyalty is both an attitudinal and behavioral tendency to favor one brand over all others, whether due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand. Customer loyalty encourages consumers to shop more consistently, spend a greater share of wallet, helping attract consumers to familiar brands in the face of a competitive environment.

Customer loyalty begins with customer satisfaction. Only when a customer is satisfied with the purchases he makes, can a company develop customer loyalty over a period of time. Customer loyalty usually results in long term profitability for business. Brands often develop a special loyalty program or loyalty discount packages for their customers to reward and retain their customer loyalty. Over the years, customer loyalty & brand loyalty has become an integral part of brand management for any organization.

Customer Loyalty Process

Customer loyalty develops over a period of time. The basic & the most important factor for customer loyalty is customer satisfaction. The customer loyalty development process can be highlighted based on the below illustration.

1. Customer acquisition step focuses on acquiring a new customer by offering a product or service which satisfies the customer needs. If the customer is satisfied, he or she can be nurtured to good customer loyalty.

2. Customer development is a step in customer loyalty process where in the customer is educated about all the benefits of being a customer. This is more of a bonding phase between the company, the product and the customer.

3. Customer commitment is a process where the company is committed to offering the benefits and value that the customer seeks. This helps build a strong trust with the company and its product.

4. Customer retention is one of the most important steps especially in a competitive market. Customer loyalty is largely driven by incentives and perks given to customers who are willing to stay loyal towards a particular company.

This process if repeated forms the customer loyalty cycle, which helps companies get new customers as well as retain good loyal customers. Customers are classified as per the customer loyalty ladder based on their engagement with the product, service and brand.

Hence, this concludes the definition of Customer Loyalty along with its overview.

This article has been researched & authored by the Business Concepts Team which comprises of MBA students, management professionals, and industry experts. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 1800 business concepts from 5 categories.

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