Brand loyalty is necessary for a company in order to attract and retain clients and in the long run provide more profit. Other reasons for the necessity of developing brand loyalty among a company’s clients are rooted on the notion that it is more expensive to acquire a new customer than retain an old one. As such, it is imperative that a company would try its best just to retain its customers and encourage the latter to increase his or her consumption frequency (Wansink, 2004).
In further support of this notion, Conlon (1996) said that if a particular company could keep at least 2% of its clients, the costs of the company could decrease to as much as 10%. Bowen and Shoemaker (2003) have enumerated a number of factors that could have contributed to consumer loyalty in hotels. Hotel loyalty according to Bowen and Shoemaker (2003) is something that exceeds customer satisfaction. For instance, there are occurrences wherein customers who did not regularly visit the particular area where the hotel is at. Therefore it would be very hard for them to go back to the same hotel again.
Albeit, it could be significantly noted as well that it is still possible for a customer to remain loyal to a hotel eventhough he or she does not regularly visits it (p. 33). In addition with this, some luxury-hotel guests are also seeking variety every time they choose to return to a particular place. It could be the case that these population are satisfied with the hotel, albeit due to the drive for novelty, such inhibits them to be loyal to a particular hotel. Other consumers are just simply price sensitive, hence finding the best value for their money.
As such, every time they see a hotel that they believed to give them the same rooms, amenities, and price, they will not hesitate to try it over the hotel that they are used to go at. Finally, consumers are also expecting hotels to live up with their advertisements. Albeit, even if the aforementioned has lived up with their promises, such things are perceived by their clients as expected of them, hence making them garner solid satisfaction ratings but not necessarily loyal customers (Bowen and Shoemaker, 2003). Customer satisfaction has been perceived as not the sole determining factor for a loyal customer base (Griffin and Herres, 2002, p.2).
During the 1980s and the 1990s, the notion of customer satisfaction which is weighed in terms of providing quality customer service and excellence has been perceived as providing good financial results and repeat purchase. A study conducted by Forum Corporation (Stum and Thiry, 1991) claimed that 40% of the customers who participated in the study claimed to be satisfied with a particular product found it easy to shift brands without any hesitation (p. 34). One of the major factors in which triggered customers to shift brands is due to price.
Juran Institute claimed that more than 70% of participating businesses on the study claimed that price ranked as the first or second feature in which customers were reported to be very least satisfied. More importantly, 10% of the customers were motivated to switch brands because of a price discrepancy.
Even those clients who were reported to be very much loyal with a particular brand was also perceived to switch products when encountered a product or service price dilemma (Fay as cited from Griffin and Herres, 2002, p. 3). As such, it has been perceived by Griffin and Herres (2002; p.4-5) that the true measurement that should be used in repeated business is Customer Loyalty. Customer loyalty focuses more on consumer behaviour than attitude. When a particular client is loyal to a brand, such a person is more particular in conducting purchase behaviour that is relatively more non random. A client who is loyal to a brand has developed a particular justified belief on which and what to buy from whom. More importantly, the notion of loyalty implies a purchase that occurs for a particular duration, which does not occur less than twice.
Also, it could be significantly noted that the decision to purchase could be made by one or two or more individuals. As such, it could be the case that the decision making to buy a particular product could be a compromise, hence explaining one of the key reasons for one’s loyalty for a particular unit. There are two important factors that are closely associated with brand loyalty and these are customer retention and total share of customer. The former describes the duration in which a particular company has the business of a client.
The rate of customer share on the other hand is equivalent to the percentage of a customer’s budget that is spent with the firm. For instance, a company is said to have 100% share of a customer’s budget if the latter spends his or her entire budget with a particular firm. As such it could be said that customer retention and percentage of customer’s budget is very important; however, there might be instances wherein a customer is prevented by certain laws to purchase just from one vendor such as government accounts.