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J. of the Acad. Mark. Sci. (2015) 43:790825 DOI 10.1007/s11747-015-0439-4
ORIGINAL EMPIRICAL RESEARCH
Building, measuring, and profiting from customer loyalty
George F. Watson IV1 & Joshua T. Beck2 & Conor M. Henderson3 & Robert W. Palmatier4
Received: 5 September 2014 /Accepted: 23 March 2015 /Published online: 29 April 2015 # Academy of Marketing Science 2015
Abstract Achieving customer loyalty is a primary marketing goal, but building loyalty and reaping its rewards remain ongoing challenges. Theory suggests that loyalty comprises attitudes and purchase behaviors that benefit one seller over competitors. Yet researchers examining loyalty adopt widely varying conceptual and operational approaches. The present investigation examines the consequences of this heterogeneity by empirically mapping current conceptual approaches using an item-level coding of extant loyalty research, then testing how operational and study-specific characteristics moderate the strategy loyalty performance process through meta-analytic techniques. The results clarify dissimilarities in loyalty building strategies, how loyalty differentially affects performance and word of mouth, and the consequences of study-specific characteristics. Prescriptive advice based on 163
studies of customer loyalty addresses three seemingly simple but very critical questions: What is customer loyalty? How is it measured? and What actually matters when it comes to customer loyalty?
Keywords Customer loyalty . Relationship marketing . Content analysis . Meta-analysis . Word of mouth
Customer loyalty is the central thrust of marketing efforts (Dick and Basu 1994; Evanschitzky et al. 2012), and U.S. firms spend dramatically to build and manage customer loyalty. For example, annual loyalty program outlays have grown 27% since 2010 to exceed $48 billion across 2.7 billion program enrollees in the United States alone, yet less than half of the 22 memberships per household are active (Berry 2013). However, the financial returns of many loyalty-building efforts fail to meet expectations (Henderson et al. 2011; Nunes and Drze 2006). Even though the concept of Bcustomer loyalty^ has been debated for more 60 years (Brown 1952), the mixed returns of loyalty efforts still stem, in part, from divergent theoretical and operational approaches, such as the varied use of attitudinal loyalty without behavioral loyalty or the use of modified word-of-mouth measures as proxies for customer loyalty (Dick and Basu 1994; Keiningham et al. 2007; Oliver 1999; Reinartz and Kumar 2002). To test the consequences of this heterogeneity...