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Evaluation of Customer Loyalty Implementations By Consumers

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DOI: 10.20491/isarder.2018.374

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 DOI: 10.20491/isarder.2018.374

Evaluation of Customer Loyalty Implementations By Consumers

Ahmet UYAR
Afyon Kocatepe University
Bolvadin School of Applied Sciences
Department of Banking and Insurance
Afyon, Turkey
orcid.org/0000-0002-7481-4045
ahmetuyar@aku.edu.tr

Abstract
In these times of increasing competition, customer loyalty is a concept which is
critically important for businesses. Now it is more advantageous to keep existing
customers rather than gaining new ones. Companies arrange various campaigns to
actualise this. However, customer loyalty is not something that can be attained just by
certain activities. Numerous factors such as the quality of the service provided to
customers, product quality, process improvements, service speed, behaviours of
company employees, etc. are critically important for customer loyalty. Within the scope
of this study, consumers were asked what businesses should do to gain customer
loyalty. The factors necessary for attaining customer loyalty from their perspective were
listed. For this purpose, a questionnaire was administered to 300 people, and the
findings obtained were subjected to variance analysis, crosstabs and correlation
analyses. According to the results obtained, businesses should keep the promises they
make and offer warranty for their products in order to gain customer loyalty. Consumers
volunteer to do word-of-mouth marketing for those companies that meet these needs,
and thus customer loyalty is ensured.
Keywords: Customer Loyalty, Levels of Customer Loyalty, Customer Loyalty
Programs
1. Introduction
Customer is an extremely important concept for businesses. It is a force which
provides businesses with income and the opportunity of survival. A customer is a
person or organisation that buys or might buy the products of a certain business for
personal or commercial use (Taşkın, 2000: 18).
The competition that emerged along with globalisation has significantly increased
the value of customers. As a marketing specialist, Roger Blackwell described our
century as the century of customers. Peter Drucker, an important name of the science of
management, said it is not making sales but gaining and keeping customers that is the
 A. Uyar 10/1 (2018) 143-155

most important goal of a business. Currently, control has shifted from wholesalers and
retailers to customers (Çoban, 2005: 297).
From the viewpoint of a business, the concept of customer is divided into two categories
as internal and external customers. Internal customer refers to all the employees from
senior managers the lowest level of personnel who perform the business activities
(Çoban and Nakip, 2007: 309). The reason employees are considered as internal
customers is to show the importance attached to them by the management. As one of the
most important factors in the formation of product and service outputs, consideration
and valuation of employees as customers is critically important for businesses. And
external customers are the persons and organisations that buy for themselves or for
others the products and services produced by companies (Doğan and Kılıç, 2008: 74).
The current study addresses the concept of customer loyalty and its evaluation by
customers. The literature part of the research provides a definition of customer loyalty,
and the advantages and methods of customer commitment. The implementation part
contains consumer opinions about customer loyalty and suggests some points to
consider for the success of loyalty programs performed by businesses. The results
obtained offer companies some clues for providing customer commitment and create a
vision for future campaigns.
2. The Concept of Customer Loyalty
In our times of intense commercial competition, it is rather difficult for businesses
to gain customers. But it is still more difficult to keep gained ones. Customer loyalty
refers to the need for companies to preserve their customers that are gained as a result of
a long relationship. Kandamplly (1998: 440) saw customer loyalty as an emotional bond
established with customers as a result of a high quality service. Kim and Yoon (2004:
762) defined customer loyalty as the word-of-mouth recommendation made to others by
a customer who continuously prefers a business and the customer's desire to maintain
this relationship with that business. Oliver (1999: 33), on the other hand, defined
customer loyalty as a customer's always buying the same product despite marketing
efforts that could influence customers and their persisting with the same products that
they buy through their commitment to a business.
2.1. Advantages of Customer Loyalty
Businesses obtain many advantages thanks to customer loyalty. Especially in our
times when it is more difficult and costly to keep customers than to gain them,
customers provide businesses with comfort for price flexibility. Thus a business can
carry out a more profitable marketing activity over a price that it likes. Besides,
businesses that have loyal customers are more easily able to make their name among
people through word-of-mouth and viral marketing. In this sense, they enjoy a more
advantageous position in terms of advertising costs. The most important advantage of
customer loyalty is about high sales figures and turnovers. As loyal customers
frequently prefer the same company, such a business is not influenced by the negative
fluctuations in the market and even gets over crisis periods with minimal damage.
Customer loyalty also leads to internal customer satisfaction and thus enables
employees to have a more reliable work environment. In this way, motivation of
employees increases their belief in their business improves. As loyal customers often

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tend to share with a business their positive and negative experiences, such a company
becomes able to position their future production processes more accurately.
2.2. Levels of Customer Loyalty
In order for businesses to recognise their customers as loyal, they needed to know
the level of loyalty of each customer. There are different levels about customer loyalty.
Disloyalty
This is when a customer is not loyal and does not show commitment to the
products of a business (Rowley and Dawes, 1999: 345). There can be many reasons for
a customer not to be loyal to a company. Some of these are attributable to companies,
and others to customers. Decreasing quality of the products or services produced by a
business, the approach taken by salespersons towards customers, insufficient after-sale
services, increasing prices, a company crisis, etc. are problems attributable to businesses
while customers being influenced by the marketing efforts of other businesses, their
beginning to like different products, their becoming more rational and beginning to
make comparisons, their trying different brands out of curiosity, etc. are conditions
attributable to customers.
Superficial Loyalty
Customers with superficial loyalty are those whose commitment to a company is
weak although they continuously buy products from that company (Çatı and Koçoğlu,
2008: 171). They are very likely to try different brands or products as they do not have
strong emotional bonds with a certain company or as they prefer a company only on a
product basis. In order to keep such customers, a company needs to organise campaigns
that would secure commitment by caring out research and developing various strategies
(Shoemarker and Lewis, 1999: 349).
Underdeveloped Loyalty
Customers with underdeveloped loyalty do not always prefer the products of a
given company although they are committed to that company and to its products with an
emotional bond (Shoemarker and Lewis, 1999: 349). There are certain reasons for
irregular shopping. For instance, stock-out products or a customer's decision being
influenced by others around them, etc. A business should certainly examine their
customers with a commitment at this extent (Selvi, 2007: 48) because such customers
have the potential of becoming a loyal customer subsequently.
Strong Loyalty
This is when customers fully commit to a business and its products or services.
This occurs in the form of bond establishment. Customers feeling a strong loyalty
frequently buy the products of the same company (Çatı, Koçoğlu, Gelibolu, 2010: 435).
According to McGoldrick and Andre (1997: 75), the reasons for the occurrence of this
situation, in which errors made by a company are easily tolerated, are the following:
Laziness: A customer might prefer a certain business just because it is closer in
proximity.
Habit: A customer might be regularly visiting a company just by habit.

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Comfort-Convenience: A customer might prefer a business due to such factors as

parking opportunity, ease of access, time of opening, etc.
Time-Saving: There can be customers who would normally prefer other businesses
but do not have time for comparison.
Fun: A customer may be satisfied with a business that they shop from and
therefore they may feel an absolute commitment.
3. Customer Loyalty Implementations
Businesses implement various programs for securing customer loyalty.
Membership cards, mobile phone messages, personal discounts, and promotions are just
a few instances. Other than these, there are some creative loyalty implementations
performed by companies all around the world. Examples:
• In the globally known Ritz-Carlton Hotel Company, each movement of
customers is carefully followed and transferred into a special customer database.
Consequently, customers receive a tailor-made service depending on their
personal characteristics. As a result of this implementation that raises customer
loyalty, this company has attained a significant success (Chan, Tse and Yim,
2008: 741).
• Apple Inc. forms customer groups in different states of the USA, brings them
together and encourages them to exchange information. Aiming to create a
special customer community by sending specific bulletins and news to these
groups, the company has gained significant success in terms of customer loyalty
(Metiner, 1997).
• The globally famous airline company Virgin Atlantic has performed a very
successful customer loyalty implementation with its membership card.
Passengers get many advantages thanks to the Virgin Atlantic flight card. The
red card owners enjoy such benefits as gaining flight miles and discounts in car-
rental, airport parks, hotel and holiday flights, while the silver card members get
50% more points from their flights and are entitled to fast check-ins and
prioritised standby flights. The golden card members, on the other hand, enjoy
the benefits of double mile points, prioritised bed and seat preference, free drink
and massage before flights, etc. (https://blog.hubspot.com).
• As the leading e-commerce website of the world, Amazon.com offers Amazon
prime users free shipping for two days a year for $99/y. Due to this service, the
company incurs a cost about $1-2 million annually. As a result of this service
that increases transaction volume, however, each prime member shops $1500/y
on average (https://blog.hubspot.com).
• Tokyo Otaku Mode is a company that sells products via the Internet. Although it
was founded in 2012, it has more than 20 million followers in Facebook. The
company adds a nicely designed letter of thanks, a brand-badge, a shopping bag
and a memo holder with a unique illustration to the shipping package of each
customer that buys a product. It also gifts 50 loyalty points to anyone who
prepares and uploads a video for a product review and/or operation. With its
fame in the social media spreading easily in this way, the company has reached a

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significant customer mass thanks to these creative techniques

(https://www.emarsys.com).
4. The Purpose and Importance of the Research
The importance of customer loyalty steadily increases in our day of growing
competition. It is more costly to retain existing customers than to find new ones.
Therefore, companies implement various programs to keep their existing customers.
The most important reason for such campaigns is to provide customer satisfaction. A
consumer who is satisfied with a product they buy will want to buy more from the same
brand. And this will lead to customer loyalty. Besides, a satisfied customer will enable
gaining new customers by carrying out word of the mouth marketing.
The purpose of the current study is to measure the influence of customer loyalty
programs on consumers. When doing this, an effort was taken to understand the
evaluation of customers about various promotions and campaigns. The study also
compared quality with other loyalty applications in an effort to see which one of these
increase customer satisfaction more. In this regard, a questionnaire was applied to
understand the influence of such demographic factors as age, gender, educational status,
etc. on ensuring customer loyalty.
Previously, some relevant studies were made in connection with supermarkets, the
banking industry, and tourism (Özdağoğlu, Özdağoğlu, Öz (2008), Selvi, Ercan (2006),
Çatı, Koçoğlu, Gelibolu (2010), and Koçer (2017). Those studies, however, were made
in specific industries and therefore their scope was limited. The current study, on the
other hand, evaluates customer satisfaction applications in a general way and tries to
determine the importance of loyalty programs in the minds of consumers. The most
important factor for ensuring customer loyalty was also questioned within the context of
the study. An effort was thus made to provide businesses with some values about which
factors they should prioritise for ensuring customer loyalty.
5. Method
The digital data collected by the face-to-face questionnaire method for research
were analysed using the SPSS 18 software package. The main audience of the research
is formed by consumers. As it was not possible to reach the entire audience, sampling
was utilised.
As a sampling method for the research, the "Convenience Sampling Method" was
used. When determining the sample size, the sample formula used for quantitative
variables and considered for populations which are unlimited or the volume of which is
unknown was utilised (Özdamar, 1999: 260).
The questionnaire form was created following a literature search, reviewed based
on the opinions of specialist academicians, and subjected to pilot application. Studies by
Yurdakul (2007), Çatı and Koçoğlu (2008) were drawn upon when identifying the
research questions, and the validity and reliability of the questionnaire was tested by a
pilot administration of 40 questionnaires before finalising it.
The questionnaire form that was created based on the five-point Likert scale was
administered between the dates of 20 May 2017 and 10 June 2017.
It consists of three parts.

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In the first part, participants were asked questions that were prepared by the five-
point Likert scale about their opinions about customer loyalty.
In the second part, participants were asked questions about customer relations, for
which they could indicate only one choice.
And in the third part, participants were asked about their demographic data.
In the research, 350 questionnaire forms were reached considering that there could
be questionnaire forms that would be excluded due to reliability level, margin of error,
deficient or erroneous coding, etc. and also considering the opportunities of the
researcher for reaching the target audience. A total of 300 questionnaire forms were
included in the analysis by excluding 50 questionnaire forms due to deficient or
erroneous coding.
6. Findings
6.1. Validity and Reliability Analysis
In the reliability analysis, the alpha coefficient that was calculated by the internal
consistency method was taken into account. The alpha coefficient is defined as the
weighted standard average variation obtained by proportioning the total variances of the
expression k contained in the scale to the general variance. The alpha coefficient is
considered according to the below rating when calculating the reliability of the scale
(Özdamar, 1999: 513-522).
0.00 ≤ α < 0.40 The scale is not reliable,
0.40 ≤ α < 0.60 Low reliability,
0.60 ≤ α < 0.80 The scale is reliable,
0.80 ≤ α < 1.00 The reliability of the scale is high
Table 1. Cronbach's Alpha Analysis
Reliability Statistics
Cronbach's Alpha Based on
Cronbach's Alpha Standardised Items N of Items
,727 ,737 18
According to the results of the reliability analysis, the questionnaire is included
in the category of reliable questionnaires by the coefficient of 0.727. Of the persons
participating in the questionnaire, 163 are men and 137 are women. While 27% of the
participants live in a metropolis, 18% live in a city centre in 46% of them live in a
district. Fifty percent of the participants are university graduates, 30% are secondary
education graduates and 17% of them are primary school graduates.
6.2. Participant Statements about Customer Loyalty
Table 2 shows the opinions of the participants about customer loyalty. According
to the table, a great majority of consumers believe that the promises which are not kept
by a business will shake their confidence about that company. This is the statement
agreed with by most of the consumers in the questionnaire. So, when businesses do not
keep their promises, they inflict a huge damage on themselves regarding customer
loyalty. According to Table 2, the statement that consumers agree with the least is the

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opinion, "I will prefer a company because of its personnel's positive attitude even if I do
not like the products of the company". Other than that, the statement "A company's logo
will gain loyal customers" was also a less preferred statement. Thus, product quality is
regarded as more important than both company logo and also employee attitude.
Employee approach alone does not suffice to gain loyal customers for a company.
Table 2. Participant Opinions about Customer Loyalty
Statements N Mean Standard
Deviation
Lifelong customer loyalty can be gained. 300 3,04 1,163
I believe that a loyal customer is prioritised by a 300 3,81 1,066
company.
I believe that a loyalty card (discount card) will 300 3,59 1,089
gain a company loyal customers.
I may become loyal to websites from which I've 300 2,88 1,183
bought a product (service).
Unkept promises will affect my confidence in a 300 4,36 ,952
company.
A smiling welcome by personnel will gain loyal 300 4,07 ,878
customers.
A company's responding messages to customers 300 3,55 1,035
will increase my commitment to that company.
I may prefer a company upon a recommendation by 300 3,44 1,057
an acquaintance.
Promotions about a company in the social media 300 3,61 ,967
will gain the company more customers.
A company's responding to the complaints and 300 3,79 ,998
requests I make over the net will increase my
commitment to that company.
I will prefer a company because of its personnel's 300 2,52 1,152
positive attitude even if I do not like the products of
the company
I may remain loyal to a product due to the 300 3,07 1,203
reputation of its brand
I think that increasing the number of employees will 300 3,29 1,139
also increase the customer service quality.
Warranty provided for products will gain loyal 300 4,09 ,974
customers.
The company which I'm loyal to will always solve 300 3,88 ,827
customer problems duly.
I may prefer a company because I like its 300 2,39 1,075
advertisement.
I recommend to those around me any company that 300 4,20 ,849
I'm satisfied with it.
A company's logo will gain loyal customers. 300 2,58 1,181

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In Table 3, the questionnaire participants were asked what the most important
factor is for gaining customer loyalty. According to the results obtained, the most
important factor that gains a company customer loyalty is reliability. Additionally,
about 27% of the participants believe that the most important reason for loyalty to a
company is quality. Therefore, businesses must behave reliably and market quality
products to have loyal customers.
Table 3. Statements about Gaining Customer Loyalty
What Is the Most Important Factor That Makes a Company Loyal to a Company?
Frequency Percentage
Quality 81 26,9
Price 31 10,3
Service 59 19,6
Reliability 85 28,2
Brand Value 13 4,3
Personnel Attitude 17 5,6
Product Diversity 11 3,7
Other 3 1,0
Total 300 100
Table 4 shows the reasons of the participants for not preferring the shopping
centres that they do not like. According to the table, the participants do not prefer, in
particular, those shopping centres which are expensive or do not have a sufficient
service quality. The rate of those who do not prefer a shopping centre because it is
expensive is around 39%. So, nearly half of the participants tend to not prefer those
places which they find expensive.
Table 4. Reasons for Not Preferring Shopping Centres
What Is Your Reason for Not Preferring a Shopping Centre That You Do Not like?
Frequency Percentage
Expensiveness 117 38,9
Insufficient Product Diversity 44 14,6
Negative Hearsay 30 10,0
Insufficient Service Quality 104 34,6
Disorderedness of Shops 5 1,7
Total 300 100
Table 5 compares the age variable with the customer loyalty statement, "A
company's responding messages to customers will increase my commitment to that
company." According to the results obtained, as the age decreases, the importance
consumers attach to responding messages increases. So, the people of advanced ages do
not care responses of companies as much as the young.

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Table 5. Variance Analysis Comparing Age and Customer Loyalty

Standard Standard
Company Response to Customer
N Mean Deviation Error p
18-25 129 3,65 1,036 ,091 ,003
26-35 66 3,79 ,920 ,113
36-45 44 3,45 ,975 ,147
46-55 42 3,29 ,970 ,150
55-65 19 2,89 1,329 ,305
Total 300 3,55 1,035 ,060
Table 6 compares customer loyalty with the gender variable. According to the
results, the rate of agreement with some statements differs between males and females.
According to the table, compared with women, men believe more that the companies
they are loyal to behave them more favourably. Women on the other hand tell that the
businesses they feel customer loyalty for do not behave them differentially or specially
and, compared with men, they care about company advertisements and logo more.
Table 6. T-Test Comparing Customer Loyalty with Gender
Gender N Mean S.D. p
I believe that a loyal customer is Men 163 4,03 ,812 ,000
prioritised by a company. Women 137 3,55 1,260
I may prefer a company because I Men 163 2,27 ,950 ,035
like its advertisement. Women 137 2,53 1,195
A company's logo will gain loyal Men 163 2,42 1,116 ,012
customers. Women 137 2,77 1,232
The company which I'm loyal to Men 163 3,99 ,762 ,011
will always solve customer Women 137 3,74 ,883
problems duly.
Table 7 shows of the correlation analyses comparing education level with
statements about loyalty. According to the table, as the education level increases, the
loyalty felt for websites also increases. Educated people appear to be prone to virtual
shopping and they feel more commitment to websites. Again, according to Table 7, a
positive and slightly significant relationship exists between education level and the
importance attached to company responses. Educated people care more for company
responses to customers, and they state that they will have more commitment to those
businesses which behave like that. According to the third correlation in the table, as the
education level increases, the rate of having recommendations from others decreases.
There is a negative and slightly significant relationship between the two. So, it appears
that educated people get less recommendation about companies.

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Table 7. Correlation Analysis Comparing Educational Level and Loyalty Statements

A company's
responding
I may become messages to I may prefer a
loyal to websites customers will company upon a
from which I've increase my recommendation
bought a product commitment to by an
(service). that company. acquaintance.
*
Education Pearson Correlation ,139 ,133* -,182**
Level Sig. (2-tailed) ,028 ,035 ,004
N 300 300 300
Correlation is significant at the 0.05 level (2-tailed).
7. Conclusion
In the current trade environment, customer loyalty is one of the most important
concepts for businesses. There are numerous variables which attract consumers to
different brands and products. In such an intense competitive environment, it is rather
difficult to maintain long-term customer relationships. In recent years, companies use
many different marketing techniques to cope with this difficulty.
The current study examined the consumer perspectives about customer loyalty
and related applications. According to the findings, consumers expect companies to
keep their promises. Failure to do this will have a significant impact on customer
loyalty. Consumers tend to recommend the companies they like to others by word-of-
mouth marketing. The fact that the communication environment is very advanced on
our day has popularised viral marketing.
Consumers believe that a company's logo and its advertisements are not sufficient
for ensuring customer loyalty. A good promotion strategy may bring brand awareness
but it does not appear possible for this alone to commit customers to the business and
establish a long-term relationship environment. Therefore, a company with an
insufficient quality of goods and services is very unlikely to succeed in terms of
customer loyalty. Businesses must keep the added value that consumers acquire from
products high. For this reason, it is important that the sale department analyses customer
value and total quality issues well.
When the questionnaire participants were asked what the most important factor
for getting customer loyalty, such concepts as reliability, quality, smiling, etc. are
highlighted. Customers prefer reliable companies and high-quality products and they
believe that this is the only way for establishing long-term customer relationships.
Employees' behaving with good humour and establishing good relationships also count
in establishing customer loyalty. From this perspective, relational marketing should be
designed properly and this should be supported by quality products and services.
Companies should not make promises which they would not be able to keep.
Consumers prioritise company honesty highly in terms of customer loyalty.
When the comparative tables in the study are analysed, it appears that the young
people care more for responses coming from companies. When this age group, which is
called the Generation Z, demands something from a business, they expect it to be met

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rapidly. It can thus be said that the young are more demanding. In recent years, the
increasing value given to customers and the raising importance of the concept of
customer orientation has been increasing consumer expectations each passing day.
There appear to be some gender-based differences about customer loyalty.
According to the t-test contained in the study, men seem to be more satisfied with the
businesses they feel loyalty for. Women, on the other hand, when compared with men,
believe that the companies they are loyal to do not behave them sufficiently well and
that they remain insufficient in problem-solving. It was also observed that women care
more for such marketing elements as advertisements and logos. Thus, messages that
could attract the attention of men more should be provided in advertisements.
According to the correlation analysis included in the study, the influence of word-
of-mouth marketing increases as the education level decreases. Highly educated people
tend to act based on their own opinions when buying products. They are also more
confident about shopping via the Internet and feel more loyal to websites. They expect
companies to respond to them and believe that their demands and requests they make in
different times must not be ignored.
The study showed that customer loyalty is especially closely related with the
concept of confidence. After-sale services, warranty, keeping of promises and quality
are elements that determine customer loyalty. All the activities of a business from the
identification of raw material, which is the first stage of the supply chain, to the usage
of products by customers and even to the stage of collecting customer information
should be planned according to customer requests. As regards those companies which
want to establish long-term customer relationships, it will be determining for their
futures and their relationships with customers to take these into consideration, ensure
customer satisfaction, and display a customer oriented approach.

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