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How to achieve customer loyalty?Marketing specialists, economists, and academics have been trying to define and predictconsumers’ behavior from the last century until today. In the 50s it was already describedthat loyal customers are the main source to do advertising in a market as a way of wordof-mouthpublicity (Brown, G.H. 1952), which can be seen as accurate for that time, butregarding the following research papers and studies presented in this project, it seems theways to achieve loyal customers are based on various internal and external factors (Rayruen,Miller, 2007) from both sides.DefinitionsBecause customer loyalty has been studied for decades, there are several definitions onwhat exactly this phenomena means. Sallberg (2004) in her publication collected six differentdefinitions on customer loyalty to show how this phenomena were defined in the 90s:SourceDefinitionCustomer SatisfactionAs it was mentioned before, customer satisfaction plays a significant role in customer loyaltybecause it seems loyalty is evolving from satisfaction which is influenced by the perceivedquality and perceived value as it is presented below.Stages to achieve customer loyaltyCustomer satisfaction is defined by Kotler (2010) as a consumer’s feeling of pleasure/disappointmentresulting from comparing a product’s perceived performance in relation to itsexpectations. In online marketing, the term satisfaction refers to the customer’s judgmentof their internet experience as compared to their experience with traditional offline serviceproviders or retail stores (Tan & Tung, 2009). Therefore it is important for online serviceproviders to understand their customers’ perceptions of them because the reflection ofsatisfaction and pleasure defines the level of customer satisfaction towards the given onlineservice provider. Arora (2013)’s model shows a relation as well between actual and expectedsatisfaction outcomes:Definitions of customer loyaltyAccording to Sallberg’s (2004) findings, the six definitions above share the factor of purchasing,meaning that customer loyalty is related with the act of purchasing. As it is presentedabove, some factors like “attraction to a brand”, “repeat patronage”, “purchase frequency”and “continuity” are all connected and play a significant role in customer loyalty.In another study, Oliver (1999) defined loyalty as a deeply held commitment to re-buy orre-patronise a preferred product or service in the future. Inamullah (2012) defined customerloyalty as the willingness of a consumer to purchase the same product or service, and keepthe same profitable relationship with a particular company.Customer loyalty?It seems a common agreement on the importance and key role of customer loyalty in currentmarket situations (Lin, Wang 2006) but It still seems difficult to understand the keypsychological factors that make a customer loyal towards a company product or service(Chen, Hu 2010). It has been argued that once a company understands its customers’mindset then they can make a long lasting profitable relationship, which can automaticallymake them loyal (Inamullah 2012). However, the measurement of loyalty is still the mosteffective if we can observe a given company’s customer and its buying behavior towardsthe firm product or service and how it gives preference and also suggests to others in theirenvironment (Kim, Yoon, 2004). In their research, Bagram and Kahn (2012) tried to findthe key role of consumer behavior and consumer attitude towards customer loyalty. Theyconcluded that Perceived Value (PV), Perceived Quality (PQ) are the main key factors toachieve customer loyalty.• Perceived Quality (PQ) - Perceived quality is one of the critical elements in consumerdecision-making. Optimally, they compare the quality that company “A” offers against itscompetitors regarding the price of a given product or service (Jin and Yong, 2005). Zeithaml(1988a) argues that perceived quality is not necessarily the actual quality of brands orproducts but the consumer’s judgement about a product’s or service’s overall excellence.This judgement is usually based on intrinsic and extrinsic informal cues which in his otherresearch had defined by Zeithaml (1988b): The intrinsic cues are related to the product’sphysical characteristics such as its appearance, performance, features, reliability, conformance,durability and serviceability. While the extrinsic cues are price, brand name, brandimage, company reputation, manufacturer’s image, retail store image and the country of origin.So these quality informational cues collectively play a significant role that influence andcreates customer satisfaction, which leads to customer loyalty later on (Bagram & Kahn).• Perceived Value (PV) - Similarly to Yee (2011), the term “value” is referred to in this projectas a judgement of preference by consumers. According to Zeithaml (1988b), perceivedvalue is the customer’s overall assessment of a product or service based on its perceptionof what is given and what is received. Stonewall (1992) defined value as a collective ofproduct features, quality terms, service, delivery and price. But he noted that consumers willconsider something valuable by their own terms. Yee (2011) determines value as the functionof overall quality and price of a company’s products or services compared to its competitors.Bagram and Kahn (2012) argues that consumer satisfaction is only achievable ifcompany “A”’s customers bear fewer costs and get more benefits from a product or service.Which means there are two ways to approach consumer satisfaction: Either reducing costs,or increasing benefits. They defined four types of benefits (product benefit, service benefit,personnel benefit and image benefit) and four types of costs (monetary cost, psyche cost,time cost and energy cost) which they prioritized product benefit as the more important butalso stated that importance is based on a product’s or service’s own nature and the targetsegment, so it is advised for companies to decide by themselves which factor is more importantfor their customers (Oliver, Swan, 1989).The findings of Bagram & Kahn (2012) also show that customer satisfaction has morecontribution for customer loyalty than customer retention, which allows me to conclude thatcustomer satisfaction plays a significantly bigger role in terms of loyalty if a company paysmore attention to the value (the balance of costs and benefits which favours the customer)and the quality (intrinsic/extrinsic informal cues) they propose for their customers. Inanother study, Kotler (1994) stated the significant concept that the key to customer retentionis customer satisfaction. Therefore, the customer satisfaction phenomena need to beresearched to see what factors influencing the Perceived Quality and Value by customerswhich eventually would lead to customer loyalty.Actual and expected satisfaction outcomesRegarding the statement above, to be able to potentially reach loyalty, an online serviceprovider should not only provide the same experience as its customer would expect it in a“traditional offline” platform, but the firm should even exceed those expectations to reachcustomer loyalty. Frederick (2000) also considered the importance of the relationship betweensatisfaction and loyalty and found it applicable for e-commerce businesses. Anotheraspect of why customer satisfaction is important for (e-commerce) companies, as Rust andZahorik (1993) stated, is that greater satisfaction among customers would increase theintent to repurchase while decreasing the perceived need to switch online service providers,thereby increasing customer repurchase and ultimately enhancing profitability of theorganization, while a high level of satisfaction provides the customer with repeated positivereinforcement that would create commitment and loyalty.TrustBuilding up trust in customers is said to be a critical success factor for businesses (Bryantet al., 2002). Studies have shown that the customer’s trust towards the service providercorrelates with the amount of satisfaction they gain from the transaction (Razzaque et al.,2003). In physical shops, it is easier for the business to gain trust because the direct contactand the first-hand experience of the product or service provides the customer with a senseof security. In e-commerce, on the contrary, the lack of trust is supposedly the main obstaclesince missing out on personal interaction with the service provider affects the confidence ofthe potential buyer in following through with the online exchange. (Rexha et al., 2003) Thereare more aspects in online purchases that would induce distrust in the customer, such asnot knowing if the acquired item has the expected quality that was stated on the website orif the business delivers on time, moreover they have to trust the business with their sensitivepersonal data, such as delivery address and credit card number, in order to complete thetransaction. Therefore, looking into ways of building up a so-called e-trust is very importantfor online businesses. The three principal components of trust were identified by Kim etal. (Lee et al., 2007), which are ability, benevolence and integrity. Showing up these threeaspects can be a passport to the highly appreciated customer trust, which eventually contributesto both loyalty and commitment. (Pratminingsih, 2013)Commitment(Morris & Swait, 2008) define commitment as a desire to continually invest in a relationshipby willingness. Some researchers (Garbarino & Johnson, 1999), (Heidt 201014) stated thatcommitment - as the most important attitudinal measure - is a significant indicator of loyalty.The reason for that is commitment often indicates either an emotional or psychologicalattachment towards a specific brand or a product. Commitment between customer and afirm - regardless if it is an e-commerce or offline company (Fullerton 2005) - is importantto maintain a healthy business relationship, because if it lacks, the relationship would notsustain and eventually debase the satisfaction between involved parties (Garbarino & Johnson,1999). In the study, Pratminingsih (2013) determined a customer’s orientation towarda relationship is based on both emotional bond (affective aspect) and on the conviction thatremaining in the relationship (cognitive aspect). So commitment acts as antecedents ofrepeated repurchase behaviour (Luarn & Lin, 2003) which, as previously stated, helps to increasecustomer satisfaction. And Fullerton (2005) stated that e-commitment has an impacton e-loyalty. Therefore, it allows me to conclude that the dynamics of commitment operatesthe same way online and as well offline if the cognitive and affective aspects are optimal.Trust withsensitiveinformationTrust with personalinformationInterest and preferenceover other optionsBaseline relevance and trustthat needs can be metHierarchy of trust - The five levels of commitmentWillingness to commit to anongoing relationship8

Customer Experience (CX)As it was mentioned before, A customer experiences his or her journey on the internetas he or she would expect in an offline environment. Researchers had acknowledged theimportance of customer experience there is still no consensus on what exactly customerexperience is constituted of, but Mahr demonstrated that the physical, social and cognitivedimensions are often used to conceptualize the customer experience (Mahr, et, al., 2019).Though there have been proposed several ways by scholars to measure CX, but all of themseemed incorrect due to focus on a single dimension (Siqueira et al., 2020). Grewal et al.(2011) concluded that if a firm provides superior experience to its customers then it will affectpositively customer behavior e.g. higher customer satisfaction, more frequent shoppingand larger buying will which are all key elements of customer loyalty. Similar conclusionswere obtained by Fernandez & Cruz (2016), who confirmed the positive effects of goodcustomer experience such as loyalty, satisfaction and word-to-mouth advertising. In anotherstudy, Tapar et al. (2017) showed that well maintained customer experience has positiveeffects on customer satisfaction that also influenced positively commitment and revisit intentions.Some researchers like Klaus and Maklan (2013) also recognized the relationshipbetween customer experience and customer loyalty. They also proposed that CX is evenmore efficient in indicating and predicting customer loyalty than - as previously mentioned- customer satisfaction. Fernandes and Pinto (2019) also found positive relations betweengood CX and relationship quality and customer retention.Cognitive ExperienceA cognitive experience can be described as the conscious mental process such as thinking,using creativity or problem-solving that allows a consumer to rethink their assumptions orexpectations about a product or service (Schmitt, 2010). In their paper, Pekovic & Rolland(2020) stated that even today, there is still a little amount of research that examined howconsumers perceive their experiences cognitively. They also observed that most customerexperience studies have focused primarily on affective evaluations of experiences whichseemed relevant rather at the start of the customer experience instead of cognitive evaluationsof experiences, which - as it suggested by Kranzbuhler et al., (2017) - might becomemore relevant and significant in later stages when the customer gains more information.Customers are usually driven by rational and cognitive experiences when they, e.g. interestedin goal-oriented shopping, or set expectations towards a product or service. Thesegoal oriented customers are more likely to consider price and quality of a product as theirprior determinants of their customer experience than impulsive customers (Pekovic & Rolland(2020).Brown, G.H. (1952), “Brand Loyalty: Fact or Fiction,” Advertising Age, June, 53-55.List of referencesThere are six dimensions defined in Pekovic and Rolland’s (2020) journal which are affectingcustomer experience. These dimensions are Emotional experience, Sensory Experience,Social Experience, Behavioral Experience, Technological Experience and CognitiveExperience. Each dimension has its own peculiarity, but Havir (2017) argues that they alsoexhibit similarities in a way. Some research showed and agreed on that alternative configurationsof various dimensions could lead to superior performance including CX (Delmas &Pekovic, 2018),Pekovic and Rolland’s (2020):Emotional ExperienceEmotions play a significant role in the act of consuming (Westbrook & Oliver, 1991) thus wecan say that emotions impact the perception of customer experience and could potentiallyprovide effects and predictions of consumer behavior such as customer preferences, evaluations,recommendations and purchase and revisit intentions (Westbrook, 1987). Generallyspeaking, emotions that are present at the moment of consumption provide antecedents ofloyalty and an affective experience influences loyalty more directly as well as affect commitment(Dube & Menon, 2000), (Iglesias et al. 2011). And Ou and Verhoef (2017) presentthat emotions influence the effectiveness of loyalty: negative emotions harm loyalty, whilepositively received customer equity could amend loyalty.Sensory ExperienceSensory experience is related with the shopping environment: the atmosphere, the brand,the products, the services and everything that cause aesthetic pleasure, excitement orsatisfaction (Gentile et al., 2007). In other words, all the five human senses (sight, smell,sound, taste and touch) are each-by-each connect us to an experience, and they collectivelyform a sensory experience (Hulten et al., 2009). Some researchers suggest that customer’sjudgement is influenced by sensory experience, e.g. people tend to stay longer ina pleasant environment and could generate positive behavioral intentions and might causecustomer retention as well as drive customer loyalty directly. (Pekovic & Rolland (2020).Behavioral ExperienceThe reason to take a Behavioral approach is either to record customers’ participation in theservice process, or to capture moments when they devote effort to the process of servicecreation as far as they participate in consuming and producing value (Dabholkar, 1990).If customers feel involved and co-producing, they are more likely to share new ideas andproblems with the given firm (Chen et al. 2011). This is due to the argumentation of Ranjanand Read (2014) who suggest that co-production involves a cooperative act of satisfactionfor the customer because they provide resources and effort to support a process. Thusco-productive behavior not only influences their engagement toward a brand but also effectivelypredicts customer satisfaction and loyalty. (Ranjan & Read, 2014).Social ExperienceGentile et al. (2007) describe social experiences emerging from social contexts and relationshipsthat are present during consumption processes. This means for example that employeesin a physical shop could affect customer experience through their behavior. Garg etal. (2014) goes even further and suggests that frontline employees are the main influencersof customer experience in case of employee-customer interaction, which can support thedevelopment of customer loyalty. In Lemmink and Mattsson’s (1998) paper show that whencustomer’s expectations are unmet and have a negative customer experience, but thenperceived positive attitude e.g. warmth or empathy from an employee, the outcome still canbe perceived positively and still could obtain loyalty as also Nysveen et al. (2013) argue.Technological ExperienceVerhoef et al. (2009) argues that technology-based services and delivery systems areintegrated to shopping - especially for e-commerce companies - therefore technologicalexperience should be a key element of customer satisfaction. However, the relationship betweenCX and technology has not been investigated enough yet (Pekovic & Rolland (2020),though Gilboa et. al (2019) have listed how firms apply new technology to improve customerexperience e.g. virtual reality and AI based customer service bot that operates 24/7 whichadds value to the shopping experience. A human-computer interaction research also affirmsthat when people use technology for the intention of consumption, it also affects their overallexperience (Borsci et al., 2015). Another research also shows that online experiences couldbe predictors of online customer satisfaction. Furthermore, another study indicates thatonline experiences influence customer loyalty through cognitive dimension, satisfaction, orpurchasing intentions (Brun et al., 2017).Rauyruen, P. and Miller, K.E. (2007), Relationship Quality as a Predictor of B2B Customer Loyalty. Journal of Business Research, 60, 21-31Sällberg, H. (2004), On the value of customer loyalty programs : a study of point programs and switching costs, LinköpingOliver, R.L. (1999), Whence consumer loyalty? Journal of Marketing, 63, 33–44Inamullah khan (2012), “Impact of Customers Satisfaction and Customers Retention on Customer Loyalty” International Journal of Scientific & Technology ResearchVolume 1, Issue 2, pp 106-110Lin, H. H., & Wang, Y. S. (2006), An examination of the determinants of customer loyalty in mobile commerce contexts. Information & management, 43, 271-282Chen, P. T., & Hu, H. H. (2010), The effect of relational benefits on perceived value in relation to customer loyalty: An empirical study in the Australian coffee outletsindustry. International journal of hospitality management, 29, 405-412.Kim, H.-S. and Yoon, C.-H. (2004), Determinants of Subscriber Churn and Customer Loyalty in the Korean Mobile Telephony Market. Telecommunications Policy, 28,751-765.Bagram & Kahn (2012), Attaining Customer Loyalty! The Role of Consumer Attitude and Consumer Behavior. International Review of Management and BusinessResearchJin, B. and G.S. Yong, (2005.)Integrating effect of consumer perception factors in predicting private brand purchase in a Korean discount store context. J. ConsumerMarket., 22: 62-71Zeithaml, V.A., (1988a), Consumer Perceptions of price, quality and value: A means-end model and synthesis of evidence. J. Market., 52: 2-22.Zeithaml, V.A., (1988b), Communication and control processes in the delivery of service quality. J. Market., 52: 35-48Choy John Yee, Ng Cheng San. (2011), Consumers’ Perceived Quality, Perceived Value and Perceived Risk Towards Purchase Decision on Automobile. American Journalof Economics and Business Administration 3 (1): 47-57,Stonewall, D.W., (1992), How to define and measure value. Executive Excel., 9: 16-17.Oliver & Swan, J. E. (1989), Consumer Perceptions of Interpersonal Equity and Satisfaction in Transactions: A Field Survey Approach. Journal of Marketing, Vol. 53,pp. 21-35Kotler, P. (1994), Marketing management. Analysis, planning, implementation, and control (8th ed.). Englewood Cliffs, NJ: Prentice-Hall.Kotler P. (2010), Marketing Management, Prentice Hall, Inc, New York,F. B. Tan, L. Tung, Y. Xu, (2009), “A study of web designer criteria for effective business to customer (B2C) websites using the repertory grid technique,” Journal ofEcommerce Research, vol. 10, no. 3, pp. 155-177Rajni Arora. (2013), BRAND LOYALTY: A MULTIDIMENSIONAL CONCEPT. International Journal of Science, Engineering and Technology Research (IJSETR) Volume2, Issue 2, FebruaryR. Frederick, M. G. Jr. Robert, and H. Christopher,(2000), “E-customer loyalty – applying the traditional rules of business for online success,” European Business Journal,vol. 12, no. 4, pp. 173-179R. T. Rust, A. J. Zahorik, (1993), “Customer Satisfaction, Customer Retention, and Market Share,” Journal of Retailing, vol. 69, no. 2, pp. 193-215.A. Bryant and B. Colledge, (2002), “Trust in electronic commerce business relationships,” Journal of Electronic Commerce Research, vol. 3, no. 2, pp. 3-39.M. A. Razzaque and T. G. Boon, (2003), “Effects of dependence and trust on channel satisfaction, commitment and cooperation,” Journal of Business to Businessmarketing, vol. 10, no. 4, pp. 23-48,N. Rexha, R. P. John, and A. S. Shang, (2003), “The impact of the relation plan on adoption of electronic banking,” Journal of Services Marketing, vol. 17, no. 1, pp. 53-67.K. Y. Lee, H. L. Huang, and Y. C. Hsu, “Trust, (2007), Satisfaction and commitment on loyalty to international retail service brands,” Asia Pacific Management review,vol. 12, no. 3, pp. 161 -169.Sri Astuti Pratminingsih, Christina Lipuringtyas, and Tetty Rimenta. Factors Influencing Customer Loyalty Toward Online Shopping. International Journal of Trade, Economicsand Finance, Vol. 4, No. 3, June 2013J. Kim, D. Morris, and J. Swait, (2008), “Antecedents of true brand loyalty,” Journal of Advertising, vol. 37, no. 2, pp. 99 – 117,F. Garbarino and M. Johnson, (1999), “The different role of satisfaction, trust and commitment in customer relationships,” Journal of marketing, vol. 63, no. 2, pp. 70 – 87,T. Heidt, T. V. Der, and P. Ponirin, (2010), Modelling the complexity of eloyalty: The Role of e-Value, Trust, e-Satisfaction and e- Commitment,G. Fullerton, (2005), “The impact of brand commitment on loyalty to retail service brand, Canadian,” Journal of Administrative Sciences, vol. 22, no. 2, pp. 97 – 110,P. Luarn and H. H. Lin, (2003), “A customer loyalty model for e-service context,” Journal of Electronic Commerce Research, vol. 4, no. 94, pp. 156– 167,Mahr, D., Stead, S., Odekerken-Schröder, G., (2019), Making sense of customer service experiences: a text mining review. J. Serv. Market. 33, 88–103.Siqueira, J.R., Horst, E., Molina, G., Losada, M., Mateu, M.A., (2020), A Bayesian examination of the relationship of internal and external touchpoints in the customerexperience process across various service environments. J. Retailing Consum. Serv.Grewal, D., Ailawadi, L.K., Gauri, D., Hall, K., Kopalle, P., Robertson, R.J., (2011), Innovations in retail pricing and promotions. J. Retailing 87, 43–52.Fernandes, T., Cruz, M., (2016), Dimensions and outcomes of experience quality in tourism: the case of Port wine cellars. J. Retailing Consum. Serv. 31, 371–379.Vinor Tapar, A., Dhaigude, A., Jawed, S., (2017), Customer experience-based satisfaction and behavioural intention in adventure tourism: exploring the mediating roleof commitment. Tour. Recreate. Res. 42, 344–355.Klaus, P., Maklan, S., (2013), Towards a better measure of customer experience. Int. J. Mark. Res. 55 (2), 227–246.Fernandes, T., Pinto, T., (2019), Relationship quality determinants and outcomes in retail banking services: the role of customer experience. J. Retailing Consum. Serv.50, 30–41.Sanja Pekovic, Sylvie Rolland. (2020), Recipes for achieving customer loyalty: A qualitative comparative analysis of the dimensions of customer experience. Journal ofRetailing and Consumer Services 569

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