An Examination of the Relationship Between a Firm's Offerings and Different Customer Loyalty Segments

Purpose: Loyalty reflects the highest state in the buyer–seller relationship and occurs when repeat patronage and commitment are both high. One generally accepted model of segmenting the customers by degree of loyalty includes 4 categories of loyalty: no loyalty, latent loyalty, spurious loyalty, and loyalty. This study examines the relationship between these 4 customer segments and their evaluation of the firm's offerings.

Methodology/approach: This study uses self-reported purchase behaviors and attitude toward the seller for segmentation. Buyers report the importance of and satisfaction with 15 different offerings or processes. The mean scores for the 4 different groups are compared and tested for statistical significance.

Findings: The loyalty segments differed in the importance placed on customized products. The loyalty and spurious loyalty groups placed a higher importance on receiving customized products from the seller. The loyalty segments also differed in their levels of satisfaction, but these differences did not fully explain repeat patronage behavior. The latent loyalty group, despite their higher levels of satisfaction with standardized offerings, purchased less than the spurious loyalty group.

Originality/value/contribution: The implication for managers is that, if properly identified and managed, understanding these differences could lead to a sustainable competitive advantage. Managers can build loyalty by applying specific tactics tailored to the customer segment.