Customer Loyalty - Computex - Case Study Example

Introduction

Customer loyalty is the tendency to favor one product at the expense of all the other products in the market (Cross & Smith, 2005). Such a situation is normally due to the satisfaction customers could be having with the service or product, the good performance of the product, psychological attachment to the product or sometimes simply being familiar with the product or service (Griffin, 2005). Loyalty leads to stability in the number of people buying the product and, sometimes, the number of buyers shoots up. Loyalty makes consumers buy the products and services consistently, spend large amounts of money on them and feel good about shopping (Ha & Stoel, 2008). The accrued effect of these actions is causing an increase in the number of people shopping for the products and services through influencing other people, perhaps friends and family.

Companies that intend to do well in whichever industry must build a firm customer loyalty base for themselves. This gives them an assurance of continuous sales, income and profits (Hughes, 2003). Once they have a good number of loyal customers, they can go ahead and look for new ones with the view of expanding their market share and, in the long run, profits (Inghilleri & Solomon, 2010). To have this loyalty, they must come up with measures such as manufacturing quality goods, lowering their prices and improving on the quality of their services, especially when customers suggest so (Hughes, 2003). However, they must be ready to meet the cost implications of doing these. Such costs can be minimized by not necessarily aiming at providing the highest levels of customer satisfaction. Rather, they should aim at attaining levels that can help their companies reach optimum long-term profit levels (Alessandra, 2007). This is possible through conducting comprehensive market studies with the view of determining the experiences and views of their customers regarding their products.

Businesses enjoy customer loyalty due to various reasons. The reasons include the fact that loyal customers are less likely to switch to competitors, are less expensive to service and normally advertise the goods and services to others (Lowenstein, 2007). Loyalty also makes employees’ jobs easier. Loyal customers and are not as sensitive to price changes as are new customers. The long-term familiarity with the services and goods provided make it almost impossible for them to switch to competitors (Pearson, 2012). It is also hard for them to switch because most of them develop a bond with their goods and service providers. These customers are easier to service because they are very familiar with the processes involved in the provision of goods and services. Therefore, they do most of the things on their own (Seven Power Strategies for Building Customer Loyalty, 2002). With regards to goods and service promotion, the passion the loyal customers have for the products drives them into advising their friends and members of family to buy them. The effect of such an act is an improvement in the number of people buying the product. These loyal customers rarely show negative reactions towards changes in prices as they only have their attention on the quality of the goods and services provided and the bond they have with their provider (Timm, 2011).

In order to determine the state of their products in the market, firms need to study the levels of customers’ preference for their products, whether old customers recommend their products to others, the amount of products purchased on the market, the amount of goods already in use and the number of customers they retain each time they sell their products (Alessandra, 2007). When the number of customers that prefer their products is stable or increases, then it means their customers are very loyal to them (Bhote, 2006). However, when this number goes down, it means that some customers are losing their loyalty to the provider. It is always a sign of problems in the services and goods provided (Lawfer, 2007). Besides this, when they receive new customers who are advised to buy the products by their friends, it means that they have loyal customers who can go to any lengths to promote their products. It is also necessary to study their market share, the amount of revenue generated from sales and the level of profitability (Linton, 2013). An increase in all these items is an indication that the company is assured of profitability for a certain period of time. This paper looks at how both the emotional and rational factors impact customer loyalty in Computex.

Computex is a company that builds computers and puts them online for their customers to make orders depending on their specifications. Customers look at the products as described online before making their orders. In their orders, they may also ask the company to design the products they want in a certain manner. They then make their orders online and even pay without necessarily travelling to meet the seller. The process of building the computers for the customers takes a maximum of three days to reach customers before the shipment process starts (Computex customer loyalty, n.d. ). The shipment is usually from Eastern Europe to different parts of the world. Their target market is the group of people that is always ready to pay for the customization of their computers (Computex customer loyalty, n.d. ). They always want their personal computers to look and operate in a certain manner. For example, they may want their laptops to have higher capacities of graphic cards, dual hard drives, in-built cameras and batteries that do not die easily. For this reason, they normally have to give their specifications to Computex and require them to customize their laptops according to their needs.

The information collected indicated that customer loyalty was determined by two categories of factors: rational and emotional. These factors, despite being different in nature, interacted to impact the loyalty of customers to Computex. Rational factors included delivery, pricing and specification. On the other hand, emotional factors included reliability, uniqueness, empathy and low stress (Computex customer loyalty, n.d. ). It was evident that each of these factors contributed differently to customer loyalty. In particular, both pricing and delivery led to a 0.24% increase in the rational loyalty of customers while specifications brought about a 0.15% increase in rational customer loyalty (Computex customer loyalty, n.d. ). The combination of these two elements of loyalty formed the rational aspect of loyalty. It was also discovered that whenever there was an increase in rational loyalty by 1%, the general customer loyalty increased by 0.30% (Computex customer loyalty, n.d. ). This means that the increase in both variables was not systematic, and therefore, not correlational. The amount of increase in the independent variable, rational loyalty, was not the same as that of the dependent variable, the general customer loyalty.

On the other hand, a 1% increase in the rating of reliability increased customer loyalty by 0.15% while a 1% increase in the uniqueness of products and services provided increased customer loyalty by 0.12% (Computex customer loyalty, n.d. ). The results also showed that a 1% increase in empathy raised the loyalty of customers by 0.08 while the reduction of stress in the handling of the products increased customer loyalty by 0.02% (Computex customer loyalty, n.d. ). These aspects of loyalty cumulatively form the emotional element of loyalty, which directly impacts the general loyalty of customers to Computex. According to the study, a 1% rise in the emotional component of loyalty raised the general loyalty of customers by 0.55% (Computex customer loyalty, n.d. ). These figures show that just as it was in the first relationship of variables, the relationship between emotional loyalty and the general loyalty is causal and not correlational.

Conclusions regarding the effect of both the emotional and rational factors on customer loyalty were arrived at after the analysis of the sales made by the company, the number of customers retained and the level of customer preference for their goods. The figures for these items were as follows: sales 24%, retention rate 26% and preference 50% (Computex customer loyalty, n.d. ). The earlier mentioned emotional and rational factors were responsible for these figures. An increase in any of these items shows an increase in customer loyalty while a drop shows a reduction in customer loyalty.

Therefore, it can be concluded that rational and emotional elements of loyalty have a causal relationship with the general customer loyalty. This relationship is such that an increase in either of these factors increases the loyalty of the customers. In this case study, the rational factors include delivery ratings, the pricing of products and the specifications of the computers. An increase in any of these factors also increases the loyalty of customers to the company. The emotional factors, on the other hand, include the rating of the company and product reliability, the uniqueness of the products and services, the level of empathy in the service and the amount of stress experienced by the customer in the process. All these factors have a causal relationship with the loyalty that customers show to the company. Precisely, an increase in any of these factors leads to an increase in customer loyalty. This relationship is not correlational because it is not a 1:1 relationship. An increase in any of these factors causes an unequal increase in customer loyalty.