Understanding and profitably managing customer loyalty

Purpose – The purpose of the paper is to draw together the salient issues surrounding customer loyalty and customer relationship management (CRM) into a single coherent discussion. Various schools of academic thought are examined. The paper concludes with practical implications for managers. Design/methodology/approach – The literature surrounding customer loyalty, customer satisfaction, effective CRM and managing loyalty in a profitable manner are all reviewed. The paper allows managers to consider a wide range of material in the context of their business. Findings – The need for businesses to retain customers is an important issue in today's global marketplace. To retain customers, a business must forge loyal and long‐term relationships with profitable customers. Reasons why customers leave a company are discussed, and preventative strategies are considered. Loyalty schemes are considered and their relative merits examined. Practical implications – A key implication of this paper is the need to focus attention on managing customer loyalty in a profitable manner. Certain theories hold the view that generating customer loyalty will automatically drive profits. This paper suggests that this is probably not the case. Given this, the paper calls for data analysis and database segmentation to be considered as an integral part of profitably managing customer loyalty. Originality/value – The paper provides both a broad and in‐depth discussion of all the salient issues surrounding customer loyalty. By drawing together these issues into a single discussion, the paper offers a unique perspective that is not available in the current literature. Holistically considering all of the practical elements of customer loyalty allows academic researchers and marketing managers to compare and contrast different theories and principles.