How can relational benefits boost customer loyalty via perceived value?


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In this information era, it is understandable that customers have to face and deal with information overloads all the time. On the other hand, customers will also be blessed to have countless alternatives both online and offline whenever they would like to purchase something, material or non-material. Thus firms currently face more challenges than ever before as the competition has become far more intense. They not only have to attract new customers, but also retain current ones. Sometimes the latter could even be way more vital to the survival and development of firms.

While e-commerce has become the center of attention, some products and services have to stay offline, such as restaurants, bars and pubs. Of all those establishments, coffee outlets happen to serve as an essential part of busy daily life, especially in metropolitan areas of developed countries. As the density of outlets continuously increases, this highly competitive environment would become even more brutal. Therefore to retain customers and enhance their loyalty is always a crucial mission. The repeat purchase rate is very likely to increase as long as customer loyalty increases, which is an essential index to coffee outlets (Dick & Basu, 1994). Meanwhile, customer loyalty would lead to strong word of mouth effects and thus generate new customers as well.

The study of Chen and Hu (2010) aims to examine how relational benefits would affect customer loyalty via perceived value enhancement. Prior studies suggest that customers can be easily attracted by the associated benefits from the products and services, and the preferences to those benefits could diversify the same as their tastes to coffee. Therefore relational benefits, which can be seen as part of relationship marketing, should be paid special attention to, since the value exchanges process can hugely influence customer loyalty. All shopping motives can be divided into two categories, namely functional motives such as price, quality and efficiency, and non-functional motives such as reputation and emotional experience. Both of them together will not only satisfy customers’ needs but also bring them pleasure.

However, the perceived value itself is complex by nature and thus fairly sophisticated to measure. Therefore when it comes to loyalty, both behaviors and attitudes should be taken into account. The authors conducted a self-administrated questionnaire to examine how relational benefits influence perceived value, both functional and symbolic, and eventually influence customer royalty, which had been checked before it was sent out. The fact that this research is based in real-life feedback provides extra reliability and credibility. The questionnaire feedback and statistical results confirm that perceived value are directly related to relational benefits, which is fairly significant and considerably strong. In addition, relational benefits have indirect impacts on customer loyalty via perceived value as well.

Therefore it could be easily seen that relational benefits indeed play a crucial role in boosting customers’ perceived value and thus increasing customer loyalty. Specifically, customers tend to systematically evaluate functional value, and they could sense symbolic value through the interaction during consumption process. Moreover, functional value and symbolic value would both matter much to customers. The pleasant consumption experience as a whole will surely impress customers and make them repeat visiting, which strengthens customer loyalty. Customers will eventually set even higher bars for both functional and symbolic values as their loyalty increases, which turns to be a double-edged sword. Thus coffee outlets should view their strategies in a more comprehensive, interactive way and differentiate themselves by not only releasing new products but also providing fresher feelings and extra services, since customers tend to care more than only price and quality when facing similar products and comparable establishments.

Article:

Chen, 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 outlets industry. International Journal Of Hospitality Management, 29(3), pp. 405-412.

Other References:

Dick, A. S., & Basu, K. (1994) Customer loyalty: toward an integrated conceptual framework. Journal Of The Academy Of Marketing Science, 22(2), pp. 99-113.

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