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1、Customer Loyalty and Cyber-marketing Ideaistic EvolutionHong Peng* Hong Peng, female, Ph.D. candidate and associate prof. of School of Business Administration, Zhongnan University of Economics and Law; Main research field: E-business; Address: School of Business Administration, Zhongnan University o
2、f Economics and Law, No.114 Wuluo Road, Wuhan, Hubei, China, Postcode: 430064. Zhihao Chen* Zhihao Chen, male, associate prof. of School of Business Administration, Zhongnan University of Economics and Law; Main research field: E-business and Cyber-marketing; Address: School of Business Administrati
3、on, Zhongnan University of Economics and Law, No.114 Wuluo Road, Wuhan, Hubei, China, Postcode: 430064. Zhongnan University of Economics and LawAbstract: Customer loyalty has already aroused the extensive attention of the marketing area, but it has been ignored by numerous enterprises in cyber-marke
4、ting. Therefore, establishing online customer loyalty and emphasizing the cultivation of loyalty is a new subject for enterprises during their cyber-marketing implementation. Customer loyalty is on the basis of customer satisfaction, but customer satisfaction does not mean that the customer has high
5、er loyalty. Customer loyalty is the key factor to improve enterprises competitiveness, and it is the foundation stone of enterprise development and the most important source of enterprise long-term profit. Internet has both positive and negative influence on customer loyalty. We should cultivate cus
6、tomer loyalty from customer relation maintaining, customer relation management, virtual experience and so on in the Internet environment.Key words: cyber-marketing customer loyalty customer satisfaction1. IntroductionIn the early 90s of the 20th century, the rapid growth of Internet has formed and d
7、ominated the “Internet Economy” within almost the whole 90s. The nearly crazy e-commerce upsurge has become logos, entering a new steady developing period after the Internet foamy wreckage in the year 2000. From the technical oriented first generation e-commerce to the second generation, this is ori
8、ented by commerce (Laudon & Traver, 2002). Under such a background, more and more scholars consider that traditional marketing conception should be applied in the Internet environment and should be extended and evolved.In 1996, the author of The Loyalty Effect, Frederick Reichheld, on the basis of t
9、horough research on such trades as software, advertising agent, etc, issued research report Zero Loss: The Coming of Service Industry Quality Period in Harvard Business Review. Reichheld pointed out that, when the enterprises customer retention ratio increases by 5%, their profit increase will reach
10、 25%-85%. At the same time, the service cost that is provided for old customers is less each year. This conclusion caused the extensive concern of the marketing industry. Before and after this conclusion, such as sale promotion cost for new customers is 6 times higher than that for old customers, th
11、e success probability for promotion to new customers is 15% while it is 50% for old customers, etc, the verdict discovered by enterprises and researchers which is almost accordant with game theory, has been taken as principle in the marketing area.However, when more and more enterprises gradually un
12、derstand that they shouldnt only focus their attention on developing new customers, many cyber-marketing enterprises stress attracting new customers as their emphasis for Internet business. They are wild about the technique for attracting new customers and always emphasize the customer increase rate
13、. They provide various kinds of interests to attract new customers while ignoring the maintenance for the customers already exist, needlessly to say how to cultivate customer loyalty. Therefore, establishing online customer loyalty and emphasizing the cultivation of loyalty is a new subject for ente
14、rprises during their cyber-marketing implementation. This paper just does some probes on this issue.2. The Connotation for Customer LoyaltyCustomer loyalty is usually defined as the behavior of repeatedly buying the same brand or product. But this is just the superficial description, the more profou
15、nd definition for loyalty is that, a kind of responsibility for buying the same product or service in the future, which makes customers buy the same brand even when they are facing other brands marketing or under the circumstance that is possible to change the product brand. Although customer loyalt
16、y does have relation with repeat buying, it is not equal to repeat buying (Jacoby & Kyner, 1973). The three factors that determine the customer loyalty are products superior quality, personal pursuit and sustain and influence by colony culture. Based on the depth of customer loyalty, it can be divid
17、ed into four administrative levels, namely perceived loyalty, sensibilities loyalty, intent loyalty and behavior loyalty.Outstanding quality of the product is the basis of actualizing the loyalty. If customers are not interested in the products, loyalty cannot be a reasonable target for them to purs
18、ue. That is to say, it is impossible to form loyalty without satisfying product. But outstanding product or service is just the least requirement to realize customer loyalty. As a matter of fact, the representation of the product only forms the most superficial perceive loyalty. Only when customers
19、ratify the product with their geist, further loyalty like sensibilities and intent loyalty comes into being. Just as Kotler (2001) pointed out, customers joviality creates a kind of appetency against products and services, it is not only a kind of rational preference, but also high degree customer l
20、oyalty thereby forms. To obtain the sensibilities, intent and behavior customer loyalty, it needs other factors support. Perfectly satisfiedLocal telephoneAviationHospitalPCAutomobile12345SatisfactiondegreePerfectly unsatisfiedLowHighLoyaltyDegree High competition areaStaple goods or low differenceN
21、o difference for customersThe monopoly under control or a few substitutesBrand assets occupying a leading positionPowerful loyalty schemeNon-competing areaFigure 1 The Relationship between Customer Satisfaction and Customer loyaltyAction loyalty as the highest level, can be realized only when the co
22、lony the customer is affiliated with, like family, stratum, also sustain using the product. Or else, customers will not repeat buying even if they are “heart loyalty”. As you can see, the relationship between product representation and customer loyalty is not as consanguineous as the customer satisf
23、action. If enterprise cannot satisfy one of the above customers expectations, the intrinsic condition for realizing loyalty is destroyed.From the definition of customer loyalty, we also can see that customers future behavior (repeat buying or changing brand) is related with loyalty. Kotler (2001) an
24、d other persons traced out the relationship between customer satisfaction and customer loyalty within the different industry markets (see Figure 1). We can see that when satisfaction degree is higher, loyalty degree is higher under various kinds of situations. But in intensive competing industries l
25、ike mobile, PC industry, theres no enormous difference between not so satisfied and comparatively satisfied. But between customers who are satisfied and those who are perfectly satisfied, the loyalty degree has enormous difference. Even lower just a little from the perfect satisfaction line, the loy
26、alty degree will down a lot. But for those monopoly market or sellers market, loyalty will keep on the relatively high level whenever customers are satisfied or not. It seems that this is the ideal condition for protected or ruling industries or enterprises, but these enterprises will finally pay tr
27、emendous expenses for customers dissatisfaction.3. Marketing Ideaistic Evolution3.1 From Customer Satisfaction to Customer LoyaltyIn the marketing area, it is known to all that customer satisfaction is the necessary condition for customer loyalty. We can say that customer loyalty develops from custo
28、mer satisfaction. Customer satisfaction theory, as the marketing Bible, comes of the 60s in the previous century. It has formed a set of relatively maturate and perfect theoretical system after developing for full 40 years. Its achievements are not only applied in the enterprises marketing activitie
29、s, but also used in the national customer satisfaction evaluation system and gradually filtered in the whole country economic circulation system.Enterprises achieved remarkable performance after they implemented the customer satisfaction marketing tactic. But some problems also gradually appeared du
30、ring the implementation, many enterprises found that it cannot be the fundamental function for upgrading enterprises competitiveness. American mobile industry made a Stat., they found that 85%-95% of customers claim that theyre satisfied with the products, but only 30-40% of them choose to buy the o
31、riginal brand or type. Some enterprises in other industries even encountered that customers whom they had tried their best to satisfy choose their competitors product in the next transaction. Some enterprises also found a kind of unable balance relation between customer satisfaction and enterprise p
32、erformance and competitive power, this phenomenon is named “customer satisfaction trap” by Reichheld.Before 90s of the 20th century, although it was widely considered in the academe that satisfaction degree is related to loyalty degree, some scholars had realized the deficiency for customer satisfac
33、tion for a long time. In 1986, Deming pointed out that “it is not enough to make customers be satisfied”. With the transition from sellers market to buyers market and grown up of e-commerce, more and more scholars find that the relation between satisfaction degree and loyalty degree is not as direct
34、 as beeline. Zones and Sasser (1995) considered that “only make customers be satisfied and have the right to choose in many ways, which is not enough to maintain their loyalty for the enterprise and brand”. Reichhelds research (1996) indicated that 65%-85% of customers who claim theyre satisfied or
35、perfectly satisfied will be lost and turn to other brand. Stewart (1999) pointed out that it is wrong to consider customer satisfaction in certain degree will consequentially lead to customer loyalty. Neal (1999) also considered that it is wrong to conceive customer satisfaction will lead to custome
36、r loyalty, which is approbatory by enterprises and academe circle during the past 10 years. Because most loyal customers are satisfied while satisfied customers are not always loyal. Oliver (1999) investigated which aspect of customer satisfaction effect related with loyalty and loyalty effect was r
37、esulted in which factors of satisfaction. After deepen research on the factors of forming customer loyalty, he pointed out that satisfaction is the necessary stage to form loyalty, but satisfaction is not so important after the loyalty formed, whether customers will be loyal or not, it is rest on th
38、e other factors after satisfaction formed. Oliver also pointed out that 90% of the satisfied customers is possible to betray. Marketing master Kolter (2001) also admitted: the high satisfaction degree cannot guarantee the customer loyalty. Some scholars like Buttle (1991), Reichheld (1993), Mitchell
39、 (1998), Naude & Buttle (2000) approved that customer satisfaction is not equal to loyalty from the angle of relation marketing. On the contrary, unsatisfied customers may become loyal customers. These conclusions make the satisfaction research and relation marketing research that is supported by cu
40、stomer satisfaction face new subjects almost at the same time. Therefore, deep customer loyalty research is attracting more and more scholars and being paid attention to by more enterprises.3.2 Customer Loyalty Is the Footstone of Enterprises Growth and the Headspring of ProfitAccording to the marke
41、ting theory, for the growing market, supply cannot meet the demand. At this time, enterprises can gain more profits. While for an almost balanced market, enterprises and customers almost possess the same status, only those who can win more customers, gain more profits. But for shortage market, it is
42、 not necessary for an enterprise to provide services for all customers; only providing services for the core customers can gain the same abundant profits.However, under the circumstances of market economys increasingly matures and gradually coming into being of buyers market, many important problems
43、 that enterprises face are not only the market occupation rate, but how many loyal customers they possess. Many enterprises start to pay more attention to customers feedback and enterprises competition target has changed from the quantity of market share (market occupation rate) to the quality of ma
44、rket share (quantity of loyal customers).Customer loyalty has an important meaning for enterprises survival and development. Cost must be paid to obtain new customers; this cost will be more expensive under the supply exceeding demand market. But their contributing to enterprises is very meager. In
45、some trades, new customers are even unable to contribute to enterprises in a short time. Comparatively speaking, loyal customers (old customers) create overflow value upon the enterprises: loyal customers will generally be the “disseminator”of the products and services; theyll try to recommend to ot
46、hers, this kind of public praise marketing is most welcomed by enterprises. Most loyal customers generally accept a certain markup for the price just because of convenience of shopping (Frederick, 2000). Loyal customers can often obtain higher values like unique products and emotional demand during
47、the relation maintenance with enterprises. Therefore, theyre not so sensitive about the price like new customers and theyd like to accept higher price for the products and services than that for new customers. We can say that, the quantity of loyal customers determines enterprises survival and devel
48、opment. Customer loyalty is the key factor of upgrading enterprises competition ability and the footstone for enterprises development and main headspring for enterprises long-range profit.4. Cyber-marketing and Customer LoyaltyAfter experiencing an explosive growth period, the first generation of e-
49、commerce that had started by using web advertisement to promote the products since 1995, was eventually ended with the crash of the network concept stock in April, 2000. Based on the first generation of e-commerce which takes experimenting, capitalization and high competitiveness as its characters, the second generation of e-commerce, which started in 2001, has stressed the commerciality which should have be
