Several academicians have established the implication of faithfulness in the service industries and at the same time, it has probable impact on the overall expansion of the suitable competitive border too for the service firms. However, it can be stated that this might be accredited to the exceptional character of services, augmented enslavement on the technologies and superior consumer participation in the entire delivery of services. A base of the trustworthy consumers can perform marvel in terms of the financial rewards and the original commerce projections as captivating a new customer can charge as much as 6 times more than the charge of keeping an old one. Therefore, it can be stated that the customer loyalty clearly brings several momentous benefits to the existing business and calls for a deeper exploration into the features that act as its inventor and make a payment in its augmentation. Baumann, Elliott and Burton (2012) have stated that customer loyalty is convoluted and dynamic as well as changing with the course of time.
Benoit and Van den Poel (2012) have mentioned in his research work that why customer satisfaction as well as customer loyalty is so important and the answer of this question in one word is revenue. It can be seen that the satisfied customers spend huge amount of money, refer more number of the new consumers and support the trade longer than the discontented consumers. Therefore, it can be stated that this all leads to more profits for the trades that can maintain their customers well contented. However, it can b e easily stated that the companies striving to maximize the amount of returns must critically believe investing in a consumer contentment and the faithfulness research curriculum.
It can be stated that the rationale of this particular research document is to talk about the importance of consumer faithfulness and its consequence in the contemporary commerce ground throughout a wide-ranging examination literature. Furthermore, it seeks to discover a variety of things that serve as previous circumstances towards consumer loyalty development procedure. In order to understand the importance of customer loyalty on the business performance, Muthoot finance has been selected and the entire research work would try to shed light on these aspects from several perspectives. Therefore, it can be stated this specific research work has tried to represent the importance of customer relationship management as well as customer loyalty for Muthoot finance that wishes to be successful enough and gain enough competitive market in the existing market (Chen, 2012).
It can be stated that a new emphasis has been shed on customer relationship management, as this concept has been gradually wide spreading with time in several operating market. Muthoot finance is the principal gold backing corporation in India in provisos of loan selection and the corporation is a “Systematically significant Non-Deposit captivating NBFC” (muthootfinance.com, 2016). From the company profile it can be seen that Muthoot finance give India’s best gold loans and thus the organization believes that focusing on customer loyalty is one of the major parts to take care of. However, besides gold loan, they provide the facilities of money transfer, foreign exchange, housing finance, insurance as well as travel jango (muthootfinance.com, 2016). Therefore, this specific research work would try to analyze the importance of customer loyalty in Muthoot finance from some different perspectives through an information-rich literature review.
2. Literature Review
2.1 Customer dependability
As mentioned by Coelho and Henseler (2012), customer faithfulness is the enthusiasm of the consumers to acquire the manufactured goods from the specific organization and maintain buying the alike from the same brand name for a longer time epoch. However, customer trustworthiness can be also termed as the unremitting buying for a particular brand and at the same time signifying other people to do the similar. Associations are at the present concentrating more on preserving soaring amount of trustworthy consumers that more clients can be recommended through them to patch up a long run business with the product name.
Evanschitzky et al. (2012) have mentioned that organisations must follow some exceptional characteristics that can be competent enough in keeping the consumers trading commodities from the brand name devoid of favouring any contestant brand. Preceding studies on consumer allegiance have stated the consumer allegiance into two noteworthy fractions, customer performance and customer approach where both the parts are interrelated to each other. Customer loyalty may be rational or touching factor depending on the node of transaction and base of customer retention. The characteristics of commodities and services are the rational factor whereas the emotional factors are unswervingly connected to the discernment of purchaser towards the association (Jahanshani et al., 2014).
2.2 Factors upsetting consumer trustworthiness
Some of the preceding research works have experienced the constraints that influence the purchaser faithfulness and preservation counting the services. These issues can be connected with the consumer faithfulness and withholding as follows:
2.2.1 Service superiority
Johnson et al. (2012) have stated that service quality has been gradually becoming one of the major issues of the business that focus on the services as well as the communication procedures. This presently enables the electronic media for communicating with the components outside the business. It can be stated that this sheds importance on gathering of necessary information. Processing several online as well as offline transactions along with the data interchanges procedure among the buyers and the sellers in regards to address space and time consumption. Service excellence from the standpoint of online method can be classified as the degree to which online subsistence of the organization offers competent buying, acquiring and conveying facilities of goods and services in such a method that consumers might be extremely contented with administration (Jyh-Fu Jeng et al., 2012).
2.2.2 Perceived price
The professed cost of the consumers refers to the dissimilarity between the settlements of the products that the consumers gain and the price of the products and the services. In that scenario, price and the profit examination plays one of the vital roles in rewarding the needs of the consumers, as the customers are highly concerned in taking happiness in superior reimbursement from the services bearing fewer prices in trading the products and the services. The profits are categorised into four fractions named, manufactured goods advantage, service advantage, individual assistance and image advantage where equivalent four costs are monetary cost, psyche cost, time cost and energy cost. Conveying improved worth to the consumers is an indispensable division of the business approach that facilitates the organization attainment competitive improvement, in order to deal with long term sustainability of the commerce, evaluated to its contestants (Khan, 2012).
As demonstrated by Komunda and Osarenkhoe (2012) in their research work, it can be seen that trust is a clear set of believes that drive the customers towards purchasing a product pr consuming the service from a particular organization. Trust can be defined as the as the self-confidence of the consumers that they experience for the organization making sure the benefits required. However, it can be stated that belief is one of the main significant expression in commerce, especially in online trade operations. Here, truthfulness and generosity works essential position in keeping approval stage at the stage the consumers are enthusiastic to believe (Kwon & Kim, 2012).
Mart?nez and del Bosque (2013) have stated reputation as the inference of uniformity in case of presentation for the long time epoch. Therefore, it can be stated that standing is created from the consisted superiority administration as well innovation amalgamation depending on the time era and the modification in the socio-economic stage. Therefore, it can be stated that the standing of the organizations required to be understood by the consumers not only based on the online survival, but also the complete organization along with its bodily attendance (Pan et al., 2012).
2.3 Strategies used to maintain customer loyalty
As per Prentice (2013), widespread literature proposes that both the marketplace share and the consumer approval leads towards productivity, however, this is not certain that the market share and the customer satisfaction have an affirmative association. Therefore, in this part, some of the significant strategies have been introduced here in details to gain in-depth knowledge of the research topic.
2.4 Business strategies
It can be stated that company’s association to their consumers is alienated into two separate commerce approaches namely offensive and defensive. Offensive policy deals with magnetizing the new consumers and the defensive strategy try to keep the previously existing consumers. Therefore, it can be stated that in order to focus on customer loyalty, Muthoot Finance is required to attract both the new customers along with the existing customers (Scherer, W?nderlich & von Wangenheim, 2015).
Figure 1: Offensive and Defensive Business Strategies
(Source: Scherer, W?nderlich & von Wangenheim, 2015)
2.4.1 Decision-making stages
Siu et al. (2013) have stated that there exist three phases within customer decision making procedure. In this case, the first phase is defining the brand alternatives, the second phase is reviewing the existing relevant information and the final stage is applying a decision rule. It is regardless to mention that the choices as well as preferences of the customers vary from one product to another product, from one organization to another organization and so on. Therefore, the entire decision making process depends on the preferences of the consumers and the companies are required to provide the customers the best buying experience, so that they become loyal to one particular organization (Tanford, Raab & Kim, 2012).
Figure 2: The sequential Multistage Process Model
(Source: Toufaily, Ricard & Perrien, 2013)
2.4.2 Structuring and sustaining advantageous consumer faithfulness
As per Wang and Wu (2012), the major purpose of each organization is productivity and one significant technique for achieving this for an organization is to increase as well as uphold trustworthy consumers. It can be stated that if a corporation spends resources for building consumer trustworthiness without concentrating on productivity, it might lead towards failure in the long run. Therefore, to gain customer loyalty, the organizations are required to focus on both behavioral and attitudinal loyalty of the consumers. However, it can be stated that customer loyalty becomes highly significant to the business of the corporation at times it results in the purchasing behaviour. This following replica can be clarified through major three fundamental objectives like building behavioral loyalty, cultivating attitudinal loyalty and linking loyalty to profitability (Toufaily, Ricard & Perrien, 2013).
Figure 3: Structuring and sustaining consumer trustworthiness
(Source: Toufaily, Ricard & Perrien, 2013)
2.4.3 Customer allegiance programs
The adoption of the customer faithfulness programs in the middle of several companies has significantly augmented over the last couple of years and automatically the consumers have turn out to be the focal point of concentration. It has been seen that the customer loyalty programs offer financial as well as relationship rewards to the consumers with the sole principle of making the customers’ brand trustworthy (Kwon & Kim, 2012).
Favored consumer management
Cost of reimbursements
Status, image etc
Table 1: Significance of customer loyalty programs
There exist five specified group of the customers like non-customers, price switchers, the passive loyal, fence sitters and the committed customers. Therefore, most of the organizations target to grab the attention of all these customers through proper delivery of their services. Muthoot Finance try their best to retain their existing customers and at the same time they tend to design their loyalty programs in such a way, so that the customers get attracted enough towards the company. There exist several economic benefits of retaining the customers like it saves on the acquisition of the customers or the replacement costs. Moreover, it promises of base earnings as obtainable consumers are likely to have a minimum spend per period. Apart from that, retaining the existing customers focus on price premiums, as the existing customers generally do not wait for promotion or the reduction of price before making a decision to buy. Muthoot finance believes that customer loyalty benefits the organization from several perspectives like this is comparatively less expensive to keep hold of the consumers that to attract the new customers. It generates huge amount of profits, decreases the making costs and helps in spreading positive word of mouth promotion. Therefore, it can be stated that customer loyalty is one of the strongest assets to the organization, as the success and sustainability of the business largely depends on the number of loyal customers.
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