Concept
Customer loyalty is when a customer is so satisfied with a product of brand they commit
to that brand and its products. This level of connection to customers is the holy grail for
companies and their marketers. Value is the main driver of customer loyalty where the higher the
value the more likely strong loyalty (Marshall & Johnston, 2023). The reason that customer
loyalty is so important is that the more loyal the customer the high the chance of retaining that
customer. When brands retain customers, they see repeat purchases and the customer lifetime
value increases (Marshall & Johnston, 2023). Brands must always remain connected to their
customers to ensure that ever loyal customers do not stray to a competitor who makes a stronger
offer provides better quality.
I’ll share a personal story from my past loyal relationship to Dish Network. I was a
customer for 12 years because I enjoyed the Dish Network programming and reliability. I had
previously been a customer of DIRECTV but left because Dish offered a better rate and
DIRECTV service would be interrupted often due to weather. Dish Network offered a newer
technology that tended to remain in service even in heavy rain or heavy clouds which greatly
increased my satisfaction. After a very long, loyal relationship with Dish, I was lured away to
DIRECTV Stream. I left Dish because they started to offer many incentive programs to attract
new customers while ignoring the loyalty of their current long-term customers. When I called
and spoke to Dish asking what incentives they would offer me as a reward for my decade plus
loyalty they simply stated that they would only incentivize new customer. They were so
concerned with customer acquisition that they failed to focus on customer retention.
The Value Chain is another way for organizations to bring together the concepts of value,
satisfaction, and customer loyalty (Marshall & Johnston, 2023). This value chain serves to
create, communicate, and deliver more customer value (Marshall & Johnston, 2023). There are
five primary activities in the value chain inbound logistics, operations, outbound logistics,
marketing and sales, and service (Marshall & Johnston, 2023). It has become the focus of many
CEOs to ensure that all these concepts come together to make sure there are no impairments to
customer value. “Intelligent investment in the primary and supportive activities within the value
chain should positively enhance profit margin through more efficient and effective firm
performance” (Marshall & Johnston, 2023).
Application/Example
When considering an example of customer loyalty, one should look no further than
Apple, Inc. Apple has the highest level of customer loyalty (Hernadez Lopez, 2024). In 2007,
Apple introduced the iPhone which revolutionized the mobile phone industry and captured the
satisfaction and interest of many new customers. This innovative device change device
functionality and shifted mobile communications away from voice and towards data
consumption (Hernadez Lopez, 2024). The device not only changed the device manufacturing
industry, but it also forced telecommunications networks to upgrade their technology to enable
faster speeds and high capacity for the data use (Hernadez Lopez, 2024). Apple’s continued
innovation of the iPhone drove revenue from $16.968 billion in 2006 to $189.538 billion in
2016. Last year, Apple’s profits exceeded $380 billion, and their stock shares have increased by
1,100%, positioning Apple as the world’s most valuable company (Hernadez Lopez, 2024).
One of the major drivers of loyalty to the iPhone was the ease of use and the innovative
features the device provided. The brand and device also created a cultural status where the “cool
people” used iPhones. The brand released new devices each year increasing the capacity of
storage, camera quality, speed, screen size, and many other upgrades (Nahum, 2016). Devices
were subsidized by the cell phone carriers making the device free and easy to upgrade every two
years. However, in the mid 2010’s the carrier model changed requiring customers to purchase
their device and not receive the subsidy. This created a real risk to Apple’s customer loyalty as
the devices cost over $1000. Customers began to question if the device upgrades were enough to
cause them to purchase a new iPhone or keep their older device (Nahum, 2016). Apple had to
quickly focus on driving real innovation that was not just cool, but that provided real value to the
customer. They had to react to protect their customers from leaving them for Samsung of Goole
devices. “Through the study of the company Apple and its smartphone the iPhone, the
establishment of an expansion strategy is not in itself a bad idea but an idea that must be
conducted intelligently” (Nahum, 2016). Apple has mastered the art of moving a customer
through the value chain to move from value to satisfied to loyal and final retained. They are a
great example of a brand and a set of products that have a cult like following and extreme
customer loyalty.
Question for Classmates
In a world where consumers have unlimited access to information and alternative
options, what strategic approach can brands take to create real customer loyalty that, like
Apple, goes well beyond a transactional relationship and creates a cult following?
References:
Hernadez Lopez, Y. (2024). THE EFFECT OF BRAND VALUE ON
CUSTOMER LOYALTY: THE CASE OF APPLE IN THE PHONE
INDUSTRY. BURJC Digital.
https://burjcdigital.urjc.es/bitstream/handle/10115/25444/2023-24-
FCEE-N-2110-2110038-c.torija.2019-MEMORIA.pdf?
sequence=-1&isAllowed=y
Marshall, G., & Johnston, M. (2023). Marketing Communications. In
Marketing Management essay, McGraw Hill Education LLC.
Nahum, B. (2016). Measuring the impact on Consumer Loyalty of Extending
the Product Lifecycle through the offering of technological upgrades,
a case study of Apple. esource DBS.
https://esource.dbs.ie/server/api/core/bitstreams/f9528bbd-137f-408d-
b1b8-e77137531aa3/content
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