<abstract xmlns="http://www.w3.org/1999/xhtml"><p>In severe economic downturns, only a few business leaders have the courage and wisdom to invest in customer loyalty to increase profits instead of reflexively cutting costs to try to maintain falling profit margins. Moreover, the usual research and advice tends to focus on how companies can effectively and efficiently reduce costs in order to survive an economic decline. This study contributes to the literature by offering a fresh look at how best to respond in tough economic times by examining companies who have responded traditionally with cost cutting strategies versus companies who instead have invested in customer loyalty. We make the unique and contrarian argument that the latter strategy can be the superior business strategy, which underscores the originality of this investigation. Thus, the purpose of this study is to highlight why investing resources in creating and retaining loyal customers is the best strategy for companies to survive and prosper in tough economic conditions while simultaneously gaining longer-run competitive advantage. Based on quantitative and qualitative survey research methodology, the study findings identify and explain key customer loyalty measures, including: customization for customers, communication interactivity, nurturing of customers, commitment to customers, customer sharing networks, customer focused product assortments, facile exchanges, and customer engagement. Perceptive company executives will measure, benchmark, and regularly compare their performances on these key customer loyalty measures with different customer groups versus their company's past performances, managerial goals, and competitors, then make appropriate adjustments to retain their loyal customers and prosper during tough economic times.</p></abstract>

In severe economic downturns, only a few business leaders have the courage and wisdom to invest in customer loyalty to increase profits instead of reflexively cutting costs to try to maintain falling profit margins. Moreover, the usual research and advice tends to focus on how companies can effectively and efficiently reduce costs in order to survive an economic decline. This study contributes to the literature by offering a fresh look at how best to respond in tough economic times by examining companies who have responded traditionally with cost cutting strategies versus companies who instead have invested in customer loyalty. We make the unique and contrarian argument that the latter strategy can be the superior business strategy, which underscores the originality of this investigation. Thus, the purpose of this study is to highlight why investing resources in creating and retaining loyal customers is the best strategy for companies to survive and prosper in tough economic conditions while simultaneously gaining longer-run competitive advantage. Based on quantitative and qualitative survey research methodology, the study findings identify and explain key customer loyalty measures, including: customization for customers, communication interactivity, nurturing of customers, commitment to customers, customer sharing networks, customer focused product assortments, facile exchanges, and customer engagement. Perceptive company executives will measure, benchmark, and regularly compare their performances on these key customer loyalty measures with different customer groups versus their company's past performances, managerial goals, and competitors, then make appropriate adjustments to retain their loyal customers and prosper during tough economic times.

Prospering in Tough Economic Times Through Loyal Customers

LeBow College of Business, Drexel University

School of Management, New Jersey Institute of Technology

International Journal of Management and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Prospering in Tough Economic Times Through Loyal Customers"}

In severe economic downturns, only a few business leaders have the courage and wisdom to invest in customer loyalty to increase profits instead of reflexively...

Prospering in Tough Economic Times Through Loyal Customers

Published Online: Oct 17, 2014

Page range: 76 - 91

DOI: https://doi.org/10.2478/ijme-2014-0038

Keywords
Customer Loyalty, Customer Satisfaction, Customer Relationship Management

© 2014 Rolph Anderson et. al.

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Prospering in Tough Economic Times Through Loyal Customers

Published Online: Oct 17, 2014

Page range: 76 - 91

DOI: https://doi.org/10.2478/ijme-2014-0038

KeywordsCustomer Loyalty, Customer Satisfaction, Customer Relationship Management

© 2014 Rolph Anderson et. al.

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Customer Loyalty, Customer Satisfaction, Customer Relationship Management