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The myth of customer loyalty: why information and scale are more important during downturns

The myth of customer loyalty: why information and scale are more important during downturns Purpose – The purpose of this article is to find out if a focus on promoting customer loyalty is a supplier’s best strategy for gaining significant immunity against customer desertions and business losses during recessions? And if not, what are the alternatives? Design/methodology/approach – The authors investigated how loyalty strategies played out in practice in the Indian IT-ITES industry (Information Technology – Information Technology Enabled Services) during the recent global downturn. Findings – Field interviews with executives of many of the major players in the industry revealed the weakness of their customer loyalty strategy and discovered some useful alternative tactics. Practical implications – Service providers that successfully navigated the rough recessionary waters relied not on loyalty but their superior information advantage. Originality/value – Field interviews suggest that hanging on to clients in a recession have less to do with investment in a loyalty strategy and more with the vendor’s superior capabilities – such as an information advantage, agile use of diverse competencies and scale–that enable it to offer the client a superior deal even in a painful business downturn. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategy & Leadership Emerald Publishing

The myth of customer loyalty: why information and scale are more important during downturns

Strategy & Leadership , Volume 43 (6): 4 – Nov 16, 2015

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1087-8572
DOI
10.1108/SL-08-2015-0068
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this article is to find out if a focus on promoting customer loyalty is a supplier’s best strategy for gaining significant immunity against customer desertions and business losses during recessions? And if not, what are the alternatives? Design/methodology/approach – The authors investigated how loyalty strategies played out in practice in the Indian IT-ITES industry (Information Technology – Information Technology Enabled Services) during the recent global downturn. Findings – Field interviews with executives of many of the major players in the industry revealed the weakness of their customer loyalty strategy and discovered some useful alternative tactics. Practical implications – Service providers that successfully navigated the rough recessionary waters relied not on loyalty but their superior information advantage. Originality/value – Field interviews suggest that hanging on to clients in a recession have less to do with investment in a loyalty strategy and more with the vendor’s superior capabilities – such as an information advantage, agile use of diverse competencies and scale–that enable it to offer the client a superior deal even in a painful business downturn.

Journal

Strategy & LeadershipEmerald Publishing

Published: Nov 16, 2015

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