How do you measure what you can't define? The current state of loyalty measurement and management

Abstract

Purpose

This research aims to provide a synthesis of the normative prescriptions from the scientific literature as it relates to customer loyalty tracking and an evaluation of how close practice comes to these prescriptions. It offers a description of the landscape for how and why aspects of loyalty measurement and management converge and/or diverge.

Design/methodology/approach

Data is gathered through in‐depth telephone interviews with 92 senior level marketing managers across a variety of industries.

Findings

The overwhelming majority of firms view customer loyalty as a top strategic priority but only one in four has a formal definition of customer loyalty. Customer satisfaction and likelihood to recommend are the two most tracked measures. The findings also demonstrate that few firms are relatively sophisticated in their analytics capabilities and only half examine how loyalty influences business outcomes.

Research limitations/implications

The current study uses single respondent per firm.

Practical implications

The results provide compelling evidence that managers need to determine more consciously what customer loyalty means in the context of their business. Furthermore, firms could benefit from the use of more sophisticated and advanced modelling approaches which have the potential to uncover patterns in customer data and link with business results.

Originality/value

This is the first study in the scientific literature that investigates how close what managers are actually doing in practice comes to scientific prescriptions for tracking and engaging with customers in an effort to engender customer loyalty.

Citation

Aksoy, L. (2013), "How do you measure what you can't define? The current state of loyalty measurement and management", Journal of Service Management, Vol. 24 No. 4, pp. 356-381. https://doi.org/10.1108/JOSM-01-2013-0018