Article | Marketing area | Year 2015 | |
The myth of customer loyalty: why information and scale are more important during downturnsby Murali Kailasam; Winai Wongsurawat | |
Strategy & Leadership 43(6), p.38-41 |
AbstractPurpose
– 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.
Keywords: Indian IT ITES firms, Information advantage, Loyalty strategy, Recession management |