Magnus Söderlund
2006-10-09
Customer Loyalty: Antecedents and Consequences (5 credits)
Customer loyalty – so what?
A prevalent contemporary marketing strategy is to focus on existing customers rather than on
new customers. Typically, firms who have adopted this strategy want their customers to
become loyal. And these firms usually follow a conceptual model referred to as “the
satisfaction-profit chain” – which is probably one of the most successful conceptual models
during recent years, at least in terms of diffusion and adoption in firms. The main components
are captured by the following statements: “the satisfied customer is a loyal customer” and “the
loyal customer is a profitable customer”. Indeed, such statements provide the main rationale
for many current business activities such as training personnel in customer interaction skills,
measurement of customer satisfaction, the creation of a complaint-handling department, and
development of reward programs for customer loyalty.
Yet there are copious examples of firms who do not get things right in this area. For example,
few firms seem to be able to articulate what customer satisfaction is, only a minority uses a
clear operationalization of customer loyalty, and not many firms collect profitability data at
the customer level. Given such conditions, it is not possible to assess the extent to which “the
satisfied customer is a loyal customer” and “the loyal customer is a profitable customer”;
under such conditions, these statements become a matter of guesswork or wishful thinking.
In addition, and perhaps more important in this course, there is plenty of confusion and
several unaddressed aspects in academic research on loyalty-related issues. Indeed, there are
many opportunities to provide contributions to the loyalty field in a Ph. D. project. The main
objective of this course, then, is to identify the current state of knowledge in the loyalty field –
with a particular focus on exploiting issues that deserve more attention in academic research.
Course modules
These are the five modules/seminars in the course: (1) What is customer loyalty?, (2)
Customer satisfaction and its determinants, (3) The satisfaction-loyalty link, and (4)
Consequences of loyalty. In addition, there will be a (5) Reflection module in which we
discuss the result of the assignment in the course (i.e., a course paper; see below).
Schedule and readings for the modules
(Classroom for all modules: C606, entrance from Prinsens Galleri, street address entrance
Saltmätargatan 13, Stockholm)
(1) Introduction + What is customer loyalty? (November 9, 10.15-12.00, 13.15-15.00)
Söderlund (2001, kap 1-2), Ittner & Larcker (2003),
Notani (1998), Oliver (1999), Söderlund & Öhman (2003).
(2) Customer satisfaction as a determinant of loyalty (November 16, 10.15-12.00, 13.1515.00)
Söderlund (2001, s 60-62, s 115-123), Fournier & Mick (1999), Johnson et al (2001), Bitner
et al (1990), Mittal et al (1998), Spreng et al (1996), Spreng & Page (2001), Winsted (2000).
(3) The satisfaction-loyalty link (November 23, 10.15-12.00, 13.15-15.00)
Söderlund (2001, kap 3-5), Dowling & Uncles (1997), Fornell (1992), Jones & Sasser (1995),
O’Brien & Jones (1995), Söderlund & Öhman (2003).
(4) Consequences of loyalty (November 30, 10.15-12.00, 13.15-15.00)
Söderlund (2001, kap 6-7), Anderson et al (1994), Ittner & Larcker (2003), Reichheld &
Sasser (1990), Reichheld (2003).
(5) Reflection (January 18, 10.15-12.00, 13.15-15.00)
Presentation of course papers.
Examination
Select one of the modules as a focus, read the literature for the module (se above), identify
four other relevant articles, and use this literature to write a first draft of a critical journal
article in which your objective is to address an important gap in the existing knowledge with
regard to the area covered by the module. This draft contains a carefully crafted introduction
and a theory part – and a research method part covering the method you would use to address
the selected void. Hand in your article draft to Magnus Söderlund (no later than 12.00, 11
January, 2007).
Teacher
Magnus Soderlund is associate professor at Stockholm School of Economics (SSE) and head
of the Center for Consumer Marketing at SSE. E-mail: (Magnus.Soderlund@hhs.se,
telephone 08-736 9541, room C711.
Literature
1. Book
Söderlund M, 2001, Den lojala kunden, Liber Ekonomi, Malmö.
2. Articles
Anderson EW, Fornell C & Lehmann, 1994, Customer Satisfaction, Market Share, and
Profitability: Findings from Sweden, Journal of Marketing, Vol. 58, July, 53-66.
Bitner MJ, Booms BH & Tetreault MS, 1990, The Service Encounter: Diagnosing Favorable
and Unfavorable Incidents, Journal of Marketing, Vol. 54, January, 71-84.
Dowling GR & Uncles M, 1997, Do Customer Loyalty Programs Really Work?, Sloan
Management Review, Summer, 71-82.
Fornell C, 1992, A National Satisfaction Barometer: The Swedish Experience, Journal of
Marketing, Vol. 56, January, 6-21.
Fournier S & Mick DG, 1999, Rediscovering Satisfaction, Journal of Marketing, Vol. 63,
October, 5-23.
Ittner CD & Larcker, 2003, Coming Up Short on Nonfinancial Performance Measures,
Harvard Business Review, November, 88-95.
Johnson MD, Gustafsson A, Andreassen TW, Lervik L & Cha J, 2001, The evolution and
future of national satisfaction index models, Journal of Economic Psychology, Vol. 22, No. 2,
217-245.
Jones TO & Sasser E, 1995, Why Satisfied Customers Defect, Harvard Business Review,
November-December, 88-99.
Mittal V, Ross WT & Baldesare PM, 1998, The Asymmetric Impact of Negative and Positive
Attribute-Level Performance on Overall Satisfaction and Repurchase Intentions, Journal of
Marketing, Vol. 62, January, 33-47.
Notani AS, 1998, Moderators of Perceived Behavioral Control’s Predictiveness in the Theory
of Planned Behavior: A Meta-Analysis, Journal of Consumer Psychology, Vol. 7, No. 3, 247271.
O’Brien L & Jones C, 1995, Do Rewards Really Create Loyalty?, Harvard Business Review,
May-June, 75-82.
Oliver RL, 1999, Whence Consumer Loyalty?, Journal of Marketing, Vol. 63, Special Issue,
33-44.
Reichheld FF & Sasser, 1990, Zero Defection: Quality Comes to Services, Harvard Business
Review, September-October, 105-111.
Reichheld FF, 2003, The One Number You Need, Harvard Business Review, December, 4654.
Spreng RA, MacKenzie SB & Olshavsky RW, 1996, A Reexamination of the Determinants of
Consumer Satisfaction, Journal of Marketing, Vol. 60, July, 15-32.
Spreng RA & Page TJ, 2001, The Impact of Confidence in Expectations on Consumer
Satisfaction, Psychology & Marketing, Vol. 18, No. 11, November, 1187-1204.
Söderlund M & Öhman N, 2003, Behavioral Intentions in Satisfaction Research Revisited,
Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, Vol. 16, 53-66.
Winsted KF, 2000, Service behaviors that lead to satisfied customers, European Journal of
Marketing, Vol. 34, No. 3-4, 399-417.