chapter  11
11 Pages

Should I stay or should I go? The case of loyalty in the UK retail banking industry Dahlia El-Manstrly

The importance of loyal customers is well documented in marketing literature (for example, Jiang and Rosenbloom 2005 , Reichheld 1996 , Narayandas 1998 ). Loyal customers are assumed to spend more, buy more, resist competitors’ offers and recommend the service provider (Gremler and Brown 1999 ). Anderson and Mittal ( 2000 ) suggest fi rms that focus on acquiring new customers, but are unable to retain them, are unlikely to see positive bottom-line results. In contrast, an increase in customer retention can positively impact on profi tability, particularly for those fi rms in highly competitive markets such as fi nancial services (Reichheld and Sasser 1990 , Fornell and Wernerfelt 1987 ). Indeed, a mere two percent improvement in customer retention has been shown to impact on profi tability through a ten percent reduction in overheads (Jamieson 1994 ).