Chapter 2

Attracting and keeping customers

Richard Cuthbertson and Richard Bell
The attraction and retention of customers consistently tops the list of concerns on the retail CEOs agenda. This considers the management of retailercustomer relationships, which encompasses the often-quoted retailer objective of customer loyalty. The chapter discusses the role of loyalty in retailing and explores some key ways in which retailers seek to create customer loyalty, including the role of private label products, loyalty schemes and multiple channels. The varied factors affecting the outcome of a retailercustomer relationship are discussed, and the implications for retailer strategy and implementation are thus derived.

Customer loyalty
Loyalty is the state of being faithful or steadfast in allegiance to another party, according to the Oxford English Dictionary (1996). Therefore, customer loyalty to a retailer can be dened as existing when a customer chooses to shop in only one store or retail chain for a specic product or group of products. Sheth and Parvatiyar (1995) dene relationship marketing as the ongoing process of engaging in co-operative and collaborative activities and programmes with immediate and end-user customers to create or enhance mutual economic value at a reduced cost. The emphasis on a two-way economic relationship is supported by Woolf (1996) who states great success comes from a marketing strategy based primarily on understanding customer economics and only secondarily on customer loyalty. To the retailer, protable customers appear more important than loyal customers. Hence, this chapter concentrates on the business effectiveness of loyalty