The Role of Product Perceived Quality in Building Customer Behavioral Loyalty Across Retail Channels

Abstract

Retail today is increasingly omnichannel. Retailers must drive customer behavioral loyalty (repeat patronage) across channels, so they must do it optimally – no company can be the best at everything. Many other factors, beyond product quality, are required to maximize customer behavioral loyalty across channels. Academia and business seem inconclusive though in explaining which are those winning factors. When the end user of the product is (often) not the buyer, such as in the toys industry, matters complicate further. This study examines these gaps based on an online survey with 785 respondents in an Eastern European country. In offline retail perceived quality beats price, assortment and customer experience in maximizing behavioral loyalty, yet only once price is perceived fair. Being the best in quality and above average in price is the optimal differentiation strategy. Despite everyone talking about customer experience today, it appears to be the least effective factor; in fact, differentiating only in experience appears more damaging to customer loyalty than not differentiating at all. In online retail, being the best in assortment and above average in experience appears to be the optimal strategy; price not only matters the least but differentiating only in price is more damaging than not differentiating at all. Product quality does not appear to play a decisive role for differentiating and building customer behavioral loyalty in online, yet it is a must.