Impact of Customer Loyalty on Organizational Performance

Abstract

This paper utilized a theoretical approach to examine the impact of customer loyalty on organizational performance. The paper identified some benefits of customer loyalty as increase profitability, business growth, enhanced firm effectiveness and reduced cost of operations. Some drivers of customers loyalty identified are: improved product quality, extended warranties, reduction in marketing and service cost, honest and quality feedback, improve brand image. The paper concluded that that customer loyalty is vital for improved organizational performance as sales volume accrued from repeated purchases helps to increase market share and improves profitability of the organization. In addition, customer loyalty intention serves as firm growth strategy and competitive advantage over rivals in the market arena. It is recommended among others that managements should make customer intention a key part of their strategy to achieve organizational growth. Besides, since attraction and retention of customers contributes significantly to overall organization’s performance, managements should ensure that they preset and offer high quality products, and quality service delivery to their customers as these will ensure reduced risks of the customers witching brands to competitions product. In addition, organizations should put in place effective customer’s intention programs such as longer warranties, new ands, and recognitions to enhance their chances of retaining their valuable customers.