Loyalty can be considered a significant outcome of CRM. Oliver (1999, p. 34) defined loyalty as “a deeply held commitment to rebuy or re-patronise a preferred
product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behaviour”. Customer loyalty has become one of the
significant research areas in the field of marketing (Buttle, 2009). It is considered a key determinant of long-term business success (Shirin & Puth, 2011). The loyalty of the customer is evident when the consumer continues to purchase the same brand, and does not consider purchasing any other brand (Hong, Lee, Lee, & Jang, 2009). Research highlights numerous benefits of loyal customers such as repeat purchasing, increasing the
number of purchases (Malthouse & Blattberg, 2005) and customer retention (Hallowell, 1996; Kandampully & Suhartanto, 2000).
Behavioural and attitudinal dimensions are the two key measures of loyalty (Dick & Basu, 1994). Shirin & Puth (2011) considered behavioural loyalty to be a predictor of attitudinal loyalty. However, they also recommend that attitudinal and behavioural loyalty be treated separately. Baloglu (2002) contends that behavioural loyalty is measured by repeat visitation, word-of-mouth, and voluntary partnerships, whereas attitudinal loyalty comprises of emotional attachment, trust, and commitment. Shirin & Puth (2011) assert that customer satisfaction, perceived value, and brand trust is strongly linked in with the concept of attitudinal loyalty.
Combining the attitudinal and behavioural dimensions, Dick and Basu (1994) classified customers into four groups: true loyalty, spurious loyalty, latent loyalty, and no loyalty. True loyals reflect a high repeat patronage and high level of attitude towards the organisation. Even though spurious loyals have a high level of repeat patronage, their relative attitude towards the organisation remains low. Latent loyals have a high relative attitude but a low patronising rate. Those who have low relative attitude and low repeat patronage are referred to as no loyals. Repeat patrons who lack the attitudinal component are also referred to as inertial loyals (Zikmund et al., 2003).
As pointed out by Bowie and Buttle (2004), generating repeat visitation and word-of- mouth (they refer to it as referral sales) is crucial for most hospitality marketers. In the hotel industry, researchers have measured behavioural loyalty exclusively through repeat visitation and word-of-mouth to determine the effectiveness of numerous stimuli (Choi & Chu, 2001; Clemes, Gan, & Ren, 2010; Matzler, Renzl, & Rothenberger, 2006; Wilkins et al., 2009). Considering its wide adaptation and the importance, in this study the outcomes of CRM were measured through repeat visitation and word-of-mouth.
Repeat visitation and loyalty is often referred to interchangeably. However, it is only a surface level reference rather than a conceptual one (Shirin & Puth, 2011). Bowie and Buttle (2004) pointed out the numerous benefits of repeat visitors to a hotel. According to Bowie and Buttle (2004) repeat customers are familiar with the booking systems and know what to expect from the service and are even familiar with the location of the hotel. Thus, repeat customers are expected to be less costly than new customers due to their
familiarity with the service operations. Repeat customers are regarded as influential in making other people visit through WOM (Bowie and Buttle, 2004).
Repeat visitation is extensively discussed at the destination level (See Alegre & Cladera, 2009; Gitelson & Crompton, 1984; Oppermann, 1998; Wang, 2004). Gitelson and Crompton (1984) identified numerous factors that motivate repeat visitation, such as: reduction of the risk of an unsatisfactory experience, assurance of finding the type of people the travellers prefer, an emotional childhood attachment, experiencing some aspect of the destination that could not be experienced in previous visits, and to introduce others to the experience. Wang (2004) studied visitors to Hong Kong. They identified that repeat visitors spend more time shopping, having meals outside and hotel and using local transport and hotels compared to first time visitors. Despite wide scholarly interest in the repeat visit phenomenon in the destination context, hotel consumption choices of repeat visitors seem to receive scant attention.
The common convention implies that customer satisfaction leads to repeat visitation. Nevertheless, the relationship between the two constructs still remains subject to much discussion. Some studies have shown a positive relationship to satisfaction, and repeat visit intention (Choi & Chu, 2001; Kozak, 2001), while others have shown that satisfaction does not necessarily result in repeat visit intention (Rittichainuwat, Qu, & Leong, 2003; Um, Chon, & Ro, 2006; Weaver, Weber, & McCleary, 2007). Therefore, the question as to “why satisfied customers switch” has been discussed in the literature extensively (Jones & Sasser, 1995; Jung & Yoon, 2011; Sánchez‐García et al., 2012; Skogland & Siguaw, 2004).
Word-of-mouth is also used to determine behavioural loyalty (Duhan, Johnson, Wilcox, & Harrell, 1997). It is considered the oldest way of communicating opinion on purchases made by consumers (Goyette et al., 2010). Word-of-mouth can be defined as “tourists
telling their friends about the wonderful time they had” (Prentice, 2004, pp. 923-924): “.
Word- of-mouth is considered the most cost effective form of customer acquisition (Bowie & Buttle, 2004; Duhan et al., 1997). Bowie and Buttle (2004) attribute the trust worthiness of word-of-mouth due to the recommendation being generated from a known party.
In modern days, word-of-mouth is more viral in nature. For example, travellers communicate among their circle of friends and family and with the entire world through
social media (Goyette et al., 2010). Therefore, most travel decisions are now influenced by e-WOM, which has now developed into a separate field called ‘viral marketing’ which can be defined as “a rapidly spreading informal online communication between
individuals regarding a service or a good” (Goyette et al. , 2010, p. 9). Due to the
importance of both conventional word-of-mouth, and viral marketing, word-of-mouth in this study is measured through both dimensions.
Word-of-mouth is considered particularly important for hotels (Litvin, Goldsmith, & Pan, 2008). Its importance to hotels is mainly due to the intangible nature of the hotel product and the difficulty in evaluating it prior to purchasing (Lu, Ye, & Law, 2014). The highly competitive nature of the market and the plethora of options available to the customer also make word-of-mouth more important, because in such situations customers tend to rely more on recommendations of known parties (Sparks & Browning, 2011).
Due to the popularity of social media, much of the research on word-of-moth in the hotel domain focuses online word-of-mouth (See Lu et al., 2014; Ye, Law, Gu, & Chen, 2011). Adding to this increasing interest, Litvine et al. (2008) investigated online hotel reviews and business performance and found that online reviews have a significant impact on online hotel sales, since reviews reduce uncertainty and risk.