Estimating User Loyalty in Social Networking Services

Estimating User Loyalty in Social Networking Services

Evangelos Grigoroudis (Technical University of Crete, Greece), Vassilios Fortsas (Technical University of Crete, Greece), Petros Pallis (Technical University of Crete, Greece) and Nikolaos Matsatsinis (Technical University of Crete, Greece)
DOI: 10.4018/978-1-4666-5129-6.ch010
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Abstract

In the last few years, customer loyalty for products and services has become an object of extensive studies from researchers of various scientific fields. Its importance is justified from the fact that, in many cases, particularly in strong competition conditions, measuring customer satisfaction does not provide a reliable quality performance indicator for business organizations. According to recent research, loyalty is defined as a positive level of customers’ commitment, which should not be based only in previous purchases (repeated or not) of a product/service. This chapter presents the development of a multicriteria methodology aiming at measuring user loyalty in social networking services and estimating the importance of influencing factors. In this context, a multicriteria analysis approach is adopted in order to measure user loyalty, assuming that the overall commitment depends on a number of criteria. The applied multicriteria approach is based on the UTADIS method, and the presented results confirm the strong relation between user satisfaction and loyalty. The results, however, reveal also that satisfaction is a necessary but not a sufficient condition for customer loyalty.
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Introduction

Modern research considers customer loyalty as the main outcome of customer satisfaction, while the positive relationship between customer loyalty and profitability is emphasized in numerous studies. This relationship is justified by the reduced marketing costs, the increased sales and the reduced operational costs. As noted by Reichheld & Sasser (1990), loyal customers are less likely to switch because of price and they make more purchases. In particular, loyal customers increase sales by purchasing a wider variety of the products and by making more frequent purchases, while they also cost less to serve, in part because they know the product/service and require less information. In addition, loyal customers may promote the business organization, since they can provide strong word-of-mouth, create business referrals, provide references, and serve on advisory boards.

In this context, studying customer satisfaction and loyalty reveals that their relationship is not straightforward (Grigoroudis & Siskos, 2010). Several researchers urge that customer satisfaction is not able to provide a reliable measure for the performance or the quality level of a business organization, particularly in a highly competitive environment. Instead, they suggest that measuring customer loyalty may give a better understanding of consumer behavior in terms of repeated purchases, and thus improve corporate financial results (Stewart, 1995).

Although, customer loyalty and satisfaction are strongly related, they are not identical. Previous research efforts have found that (Griffin, 1995; Vandermerwe, 1996; Oliver, 1997; Hill & Alexander, 2006):

  • Customer satisfaction and loyalty are strongly related; however their relation is rather nonlinear.

  • Loyalty is considered as the main consequence of customer satisfaction.

  • Satisfaction is a necessary but not a sufficient condition for customer loyalty.

On the other hand, social network services (SNSs), such as Facebook, Flickr, Google+, MySpace, and Twitter, are platforms offering connecting opportunities to people. A social network is used for people to get to know each other and to create new friends/connections, while they also use it to share things with others. According to Boyd and Ellison (2008), a SNS is a web-based service that allows individuals to:

  • 1.

    Construct a public or semi-public profile within a bounded system.

  • 2.

    Articulate a list of other users with whom they share a connection.

  • 3.

    View and traverse their list of connections and those made by others within the system.

The nature and nomenclature of these connections may vary from site to site. Currently, however, there are hundreds of SNSs with various technological affordances, which support a wide range of interests and practices. These SNSs have attracted millions of users, many of whom have integrated these sites into their daily practices.

Based on the previous, the importance of SNSs in modern marketing management has been widely recognized by business organizations, since SNSs may easily offer a relatively reliable communication channel between a company and its customers (current and potential). For this reason, previous research efforts have focused on exploiting SNSs in order to increase customer satisfaction and loyalty. The most characteristic example is the incorporation of SNSs in customer loyalty programs offered by numerous companies. In addition, other studies have examined customer loyalty in various Internet contexts. However, only limited research efforts have studied user loyalty for SNSs, with most of them focusing on conceptualizing and empirically validating either theoretical customer loyalty models or the determinants of customer loyalty for SNSs (Gu et al., 2010).

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