Application of Latent Class Analysis to the Investigation of Customer Loyalty in Service Companies

Abstract

Loyalty as a strategic goal presents important returns for the organization. The existence of a base of loyal customers shields the company against actions from competitors, thus, ensuring medium- and long-term survival. Unfortunately, detection of truly loyal customers is not an easy task. Current research has clearly shown that the so-called direct or behavioral measurements (Berné, 1997; Jacoby & Chesnut, 1978) are not sufficient for this purpose, given that they can lead to identifying as loyalty patterns of repetitive purchasing that do not imply a real commitment to the service providers. It has also been shown that indirect measurements (Berné, 1997) can lead to interpreting as loyalty attitudes and intentions that never materialize in a real purchasing pattern. In our view, both approaches should be combined to reach the goal of detecting and describing different segments of consumers according to their loyalty to the service provided. The most important finding of this research focuses on the identification of different levels of loyalty, based on the attitudinal and behavioral measurements employed. Six different segments of consumers with varying characteristics emerged (true loyalty, latent loyalty, superficial loyalty, repetitive purchasing, forced loyalty and absence of loyalty).