Business Psychology - Latest Findings

Article No. 278
Customer Psychology Findings, by James Larsen, Ph.D.

Loyal Customers

New research explores identification as a basis for loyalty and makes a provocative claim.

Loyal customers continue to astound business owners and business researchers alike. They drive past competitors to patronize their favorite businesses. They politely dismiss salespeople from other firms and refuse to listen to their pitches. They thumb past competing ads to find the ads of the businesses they patronize and study them to make purchasing decisions. They don�t even know if the same items could be purchased elsewhere for less. They even help out when they see a need. They may sack their own groceries or pick up items that have fallen from a display.

Businesses with loyal customers thrive. Businesses without them struggle, and everyone involved in business would like more of them.

Michael Ahearne, from the University of Houston, believed that a psychological factor called organizational identification might play a part in creating loyal customers, so he carried out a study to find out if he was right and to learn ways to encourage it. He was successful on both goals. Organizational identification does create loyal customers, and there are actions businesses can take that will encourage this process.

Organizational identification occurs when a customer believes he/she and the business share the same defining attributes, especially when these are attractive and distinctive. For example, regular subscribers of Playboy Magazine could be expected to share Hugh Hefner�s casual, recreational attitudes about sex. For them, purchasing a subscription to the magazine or taking friends to a nearby Playboy Club and exercising their privileges as key club members are actions of self-expression. They fulfill a psychological need to display oneself, to create a public, social, and distinctive self-definition that others recognize and validate.

Avid fans of professional athletic teams are another example of organizational identification. Such fans attend every game, read every word written about their teams, and wear clothing that identifies them with their team and their favorite players. Responding forcefully when faced with adversity is a value they share with their teams, and identifying themselves as fans displays this value to others.

Ahearne studied the process of organizational identification in a sample of physicians who patronized pharmaceutical firms by writing prescriptions, and he discovered that the following conditions lead to identification: 1) frequent contact, 2) the product or service is important for the person, 3) the firm has features in its climate and culture that are attractive to the customer, 4) these features are clear, 5) these features are distinctive and enable the firm to stand apart from competitors, 6) other people who are important to the customer hold favorable views of the firm, and finally, 7) the person who represents the firm (the salesperson) is viewed favorably.

When these factors are present, Ahearne found that customers begin to feel more like insiders in the business than customers, and they commit themselves to the achievement of the firm�s goals.

For example, a local grocery store my wife and I patronize employs mildly retarded adults to sack groceries. By doing so, the firm displays two attractive values: a willingness to help the less fortunate and a belief that the best way to help is by allowing a person to work. As customers, we often help supervise the packing of our groceries, and we offer encouragement to the sacker. This firm displays two values that we find attractive, and it is the only grocery store we patronize.

Ahearne believes that customer contact people offer the best opportunity to display distinctive, attractive qualities that drive organizational identification, and his research backed up this belief. Physicians who had the most favorable view of the salespeople with whom they had contact measured the highest on Ahearne�s measures of organizational identification. This finding suggests that attention to this position may be appropriate. Careful selection, supervision, and training may be well rewarded, and Ahearne suggests that we attend especially to personality, dress, responsiveness, empathy, knowledge, assurance, and reliability.

Ahearne also made a provocative assertion. He believes that competent salespeople will attract loyal customers who will be willing to support the firm through behaviors beyond merely buying the products the firm sells. They will be �willing to take the extra step to support the company� (p.580) through extra-role behaviors, like recruiting new customers, making improvement suggestions, alerting the firm of potential problems, and pointing out opportunities the firm is missing. But they need to be recruited by the salesperson to do so. Ahearne believes this is an unexplored opportunity that firms need to exploit.

Reference: Ahearne, Michaael, C.B. Bhattacharya, and Thomas Gruen (2005) Antecedents and Consequences of Customer-Company Identification: Expanding the Role of Relationship Marketing. Journal of Applied Psychology, 90 (3), 574-585.

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