The Importance of customer loyalty in service industry and the role of relationship marketing developing customer loyaty: An application in banking industry

ABSTRACT In this study, it was examined the importance of customer loyalty in highly competitive service and banking industries and the roles of marketing strategies, variables and especially relationship marketing in developing customer loyalty. Customer loyalty is very important in service industry. Loyal customers are to have direct impact on profitability, demonstrate immunity to the competition and competition tools, be tolerant to service failures, lead positive word-of-mouth communication for attracting new customers. Moreover, customer loyalty and long- term relationships with loyal customers can't be imitated easily from the rival companies in short-term so it provides long term competitive advantage to service companies. Therefore, companies and especially service companies must develop long-term relationships with existing customers for developing customer loyalty and attach importance to marketing strategies and variables affecting its developments. The thesis consists of five chapters. In the first chapter; service marketing problems resulting from service characteristics, in the second and third chapters; customer loyalty and the role of marketing strategy and other variables (reasons why customer are loyal) developing customer loyalty, in the fourth chapter; the relationship between customer loyalty and relationship marketing in the service and banking industries, in the last chapter; two surveys conducting banking companies and customers in Turkey are discussed. In the banking survey; marketing strategy of banks and the importance of customer loyalty and relationship marketing in their marketing strategies, in the customer survey; loyalty towards banks, variables affecting bank loyalty and impact of relationship marketing to customer loyalty are determined. In the customer survey, relationship marketing was found to have positive and important role on developing loyal bank customers. Relationship marketing tools were found to impact fourth and fifth variables affecting developing loyal bank customer after transaction cost (interest rate), bank image (and reliability), service quality. Taking into consideration that banks offered similar transaction cost, interest rate and service quality, customer loyalty with developing relationship marketing approach provided very important long-term competitive advantage to service companies. VII