Social Media Influencing Customer Loyalty

 

Sameer Jan Bhat¹*, Sadaf Firdous²

¹The Business School, University of Kashmir, Kashmir

²Centre for Management Studies, Jamia Millia Islamia, New Delhi

 

ABSTRACT:

With emergence of social networking, marketers are keen to utilize the best possible benefits of the social media to gain competitive advantage. The rise of social media has altered the way people communicate, interact and most importantly the purchase decisions. As more people use social media, business must use social media both target their audience and increase productivity. However, the things that make social media so attractive to users are the personalization, the ease of access, the ease with which information is shared and the real time nature of the medium. This encourages the marketers to explore the social media at their best. This study thus aimed to investigate how social media influences the customer loyalty.  The study reports that the social media directly influence the customer loyalty and have an indirect influence through several intermediating variables. Those variables include customer relationship, brand awareness, positive word of mouth, and new ideas. The intermediating variables apart from direct influence on customer loyalty are revealed to have considerable positive role in mediating the relationship between Social Media and customer loyalty. The study also furnishes a conceptual model showing the relationship of the variables and their impact making it more lucid for the researchers and practitioners.

 

 

 

1. INTRODUCTION:

Twentieth century as changed the way companies do their business. Researchers relate these changes with the advent of the internet. (Ainin and Noor Ismawati 2003). The swiftness of innovation increases day-by-day, and this era has the highest rate in the speed of the development of technology in comparison with any previous era. Undoubtedly, usage of the Internet and computer has an important influence on this issue.

 

Nowadays, we can easily see that for many people use of the Internet and computer devices, smart phones as well as emails and logging on to social media sites like Face book, LinkedIn or twitter has become an essential daily need (Raad, Yeassen et al. 2010). To remain competitive, companies work on building strong relationships with their customers known as relationship marketing. Berry (1983) defined relationship marketing as “attracting, maintaining and enhancing customer relationships”. Initially, there was one way of marketing practices, but because of the social media the trend has changed. Social media is different from traditional media, since the communication runs both ways instead of one-way. The two-way aspect makes it possible to start conversations between multiple parties (Miller, 2011). Hanna et al. (2011) concluded that social media must be used in addition to traditional media in their marketing activities. Meadows-Klue (2008) argues: “Relationship marketing for the Facebook generation demands both thinking and acting differently”. Social media have gained popularity the last few years in the travel industry.  Developments in information technology have led to new possibilities for communication in the travel industry. Social media are becoming more and more important and experts in the professional sector are recommending the travel trade to actively anticipate to it (Travel Magazine, 2011b; Travel Magazine, 2011c). Several benefits of social media for the travel trade are suggested, like customer relationship, creating brand awareness, positive word of mouth, new ideas and creating customer loyalty (Travel Magazine, 2011a). Kasavana et al. (2010) support this, saying that social networking can assist in improving customer loyalty and satisfaction. To achieve goals like these, the use of social media need to respond to customer’s needs (Hekkert, 2011).

 

2. CUSTOMER LOYALTY:

According to Hennig-Thurau et al. (2002), customer loyalty is an important relationship marketing outcome. Relationship with customers increases customer satisfaction and loyalty (Reynolds and Beatty, 1999; Berry and Parasuraman, 1991; Czepiel, 1990). Keller (1993, cited in Anderson and Srinivasan, 2003, p.125) defines loyalty as “a favourable attitude for a brand manifested in repeat buying behaviour”. Loyalty relationships between tourists and a service provider are often described by trust, commitment and satisfaction. Two key dimensions of loyalty exist in the literature. On the one hand there is behavioural loyalty and on the other hand there is attitudinal loyalty (Anderson and Srinivasan, 2003; Hallowell, 1996; Pritchard et al., 1999). Behavioural loyalty can be characterized by repeat purchases from one particular supplier, an increase in scale and/or scope of the relationship and by recommendations given. Attitudinal loyalty is about feelings customers have creating a sort of attachment to a particular product, service or organization and this is solely cognitive (Hallowell, 1996). Customer loyalty forms an important basis for the development of sustainable competitive advantage (Dick and Basu, 1994), because loyal customers have several benefits in comparison with ordinary customers. First of all, they can cause an increase in revenues for a firm. Second, often they purchase more additional goods and services (Gwinner et al., 1998). Moreover, retaining a customer is less expensive than to attract a new one, due to less sales and marketing costs (Conze et al., 2010; Hennig-Thurau, 2002; Gwinner et al. 1998; O’Reilly and Paper, 2009). Health (1997) argues that loyal customers may yield up to ten times more than average customers.

 

 

3. SOCIAL MEDIA AND CUSTOMER LOYALTY- A FRAMEWORK:

Social Media is assumed to have a positive impact on the customer loyalty. This positive impact will be reflected on the employee trust, commitment and satisfaction. The framework highlights that the social media directly influence the customer loyalty and have an indirect influence through several intermediating variables. Those variables include customer relationship, brand awareness, positive word of mouth, and new ideas. The intermediating variables apart from direct influence are revealed to have considerable positive role in mediating the relationship between Social Media and customer loyalty. The study also furnishes a conceptual model showing the relationship of the variables and their impact.

 

Fig 1.  Direct and indirect influence of social media on sales volume and customer loyalty

 

 

Consequently following hypothesis is assumed:

H1: social media has positive impact on customer relationship, brand awareness, positive word of mouth and new ideas

H2: Customer relationship, brand awareness, positive word of mouth and new ideas has positive impact on customer loyalty 

H3: Social media has positive impact on Customer loyalty

 

4. METHODOLOGY:

Present study was carried out to establish the relationships between two dimensions, i.e., social media and customer loyalty. The primary data was collected from several tour operators operating in the Kashmir.  Srinagar, Ganderbal, Pulwama was considered as various strata and proportionate stratified sampling procedure was used. Operators were asked to respond the questionnaire to analyze the social media impact on customer loyalty. The sample size was 100 operators.  Lickert’s 5-point scale was used to measure the various dimensions wherein respondents were asked to state their agreement and disagreement level with items

 

5. ANALYSIS AND RESULTS:

The present analysis attempts to assess how social media influences customer relationship, brand awareness, positive word of mouth, and new ideas with the help of path coefficients. In the same way the impact of each intermediating variables on customer loyalty is again assessed through path analysis.

 

Impact of social media on customer relationship, brand awareness, positive word of mouth and new ideas

It has been observed that there is a significant impact of social media on customer relationship, brand awareness, positive word of mouth and new ideas

 

Table 1: Impact of social media

Independent		Dependent
		Customer Relationship	Brand Awareness	Positive word of mouth	New ideas
	Social media	0.21**	0.13***	0.14***	0.16*
	R2	0.18	0.15	0.11	0.12

Note * <.001 ;**< .01;*** <.05.

Source: Data collected by the authors for this study

 

 

The results show that the Social media influences Customer Relationship (b = 0.21, p <.01), Brand Awareness (b = 0.13, p <.05), Positive word of mouth (b = 0.14, p<.05) and New ideas (b = 0.16, p <.001). Taking together the results, it is justified to accept the H1 that social media has positive impact on customer relationship, brand awareness, positive word of mouth and new ideas

 

Customer relationship, brand awareness, positive word of mouth and new ideas has positive impact on customer loyalty

 It is inferred from the statistics in the Table 2 that Customer relationship, brand awareness, positive word of mouth and new ideas has positive impact on customer loyalty  The estimated R² confirms the influence of about 26% in Customer loyalty. . It is evident that customer Relationship is the most powerful variable (b=0.16, p<.001) that influence the customer loyalty followed by the Positive word of mouth (b=0.15, p<.01) and new ideas (b=0.11, p<.001)

 

Table 2: Impact on customer loyalty

Independent  Variables		Dependent Variable
		Customer Loyalty
	1. Customer Relationship	0.16***
	2. Brand Awareness	0.11*
	3. Positive word of mouth	0.15**
	4. new ideas	0.13**
	R2	0.26

Note * <.001 ;**< .01;*** <.05; and ns not significant.

Source: Data collected by the author for this study

 

 

Thus in view of the statistics in Table 2, it can be safely concluded that the H2: Customer relationship, brand awareness, positive word of mouth and new ideas has positive impact on customer loyalty 

 

Impact of Social media on Customer loyalty

On evaluating the casual relationship between Social Media and customer loyalty both the direct and indirect impacts are calculated and reflected in Table 3

 

Table 3- Impact of Social media on Customer loyalty

	Customer Loyalty (Dependent Variable )
	Direct effect	Indirect effect	Total effect
Social Media	0.171*(45%)	0.185*(55%)	0.374*

Note: * significant at p <.01; ** significant at p < .05

 

 

DISCUSSION AND CONCLUSIONS:

The present study has highlighted the importance of social media for customer loyalty by examining into the causal relationship between social media and intermediating variables and their relationship with the customer loyalty. The present study clearly validates the impact of social media and customer loyalty. The intermediating variables apart from direct influence on customer loyalty are revealed to have considerable positive role in mediating the relationship between Social Media and customer loyalty. The impact is indicative of the fact that the social media has a potential of bringing certain changes in the behavior of the customers. This impact was the basis of the hypothesis which was justified by the analysis of the study.

 

REFERENCES:

Anderson, E. W. (1998). Customer Satisfaction and Word of Mouth. Journal of Service Research, 1(1), 5-17.

Anderson, R. E. and Srinivasan, S. S. (2003). E-Satisfaction and e-Loyalty: A Contingency Framework. Psychology and Marketing, 20(2), 123-138.

 Beatson, A. Lings, I. and Gudergan, S. (2008). Employee Behavior and Relationship Quality: Impact on Customers. The Service Industries Journal, 28(2), 211-223.

Benner, J. (2009). The Airline Customer Loyalty Model - A relational approach to understanding antecedents of customer loyalty in the airline industry.

Berry, L. L., Parasuraman, A. and Zeithaml, V. A. (1991). Understanding Customer Expectations of Service. Sloan Management Review, 32(3), 39-48.

 Conze, O., Bieger, T., Laesser, C. and Riklin, T. (2010). Relationship Intention as a Mediator between Relational Benefits and Customer Loyalty in the Tour Operator Industry. Journal of Travel and Tourism Marketing, 27, 51-62.

 Chang, Y. and Chen, F. (2007). Relational Benefits, Switching Barriers and Loyalty: A study of Airline Customers in Taiwan. Journal of Air Transport Management, 13, 104-109.

 

 

 

Accepted on 12.06.2017          © A&V Publications all right reserved