Building Customer Loyalty: A customer experience based approach in a tourism context

In light of the challenges facing the Irish tourism industry, Failte Ireland (TPDS report) emphasises that the future success of tourism enterprises relies upon delivering a ‘unique and complete holiday experience’. In addition, it has recognised that the underpinning critical success for the tourism industry is building customer loyalty through the creation of the total customer experience. A review of the literature indicates a general consensus that quality, value and satisfaction are major determinants of customer loyalty. However, while much is known about the relationship between the aforementioned variables and customer loyalty, these variables do not fully explain how customer loyalty is built. Therefore, this research study seeks to reduce the existing gap in extant knowledge by identifying and examining a new determinant of customer loyalty – the customer experience. The overarching objective of this thesis was to examine the relationship between customer experience and customer loyalty. Indeed, both customer relationship management (CRM) and brand literature indicate that loyalty-building is found in the customer’s experience with the product/service, hence it is perceived that a fundamental key to building customer loyalty is the successful management of each individual customer’s experience. The customer experience has been defined as involving three components: functional clues, humanic clues, and mechanic clues. Each one of these clue sets have been investigated individually in relation to their impact on loyalty. Based on the literature, the relationship between customer experience and loyalty in this study has been hypothesised to H1. There is a direct relationship between functional clues and loyalty. H2. The relationship between functional clues and loyalty is mediated by the variables - value and quality. H3. There is a direct relationship between mechanic clues and loyalty. H4. The relationship between mechanic clues and loyalty is mediated by value and quality. H5. There is a direct relationship between humanic clues and loyalty. H6. The relationship between humanic clues and loyalty is mediated by value and quality. The study utilised two phases of data collection – an initial qualitative phase followed by a second phase involving a quantitative methodology. The study collected data from both sides of a dyad: key informants from the hotel industry and the hotels’ customers. The study involved assessing three and four star hotels in the cities of Waterford, Wexford and Kilkenny in the South East region of Ireland. The data was analysed using Nvivo (N7) and the Statistical Package for Social Science (SPSS V.15). The qualitative phase of the study involved in depth interviews with hotel key respondents. This provided the necessary information to create a detailed blueprint of the customer hotel experience based on four critical stages and on each of the experience clues – functional, mechanic and humanic. Indeed, this was a major outcome of the qualitative phase and informed the development of the customer survey in the second quantitative phase. The quantitative phase revealed that the relationship between the functional and mechanic clue sets and loyalty is totally mediated by the value and quality variables. The relationship between the humanic clue set and loyalty was both direct and indirect; the indirect relationship was mediated through value and quality. Due to the lack of research and interest in this area, this study not only contributes substantially to extant academic knowledge, but also makes a significant contribution to tourism practice. Ultimately it bridges the knowledge gap by conceptualising customer loyalty through identifying a number of key determinants. Hence, a major theoretical contribution of this thesis is the fact that it both synthesises and builds on extant efforts to conceptualise and build loyalty. The main practical implication is that it provides best practice guidelines for building customer loyalty through the customer experience. Indeed, for destination managers it highlights the importance of focusing on each of the experience clues - functional, mechanic and humanic - in order to create the total customer experience, a key determinant in building customer loyalty. Furthermore, this study also offers a methodological contribution of data collection in the form of blueprinting – a critical technique in illustrating the customer experience process. While this technique has been in existence for the last twenty years, it has not commonly utilised. Therefore, this study offers a guideline for future researchers in terms of this data collection technique.