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Drivers of Loyalty, Hsieh 2005

4 important questions on Drivers of Loyalty, Hsieh 2005

How do we call the hierarchy in which the drivers of loyalty have been structured?

Hierarchy relational bonds.

Shortly explain the Hierarchy Relational Bonds

Financial bonds = discount/price incentives or rewards/gifts that are main drivers for relationship;
Social/emotional bonds - by brand, recognition on individual/group level or other consumers/users. Social bonds are created over time (part of business class lobby);
Structural bonds = added value you get because of the relationship which will be gone when relationship is severed.

What are the positive and negative effects that make up for the Structural bonds because both the firm and customer have to invest? Also referred to as the Golden Cage effect.

Positive = added value (personalised recommendation of Netflix or priority lane for business class);
Negative = high switching costs thus reason to stay but you actually want to leave.

Findings of the Hsieh article with regards to the type of product and the type of tie that suits it best.

Financial bonds = the more tangible the product, search products - have a positive impact on customer commitment;
Social bonds = positive impact on customer commitment for all three types of goods/services (search products, experience goods and credence goods);
Structural bonds = positive impact on customer commitment and more important for credence and experience goods than search.

The question on the page originate from the summary of the following study material:

Relationship Equity W5 KC5

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