The Effects of Customer Value on Loyalty and Profi

Authors: TingHua Chang JunYen Lee RuHwa Chen

Publish Date: 2008/04/26

Volume: 32, Issue: 3, Pages: 317-

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Abstract

Providing high value products and services to customers normally leads to customer loyalty and profits In practice the relationship of customer value loyalty and profits can be observed in the market However the dynamic interactive relationships which lead to customer loyalty and profits still remain ambiguous In this paper the AgentBased Computational Economics ACE model is introduced to explore the formation of customer loyalty in the Taiwanese imported lumber market Using agents with reinforced learning algorithms in trading simulations the effects of customer value on loyalty and profit are incorporated and examined in this interactive dynamic model As results the positive correlations among variables of customer value loyalty and profits are observed A controlled experiment shows that changing customer value leads to changes in customer loyalty and profits but price is not the determinant factor for improving customer loyalty The R 2 values of customer loyalty and profits elucidate that they are increasing as the time lapsed elongate Providing high value of products and services is a better strategy for suppliers to attract potential loyal customers

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