Importance of customer loyalty in service sector

by Maryam Iqbal

Since many years, it has been witnessed that customer loyalty remains the major concern for the businesses in Pakistan. The reason behind this is the only focus on customer satisfaction and ignorance towards the importance of the customer loyalty or customer retention. If we look at the contribution of service sector in Pakistan, the GDP is increasing day by day by this sector. According to the economic survey of Pakistan 2017-18-19, service sector is contributing 60% to the total GDP of Pakistan.

Despite the huge contribution of service sector in the overall GDP of Pakistan, this sector is still facing big challenges in terms of the customer loyalty. It has been continuously witnessing major decline in customer loyalty especially in the service sector of Pakistan. Unfortunately, very little efforts have been made to solve the issues related to customer loyalty in Pakistan. Even today, service industries like banks, airlines, telecommunication, restaurants etc. are facing continuous decline in customer loyalty.

Managers in the restaurant industry of Pakistan are unaware of the latest strategies to gain or increase customer loyalty. Due to this issue, sales of many restaurants decrease that directly effects their profitability. This not only causes a decline in their sales but it also makes very difficult for the restaurants to survive. This ultimately causes many restaurants to wind up their operations after spending some time in the market that ultimately leaves the customers with limited options to eat and enjoy. On the other hand, the customers are of the view that restaurants are not actively and strategically seeking or trying to gain their loyalty.

In many developed countries like USA and UK etc. the service sector is contributing around 76-77% to their total GDP. Actually, the trends have changed now; companies need to retain their customers to generate more profits because loyal customer spends five times more as compared to the new ones. By gaining the customer loyalty, business activities may increase and once the business activities go up, it leaves a strong and positive impact on a country’s overall GDP. So, to boost Pakistan’s GDP by enhancing business activities, it is getting necessary for the business organizations in Pakistan to measure the factors which can pull the curve from downward to upward in the customer loyalty.

As compared to Pakistan, companies operating around the globe are investing a lot to gain loyalty among the customers. There are many ways to gain customer loyalty especially in the service sector; some of them are given below: