Loyalty business model

The loyalty business model is a strategic management approach in which a company directs its resources toward increasing the loyalty of its customers and other stakeholders, on the reasoning that superior product or service quality drives customer satisfaction, satisfaction builds loyalty, and loyalty in turn drives profitability, because retaining an existing customer costs less than acquiring a new one. The model rests on the strength of the relationship between a company and its customers, shaped by perceived quality, trust and various economic or social bonds, and it has been extended beyond customers to employee and supplier loyalty as part of a self-reinforcing cycle in which satisfied employees help deliver the quality that keeps customers loyal in turn.