Testing Dick and Basu's Customer Loyalty Model

Abstract

A widely cited model of customer loyalty is the typology proposed by Dick and Basu (1994) that depicts loyalty as a two-dimensional construct involving relative attitude and repeat patronage. However, while Dick and Basu conceptualise the loyalty construct, they do not operationalise it or provide empirical evidence of its predictive ability. This paper reports a test of the predictive ability of Dick and Basu's model in personal retail banking. The study is a replication of East, Sinclair and Gendall's (2000) research on loyalty in supermarket shopping, from which these authors concluded there was little support for Dick and Basu's loyalty typology. Our study found that, in some circumstances relative attitude was a better predictor of bank loyalty than banking behaviour, while in others share of wallet (a proxy measure for repeat patronage) was better. Like East et al. (2000), we found no evidence that the prediction of customer loyalty was enhanced by the inclusion of a term for the interaction between attitude and behaviour. Nevertheless, our findings suggest that Dick and Basu's model may have some validity in subscription-type markets, like banking, where brand portfolios tend to be small and customer churn rates are relatively low.