Loyalty is a philosophy of leadership that seeks mutually beneficial management of the relationship
between the enterprise and its stakeholders (Finnie and Randall, 2002; Hart and Johnson, 1999). Higher
customer retention (5%) results in a significant rise in profitability and business growth. The higher
profitability derives from the basic profit associated with all activities, a rise in sales to each customer,
economies generated as a result of improved reciprocal understanding between the customer and
business, new customer recommendations by loyal customers, and bigger profits resulting from the
lesser tendency of loyal customers to make purchases on the basis of price alone (Reichheld, 1996).
There are three types of key principles governing customer loyalty (Bhote, 1996). First, there are the
matters of ethics and uncompromising integrity, mutual trust, openness and access to information. Then,
there is a need to ensure closeness to the customer, allowing the customer to “coach” the business and
demonstrating true interest in the customer after the sale has been consummated. Finally, there is a need