Effect of Public Relation on Customer Loyalty with Special Reference to E-Commerce Portals

AbstractThe business world is changing rapidly, seeing new trends of strategy implementation. Moreover, the Internet provides customers with ample information for whatever they require. This calls for more credibility and transparency from the organizations to attract new customers and maintain existing customer base. With customer acquisition being a costly affair, organizations look at leveraging customer loyalty. This study aims to examine the effect of public relation (PR) on customer loyalty for e-commerce portals. The researchers used questionnaires for data collection, which they distributed to 188 samples comprising of Flipkart, Jabong, and Ebay users - the top thee ecommerce portals in India based on Alexa rankings. Bi-variate correlations identify the relationship between public relation and customer loyalty. The findings indicate public relation has a positive influence on customer loyalty, provided the awareness, reach, and efficiency of the PR activities are high. Low awareness and low efficiency of the PR message do not foster loyalty of any kind. Public relation also has a higher significant relationship with customer loyalty when past good experience with the e-commerce portal acts as a moderating factor.Keywords: public relation, customer loyalty, e-commerce, flipkart, jabong, ebayIntroductionCustomer purchases of various products are on the rise. Alongside, newer products also are entering the market, hoping to gain a good market share. Today, there is cutthroat competition in all markets, and the challenge lies heavily with businesses to create and maintain a cordial relationship with the customers in order to maintain and increase their market share. Public relations (PR) is one such tool to achieve this. The concept of public relations has been evolving over time. In 2011 and 2012, the Public Relations Society of America (PRSA) defined PR as "a strategic communication process that builds mutually beneficial relationships between organizations and their publics" (PRSA, 2012). It is essential for businesses to manage the communication flow effectively with the public to avoid perception gap between the organization and the public.Customer acquisition is a costly affair. Firms spend more than five times as much to obtain a new customer than to retaining an existing one (Kotier & Keller, 2006). According to a study by the global business consulting firm Baines and Company, a 5% increase in customer retention can increase a company's profitability by 75% (1999). Customer loyalty enhances customer retention that results from effective PR services. Loyalty factors are an organization's most reliable success indicators (Zeithaml et al., 1996). Higher customer loyalty implies a higher market share and an ability to demand relatively higher prices, compared to those of competitors (Chaudhuri & Holbrook, 2001). Moreover, loyal customers foster positive word-of-mouth promotion and defy competitors' strategies (Dick & Basu, 1994).Also important is assessing the effectiveness of communication, failing which the effort of the business in executing a PR strategy will not see effective results. This, in turn, would affect the loyalty of the customer toward a product. Equivalent of advertising value has become obsolete in the West and soon will do so in other parts of the world. Reach is the key now. Without standardization, results remain fragmented, and organizations are unable to define return-on-investment. A recent report by the MSL group (MSL Group, 2013) on public relation in India and on 2013 outlook states that measuring the number of media mentions is meaningless. Media measurement should include quality of media coverage (tone, relevance, credibility). Buying behavior is changing rapidly as consumer perceives brands. Therefore, public relations has the ability to measure outcomes by gauging purchase behaviors and decisions, rather than measure outputs. Therefore, this study aims to investigate the effect of public relation on customer loyalty with special reference to e-commerce portals. …