Title: Differential model of customer loyalty evolution as loyalty forecasting tool

Authors: Michael Vigdorowitsch

Addresses: Angara GmbH, Düsseldorf, Germany; All-Russian Scientific Research Institute for the Use of Machinery and Oil Products in Agriculture, Tambov, Russia

Abstract: The paper introduces a differential model of customer loyalty evolution which enables one to construct solutions, based on hypotheses and incorporated sub-models of factors affecting the loyalty. We consider first heuristically a differential equation holding the balance between selected factors affecting one another (functionality, quality, and price) and are related to the notion customer loyalty. Such an equation classified as the first integral ('the first way to solution') in the theory of differential equations enables one to rigorously analyse it and construct hypothesis-driven solutions. A special (simplified) case is considered to demonstrate how the approach works. The model allows to construct solutions depending on particular representations of functionality, quality and price impacts. Serving as a prototype of a corporate tool, the model is shown with simple examples to generate the loyalty evolution forecasts. It is especially useful with further adaptation for practitioners and those who have commitment to integrated corporate management solutions.

Keywords: customer loyalty; satisfaction; service functionality; service quality; loyalty depreciation.

DOI: 10.1504/IJSOM.2024.141995

International Journal of Services and Operations Management, 2024 Vol.49 No.2, pp.161 - 174

Received: 26 Mar 2022
Accepted: 01 Jul 2022
Published online: 07 Oct 2024 *

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