How Can Personalized Online Services Affect Customer Loyalty: The Relationship Building Perspective

Personalization that uses information technology to tailor content and products/services to the preferences and tastes of individual customers has become a useful function in online relationship marketing. Many techniques have been developed, and research on personalized services has increased substantially in recent years. The objective of this research is to propose a relationship-building perspective that treats the relational benefits resulting from personalized services as the important mediated factors that affect customer loyalty. Both cognitive benefits and affective benefits are included in order to investigate their relative influences. In this study, a controlled laboratory experiment was conducted to investigate how different tactics of personalization on a website affect customer loyalty. There are three tactics for designing website personalization, including social ness, self-reference, and content relevance. The results showed that personalized services can contribute to customer loyalty by bringing relational benefits to customers, and the impact of affective benefit on customer loyalty is greater than that of cognitive benefits. The findings extend our existing understanding of personalization, and offer valuable information to practitioners on enhancing their website design.