BSNS 6371 Business Research Method Assignment One Semester 2 2010 Literature Review "Customer Satisfaction"

To: Asoka Guratne

Prepared By: Suliana Julie Moala Due Date: Friday, 20th August 2010

Introduction

Since the world is becoming a global market, 'customer satisfaction' has become a key concern for many businesses. However, there are various drivers of customer satisfaction. The purpose of this literature review highlights some key themes surrounding customer satisfaction such as customer services and customer loyalty. This literature review also determines how businesses can manage and take care of their customers with its service or product as well as ways that they could adopt to increase the lifetime value of their customers. However, evidence from the literature says that the importance of 'customer satisfaction' is varied. The most significant one is businesses cannot survive without customers. Therefore, managers must work closely with their customers to make sure that their customer's requirements is fulfilled and satisfied. In addition, a method of measurement is identified to help organisations to be more succesful and become profitable. Organisation can view the problems of their customer experience, by measuring and manage customer satisfaction and loyalty as well as getting bottom line benefits by improving their services to customers.

Customer Satisfaction Gitman and McDaniel, (2005) meaning for 'customer satisfaction', as a term in business for measuring products and services supplied by a company to meet or surpass their customer's expectation. Therefore, it is seen as a key performance indicator within business and is part of the four of a Balanced Scorecard. As a result, in a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy.

Raimrez, (2010), also defined 'Customer Satisfaction' as a foundation of a good business. According to Kevin, Serenko, Turel, & Wong (2006), believe that customer satisfaction lies at the core of a sequence of relationships, including the antecedents of customer satisfaction which perceived quality and value as well as the consequence of customer satisfaction and loyalty.

The critical issues that concerns in some organizations that effect 'customer satisfaction' include mismanagement, ethics, or bad service to customers. Kumar & Shah, (2004) believe that 1

customer loyalty is one factor that is too simplistic. In the extreme single-minded pursuit of satisfaction may lead to overspending and misallocation of resources. However, in relation, there are some other factors that moderate the association between satisfaction and profitability or the boundary limits of the key strategic relationship (Mittal, et al, 2005) which can lead to the question 'should 'customer satisfaction' be a factor to build profit of the business?'.

Masood & Sharma (2010), suggest that increasing customer satisfaction should not equally reward for all firms. Alan & Basu, (2010) state that customer loyalty becomes more meaningful only when it translates into purchase behavior. Purchase behavior generates direct and tangible returns to the firm as compared to the effects of pure attitudinal loyalty, which may be commitment or trust that does not translate into actual purchase behaviour.

Customer Loyalty Terblanche & Boshoff, (2010) defined customer loyalty as the degree to which customers are predisposed to start with a company and resist competitive offers. As a measure, customer loyalty is the proportion time, a purchaser choose the same product or devices in a specific category. Moreover, it is compared to the total number of purchases made by the purchasers in that category. Tsai, Tsai & Chang, (2010), argue while relations are a central part of loyalty, they alone are not enough to make a customer loyal. Therefore, the process of building customer loyalty is often described using loyalty ladder with five ascending steps of suspect, prospect, customer, client and advocate.

Customer loyalty has been commonly recognized as a valuable asset in competitive markets, and still a major focus for marketing managers in all services industry. Mao, (2010) defined customer loyalty as keeping preferable to a specific product or service. For example, authentic consumers s are paying for the same brand of merchandise, because of its value. The purpose of marketing activities is to move the customer through a series of steps that culminate in the customer being an activist for the company's product. However, Word of Mouth is also integrated to build customer loyalty. Therefore, Paulins (2005) indicates that clear communication to customers regarding store policies and services available is important to establishing positive customer service relationships, for example 'word of mouth'. Therefore, 2

retailers should evaluate their policies in an effort to identify barriers that prevent their associates from being responsive, offering assurance and demonstrating empathy.

Customer Service Molina, et al., (2009), state customer service as a key factor towards generating loyal retail customers, and ultimately, successful retain businesses. In addition, customer service is the provision of service which is vital during and after the process of purchasing. Therefore, business organizations provide services where they can deal with customer's returns, exchanges and complaints, or will perform related functions at the point of sale. Adam, (2004) believe that the quality and level of customer service has slowly decreased from a lack of support or understanding in the management levels or a customer service policy of an organization. Therefore, a variety of methods can be used by organizations as a way to improve their service and build customer's satisfaction levels.

Methods and measures Measuring customer satisfaction Organizations need to retain existing customers while targeting non-customers. (Goring, 2008). Measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace (Siddiqui, Khand, Triptighosh & Ghaziabad, 2010). The state of satisfaction depends on both psychological and physical variables. Therefore, customer satisfaction is an abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service.

Improving Customer Satisfaction

The International Customer Service Institute founded in 2005 (TICSI) is a method that has been exist to help organisations to develop their current levels of customer satisfaction. The International Customer Service Standard (TICSS) is a program of TICSI that enables organizations to focus their attention on delivering excellence in the management of customer service, whilst at the same time providing recognition of success through a 3rd Party registration scheme. Ways of improving the delivery of customer satisfaction in order to help organizations 3

is through providing tools such as the Service Quality Model. This model uses the five key concepts called the '5P's which are; Policy, Processes, People, Premises, Product/Services, and Performance measurement. The implementation of these five key concepts should lead to higher levels of customer satisfaction, which in turn influences customer retention and customer loyalty to an organization (The International Customer Service Institute, 2005).

Conclusion

Customer service, like any aspect of a business, is a practiced art that takes time and effort to master. A common theme from the current search that is identified to improve customer satisfaction is to treat your customers like your friends and they'll always come back. The significant model to be used is the TICSI, with the objective of maing it the cornerstone global standard of quality customer service. Moreover, the Service Quality Model (SQM) enables organisations to focus their attention on delivery of excellence in service quality and at the same time providing recognition of success. All these aspects shows evidence that customer satisfaction has become a key concern for many businesses.

References

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