Customer satisfaction and loyalty pdf
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- Why Satisfied Customers Defect
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- Customer satisfaction, loyalty and commitment in service organizations: Some evidence from Greece
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Why Satisfied Customers Defect
Actually not, as Xerox Corporation discovered. Its merely satisfied customers were six times less likely to buy again from Xerox than its totally satisfied customers. What explains this? And how can companies ensure true customer loyalty—that single most important driver of long-term financial performance? Whether in highly competitive markets e. Yes, totally satisfying customers requires some investment and ingenuity—but it pays for itself many times over.
Clearly define your target customers, i. Factors such as loyalty-promotion programs e. Completely satisfy customers by providing top-notch support services making your basic product or service easier to use and a highly responsive recovery process when something goes wrong. You also have to listen carefully to find out how target customers perceive the service experience and what they want most—and then give it to them.
Lexus dealers provide the basics—and much more. Dealers completely satisfy customers by picking up their cars at their homes or offices; leaving loaners; repairing, cleaning, and returning cars later that day; retrieving loaners; and, of course, checking later to make sure the repairs were done properly. All are feeling pressure from strong competitors, and the corporation has created a customer-satisfaction survey as one method of measuring the impact of its quality-improvement process.
After dispensing with several items on the agenda, the group turns to the third-quarter customer-satisfaction indices, and a transparency is placed on the overhead projector.
There are three divisions with average ratings of 4. There is general consensus that they have reached the point of diminishing returns and that further investing to increase customer satisfaction will not make good financial sense. The group next examines the results of the division with the lowest average rating, a 2. This business unit manufactures bulk lubricants and sells to companies that repackage the product for sale to the retail channel. It is a highly competitive, commodity-type business and operates with very tight margins.
There is a general consensus that its customers are a lost cause and that it does not pay to make additional investments to try to satisfy them. Finally, the discussion turns to four business units whose customers generally are neutral or pleased but certainly not delighted. Two divisions manufacture large industrial machinery. Two other divisions provide after-market service for the products of both the company and its competitors.
Each division has an average rating between 3. The others nod in agreement. Implicit in this discussion are a number of beliefs widely held by managers of the dozens of manufacturing and service companies we have studied.
First, it is sufficient merely to satisfy a customer; as long as a customer responds with at least a satisfied rating a 4 , the company-customer relationship is strong. In other words, a level of satisfaction below complete or total satisfaction is acceptable.
After all, this is the real world, where products and services are rarely perfect and people are hard to please. Second, the investment required to change customers from satisfied to completely satisfied will not provide an attractive financial return and therefore probably is not a wise use of resources.
Finally, each division with a relatively high average rating 3. Striving to understand the causes of their dissatisfaction and concentrating efforts on addressing them is the best use of resources. The extensive research that we conducted on the relationship between customer satisfaction and customer loyalty, however, shows that these assumptions are deeply flawed. They either ignore or do not accord enough importance to the following aspects of the relationship:.
At the heart of any successful strategy to manage satisfaction is the ability to listen to the customer. There are five major categories of approaches that companies can use to listen to their customers. Most highly successful companies employ several, if not all. Many average or poor performers either use very few or, if they use many, do a poor job of incorporating the results into their strategies. The five categories are:.
Customer-Satisfaction Indices. The fact that such indices are quantitative makes them a useful tool for comparing results from different time periods, locations, and business units. A company cannot implement a recovery strategy—a plan for making amends when something has gone wrong—if it does not know who has had a problem. Market Research. Although companies traditionally invest significantly in this area, they often overlook two critical listening points.
Customers should be interviewed both at the time of arrival when they become customers and at the time of departure when they defect about the reasons for their behavior. It also is absolutely critical to understand why a customer defected. Gleaning that information requires a high degree of sensitivity and skill because most customers will blame the price or some other relatively basic product attribute in order to avoid discussing the real issue.
Frontline Personnel. Employees who have direct contact with the customer provide a superb means of listening. They also must have processes in place to capture the information and pass it along to the rest of the company.
Many companies that excel in satisfying customers have institutionalized one other practice: All employees—not just those with frontline jobs—spend a significant amount of time interacting in depth with customers. Strategic Activities. Some companies go to extremes to involve the customer in every level of their business.
MTV, the cable music channel geared to to year-olds, insists that most of its employees must belong to the demographic target group. Intuit, the financial-software company, regularly brings in customers to participate in product-development sessions. Executives at Xerox Corporation, which had conducted in-depth satisfaction studies of its office-products customers, played a major role in helping us define our research project.
High-quality products and associated services designed to meet customer needs will create high levels of customer satisfaction. This high level of satisfaction will lead to greatly increased customer loyalty. And increased customer loyalty is the single most important driver of long-term financial performance. Separate research has validated these beliefs. Reichheld and W.
Earl Sasser, Jr. Although these assumptions might seem relatively simple, one discovery by Xerox shattered conventional wisdom: Its totally satisfied customers were six times more likely to repurchase Xerox products over the next 18 months than its satisfied customers. The implications were profound: Merely satisfying customers who have the freedom to make choices is not enough to keep them loyal.
The only truly loyal customers are totally satisfied customers. Was this relationship between satisfaction and loyalty unique to Xerox? To investigate, we scrutinized more than 30 individual companies and analyzed data from five markets with different competitive environments and different types of customer relationships.
The five markets were automobiles, personal computers purchased by businesses, hospitals, airlines, and local telephone services. These feelings manifest themselves in many forms of customer behavior. The ultimate measure of loyalty, of course, is share of purchases in the category. In the automobile business, it is share of garage. In the clothing industry, it is share of closet. Unfortunately, such information is rarely available at the individual customer level. But there are alternative measurements, which we have grouped into three major categories.
Intent to Repurchase. At any time in the customer relationship, it is possible to ask customers about their future intentions to repurchase a given product or service. Although their responses are simply indications of future behavior and are not assurances, they have very important benefits. First, companies can capture this information when they measure satisfaction, making it relatively easy to link intentions and satisfaction for analytical purposes.
The fact that intent to repurchase can be measured at any time in the customer relationship makes it especially valuable in industries with a long repurchase cycle. Finally, intent to repurchase actually is a very strong indicator of future behavior. Although this measure will generally overstate the probability of repurchase, the degree of exaggeration usually is fairly consistent, meaning that the future results can be predicted fairly accurately. Primary Behavior. Depending on the industry, companies often have access to information on various transactions at the customer level and can measure five categories that show actual repurchasing behavior: recency, frequency, amount, retention, and longevity.
Although they are important measures of actual behavior, they only provide a glimpse of overall share and are most useful as an indication of changes over time. Moreover, sometimes they can send the wrong message. For example, the credit-card industry traditionally measured the willingness of the consumer to pay the annual fee as its prime measure of retention.
The consumer was willing to pay the fee to have the credit card available but often did not use it. Therefore, recency, frequency, and amount of purchase were significantly better measures of loyalty. Secondary Behavior. Customer referrals, endorsements, and spreading the word are extremely important forms of consumer behavior for a company. In most product and service categories, word of mouth is one of the most important factors in acquiring new customers.
Frequently, it is easier for a customer to respond honestly to a question about whether he or she would recommend the product or service to others than to a question about whether he or she intended to repurchase the product or service. Such indications of loyalty, obtained through customer surveys, are frequently ignored because they are soft measures of behavior that are difficult to link to eventual purchasing behavior.
However, since secondary behavior significantly leverages the positive experiences of a single customer, it is very important to understand what types of experiences create such behavior. Of the five markets, local telephone service, with nearly complete control over customers, was the only one for which the relationship between satisfaction and loyalty turned out exactly as one would expect. Customers remained loyal no matter how dissatisfied they were.
According to conventional wisdom, the link between satisfaction and loyalty in markets where customers have choices is a simple, linear relationship: As satisfaction goes up, so does loyalty. But we discovered that the relationship was neither linear nor simple. To a much greater extent than most managers think, completely satisfied customers are more loyal than merely satisfied customers.
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The loyalty programs are often part of a comprehensive strategy for customer relationship and provide a good way to identify and maintain customers with greater value than others. The main objective of this paper is to show the role of loyalty programs affecting customer satisfaction in retail. The purpose of the empirical research was to discover the effects of loyalty programs on customer satisfaction. All other examined factors such as product range, price, locationof the store and customers relationship proved to be the more relevant for consumer satisfaction. PhD diss. British Food Journal , Vol.
RB is measured by the number of transactions and the corresponding amount spent by clients, based on data provided by the company. The proposed hypotheses are tested using random sampling and hierarchical regressions. The significant moderators are different depending on the CL measure used. However, when RB is assessed using the number of transactions made by the credit card's owner, the length of the relationship becomes the significant moderator. The study is limited to a single firm, from one industry sector, but provides future researchers a multitude of replication opportunities.
PDF | A large number of studies on customer satisfaction and customer loyalty have been conducted in marketing over the years. Customer satisfaction is.
Customer satisfaction, loyalty and commitment in service organizations: Some evidence from Greece
European Retail Research pp Cite as. The popularity of relationship marketing has increasingly grown in the past couple of decades. Retailers recognize that satisfying and retaining consumers by building relationships is one of the most sustainable competitive advantages. Although the use of loyalty cards is popular in retailing, a lot of customer loyalty programs are virtually interchangeable, lacking in attractiveness and differentiation.
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The present study attempts to contribute to the knowledge of how customer satisfaction, loyalty and commitment are defined and relate to each other in the Greek context. It is based on responses collected from 20 service providers in four service settings: financial services, retailing, entertainment and transportation services. Surprisingly, company satisfaction was not interpreted as a conceptually distinct construct from customer loyalty; a conceptual overlap also emerged between attitudinal loyalty and loyal behavioral actions such as word of mouth; whereas customer commitment was highly positively associated with loyalty and satisfaction , according to expectations.
Наверняка, - объявил Бринкерхофф. Фонтейн молча обдумывал информацию. - Не знаю, ключ ли это, - сказал Джабба. - Мне кажется маловероятным, что Танкадо использовал непроизвольный набор знаков.
Чатрукьян вдруг обрел прежнюю уверенность. - Цепная мутация, сэр. Я проделал анализ и получил именно такой результат - цепную мутацию. Теперь Сьюзан поняла, почему сотрудник систем безопасности так взволнован. Цепная мутация. Она знала, что цепная мутация представляет собой последовательность программирования, которая сложнейшим образом искажает данные.
The contribution of this study to the literature is that of customer satisfaction and loyalty outcome not only other sectors but in retail super markets in UK.