Organisational Performance and Customer Satisfaction Equation.

As the Chief Executive Officer of Sierra Lighthouse Hotel Freetown, I’ve been provided with an Organisational Performance and Customer Satisfaction equation: Consumer Expected Quality – Organisational Actual Quality = Customer Perceived Quality EQ > AQ => Dissatisfaction EQ = AQ => Mere Satisfaction AQ > EQ => Delighted Customer An Organization Performance includes multiple activities, that help in establishing the goals of the organization, and monitor the progress towards the target. It is used to make adjustments to accomplish goals more efficiently and effectively.

Organization Performance is what business executives and owners are usually frustrated about. This is so because, even though the employees of the company are hard-working, and are busy doing their tasks, their companies are unable to achieve the planned results. Results are achieved more due to unexpected events and good fortune rather than the efforts made by the employees. Customer satisfaction, a business term, is a measure of how products and services supplied by a company meet or surpass customer expectation.

It is seen as a key performance indicator within business and is part of the four of a Balanced Scorecard. The balanced scorecard (BSC) is a strategic performance management tool – a semi-standard structured report supported by proven design methods and automation tools that can be used by managers to keep track of the execution of activities by staff within their control and monitor the consequences arising from these actions. 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.

Organizations need to retain existing customers while targeting non-customers. Measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. 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. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate.

The level of satisfaction can also vary depending on other factors the customer, such as other products against which the customer can compare the organization’s products. Consumer Expected Quality – Organisational Actual Quality = Customer Perceived Quality Analyzing the equation showing how it could lead to all the possible customer perception outcomes: EQ ; AQ =; Dissatisfaction EQ = AQ =; Mere Satisfaction AQ ; EQ =; Delighted Customer The above figure provides a view of the process in which customers needs and expectations are translated into output during the design, production and delivery process.

True consumer needs and expectations are called Expected Quality ( EQ ). EQ is what the customer assumes will be received from the product. The producer identifies these needs and expectations and translates them into specification for products and services. Actual Quality ( AQ ) is the outcome of the production process and what is delivered to the customer. AQ may differ considerably from EQ. This difference happens when information gets lost or misinterpreted from one step to the next.

Perceived Quality ( PQ ) is the customer’s perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives. The quality of the product may considerably differ form what the customer actual receives. Because PQ derives customer behavior, this area is where producers should really concentrate. Any difference between the EQ and AQ can cause either a delighted customer ( AQ > EQ ) or dissatisfied customer ( EQ> AQ ), but when EQ = AQ results in merely satisfied customer. EQ > AQ = Dissatisfaction

This is were in the actual quality of a product or service is greater than what the customer expected I. e. the expected quality. Example, a person may have heard only good things about the food at Sierra Lighthouse restaurant and decides to eat there. The food is expensive since it’s a five star hotel. Upon arrival he orders a dish and instead of being served within 20 minutes like it’s suppose to be the dish comes after 45 minutes. The customer tastes the food and it’s tasteless, the customer would be dissatisfied and would never visit Sierra Lighthouse.

The customer would also tell his friends and family about his/her bad experience and they too would never visit Sierra Lighthouse. EQ = AQ = Mere satisfaction This is were in the what a customer expects ( EQ ) is exactly what the customer gets ( AQ ). Example, a person is used to eating grilled shrimps at Kimbima’s Restaurant then a friend comes along and offer to take him/her to Sierra Lighthouse for Dinner. The customer orders grilled shrimps at the Sierra Lighthouse and when customer taste the food it’s tastes the same as Kimbima’s.

The customer would have a mere satisfaction because that’s the taste he/she has been used to already. All the customer would have is another place to eat his/her favourite dish in case Kimbima runs out of shrimps. AQ > EQ = Delighted Customer This is were in what a customer gets from a product or service ( AQ ) is more than what the customer expected ( EQ ). Example, a person is used to eating Pizza at King David’s restaurant and one day a friend tells him the pizza at Sierra Lighthouse is better. The person decides to visit Sierra Lighthouse with already high perception of the pizza prepared there.

The customer orders a large pizza and was told that by ordering a large pizza he/she gets 1 small pizza free. When the pizza arrived and the customer tasted it, it was more delicious than he/she imagined. The customer was delighted because he/she not only at a very delicious pizza but he had an extra one to go home. As the CEO of Sierra Lighthouse Hotel I would like to show in details how I can create dissatisfaction, mere satisfaction and Delight in my customers using my hotel. A Japanese professor Noriaki Kano, suggests three classes of customer requirements: Dissatisfiers Satisfiers

Exciters/Delighters Dissatisfiers- These are linked to customer dissatisfaction. These are requirements that are expected by customers in a product or service which are generally not stated by a customer but assumed to be there. If these features are not present the customer would be dissatisfied. Example, a customer takes a room at Sierra Lighthouse hotel for a week, he/she knows that it is a five star hotel and it should have certain standards. Five star hotels most have a hair drier, hot water, air condition, towels ( both bath and hand towels ), 24 hour electricity, internet connection and cable TV.

The customer who is a woman after unpacking and going for a shower and washing her hair realizes there is no hair drier. The customer would be dissatisfied because it is a most for a five star hotel to have a hair drier in their bathrooms. Satisfiers- These are linked to mere customer satisfaction. These are requirements that customers say they want. Although these requirements are generally not expected fulfilling them creates satisfaction. Example, a customer calls and books a room at Sierra Lighthouse and tell us if possible he/she would like a room with a bath tub and a balcony with sea view if possible.

When the customer is show his/her room it’s exactly what he/she asked for, the customer would be merely satisfied because he/she know that my hotel would always meet customer wants. Exciters/Delighters- These are linked to delighted customer. These are requirements that a customer doesn’t ask for or expect. These requirements are generally not asked for or expected but are offer to create delight. Example, a customer calls from over seas and books a room with Sierra Lighthouse hotel and gives us the date and time of his arrival.

The hotel sends a car to the airport to pick up the customer, the customer would be delighted. This is because he/she didn’t ask or expected to be picked up but was delighted to see that the hotel offered an extra service. The effects of the three possible performance outcomes on the profitability or other wise of the organisation: Dissatisfaction When a customer’s expectation about a product or service is greater than the actual quality of the product or service, the customer will be dissatisfied. When a customer is not satisfied he/she would simple stop requiring the product or service I. . stop buying them. When a customer stops buying a product or service that mean the organisation looses that customer because the customer would go and look for a better replacement. If customers of an organisation are not satisfied with the product or service that, that organisation produces, then the organisation is not only loosing it customers but also looses it money. An unsatisfied customer is a customer who’d give bad publicity to the business, and as long as the word is out the business would start losing money because there would be no customers to buy their products or services.

Dissatisfaction has a negative impact on the profitability of the organisation, which would eventually turn into loses and the collapse of the business. Mere Satisfaction When a customer is merely satisfied, it means that customer expectation is equal to the actual quality of the product or service. Merely satisfied customers are not enough for an organisation to become very profitable, instead the organisation maybe on the edge of collapsing.

Customers may patronize the organisation out of loyalty, but for most customers, they’d be looking for somewhere to get extra value for their money’s worth. An organisation which offers products or services that merely satisfy it customer wouldn’t be very profitable. Either the organisation works on their quality to get delighted customers or shut down for good because in the long run the organisation would collapse. It will collapse because at the end of the day all the customers would leave to look for an organisation that will offer them better products or services.

Delighted customer When a customer is delighted, it means that the actual quality of the product or services exceeds the customers expectation. A delighted customer has little incentive to even consider other brands. On the contrary, by changing brands they risk loosing some of their current delight. The organisation which delights it customers would become very profitable and have a great publicity. Old customer will keep on buying from that organisation and bringing new customer to the organisation.

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A Study on Customer Satisfaction in Banking Industry in Sri Lanka

CHAPTER 1 INTRODUCTION World class companies have taken more market share by providing notably better customer service. Executives know that to stand out in a crowded field of competitors, customer service is a very critical component in achieving and maintaining a high level of customer satisfaction. When pressures move the organization to meet only performance goals and measurements such as overhead absorption, shipping dollar targets, labour efficiency, purchase price variance and the like, however, customer service often takes a back seat to these other concerns.

The result can be a plunge in customer satisfaction and ultimately, if allowed to continue, erosion in market shares. Because of globalization, internationalization, technical innovations, law deregulations, and market saturation, the current situation of the banking industry is changing. The intensity of competition increases due to new products and services as well as the entrance of competitors from other industries, such as the so-called non- and near-banks. Even more, the continuously growing educational standard as well as better opportunities to gather information induce enormous changes in customer behavior.

Thus, competition for customers becomes more difficult and, considering the growing intensity of competition, the major banks’ need for sustained competitive advantage increases Organisations often think the way to measure customer satisfaction is to examine the number of customer complaints. The problems with this method is that it is reactive, it only responds (if at all) after the event and it does not really measure satisfaction only dissatisfaction. Monitoring complaint levels does not really tell if the customers are any more or less satisfied with the product or service.

For example, consider how many times you have been dissatisfied with a product or service – say once a month. Now how many times have you written to complain – possibly once or twice or maybe never. Managers and Directors often say “if our customers are unhappy, they soon tell us”. Well do they? If on a personal level you rarely write to complain, what happens as a company level – is it different? Here is an example of an organisations basing its customer satisfaction strategy on levels of customer complaints and getting badly misled. In a Warehousing organisation, customers were unable to obtain product (spares, consumables, etc. from the newly relocated, reorganised and centralised warehouse. Deliveries were often late or wrong if they arrived at all. The customer complained verbally but being unable to obtain their spare or consumable, spent their time looking for an alternate supplier rather than wasting their time complaining. The customer could not afford the time to complain, they were too busy avoiding their processes from stopping by sourcing the required items from another supplier. The Warehouse turnover plummeted. “If our customers are unhappy we’ll soon know about it” said management.

Well, they didn’t at least not until it was too late and they had lost 90% of their customers. Yes 90%. There is obviously a strong link between customer satisfaction and customer retention. Customer’s perception of Service and Quality of product will determine the success of the product or service in the market. With better understanding of customers’ perceptions, companies can determine the actions required to meet the customers’ needs. They can identify their own strengths and weaknesses, where they stand in comparison to their competitors, chart out path future progress and improvement.

Customer satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate improvements in the work practices and processes used within the company. In any type of business, whether companies are selling toy airplanes or offering massages, customer satisfaction plays a key role in the success of the business. Much like employee satisfaction, customer satisfaction is important to consider when running a business Companies that care about their success always care about customer satisfaction.

The customer is the end user and if they aren’t happy with the product or service then they might not return to purchase the product or service again. This usually results in the business losing money, due to poor customer satisfaction. Customer satisfaction emerged from consumer studies that sought to quantify the basic assumption implicate in the marketing concept that satisfied customers are more likely to have a positive attitude towards the product and re buy it. The value of satisfaction is often underestimated. Loyal customers and employees affect an organization’s success, which can be difficult to quantify.

Loyal customers grow business by increasing market share. Over a lifetime, a loyal customer purchases more, purchases at a premium (they are less sensitive to price), costs less to sell to, and refers the company business to others. Employees, especially those on the front line, directly impact customer satisfaction. An essential part of assessing satisfaction includes identifying dissatisfaction. Dissatisfied customers and employees often hold the information what the company need to succeed. Understanding when and why dissatisfaction occurs helps the organization to implement changes to gain and retain future customers and employees.

Measuring customer satisfaction is an important element of providing better, more effective and efficient services. When clients are not satisfied with a service as provided, the service is neither effective nor efficient. This is especially important in relation to the provision of public services. Under conditions of perfect competition, where clients are able to choose between alternative service providers and have adequate information, client satisfaction is a key determinant of the level of demand and therefore, the operation and functioning of suppliers.

However when a single agency, either government or private sector, is the sole provider of services, the level of client satisfaction is often overlooked when assessing the effectiveness and efficiency of services. Customer satisfaction is the extent to which the desires and the requirements of the clients are met. A service is considered satisfactory if it fulfils the needs and expectations of the customers. There are many factors taken into consideration by the customers in appraising the services provided, including: promptness, reliability, technical expertise, expectations, quality and price. . 1 RESEARCH PROBLEM ANALYSIS The staffs in the front office fail to deliver goods in the proper way to the customers due their inefficiencies where by the customer gets frustrated by the service rendered of the front office staffs and goes to the extent of closing their accounts and look for another bank who could better service for the customers. Due to this problem customers maintain several bank accounts in many banks to consume better services. This problem was faced by the researcher and some informal discussions were done by the researcher with some other banking customers.

They also experienced some similar problems with their banks’ services. This gave an idea to researcher to do a research in customer satisfaction level in the banking industry in Srilanka. 1. 2 IMPORTANCE OF CUSTOMER SATISFACTION: ENSURING FUTURE REVENUES A renewed focus on customer service and satisfaction leads to improved customer loyalty and increased revenue. For example, reducing customer churn by 1 percent can translate into the same percentage increase in revenue. Particularly in industries characterized by low switching costs and products that are dif? ult to differentiate, customer service offers a way of providing distinct value to the customer. The company gives excellent services customer satisfaction other brands become less important and switching costs decline, the importance of customer service has increased and, in some industries, become the major differentiator. Companies that align themselves to better serve their customers enjoy lower customer churn, lower costs, and higher pro? ts, since satis? ed, loyal customers purchase additional products and services. At the same time, customers expect better service.

They expect their requirements to be fulfilled promptly and their issues resolved quickly and to their satisfaction. Long periods spent on hold, multiple transfers, and interactions with inexperienced or poorly trained customer service representatives can damage the relationship. Accordingly, every customer interaction has the potential to either strengthen the relationship or drive the customer to a competitor. 1. 3 CUSTOMER SATISFACTION AND LOYALTY: FOCUSING ON THE LONG TERM Achieving high customer satisfaction levels, low churn rates, and effective cross-selling requires a strategy that balances the seemingly con? cting factors that affect organisation performance. Such a strategy can increase overall business performance by balancing ef? ciency-based measures with effectiveness measures that emphasize customer service and cross-selling. Whether an organisation is focused primarily on servicing customers or generating additional sales revenue, maximizing the value of customer interactions depends on a company’s ability to clearly understand the factors impacting performance and make decisions that leverage or resolve hose factors. Through this level of insight, organisation can achieve and maintain high satisfaction levels and higher revenues while keeping their costs as low as possible. 1. 4 NEED OF CUSTOMER SATISFACTION RESEARCH Spending on customer satisfaction research by American industry has grown tremendously – in recent years, and a number of trends suggest that the need for this type of research will continue to rise in the years ahead, particularly among firms that sell to other organizations.

The following reasons induce organizations to conduct research on customer satisfaction. Companies are buying more, but from fewer suppliers Business and government markets are growing, but getting tougher to sell to. Organizations bought more than $8. 3 trillion worth of goods and services in 1993, according to Penton Research Services’ estimates. Spending has increased every year since 1982, even during the 1990-91 recessions. Companies forced to downsize in recent years are now buying many of the goods and services they used to produce internally.

Goods-producing industries outsource the most, although government – which is privatizing a number of operations – and many service firms expect to do more outsourcing in the years ahead. Total business and government purchases are expected to double over the next decade, reaching $17. 5 trillion by the year 2005. However, it’s also becoming more difficult for suppliers to get – and keep – customers. A Penton Research Services study found that 40 percent of large business and government units are buying from fewer suppliers than they were five years ago, even though the amount purchased is up.

And nine out of ten purchasing executives at Fortune 1000 companies surveyed by the Center for Advanced Purchasing Studies (91 percent) expect to use fewer sources of supply in the year 2000. Business and government buyers want to establish partnerships with their suppliers. Properly-conducted customer satisfaction research can help a company build stronger relationships with both current clients and key prospects. Customer power is increasing The balance of power in business transactions is shifting to the customer.

According to a study conducted by Arthur Andersen in conjunction with the Distribution Research and Education Foundation, the buyer’s ability to dictate such terms and conditions as billing and pricing is expected to increase during the ’90s, while the power of suppliers/ manufacturers and wholesaler-distributors decreases. As buyers gain power, they’ll have increased leverage to set standards for product quality and specifications, delivery time, and service. More than half of the executives surveyed by the Gallup Organization (53 percent) report that demands from their company’s customers are rising or changing a great deal.

Research allows a supplier to truly hear the voice of the customer and tailor its product/service mix to changing buyer needs. Suppliers need to satisfy multiple buying influences Companies selling to industry, have to please a number of different individuals within customer organizations, each with their own needs and agendas. According to a Penton Research Services survey, the number of people involved in a buying decision ranges from about three, for services and items used in day-to- day operations, to almost five, for such high-ticket purchases as construction work and machinery.

A Forsyth Group analysis of buying decisions at one large firm, Harnischfeger, showed that the number of individuals involved in the purchase of a single type of product could exceed 50. In addition, it’s not going to get any easier for suppliers. A Center for Advanced Purchasing Studies survey found that 87 percent of the purchasing executives at Fortune 1000 companies expect teams of people from different departments and functions to be making buying decisions in the year 2000.

A well-designed customer satisfaction measurement program that targets key buying influences can help keep current customers sold and identify ways to win over non-customers. Quality is still job one Customers want a good price, but refuse to sacrifice quality or service to get it. A Penton Research Services survey of business and government decision-makers found that quality is the single most important factor in choosing a supplier. Price received the second largest number of mentions, followed by reputation, delivery time, and technical assistance.

In fact, nine out of 10 business buyers believe that paying a higher price for quality is more cost-effective in the long run, and according to a study conducted by Kane, Parsons & Associates, most executives (86 percent) prefer to do business with suppliers that have made a formal commitment to quality improvement and customer satisfaction. The buyer, not the seller, determines what attributes of a product or service constitute quality, and research can provide an objective measure of what customers think, correctly or incorrectly, about a company and its competition.

The rate of change is fast and getting faster American industry is in a continual state of flux. There are more than 8,200 new business incorporations, failures, acquisitions, address changes, and name changes on the average business day. The buying influences that suppliers need to keep satisfied are also constantly changing. A Penton Research Services analysis of changes among managers, engineers, and purchasing agents found that more than 20 percent leave their company, change job titles, or transfer to another location over the course of a year.

This means that more than half of the buying influences will probably change in some way within three years. Most of the executives surveyed by the Gallup Organization believe that the current rate of change at their company is rapid or extremely rapid, and 61 percent of them think that the pace of change will accelerate in the future. Companies selling to industry have to continually monitor the marketplace to be able to respond quickly to changes in buying procedures, factors influencing the purchase, and the people making the buying decision.

Customer satisfaction research will be needed more than ever by firms that want to survive – and thrive – in the challenging years ahead. 1. 5 CORE BANKING FUNCTIONS Banking has always been a changing industry. Lord Denning, once observed; “Like many other beings, a banker is easier to recognise than to define”. (D G Hanson, Page 1). D G Hanson in his popular book on Service Banking writes, “We are tempted to say that banking is what one cares to make it”. Whatever way one defines a bank, a banker or the business of anking, it appears that, despite a large spectrum of financial services that banks have embarked on to offer, certain fundamental economic functions of Banking remain yet to be fully substituted. To understand this proposition it may be necessary to look at Banking from both a traditional functional view, i. e. a functional analysis and from a logical business and economic view, i. e. an economic analysis. A Functional Analysis A functional analysis of banking business will look at the apparent activities that a bank performs. The activities are numerous and more keep adding to the list.

The Banking Act No 30 of 1988 defines the business of banking as ““banking business” means the business of receiving funds from the public through the acceptance of money, deposits payable upon demand by cheque, draft, order or otherwise, and the use of such funds either in whole or in part for advances, investments or any other operation either authorized by law or by customary banking practices;” This definition mainly deals with the aspect of banking where the function invariably looks at the maintenance of demand deposits commonly known as current accounts.

Current Accounts are maintained only by Licensed Commercial Banks. Does this mean that only Commercial Banks carry on the business of Banking? Probably not so. There are other institutions and instruments that perform most of the economic functions of Banking. It is important, therefore, for us to analyse the economic functions more than the activities of Banking. The concentration of this article will therefore be on Economic Functions.

Nevertheless, it is useful to look at the activities that banks do carryout with a view to analysing the Economic Functions. The Banking Amendment Act No: 33 of 1995 by its section 31 that introduces section 76A to the Act, to provide for Specialised Banking, restricts the carrying on of the business of accepting deposits of money and investing and lending such money to be only by a company which has an equity capital in an amount not less than Rs 50 Million and under the authority of a licence issued by the Monetary Board.

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Customer Satisfaction Research Proposal – Canopy Technical Services Limited

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Rapid technological advancements have necessitated the improvement of techniques used in fabrication of components and the general quality of services performed by the organization. The impending state of affairs often necessitates the adoption of technologically sound methods of working and the replacement of some equipment which are deemed to be technologically outdated. Canopy Technical Services Limited is an organization that designs, services and fabricates engineering components.

The incorporation of new equipment and techniques of production into the company’s production line, and radical changes in practices are anticipated to have positive effects in the overall performance of the company. This however comes at a great cost; new equipments in effect are more efficient and cost effective but demand high initial capital input. While Balance sheets are used to measure business success, an alternative and more proactive means of accomplishing this goal is through analyzing what the customer has to say concerning the firm and its products.

The company has also noted that the level of customer satisfaction plays a vital role in relation to the revenue the company generates annually. Canopy Technical Services Limited needs to determine the level of satisfaction its customers assign to the services and products it provides under the current situation so as to make informed decisions as to whether or not it needs to change its operating strategies, production techniques and replace the current production equipments. Customer satisfaction is a practical measure of how an organizations goods and services are perceived by customers or consumers.

It is one of the most reliable key performance indicators and forms one of the dimensions of a balanced business scoreboard. It basically seeks to answer the question: do the organization’s products and services meet or exceed customer expectations? Several methodologies have been designed for the purposes of conducting customer satisfaction research. The Net Promoter score which is used to measure loyalty between a firm and its customers and is often used as an alternative to traditional methodologies will be applied in this case.

During the research, surveys will be conducted across all categories of customers; corporate organizations, institutions and individuals. Questionnaires will be sent to respondents through registered mail to ensure that respondents receive questionnaires with minimum doubt without having to spend any money when forwarding back the results. Mail surveys in this case would be much cheaper compared to telephone surveys one-on-one interview and other methodologies. A random sample of 100 clients will be used for the purpose of the study.

This size is chosen due to the fact that it represents about 30 percent of the total population of the company’s client base. Canopy Technical Services Limited will opt for buying new equipments and making major changes in its operation if the values attained in the overall analysis falls below 70%.

Introduction

Canopy Technical Services Limited is an organization that designs, services and fabricates engineering components. The organization has a relatively wide customer base some of which are corporate bodies.

Canopy Technical services Limited has been in operation for the last ten years and enjoys the benefit of experience compared to its main competitors. The organization is made up of five functions/departments which work together to accomplish its mission. The company functional departments include the Finance and Management, Design, Fabrication, Quality Control and Sales Departments. Rapid technological advancements have necessitated the improvement of techniques used in fabrication of components and the general quality of services performed by the organization.

The impending state of affairs often necessitates the adoption of technologically sound methods of working and the replacement of some equipment which are deemed to be technologically outdated. The incorporation of new equipment and techniques of production into the company’s production line and general practices are generally anticipated to have positive effects in the overall performance of the company. New equipments in effect are more efficient and cost effective but demand high initial capital input. Such expenditures should be delayed as much as practicably possible with.

Statement of the Problem

The company has noted that level of customer satisfaction plays a vital role in relation to the revenue the company generates annually. Canopy Technical Services Limited needs to determine the level of satisfaction its customers assign to the services and products it provides under the current situation so as to make informed decisions as to whether or not it needs to change its operating strategies, production techniques and replace the current production equipments. Literature Review Practically all business organizations are faced with the task of measuring success.

One means of achieving this is through the use of balance sheets. This means of measuring success however gives delayed results which could be detrimental especially when the business is taking a downward trend. An alternative and more proactive means of measuring success is through analyzing what the customer has to say concerning the business and its products (Steiner Marketing 2003). Across the world businesses are both interested in achieving customer loyalty and expanding the customer base which in turn translates into higher profitability for the firm.

Customer satisfaction is a practical measure of how an organizations goods and services are perceived by customers or consumers. In itself, the term “customer satisfaction” may seem to be both ambiguous and abstract with much of its meaning being derived from the individual’s perspective and the product or service that is under study. It basically seeks to answer the question: do the organization’s products and services meet or exceed customer expectations? (Cooper and Schindler, 2006) Customer satisfaction is one of the most reliable key performance indicators and forms one of the dimensions of a balanced business scoreboard.

With continuously rising levels of competition in the market, customer satisfaction plays a key role in setting the difference between customers’ loyalty to one organization as opposed to another (Cooper and Schindler, 2006). Customer satisfaction largely depends on several physical and psychological variables which are correlated with satisfaction behaviors. It is also noted that employee satisfaction is correlated with customer satisfaction and hence it can be used to gauge employee satisfaction levels. Satisfaction being a psychological state, care needs to be taken when determining its quantitative values.

According to research carried out in the past, satisfaction domains include: environment, value, front line service, quality, timeliness, ease of access, efficiency, inter-departmental teamwork, commitment to the innovation and customer (Nigel, Brierley, MacDougall, 2003). Benefits of Customer Satisfaction It is notable that satisfied customers bring new business through personal advertising on top of repeat business. Satisfied customers also prove to be much more immune to actions of competitors and assure a stable environment to the business.

Maintaining satisfied customers require low maintenance unlike their dissatisfied counterparts who can easily destroy the organization’s reputation (Chris and James 2007).

Importance of Customer Satisfaction

Research Research about customer satisfaction may help the organization in several ways as listed below (Steiner Marketing, 2003). Information yielded from the research helps to: i. Make better plans for marketing and sales among others ii. Safeguard and increase the organization’s revenue streams iii. Maintain and possibly increase company customer base iv.

Optimize costs related to sales

v. Increase value of brand

vi. Amend competitive strategies vii. Speed adoption of new products

viii. Safeguards the organization from actions by competitors Common Research Methodologies Commonly applied methods of market research include: surveys, personal interviews, focus groups, observation, and field trials. Each of the methods above has its pros and cons much of which depend on the sample size, applicability and nature of the research (Kothari, 2005). Several methodologies have been designed for the purposes of conducting customer satisfaction research.

The American Customer Satisfaction Index (ACSI) which takes a scientific approach can be used to accurately predict Gross Domestic Product growth and Personal Consumption Expenditure. Increasing ACSI points predict loyalty, purchase behavior and word of mouth recommendations (Rowman, 2005). The Net Promoter score is used to measure loyalty between a firm and its customers and is often used as an alternative to traditional methodologies (Joseph, 2004). In its application, customers are asked whether they would recommend an organization’s products to a college or friend.

Customers, based on responses, are categorized into three groups: detractors, passives and promoters. Promoters are valuable assets to the organization as they profitably contribute by their increased purchases, referrals and longevity. On the other hand, detractors are liabilities that can destroy the firm’s profitable achievements as a result of their complaints, negative advertisements, and reduced purchases. Another common model used in measuring customer satisfaction is the Kano model, developed by Professor Noriaki K. in the 1980s.

In it, customer preferences are classified into five categories: Reverse, Indifferent, Must-Be, One-Dimensional and Attractive. The model offers insight into attributes which the customer perceives to be important (Arthur, 2000). While several other models exist, the JD Power and Associates and the RATER models are worth mentioning. RATER is commonly integrated into satisfaction surveys and has a service-quality framework (John, Creswell). Research Design The research to be conducted should be simplistic in its approach and giving unbiased results.

The design should also ensure high response rates from respondents which will accurately reflect the customer base. During the research, surveys will be conducted across all categories of customers; corporate organizations, institutions and individuals. For purposes of collecting data, questionnaires will be sent to respondents via registered post. This will ensure that respondents receive questionnaires with minimum doubt without having to spend any money when forwarding back the results. Mail surveys would be cheaper compared to telephone surveys and one-on-one interview considering the sample choice taken.

Methodology

The Net Promoter score will be used to measure loyalty between the organization and its customers. In its application, customers will basically answer whether they would recommend the organization’s products to a college or friend. Customers, based on their responses, will be categorized into three groups: detractors, passives and promoters. This research will measure satisfaction domains such as value, front line service, quality, timeliness, ease of access, efficiency, commitment to the innovation and commitment to customer. A random sample of 100 clients will be used for the purpose of the study.

This size is chosen due to the fact that it represents about 30 percent of the total population of the company’s client base. While administering surveys through post is cost effective and reliable, there is a probability of some respondents not attending to the questionnaire or giving misinformation due to varied reasons. In case of corporate bodies, there is a possibility in conflict as to who should answer the questionnaire. It will be suggested that one senior member (in liaison with others) of the quality control or engineering departments of the responding organization take the role of respondent.

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A Paper On Customer Satisfaction

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Marketing is an organizational function and a set of processes for creating, communicating and delivering values to customers and for managing customer relationships In ways that benefit the organization and its stakeholders. These values are related to an economic dimension and the psychological dimension of the said marketing definition. The same dimensions speak about perceived price through transaction values and cognitive and affective influences on brand choice and affective influences.

This definition of marketing leads to the importance and critical roles of customers perception of corporate Images and reputation leading to customer satisfaction as an Intermediary to customer loyalty. This Is done In relevance with the belief and fact that customers are the primary ‘assets’ of a market and not the product itself. With customers being satisfied, or if customers show a high level of satisfaction then only can the market for the particular product grow. This in turn can lead to customer loyalty and loyalty intention.

What is Customer Satisfaction?

Customer Satisfaction Is said to be able to Increase product sales and bring about fulfillment response. It is a Judgment that a product or service feature, or the reduce itself, provided or is providing a pleasurable level of consumption-related fulfillment including levels of under or over-fulfillment”. It is the degree of experience that a customer receives from a good or service provided by a market. Thus ‘Customer Satisfaction’ is the measure of this degree of experience or pleasure of customers measured by the number of repeated customers who repeatedly use the goods or service.

It is also seen that customer satisfaction leads to the customers being loyal to the product or service thus in return be loyal to the particular brand of the product. It can also be used as a measure of loyalty intention. Oliver (1997) defined customer’s loyalty as “a deep held commitment to rebury or re-patronize a preferred product or service consistently in the future, thereby causing repetitive same brand or same brand-set purchasing, despite situational influences and marketing efforts that have the potential to cause switching behavior. Loyalty then is the intent or the customer’s behavior to rebury the same product or service from a particular source (thus linking to a brand) because of the satisfaction that he or she achieved from using the product/service repeatedly.

Why is Customer Satisfaction Important?

Talking about customer satisfaction, one must understand why customer satisfaction is important. In asking that question the following reasons come up based on research. The main point is because customer satisfaction as a measure of loyalty intention and customer retention is a leading indicator and a point differentiator.

Studying customer satisfaction or performing customer satisfaction surveys yields a better understanding of customer lifetime value and reduces customer churn. In saying so, keeping and making old customers satisfied is a lot cheaper than acquiring new ones. Making customers happy reduces negative word of mouth for the product or service and thus doesn’t affect the product or service negatively. On the other hand, with satisfied and happy customers word of mouth would enable an acquisition of many more other customers who can then be transformed to satisfied customers and then into totally satisfied customers.

Retaining customers who are satisfied isn’t much of a problem, it is those customers who often have problems with the products or services offered that needs to be looked into. Suppose if a ‘satisfaction’ survey is carried out on a particular product, and the result gives a list if any customers who are not satisfied with the product or who gives a low rating for the product; then one must look into how and why they are unsatisfied with the product. One can keep a watch list on these customers and follow up with different queries so as to determine why they are not satisfied.

In knowing this, the brand can know the actual number of people who have intent of repurchase and of those who are actually loyal to the brand. The main difference between competitors in a market is their ability to retain and satisfy those customers who continue to be with them. Bringing customer satisfaction as a main strategy or a core point of action for a brand can be a detrimental factor for two or more competitors offering the same service or product. Take for example Competitor A and Competitor B both offering Product X.

A customer C would go for either of the competitor’s Product X if C would have received feedback from another customer (say D) if D would have given a positive feedback to given a positive word of mouth feedback to C of the Product X from Competitor A if the competitor A had offered or given a high level of satisfaction to the customer D. Thus the main differentiating factor for C for choosing product X from A and B would highly depend on the recommendation from D. This is what is meant by acquiring new customers and retaining old ones based on customer satisfaction.

Studies have shown that totally satisfied customers are more loyal to a brand than Just satisfied customers. The Customer Lifetime Value (CLC) which can yield profit from a customer based on prediction of spending of the customer on a particular product or service is different for totally and Just satisfied customers. Just satisfied customers can and eight defect to other products or services and have a lower CLC. This is because with just satisfied customers, chances of new products from competitors who offer better services and benefits might make them shift from their regular brand and products.

This can be attributed to the effect of the new product attributes that wooed them to shift or because of the lack of retention capability of the current brand. In the case of totally satisfied customers however, a new product or service with better offers and benefits than the current brand isn’t enough to deter them to take a shift. This might be due to the high loyalty they have towards their current brand because of their high levels of satisfaction they achieved from using the product or service or because of the brand’s capability to retain them by incorporating customer satisfaction strategies in their business plans.

Thus we can see that Just satisfied customers are willing to shift to other products more readily than totally satisfied customers. Markets should be able to distinguish between these two and formulate strategies to convert Just satisfied to totally satisfied customers which can raise the Customer Lifetime Value and thus increase profit. Consistency as a Customer Satisfaction Tool For a brand to be able to retain customers and to make them satisfied and happy, consistency is one of the major routes in achieving total customer satisfaction.

The consistency that the paper talks about is the consistent satisfaction of a customer and its measure of relation to the overall sum of customer satisfaction over a period of time. This is in contrast to the measure of a five point scale satisfaction survey of individual customers. In measuring this satisfaction consistency, we measure the attestation levels of an individual customer for a particular product or service provided by a certain brand over their continued use and repurchase of the product or brand. This gives us a better understanding of the customer’s response to the product or service though out the customer lifetime value.

With increasing use of the product the customer can either be satisfied, totally satisfied or be frustrated with the product. This study based on consistency can then be translated into strategies or plans to enable the brand to retain the dissatisfied customer, convert the Just testified and improve the totally satisfied customer. Throughout the customers’ lifetime with the product the brands consistent work to provide them with excellent and effortless service and a consistent support mechanism can ensure maximum customer satisfaction. However not all brands can offer and deliver the same.

Having a positive customer experience emotions – encompassed in a feeling of trust-were the biggest drivers of satisfaction and loyalty in a majority of industries. Consistency with customers in relationships, services and relations is important to forge trust brands’ customer pool. A company’s brand is driven by more than the combination of promises made and kept. It is also critical to ensure customers recognize the delivery of those promises. This requires communicating and key messages that consistently highlight delivery and themes.

In this case customer’s perceptions and views of the brand are reinforced. This in turn generates goodwill in the minds of the customers thus leading into a satisfaction level though the communication of these fulfilling promises and on time market communications to reinforce experiences. Relationship between Price and Satisfaction Say a customer A was traveling and had to stop to stay for a night. The hotel that he stayed charged him an exorbitant amount as the room rent and other charges and this caused A to be upset and thus dissatisfied with the hotel.

But because of the urgent requirement he had to put up with it. But in staying at the hotel he found out that the overall service of the hotel, the staffs and the facilities provided were much more than he anticipated. When asked to rate the hotel he gave it a ten out of ten. This is an example of how price can be related to satisfaction. But this is not the case with most products and services. Customers often expect good sales and services when they pay a hefty price for a product. If the product performs they are more likely to continue the use of the same product and recommend the same to others.

The opposite is the case if the product doesn’t meet the necessary requirements the customer had in mind while paying for it. If that’s the case, a sure negative response from the customer via word of mouth would go to others, thus making the brand lose out on a potential customer while not retaining a customer. Thus customer satisfaction and price has a direct negative relationship and impact on customer attention. This is regardless of satisfaction with the service experience or reward programmer membership status.

This also shows the price sensitivity of customers in relation to being satisfied with a product or service. Achieving Customer Satisfaction As customer satisfaction is an important factor for brands, companies and the market, plans and strategies must be included to achieve the same. This part of the paper will give a simple layout on how to achieve customer satisfaction. Since the business or the market continues to exist because of the customer, the customer should be made the first priority. This is in accordance to what was said at the beginning of the paper where customers where declared as assets of a market.

If customers are unhappy and uncaring for a product or service; chances are they have already made up their minds to shift to another. They also are highly capable to spread negativity about the same product or service via word of mouth. A “Can-Do” attitude by sales executives and the staffs in general can go a long way to making customers happy and satisfied. Inconvenience caused by the staffs and personnel at a retail shop or outlet can cause a very long lasting negative impression on the minds f the customers. The lesser the complaints received, the more highly the customer is satisfied with the service.

Communication with customers also offers a great platform in creating relationships with them and building trust in them. Also communication about the services and products provided by the brand to increase the knowledge of the customer is an ideal way to retain customers. If the full quality and service of a product and the extent to which the product or service can be used is made known to customer gets about the product or service, the more highly it can affect his/her purchase decision again and again. This can then lead to customer retention and satisfaction.

Timing is also one of the basic factors that can lead to customer satisfaction or dissatisfaction. On time deliveries, sales and services, and deadlines are real time factors influencing customer satisfaction. Uncertainty and lack of confidence with customers are negative points on the customer’s mind. Your customer expects prompt, courteous service. When asking for service help, your customer should never have to make a second call. Establish clearly defined and attainable service standards using the input of customers and employees. Ensure hat those standards are thoroughly understood by employees and promoted to customers.

Put the standards into practice through employee reward programs that establish and recognize excellence in service. Research into competitors actions to improve your own goals and improve your own techniques and services. Remember that the customer is the markets’ everything. Complains must be listened and taken into account. Positive solutions must be encouraged along with politeness, compliments and enthusiasm. You are the company that the customer sees. The customer is always evaluating you, so offer a better service than your competitors ND always show interest in the customer.

Conclusion In concluding we can see that although there are customers who will always buy and purchase a product or service because of needs and requirements; totally satisfied customers are hard to find. Retaining Just satisfied customers also is a hard process since it entails a lot of work and research into why there can be a shift even when they are satisfied. Customer satisfaction is thus seen as not Just a unit of measure for brands and markets to calculate their profits and revenues but is seen as an important factor for marketing strategies and plans.

This is because the more satisfied the customers are, the more loyal they can become and the more loyal they become the more benefit the brand and the market can achieve from them in terms of profit and revenue. The results of the study shows that the markets offering different products and services should concentrate on customer satisfaction as it plays an important role in retaining customers which are the “Assets” of any market.

References

  1.  Enhance Plus; “Why is Customer Satisfaction Important? “
  2. “The effect of price on return intentions: Do satisfaction and reward programmer membership matter?

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Customer satisfaction Argumentative Essay

Table of contents

Purpose

With increasing competition in the telecom sector, it is important to know what factors lead to customers switching to other service providers. To study this, customer perceived price and perceived service quality and customer satisfaction should be measured and the switching costs which act as barrier for the customers to shift to other service providers have to be identified. The effect of recently introduced mobile number portability on the reduction in barrier of switching cost has to be studied.

This paper’s aim is to measure the mediating effect of Customer satisfaction of customer’s willingness to switch service provider and the indirect effect of Perceived price and Perceived Service Quality on willingness to switch. Further, the moderating effect of switching cost on the relationship between customer satisfaction and willingness to switch will be studied.

Design/methodology/approach

The data set covered 155 mobile phone users- resident students of Indian B-schools. The data was analyzed by regression analysis to test the hypotheses.

Findings

The findings of this study show that the switching cost does not have a moderator effect on relationship between customer satisfaction and willingness to switch service provider. Further, perceived price and Perceived Service quality have an indirect effect on willingness to switch and customer satisfaction has a mediating effect on willingness to switch.

Research limitations/implications

The data set on which the research is conducted was 155, which is a small sample size compared to the number of mobile users in India. Also the data set is limited largely to the age group of 20-35 years.

Practical implications

The research findings show that the switching costs have become insignificant after the advent of mobile number portability and if customer satisfaction is not maintained then there is a high chance of customers switching to other service providers. Hence, Service providers have to focus their efforts towards customer satisfaction the customers. Originality/value – Although a lot of research has been done in the Indian mobile market, however this research was done before the introduction of mobile number portability.

Hence, this research adds value in terms of analyzing the effect of MNP on customer’s willingness to switch the service provider. Further, such research was conducted in other countries where the MNP was introduced much earlier. The same has however not been done in the Indian context. Hence the research gives new insights in the Indian market.

  • Keywords – Customer satisfaction, Willingness to Switch service provider, switching costs, Perceived Price, Perceived Service Quality.

Mobile Number Portability (MNP) is a facility that allows the mobile users to change their Service provider while retaining their phone number. The retention of the same number will enable some business customers to maintain their contacts and flow of business. Also there is a possibility of reduction in prices due to increased competition. Many studies have shown that change of mobile number when the service provider is changed is a major barrier and acts as a switching cost for changing service provider.

With the advent of Mobile number portability, it is important to study what factors majorly result in the intention to switch the service provider by the customer. By removing the barrier of change in number, will the consumers be more inclined to switch service providers or do the switching barriers still remain high remains to be studied. Similar study was conducted in Korean context and was found that the customers perceive higher switching barriers even after the introduction of mobile number portability.

This study will be conducted in Indian context to analyze the effect of Customer satisfaction, switching costs on the customer’s intention to switch in the context of mobile number portability. Mobile number portability in the US and Korean markets: Other Studies In the US, MNP was introduced nationwide in May 2004. It was observed that the number of customers who changed their service providers was far less than expected in the first year of introduction of MNP.

It was inferred that this was due to the positive impact that MNP had on subscribers in terms of increased retention strategies. It could be said that the switching barriers were not completely removed with the advent of MNP. MNP was introduced in Korea in January 2004. It was observed that there was no significant movement in the number of subscribers after the introduction of MNP, same as in the US. The reasons found were that Service providers developed customer lock-in strategies thus retaining the customers and reducing the effect of MNP.

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Customer satisfaction in business studies

Satisfaction can be characterized as an evaluation post-purchase of a product quality in comparison to the expectations before the purchase (Kotler 1991). The difference of the pre-purchase expectation is evaluated during post-purchase that can either be satisfactory or unsatisfactory. The role of satisfaction represents a crucial cornerstone between the provider-customer relationship. This relationship has its starting point even before the customers purchase the products and services.

Speng et al. (1993) proposed that an important influence on overall satisfaction judgments is that the customers’ satisfaction starts with the availability of product information when comparing different product options. Satisfaction is also defined as a result of the purchase process and satisfaction with the purchase outcome. Purchase process refers to product comparisons and interactions with the sales team while purchase outcome is the actual product or service purchased.

The stages of the consumer-provider relationship include formation search, comparison of alternatives, and the sales team interaction. Once the consumer finds satisfaction or is able to meet his or her expectation then the more likely it will yield satisfaction with other stages. The purchase process and purchase outcome is similar to the pre-purchase and post-purchase evaluation that either leaves the customer satisfied or not satisfied. The purpose of the literature review is to provide extensive reviews on the impacts of pricing on customer satisfaction related to the purchasing behavior.

It is equally important to managers to have a better understanding of the link between satisfaction and the duration of the provider-consumer relationship to help determine the purchasing behavior of its market to increase profitability as well as customer retention. 2. The impact of customer satisfaction on business profitability. Numerous researches have been done to determine the relationship between customer satisfaction and loyalty, retention and economic performance (Kristensen & Martensen, 1996; Rucci et al. , 1998; Duboff & Heaton, 1999; Edvardsson et al. , 2000; Bernhardt et al.

, 2000) including the structure of the framework (Eskildsen et al. , 2004). The success of business entities significantly relies on how customers are satisfied with the products and services. The role of satisfaction within the context of business is that it favors retention of customers hence “repeat” business will likely occur. A relationship of customer satisfaction and retention, along with identified specific actions, can boost retention and profitability in the long run (Boston 1998). Customer loyalty Customer satisfaction and customer loyalty has turned into an increasingly significant in a study on modern retailing (Juhl, H.

, Kristensen, K. & Ostergaard, P. 2002). The stiff competition in the market demands an increase in differentiation consequently increasing customer loyalty. The true loyalty of customers is a powerful influence especially when customer’s intention to favorable recommends the brand or company to others (Getty and Thompson, 1994), horizontal communication or the mouth-to-mouth communication (Gremler & Brown, 1999; Reynolds and Arnold, 2000; Srinivasan et al. , 2002), customer’s resistance to the offerings of the competitors (Gundlach et al.

, 1995) and persuasive tactics to attract new customers (Dick & Basu, 1994). Customer Retention As has already been noted, satisfaction has been concern for a number of years and is generally recognised as a post purchase construct related to how much consumers like or dislikes a product or a service during the post-purchase period. It can be defined as an evaluation that an “experience was at least as good as it was supposed to be” (Hunt, 1997). Satisfaction is a response to a perceived discrepancy between prior expectations and perceived performance after consumption.

Consequently, managers need to understand how expectations are created and how these expectations are influenced by people’s consumption experiences. Customers are assumed to have developed expectations prior to consumption, later on the perceived performance is compared to these expectations in a same way as a “better than” or “worse than” model. Oliver (1981) defined satisfaction as a “summary psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with the consumer’s prior feelings about the consumption experience” (p. 27).

Oliver (1997) pointed out that satisfaction encompasses more than mere fulfillment. It describes a consumer’s experiences, which is the end state of a psychological process. Satisfaction has become a central concept in modern marketing thought and practice. Many studies have made significant contributions to better understanding this complex phenomenon (Bearden and Teel 1983; Oliver 1980, 1989; Spreng et al. 1996; Williams 1988). Achieving visitor satisfaction is one of important goals for most tourism service businesses and organizations today (Jones and Sasser 1995).

Increasing customer satisfaction and customer retention generates more profits, positive word-of-mouth, and lower marketing expenditures (Reichheld 1996; Heskett et al. 1990). Satisfaction is a visitor’s affective and evaluative response to the overall product or service experience (Oliver 1997). What visitors received from the investment money, time and other resources on a trip or a visit) are psychological benefits. Thus, it is an experience that tourists receive from a visit with tangible goods (Mathieson and Wall 1982).

It is also more likely that satisfied visitors will return and say positive things about a service (Tian-Cole et al. 2000). Improving the quality of service attributes as well as improving the emotional and psychological reactions that visitors obtain from service experiences are considered important to commercial and public tourism businesses and organizations. As Otto and Ritchie (1996) stated, the intimate, hands-on nature of the service encounter itself affords many opportunities for affective response.

It has long been acknowledged that human interaction itself is an emotionally charged process that applies in the context of business as well. There has been a considerable controversy about the link between customer satisfaction and retention. The strength of the relationship between the duration times and levels of satisfaction relies on the length of customer’s prior experience with the organization (1998:45) It means that when customers received what they paid for with failures during the service transaction then the business relationship will likely be very short-lived.

The management belief’s rests that higher levels of satisfaction increase retention rate, enhances consumption, thereby allowing firms to charge a premium or decrease costs of products and service offered. Satisfaction levels lies on several factors namely duration of service provider-customer relationship, competitive prices, quality of products, marketing efforts, maintenance or enhanced customer relationships. Each individual can be a potential customer, thus when pricing strategy and quality evaluation met his or her expectations will later on, become a part of the market or population directly proportional to the revenue of companies.

The changes in customer satisfaction can spell out the financial implications for the organization. High customer satisfaction ratings are the best indicator of the future profit of the company (Kotler 1991, p. 19) The total purchasing process takes into account each stage where the consumer is being introduced to the product or service in the forms such as promotional marketing, word of mouth, and advertisements to the time when a purchase decision has been made.

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Customer Satisfaction with the Services of Starbucks

In an increasingly capitalistic and commodified world, there is a constant need for manufacturers and companies to innovate, to lead their competitors in terms of sales and customer loyalty. One important strategy being used is the development of customer loyalty is to give them unique benefits. Undoubtedly, all managers were right in believing that it is only through satisfying their customers that they shall be able to improve their profits. However, this is still not enough.

Customer satisfaction may not be able to ensure a certain company, or a certain business for this matter that customers will return to purchase. The trend then now is not just to ensure the satisfaction of their customers but to also make sure that their customers would return (Kandampully and Suhartanto, 2000). When relating customer service and customer satisfaction, creativity becomes a very important aspect. Creativity is said to allow people to handle or disseminate problems at hand or deal with them later in the process of conducting daily businesses.

In the same manner, the organization does not only deal with the activities it perform with the customers but also gives importance to the loyalty the customers are willing to give at the end of the transaction. In ensuring the satisfactions customers receive from a certain organization, those who attend to them must know what they want. Satisfaction, then is achieved when a certain organization or institution is able to meet the demands of the customers. It is only through this that customers are delighted, making them want to come back for future business transactions (Williams, 2006).

Starbucks is one of the most successful and established coffee shops around the world, having branches in almost every country in the world (Australia, Bahrain, Canada, Hong Kong, Israel, Japan, Kuwait, Lebanon, Malaysia, New Zealand, Oman, Peoples Republic of China, Philippines, Qatar, Saudi Arabia, Singapore, South Korea, Switzerland, Taiwan, Thailand, United Arab Emirates, and United States). The success of their business is attributed to their provision of a unique experience to their customers which significantly increases the latter are satisfaction.

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It is proposed that this research be conducted to look at the role of customer satisfaction in making this business one of the most successful ones in the whole world.

REVIEW OF RELATED LITERATURE

Service Theories

Theories of service design state that service can be tangible and intangible. It involves communication, environment and behaviors. It must be consistent, easy to use and strategically applied. Service design must then be devoted to the designing and constructing of technologically advanced social practices that could provide customers with better services.

According to Routio (2007) theories of service are concerned with what is permanent and normal in producing a service. Traditionally it has only included the professional skills of people who are included in the service. Service theories use either the descriptive or normative purposes, two approaches being used by theories of service. Descriptive theory is normally concerned with the knowledge about past or present activities that produce or use a service but does not contribute much in the modification process for the service to keep up with the latest requirements.

This theory is categorized into extensive studies of a large number of cases and intensive studies of one or a few cases. On the other hand, normative theory of service deals with the applicable knowledge and tools that can be utilized in giving the service that customers need. It is usually extensive in nature as it requires a big number of cases for the material. A third kind of research also gives importance to the request of service (see Figure 1) that gives importance to the role of clients in the planning of service.

Basically, this particular research is simply concerned with studying and planning the implementation of one’s tasks in coming up with newer services and ensuring that the problems that exist in other services is removed. The Elements of Service According to William (2006) customer service is actually the combination of five basic elements. These are:

(a) Organizational culture,

(b) Employee Temperament,

(c) Leadership Example,

(d) Communicated Expectations, and

(e) Management Leadership Training.

Organizational Culture is defined as the way things work when the superiors are not looking. Read also Research Proposal sample on customer satisfaction

Institutions should then create an organizational culture of superior customer service that does not really require much attention from the bosses. The leaders of different organization should make their staff aware of the importance of excellent customer service. At the same time, they must exhibit a high level of service with their actions. Thus, their employees follow the examples they have shown (p 13. ) The second element is employee temperament, related to what is more commonly known as personality. There are some personalities that are efficient in delivering superior customer service than others.

Because of this, management should devise ways by which they could help in improving the personalities of some of their employees who do not possess the personality one needs in customer service (Williams, 2006). The third element of customer service is the example of customer service demonstrated by the leaders, or simply leadership example. A leader then should not expect his or her subordinates to perform a level of customer service that is higher than what the employee does in his or her daily activities.

Whenever a higher level of customer service is to be delivered, leaders should perform them by setting examples for their staff to follow, thus performing the same kind of effective customer service at the lower level. However, there are times when providing example is not enough; employees must be constantly reminded what is expected from them in treating their customers. The fourth element thus, is related to the extent by which the leaders communicate their expectations to their staff. Employees must be constantly reminded of what is expected from them in the treatment of their customers.

The fifth element is concerned with customer service and management leadership training. Not everyone is gifted with the talent of actually being able to be of great service to the customers. Smiling and greeting customers are unfortunately, never enough. Also, most customer service happen when something goes wrong; situations which could win or lose a customer depending on how staff members address these concerns. Thus, employees should be given proper training in handling customers in times like these. The Impact of Service on Customer Satisfaction

When relating customer service and customer satisfaction, creativity becomes a very important aspect. Creativity is said to allow people to handle or disseminate problems at hand or deal with them later in the process of conducting daily businesses. In the same manner, the organization does not only deal with the activities it perform with the customers but also gives importance to the loyalty the customers are willing to give at the end of the transaction. In ensuring the satisfactions customers receive from a certain organization, those who attend to them must know what they want.

Satisfaction, then is achieved when a certain organization or institution is able to meet the demands of the customers. It is only through this that customers are delighted, making them want to come back for future business transactions (Williams, 2006b). Because of this, factors that organizations should give importance to ensure that their service would yield a positive impact the satisfaction being experienced by the customers. Organizations should avoid these guarantee failure in sales, satisfaction and most importantly, loyalty. First to be avoided is that employees are forced to comply with a firm chain of command.

Second, they also fail when employees are closely being supervised. In the same way, when conflicts, in whatever form have arisen. A failure in service that could also lead to the dissatisfaction of the consumers could be caused by rewards systems that are based on carrot-and-stick principles. Lastly, another issue that could guarantee failure in sales, satisfaction and loyalty is when wrong objectives are measured. Haworth (2005) defines Quality customer service as communicating one’s best through body language, the sound and tone of one’s voice which is said to be more important than the words being used.

In the same way, quality in customer service is seen when staff members are able to identify, understand, and anticipate the needs of their customers by being sensitive to cultural differences, knowing their time requirements, being attentive, and developing the skill they need to read what the customers want and be able to understand them (Haworth, 2005). In the same manner, it also includes instilling trust and confidence by treating customers with respect and courtesy, making them feel welcomed and important.

Employees must provide their customers with a comfortable environment, keeping up their energy together with projecting a positive attitude. Staff members should also listen, obtain feedback, send clear messages, say the right thing, and know their business by educating themselves about their products and services. Organization is needed to ensure that they give quality customer service. Upon the arrival of a customer in one of the numerous coffee shops of Starbucks, they ensure that these get a personalized experience of their coffee shop.

Undoubtedly, few brands could go beyond Starbucks, a coffee company which humble origins could be traced back twenty years ago, as a single coffee shop in Seattle. Although its financial records are quite impressive in nature, Postrel (2003) says that these numbers do not tell the whole story of Starbuck’s incorporation into popular culture. This particular company surely contributed so much to dramatic resurgence of coffee consumption in the United States which then affected and changed the leisure practices and daily routines of its customers.

The coffee being served at this very popular coffee shop is not just the reason why consumers patronize Starbucks. Postrel (2003) also recognizes the importance of the aesthetic look, feel, and sound of Starbucks which influenced the design of the retail services being offered. The so-called Starbucks Revolution became an important cultural icon that created the growing market for coffee shops and premium-priced gourmet coffee beans, as Helliker and Leung (2002) explicitly states.

The rise of Starbucks is credited to its successful emotional brand planning and brand positioning which contributed so much to the level of satisfaction that customers who have receive upon entering the business establishment. There are other factors that consumers take into consideration although majority does not hold the share opinions; these factors include, the coffee (or pastries) being served, the ambience, the design of the coffee shop, the service they receive from the waiters/stag, etc (Shapiro, 2006).

Starbucks have been true to its saying: Everything Matters. According to the owner of this big coffee business, Howard Schultz, as mentioned by Shapiro (2006), they make sure that each coffee shop is designed in such a way that it would enhance the quality of everything that the customers would see, touch, hear, smell and taste. It is because of this that artworks, music, aromas and surfaces are designed in such a way that it would be sending the same message. Customer Satisfaction

Joan and Cote (2000) defines customer satisfaction as when a customer is satisfied with a product or service that meets the customer’s needs, wants and expectations. At the same time, the article (title) also defines it as the provision of goods or services which fulfill the customer’s expectations in terms of quality and service, in relation to price customers paid (Joan and Cote, 2000). It has been said that relying on customer loyalty is more effective than actually having to rely on pricing strategies to keep businesses alive.

According to the different studies made in relation to the said topic, a five percent increase in customer loyalty that is often related with customer satisfaction produces a profit increase which range from about 25 to 85 percent. Managers should ensure that their services fully satisfy their customers as this is the only way that could increase their profits. In the same manner, hotel managers should know that the satisfaction their customers receive on their first transaction with their businesses should in return, ensure them of the customers’ loyalty, existing or prospective (Kandampully & Suhartanto, 2000).

According to Kandampully and Suhartanto (2000), is said to be most important results. Satisfied customers are necessary to expand the businesses in order to gain a higher market share that could bring about a repeat or referral business that in turn, would bring more profits to a business. Different studies show that customer satisfaction has significantly affected purchasing practices in different industries and sectors. There are many theories that often point out to the best method by which one could measure customer satisfaction.

These theories include: (a) the expectancy-disconfirmation approach, (b) the performance-only approach, (c) the technical and functional dichotomy approaches, (d) the service quality versus service satisfaction approach and (e) the attribute importance approach. The confirmation-disconfirmation approach basically deals with the comparison of the customer’s expectations versus what he or she actually experienced. In this particular approach, the use of Customer Satisfaction Index or CSI is applied. The scores obtained through the CSI function as the financial capability of companies and industries.

On the other hand, the performance-only approach measures the features of services and relates them to the satisfaction being experienced by a particular customer with regard to a particular service. In this particular approach, the Customer Satisfaction Survey plays a very important role (Customer Satisfaction Model, n. d. ). This is would be essential in the evaluation of the satisfaction that the people receive from their stay at one of the many establishments of the Starbucks chain all over the world. Were the customers really satisfied with what has been offered to them based on the use of the customer satisfaction index?

Hypothesis The provision of a personalized experience significantly increases the level of satisfaction that customers receive from Starbucks. Null Hypothesis The provision of a personalized experience does not significantly increase the level of satisfaction that customers receive from Starbucks. METHODOLOGY Subjects The researcher shall use simple random sampling to obtain the 50 participants needed for surveys. One of the advantages of performing simple random sampling is that it gives each member an equal chance of being included in a particular study.

One way of doing this particular sampling is to give each member of the population a specific number. The researcher then draws numbers to select the sample they need. The use of simple random sampling can be advantageous to the researcher as this is ideal for statistical purposes. However, it seems like disadvantages outnumber the said advantage as this particular sampling method is hard to achieve in practice, requires an accurate list of the whole population, and lastly, expensive to conduct as the members of the population may be scattered over a wide area.

As the respondents shall be selected randomly, the researcher shall not look at the ages, gender or profession of the participants. Instrument The researcher shall make use of a ten item survey that would include an evaluation of all the services being provided by Starbucks. A reliability pilot study and was conducted before the actual study began for reliability purpose. The questionnaire had ten questions using Likert-style rating scale. It would focus on the variety of the menu, the quality of the coffee, the design of the coffee shop, the attitudes and behavior of the baristas and other employees, advertising materials,etc.

Procedure The researcher shall collaborate with the management of Starbucks to gain permission for conducting a survey in their coffee shops. Upon getting their permission, the researcher shall leave a box that is fully sealed where the respondents would drop the accomplished survey forms. The staff would hand out a survey form to each questionnaire upon ordering. The respondent may or may not accept this form. They are required to tick the boxes to indicate their answers in rating the services of Starbucks.

Afterwards, the respondent places the accomplished survey inside the envelope that was also provided by the researcher. He or she seals it and affixes his or her signature on the flap of the envelope. The envelope will be handed over to the manager on duty and the latter then ensures that these are dropped in the box provided by the researcher. The researcher then picks the box up after three (3) days. Analysis The pieces of information that the researcher shall obtain from the study shall analyzed using the statistical package for the social sciences or SPSS.

Descriptive statistics and group statistics shall be obtained. T-tests, Levene’s test for the equality of variance, ANOVA and Multiple Comparisons tests shall be performed to ensure the reliability and quality of the data produced and to ensure that the data analysis would be dependable, tables and graphs will also be presented to show the frequency of the data collected. The acceptance of either the null or alternative hypothesis will depend on the value of either the f or t tests based on the table, making use of the 0. 05 level of significance.

References

Customer Satisfaction Model (n. d. ). Retrieved December 3,2007 from

Customer Satisfaction Model (n.d.). Retrieved December 3, 2007 from http://faculty.msb. edu/homak/HomaHelpSite/WebHelp/Customer_Satisfaction_Model.htm Helliker, Kevin and Shirley Leung (2002).

Counting Beans: Despite the Jitters, Most Coffeehouses Survive Starbucks. The Wall Street Journal, (September 24), A1, A11. Joan, L. and Cote, J. A. (2000).

Defining Customer Satisfaction. Academy of Marketing Science Review. Kandampully, J. and Suhartanto, D. (2000).

Customer Loyalty in the Hotel Industry: The Role of Customer Satisfaction and Image. International Journal of Contemporary Hospitality Management. 12/6. 346-351. Postrel, Virginia (2003).

The Substance of Style. New York: HarperCollins. Routio, P. (2006).

Theory of Service. Retrieved December 2, 2007 from http://www2. uiah. fi/projects/metodi/121. htm Shapiro, T. J. (2006).

Your Practice, Your Brand. The Hearing Review. Williams, R. L. (2006).

5 Elements to Customer Service: A Fresh Look. Retrieved December 4, 2007 from http://www. buzzle. com/editorials/2-9-2006-88493. asp

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