2.5 Customer satisfaction and Customer Loyalty

2.5 Customer satisfaction and Customer Loyalty

Through out the years, professional studies as well as trade publications, have justified the importance of satisfaction. Yuksel and Rimmington (1998)noted  that the benefits of customer satisfaction evaluation is central when identifying product and service differentiation, increasing customer retention, creating intentions to recommend, and encouraging positive word of mouth communication.

 service organizations realize that an effective system is a vital means to increase  customer satisfaction and a long term relationship .Then they get  the  customer loyalty and positive behavioral intentions (Tax, Brown & Chandrashekaran, 1998).

To support the importance of cumulative satisfaction, Olsen and Johnson (2003) found that customer loyalty and repurchase intentions are based on a broader consumption history and are able to explain more variation in loyalty; therefore, service providers must concentrate on satisfaction over the course of the service provider-customer relationship.  

What is valuable about loyal customers is that that they will display their loyalty by giving positive feedback and word-of-mouth. Therefore customer satisfaction is considered by everyone to be a very valuable factor. Kim, Lee, and Yoo (2006)

In response to the vast amounts of research as shown above, service providers have slowly come to realize that satisfied customers are truly assets to the organization. 

 For example   Dell’s  “beginning with the customer and ending with the customer” made  Dell to provide personalized service for their customers which can lead to customer satisfaction indeed. (Dell, 1999).

2.4 Service quality and customer Loyalty

2.4 Service quality and customer Loyalty

Many researches, identifies Service quality as the most important factor which gain customer loyalty.It also helps to gain new customers . Loyal customers’ positive feedback  which based  on good service quality attract the new customers and   in  the long run consistent it ensures  retention of the both existing  and new customers. (Berry et  al,1985) Bitner (1990) pointed out that good service quality gets service loyalty.Parasuraman et al.(1991) found  the customers give recommendation to others willingly when they received the high  quality of service in an organization. (When generating the proposed model this idea was taken in to consideration)

Fornell, (1992) identifies a relationship between high quality and

high levels of consumer retention which  leads to higher profits. Olorunniwo,et al,(2006) revealed  the connection between the   service quality  and behavioral intentions. (When generating the proposed model this idea was taken in to consideration)

 Zeithaml (1993) points out how service quality leads to willingness to

Recommen and return. (When generating the proposed model this idea was taken in to consideration)

2.3.5 Measuring customer loyalty

2.3.5 Measuring customer loyalty

Many service organizations use different methods in  measuring customer loyalty and these measurements  have changed significantly over the years with many studies.

In 2003 Shoemaker and Bowen evaluated how the hospitality industry   practiced  the loyalty of customer. When loyalty efforts were first realized to add value to the organization, most service organizations relied upon the sales and targeted promotion approach (Dube & Shoemaker, 2000).  This concept offered discounts and promotions with little to no effort being made to track the overall effectiveness of the process.  As time and research efforts progressed, the origin of the frequency programs emerged.  As outlined in a previous section, although frequency programs are beneficial to some service organizations they were not as well received in the hospitality industry.

 Today, many service organizations focus their loyalty efforts on building and strengthening relationships with the customer (Shoemaker & Bowen, 2003). When building relationships  it is needed to understand the customer properly.

 That  knowledge should gather from the customers  on their expectations and perception of the services and products (Shoemaker & Bowen, 2003).  This in turn sheds light on the numerous antecedents of customer loyalty.  Most of them are based on service quality, satisfaction and future intentions. (When generating the proposed model this idea was taken in to consideration)

These are more valuable and should be consider as operating strategy and manage them properly. Model presented by Olsen, (2002) explain quality equal to customer satisfaction and  loyalty. (When generating the proposed model this idea was taken in to consideration)

Heskett et al.,(1997) explain the relationship between quality, service value, satisfaction and loyalty  and   created the Loyalty Profit Chain.  Their model shows how the satisfaction influences loyalty and retention.  It reveals a combination of satisfaction, loyalty and retention  help not only  to  increase revenue and profit . (Figure 2.3.5.1)

At one time, customer loyalty  studies mainly  concentrated primarily on buying patterns of the consumes; promoting the  rewards and points systems; however, more recent research efforts focus on customers expectations, perceptions and attitudes toward loyalty (Mason, Tideswell & Roberts, 2006). However, Reichheld (2003) explained that the problems associated with behavioral research are that loyalty  go beyond  repeat purchases.

Some customers may consider themselves loyalty to an organization but their buying patterns maybe different .This in turn has created the need for researchers to explore the significance of customer expectations, perceptions and attitudes and how the three directly influence the customer’s future behavioral intentions.  (When generating the proposed model this idea was taken in to consideration)