Customer Satisfaction Concept Theory Of Customer Satisfaction Marketing Essay
From the beginning of the "customer service revolution" almost 20 years ago, business consultants, corporations and others have worked to identify the characteristics of organisations that consistently please their customers. As a result, more than 15,000 academics and trade articles have been published on the topic of customer satisfaction since the past two decades (Peterson and Wilson, 1992).
In today's business world where most firms are adopting a market oriented strategy, there have been several conferences and extensive literature reviews devoted to the subject matter to develop tools for monitoring customer satisfaction, and to build continuous, quality improvement systems that respond to consumer feedback (Oriola, 2007; Shelton, 2000; White, 1999). As a matter of fact, this has led to the development of five distinct theories of customer satisfaction. Most of these theories are based on cognitive approach; some with less benchmark importance, while other theories have been introduced without any empirical research. The five theories include:
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(1) Paradigm of disconfirmation expectations,
(2) The theory of comparative level
(3) Equity theory,
(4) Norms as a benchmark standard,
(5) Theory of perceptual disparity value (Natalisa Diah, 2000: 63).
What is customer satisfaction?
Customer satisfaction is about assessing customer attitudes about products, services and brands. While it's always been smart to keep customers happy (Kotler 2003), the term "customer satisfaction" became popularized in the 1980's with the total quality movement. Therefore customer satisfaction postulate as one of the main indicators of business performance. It results to repurchase behavior (Bolton, 1998; Fornell, 1992), positive word-of-mouth referrals (Oh, 1999), fewer complaints (Bearden and Teel, 1983; Fornell et al., 1996), and a smaller set of alternative offers considered in purchase decisions (Lapersonne et al., 1995). These influences on consumer behavior cause customer satisfaction to reduce marketing costs (Reichheld and Sasser, 1990), warranty costs (Garvin, 1988), and the business risk (Fornell et al., 2006) and contribute to enhance sales (Gómez et al., 2004), profitability (Anderson et al., 1994; Ittner and Larcker, 1998), stock value (Anderson et al., 2004; Ikeshoji and Enkawa, 2004), and the overall corporate image (Anderson and Sullivan, 1993; Johnson et al., 2001).
Therefore, accurate measurement of customer satisfaction through reliable consumer feedback is vital for developing effective management strategies coupled with allowing managers to implement satisfaction improvement programs. As a result, there has been the development of five distinct theories (Natalisa Diah, 2000: 63) to explain the concept of customer satisfaction, with strong support for the expectancy disconfirmation theory, developed by Richard Oliver (1980), as it is the most widely adopted model by firms in today's business world.
Adapted EDT (R)
Figure 3- EDT Schematic adapted from Nevo (Nevo, 2005).
As a matter of fact, the expectancy disconfirmation paradigm (EDP) has become the dominant stepping stone used by both the public and private sector, to assess customer satisfaction (Brookes, 1995, p.10). The main components of this model are; Expectation, Perceived Performance, Disconfirmation and, Satisfaction. It thus focuses on the gap between performance and expectations. Expectation-confirmation framework is based on the ideology that expectations, coupled with perceived performance, result in post purchase satisfaction. Expectations reflect anticipated behavior (Churchill and Suprenant, 1982). Expectations serve as the comparison standard in ECT , thereby making satisfaction a function of the baseline effect of expectations' (Devlin et al. 2002, p.119). Therefore the disconfirmation judgment formed inevitably affect satisfaction, either positively or negatively. In line with this, if a product/service surpasses expectations (positive disconfirmation) post-purchase satisfaction will result, while if perceive performance is equal to expected performance, this will create a neutral feeling know as confirmation. If on the other hand, a product falls short of expectations (negative disconfirmation) the consumer is likely to be dissatisfied (Oliver, 1997: 104).
P < E
P > E
P - E
Figure 2. The Disconfirmation Model of Consumer Satisfaction
Source : Walker, 1995 : 7
In contrast to this, despite the fact that it is the most widely adopted framework, this model also have a number of weaknesses and unsolved issues, notably within the marketing literature concerning the nature of the effect of disconfirmation on satisfaction. The root of the problem lies in the definition of predictive expectations and tacit knowledge/behaviour as individuals express their own expectation in different ways, based on their experiences, ideas, values and emotions' (Gourley, 2002, p.2). As a matter of fact, this will hinder the comparison standard for perceived performance. In such case, the confirmation of negative expectations is not likely to lead to satisfaction (Brookes 1995, p.11). To overcome this problem, researchers have proposed other comparison standards such as desires, ideals, equity, or past product and brand experience (see reviews by Halstead, 1999; Yi 1990 and analysis by Tse and Wilton, 1988. Also see (Zeithaml & Bitner, 2001: 59-60).
The confirmation model.
This model which is in line Oliver and DeSarbo ideology (1988), states that satisfaction is linked to customer expectations, the outcome is known as (dis)contentment. For example; we are happy when the air-conditioner keeps the room cool. However this state of happiness becomes discontentment if our expectations are not met (Kotler 2003), like it is the case when internet connection are low, buses are too noisy or uncomfortable seating and the use of unsatisfactory products such as dripping taps or low life bulbs.
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As a matter of fact, very often because utility is a highly personal assessment, it is Human nature to overlook some of the low state of arousal notably because of the process of habituation usage and thus, we still continue to use the product. For instance, since 3 years, the on/off switch of my television was broken but I continued to operate it using the remote control until the problem became more evident. Therefore, the ideology behind such a behavior is that as long as the problem is a minor one whereby one can cope with and continue using the product, people will become accustomed to use the product the way it is.
However, the confirmation model relating to habitual usage is put into contrast when people's needs and wants are questioned and/or product technicalities are being compared with substitutes; thereby further boosting their expectations. For example, advertisements on a newly designed sofa set make us realize and think about our own seating discomfort.
In line with this thinking, the adaptation theory (Helson, 1964) can be used to explain the toleration of product deficiencies. As a matter of fact, this theory focuses on the gap between customer expectation and the actual product performance. The ideology behind this is that, as long as the gap of expectation and product performance is low, people will continue to use the product and it will have little effect on the reference standard, while on the other hand, as the gap become larger, this further affect the adaptation level. This can be supported with Oliver's view (1981), whereby he stated that expectations provide the adapted degree used for benchmarking related experience.
In the light of the above arguments, this now leads to some thinking that adjusting our environment may not be to our favor, because if consumers actually possess little information on the shortcomings of everyday products, this will not affect to an extended degree their expectations and in turn their consuming behavior. However, such a practice will forgo improvement and innovation within a product if people continue to adopt the habitual usage process. Sometimes, although there is adaptation and habituation, focusing on research and development through the process of innovation may generate positives results or may even surprise them thereby exceeding their expectations.
The disconfirmation model
Disconfirmation theory postulates that satisfaction is related to the size and direction of the discrepancy between prior expectations and actual product performance (Swan & Coombs, 1976; Oliver, 1980; Barber & Venkatraman, 1986). For them, people use standards of assessment in judging products. In this model, the consumer is surprised by the product features, that are better or worse than expected; the magnitude of surprise being related to the size of discrepancy between expectation and experience.
This implies that when product performance exceeds prior expectations, positive disconfirmation results and this also leads to satisfaction. On the other hand, negative disconfirmation is the result of performance being lower than expected, leading to dissatisfaction. Based on the disconfirmation theory of consumer satisfaction, it is hypothesized that there exists a significant positive relationship between disconfirmation and consumer satisfaction. Rivaling the confirmation/disconfirmation model, Oliver and Bearden (1983) found that the importance of expectations as determinants of satisfaction decreases for high involvement products, while the importance of outcomes or performance increases. Accordingly, performance becomes an independent determinant of satisfaction.
A second determinant of (dis)satisfaction is the importance or value of the product, which again can be measured by expectation. For instance, we derive more satisfaction from a car than from a mobile phone. A third aspect affecting satisfaction is the perception of the performance of the product. If for example you have high expectation on a particular product but performance is low; you'll experience disconfirmation.
Later work (Westbrook and Oliver, 1991) demonstrated that consumer subdivided their (dis)satisfaction into three components; they separate negative emotions from positive satisfaction, and further divide positive satisfaction into; one part linked to surprise and another part based on interest. If this holds true, the questionnaire for customer satisfaction must include items that that addresses these different items. Similarly, in the research and design of products, you may need to take into account these different ways of reacting to them if you want to give full satisfaction to your customers.
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Another ground of questioning is whether positive disconfirmation always lead to increased loyalty. In line with the surprise and expectation theory with which customer used to benchmark product performance and thereby evaluate their satisfaction, it seems quite likely that those who are unexpectedly pleased with a product may also be open to change. The result is that they may be tempted to explore competitors offerings.
No matter what, customer satisfaction has instrumental value too because it influences consumer behavior, thereby affecting profits. Satisfied customer will recommend the product to others, repeat purchase and even try line extensions. Thus businesses must always be customer-oriented.
Loyalty and customer satisfaction
The concept of customer loyalty is divided into two parts, namely,
Loyalty behavior and
Loyalty behavior, also known as customer retention, account for the action of repeat purchases by consumers on a particular brand to which they associate themselves rather than switching to a competitor brand instead. Therefore loyalty behavior is viewed to be directly related to sales and market share, whereby its measurement is done by analyzing customers' sales transactions, revealing customer retention rates and customer defection rates over varied time periods as well as the lifetime value of each individual.
Loyalty attitudes, on the other hand, are based on the judgmental factors and feelings towards products, services, brand or company that have led to repeat purchases. It is measured by means of loyalty questionnaires for surveying customers. This will help companies to obtain information about the factors behind loyalty attitudes as well as enabling firms to subdivide them into groups such as "new arrivals", "repeat buyers," "advocates," "loyalists" and so on as they slowly bond with your company over time.
The contrast is important because people can feel one way and behave quite differently. Sometimes customers exhibit loyalty behavior without having loyalty attitudes, as in markets dominated by a monopolist. And sometimes customers exhibit loyalty attitudes without demonstrating much loyalty behavior, as in the case of customers who buy very infrequently.
The end result is that loyalty behavior is worth almost any effort, unless on the extreme it is achieved by deep price cutting or huge inefficient promotional campaigns that destroy profits. Loyalty is so valuable because it has huge impact on market share. Established repeat customers may often generate superior profit margins. They require less customer care, have less price sensitivity, need fewer advertising and promotional inducements; they refer their family and friends to your brand.
In the light of the above arguments, one of the fundamental questions we tend to ask is that;
If Loyalty is the Goal, why is it Necessary to Work on Customer Satisfaction?
Loyalty behavior is the outcome of very high satisfaction. What has to be worked on and improved is satisfaction. As customers become more satisfied they start to take on some loyalty attitudes. In managing a loyalty program it makes most sense to consider loyalty attitudes to be part of customer satisfaction.
All your efforts in this field need to be directed at winning more favorable customer attitudes so you can get more loyalty behavior. Don't spend your time trying to "improve" loyalty behavior, it's just the result. It's a metric. Spend you time improving the root causes of customer satisfaction and that will create loyalty behavior outcomes.
You can't improve loyalty by being "results oriented." Again, that is because loyalty behavior is a result, an outcome, a metric (The achievement zone by Shane Murphy). For instance, a striker can contemplate clearing a particular league season with 30 goals (the result or outcome), but this focus on a desired result doesn't help to accomplish the result. It is only through training and practicing that the football player will improve performance and start raising the number of goals. So, improve loyalty by improving your product's root causes of customer satisfaction. And be wary of loyalty literature or programs that don't connect to the things that make customers more satisfied and delighted
THE SATISFACTION DRIVERS
What causes customer satisfaction? In 2006, a research study has identified a powerful set of five factors that drive satisfaction. This model should be seen as a tool to help all those involved in delivering and monitoring the areas that are important to their customers (mostly in the public services thought it can be extended to other sectors of the economy). The drivers of client satisfaction are listed here in order of importance. They include;
1).Delivery - the service delivers the outcome it promised and manages to deal with any problems that may arise. "I got what I needed."
2).Timeliness - the service responds immediately to the initial customer contact and deals with the issue at the heart of it quickly and without passing it on between staff. "I was satisfied with the amount of time it took to get the service."
3).Professionalism - staff are competent and treat customers fairly. They are prepared to go the extra mile to give us the extra smile.
4).Information - the information given out to customers is accurate and comprehensive and they are kept informed about progress.
5).Staff attitude - staff are friendly, polite and sympathetic to customers' needs.
They treated us fairly.
Among people who visit offices in person, there is a sixth key driver - the physical environment (whether offices are clean and comfortable, and the appearance of staff). However, it is not as strong as the five identified above.
QUALITY AND SATISFACTION
Quality and satisfaction are very often inter-related. As said earlier, the term "customer satisfaction" became popularized in the 1980's with the total quality movement. Customer Driven Excellence and Customer Focused Results remain important aspects of the Baldrige National Quality Programme.
However, it is a fact that there exists a gap between these two concepts. According to Cronin and Taylor (1992), this distinction is important to both managers and researchers alike, since service providers need to know whether their objective should be to have consumers which are satisfied with their performance or to offer the reinforce customer service excellence.
Many of the theorists of customer satisfaction like Oliver and Rust viewed that satisfaction is a highly personal based assessment and as such, it emerges as a response to a single or prolonged set of service encounters.
As a matter of fact, satisfaction is therefore a 'post consumption', which contrasts perceived quality with expected quality, while service excellence is a global evaluation of a firm service delivery system (Anderson and Fornell, 1994). Perceived quality is on the other hand, based on personal attitudes and judgments coupled with superior service experience over time. In line with this statement, this now put into question the propositions of most researchers, of whether service quality is a vital antecedent to customer happiness. Taking into account the views of Oliver (1980) and Bitner (1990), there is now evidence to suggest that it is satisfaction that drives service quality. Regardless of the school of thought taken, it all leads to the conclusion that service quality and satisfaction have strong relationship. In turn, both are vital in helping buyers develop their future purchase intention. But we must also take into account the fact that, quality improvements that do not focus on customer needs, will not lead to improved customer satisfaction.
THE SERVICE-PROFIT CHAIN THEORY
In today's business world, as most firms are adopting a market oriented strategy, we raise the debate that whether improvements in customer satisfaction will boost firms profitability. Much evidence shows that there is strong positive relationship between these two.
A satisfied customer, who has experience good quality service, will normally recommend the product to others, repeat purchase and even try line extensions as said earlier. This in turn will act as a circular flow, thereby boosting the economic performance of the firm.
However it is to be noted that, a firm though it scored well on customer satisfaction, may performed poorly at the end of a financial year. This is because, there are also other factors apart from loyalty and customer satisfaction, that affects the overall financial performance of an organisations like; production and labor cost, hidden cost ,economic health of a country, etc....
We can also question the fact that, as more and more businesses are becoming customer oriented, and that competitions in markets continue to increase, it might not seems surprising if some consumers switch to competitors if they feel that the competitors product performance and technicalities surpasses their actual performance.(disconfirmation model) or if they are being surprised with new innovative products that further raises their expectation standards, thereby eliminating the practice habituation process.
Therefore, companies must strive to find the right balance between improvements & innovations in service excellence and other business costs, and have an edge over their competitors if they want to retain customer loyalty.
FRAMEWORK TO EVALUATE CUSTOMER SATISFACTION WITH SERVICES
WHY MEASURE SERVICES WITH different approaches?
Many studies suggest that there is a fundamental difference between products and services, namely in the way it is consumed and produced (Gronroon 1998). With services, the time frame for the process of production and consumption is shorter as compared to products. Service products are often more face to face. Thus the quality of interaction between customer and service provider influences customers' perception of service quality. For instance, in services, a single employee may affect service efficiency and consequently customer satisfaction with the service (Barnard 2002).
Some of the main model to benchmark satisfaction within the service sector includes;
The SERVQUAL model /Service Quality model; which state that satisfaction will differ among consumers depending on what strategy the company chooses to deliver and promote that service. This is based on extensive research in genetic determinants of perceived service quality (Parasuraman, 1985). It measures the gap between customer's expectations about general quality and their perception about actual performance of a service provider. It uses a set of quality determinants measured by a 22-item scale. A major drawback in this model is that it has paid little attention to an understanding of how perceptions are formed.
SERVPERF model; problems with the disconfirmation expectancy models have led to the development of the application of a more direct form of measurement technique in the form of SERVPERF. Like SERVQUAL, this approach requires to rate the provider's customer performance extending from 1) strongly disagree to 5) strongly agree.
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