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Strategies for Customer Satisfaction and Loyalty

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Abstract

This research aims at to provide the strategies which can be employed by company in order to establish customer satisfaction and customer loyalty by looking at the case of Thai square which is the famous Thai restaurant in London regarding to its reputation. Since customer relationship management is gaining more important to businesses. Many companies try to solve their problem by applying customer relationship management such as the motivation of staff , staff training , method of increasing customer satisfaction, how to gain customer loyalty. These factors can lead to building customer loyalty in the future.

In the part of literature review will emphasize on the basis theories which are relevant to the customer relationship management. This research contains the motivation theory , staff training , customer satisfaction and customer loyalty.

By achieving this research purpose , this research employs secondary and primary data. The primary data was acquired by a questionnaire survey which is the methodology of this research. Regarding to the questionnaire for staffs , there are 20 respondents who participated in this research as well as there are 100 respondents who walk into and eat at Thai square restaurant who responded to the questionnaire for customers. The sample size of this research is Thai square restaurant (Minories).

To conduct this research researcher used both primary and secondary data achieved by self – administered questionnaire. By analysing primary data from the questionnaire , the SPSS and Microsoft Office excel was used to achieve it. The statistical method was applied to analyse the result of this research. The results illustrate what factors could gain customer satisfaction , how successful the staff performance after being trained , how well staff can achieve companies’ objectives.

This research also provides recommendations for company and the further research so that company can improve the customer relationship management as well as can gain more customer loyalty in the future.

Chapter 1

Introduction

1.1 Overview

Nowadays, the consumer behaviour has been changed from the product centred stage to the customer cantered stage . Moreover, the customer’s behaviour has been changing. Mudie & Pirrie (2006 p.7 ). When they purchase product , they expect not only good product , quality and design but they also expect on service. Therefore, the service has been the significant reason in decision – making process.

Since many business have been trying to improve and develop their strategy in order to meet the customer’s need rather than the products. All organisation’s achievement has to give an important to the customers. Companies need to recognize all details of their customers such as the details about what customer need , who they are , what they buy, when and where they buy , how often and how much they spend. Moreover, companies have to evaluate approximately the customers’ behaviour in order to predict what customers will do in the future. In addition, companies should establish the database of their customer and profile so that they can keep contact and advertise new promotion. These has been the knowledge of company which have been assumed as the asset of company. The managing customer relationships strategies is the essential process.

By emphasizing on customer relationship management , companies may increase their abilities in knowing what customers need. Moreover, customer relationship management can help companies to target potential customers and to cut unnecessary cost and gain higher return on investment.

As the staff motivation and training is a part of the Human Resource Management. There is a connection between customer relationship management and Human Resource Management because customer relationship management relies on staff’s effectiveness and moral. Customer relationship management focuses on customers. To satisfy them , companies need to develop their staff’ effectiveness and moral using motivation and training method. By doing so , companies may gain customer satisfaction and customer loyalty which are companies’ objectives.

Customer relationships management strategy has generally been company’s strategy in managing customer relationship so that companies can retain their customers and increase customers’ satisfaction and loyalty (Blazey 2006 p.136)(Kumar 2006 p. 156-157)

Companies are focusing on customer retention , customer loyalty and customer satisfaction as a key management objectives. The one objective of customer relationship management is the advertising of customer loyalty .(Peppers & Rogers 2004 p.12). The greatest benefit of customer service is customer loyalty (Tschohl & Franzmeier 1996 p.20).Loyal customers are forcing organization changes.(Montano 2005 p.332)and can improve employee morale and productivity because customers respond positively to company. (Tschohl and Franzmeier 1996 p.20).

The motivation for loyal customer based on better products, better service and better market value.(Montano 2005 p.332) . The manager is more likely to achieve improved levels of motivation(Nieto 2006 p.108) Companies have to motivate staff to participate in training process for improving staff performance so that they can achieve customer relationships management strategy. Organization tend to concentrate on performance management and rewards to elicit employee cooperation ,supporting the value management and employee relations in workforce. (Nieto 2006 p.108)

1.2 Aims and Objectives

The objective of this research is to provide the strategies which can be employed by company in order to establish customer satisfaction and customer loyalty and to improve employee’s performance to achieve objective in the future.

The objectives are that :

1. To evaluate the customer satisfaction which may lead to customer loyalty

2. To explain the relationship between motivation of staff and staff training as well as their effectiveness to improve customer service in order to satisfy customer

3. To establish the appropriate strategies for restaurants in terms of customer relationship management.

4. To give an advice for restaurant , staffs on how to improve their potential in providing so as to satisfy customer.

1.3 Organization background

The Thai Square Restaurant Group was founded in 1996 when the first Thai Square opened in The Strand in central London. Thai square restaurant aims to maintain the leader status in the London market and sustainable growth of Thai restaurant market. The currently competition is intensive and the customer’s behaviour have been changing very rapidly. Many competitors can soon gain the competitive advantage and also gain more market share eventually. The company creates challenges with authentic Thai food, fresh ingredients , excellent service as well as restaurant’s design and decoration to be unique and different from the competitors. To address these challenges, the company need to provide a great service in order to gain customer satisfaction and loyalty. Thai square has planned to add value to the customers by capturing customer feedback received by telephone, e-mail, and establishing a knowledge base of problems and solutions. (Interview with restaurant manager of Thai square (Minories)

According to the restaurant review, the customers choose Thai square restaurant because its decoration , quality of food and service however the price of food and drink in Thai square restaurant when compare to the competitors is quite high especially today’s economics is critic and the customers’ behaviour have been changing. They may choose to spent on food and drink which is not too expensive and value for money. Therefore, they will choose somewhere else which is cheaper even if it is not good as Thai square. The increasing competitors and changing consumer behaviour are forcing company to apply the managing customer relationships strategies such as customer loyalty , customer loyalty and customer service so as to meet customers’ need. Thai square uses the concept of managing customer relationships strategies to be the optimal solution for this case. (Interview with manager of Thai square (Minories))

In the case of Thai square restaurant, the company grew at a lower rate than last year (2008). Net profit declined by 23% from last year due to economic crisis. In addition, it is affected from changing consumer behaviour.The company applied the idea of customer relationship strategies to meet the customer satisfaction and consequently increase customer loyalty.

1.4 Research Structure

The structure of research consists of 6 chapters is as follows;

Chapter 1: Introduction

This chapter contains aims and objectives of research , organization background which is a case study of this research as well as the structure of this research.

Chapter 2: Literature review

This chapter focus on all theory and strategies that relate to this research such as motivation theory , staff training , customer service , customer satisfaction and customer loyalty.

Chapter 3: Methodology

This chapter describe what methodology can be employed in research and what methodology which is applied by this research. This chapter also contains the objectives and goal of this research, research design , sampling method , data collection and data analysis technique as well as the validity of this research.

Chapter 4: Data analysis

This stage is using Microsoft office excel (Excel) and SPSS program to analyses questionnaire’s data. As well as this process will be evaluated data into percentage and mean score in order to show result by bar chart and pie chart in next step. Bar chart and pie chart will help to easily understand the research topic in each questionnaire

Chapter 5: Conclusion

This chapter provide the conclusion of the questionnaire result is provided to answer the research aims and objectives.

Chapter 6 : Recommendations

This chapter provide some recommendations for company and its employee as well as further research.

Chapter 2

Literature Review

As a result of competitive business situation , many businesses need to pay attention to the new method in retaining and creating new customers. Customer loyalty lead to profitability. Companies should develop positive relationship with customers by increasing customer satisfaction. Since customer satisfaction has been an important to establish long – term relationships which may result in customer loyalty and long – run businesses. It is widely known that the cost of retaining an existing customer is much cheaper than attaining a new customer.

In addition, increasing a customer loyalty may be achieved by the level of service which is delivered by company. Companies need to develop the quality of service by increasing responsiveness , fulfilling customer’s needs as well as providing consistent service. In many business industries, customer satisfaction has been used as the guiding principle for developing customer relationship management strategies as well as organizing business activities.

2.1 Theories of Motivation

2.1.1 Introduction

The motivation in work is “The processes by which people are enabled to and induced to choose to behave in particular ways (Stevens 2005 p.90). As a result, The motivation could be maintained and improved if it was related with a seek for the methods by the job performance and productivity of members

2.1.2 Need Based Theories

The previous idea of human motivation was based on the concept of self-satisfaction which human tries to meet with the happiness and relieve and tries to avoid sadness and distress. However ,this statement, whilst being apparently rational, cannot clarify many ways of human behavior. For example, why do the volunteer charity workers offer their time and attempt for nothing? Why do amateur athletes exert such high levels of effort, whereas a hedonist would prefer to relax? Researchers started to understand that human has other needs and desires which cannot be given an explanation under such a restricted observation of human behavior as hedonism. Therefore, there is the basic principle of needs theories which human motivation is resulted from the absence of an important needs.(Argenti 2002 p.89)

Figure 2.1: The Motivation Framework

Source: Griffin, R.W. (2003), Fundamentals of Management- Core Concepts and Applications (3rd edn), Houghton Mifflin Company, Boston

2.1.3 Maslow's Hierarchy of Needs

Yeatts and Hyten (1998 p.62) regarded motivation as a continually changing desire to fulfill changing needs. Maslow supposed that human needs arose in a hierarchy of importance, that was called ‘prepotency’. Only the motivators will play a role on the next stage of needs in the hierarchy. Therefore, the act as motivators would be ended when the stage of needs has been fulfilled and the person will pay directly the attention to the next stage of needs in the hierarchy. Maslow’s hierarchy of needs

is shown in Figure

Physiological needs

(Food, water, shelter)

Safety needs

(security, protection)

Social needs

(sense of belonging, Love)

Esteem needs

(status, self-esteem)

Actualisation

Needs

(Self-development)

Self-

Figure 2.2: Maslow’s Hierarchy of Needs

2.1.4 Motivation-Hygiene Theory

The research observed the link between job satisfaction and productivity with 200 engineers and accountants. The research outcome was the motivation - hygiene theory of Herzberg, which proposes that certain factors (intrinsic factors)can result in job satisfaction, while others (hygiene factors) can prevent from dissatisfaction but cannot stimulate satisfaction. Herzberg at el (1959 p.102). Intrinsic factors are factors which are inherent to the job, for instance , the satisfaction of the job itself as well as the recognition and development for success , the availability of chances for the responsibility.

On the other hand , hygiene factors are relevant to the environment in which the job performance is achieved. The hygiene factors consist of working conditions , supervision and interpersonal relations , salary as well as the policy and administration of organization. Besides, the importance prerequisite factor , which is needed to influence human’s motivation, is regarded as the hygiene factors.

The motivation factor would be able to proceed on the staff and establish job satisfaction and productivity if there were ‘good’ hygiene factors which lead the staff to be in a form of ‘no dissatisfaction’. Consequently, to encourage staffs towards higher productivity, “while it is important to ensure that the hygiene factors are correct, the manager must manipulate the motivation by attending to job-content issues (e.g. job-enrichment)� (Carson at el 1997 p.136). Job- enrichment entails redesigning jobs to make them more interesting and challenging by allowing provisions to be made for increased responsibility, creativity and autonomy.

The Herzberg’ research has been criticized because of the research itself and the biased collection of sample (see Holloway 1991). Holloway (1991 p.1) stated that the clerical and production workers ‘did not produce the accounts he was seeking, he didn’t sample them’. Goldthorpe et al (1968 p.11) suggests that other types of employee (such as assembly-line workers) may indeed view work in the way expressed by scientific management and be primarily motivated by financial incentives. A case of workers being primarily motivated by what Herzberg regards as a hygiene factor. The important point to be made from the criticism of Herzberg and from the work of Goldthorpe et al. is that no one theory, be it human relations or scientific management, is likely to apply universally.

Different socio-economic groups appear to attach different meanings or have different orientations towards and work (Parker 1972 p.200). While different group s of people may have different attitudes towards work, they are also likely to react differently towards management policies. A model of worker motivation should therefore be able to differentiate between different types of worker and treat the wants, expectations and attitudes towards work as ‘culturally determined variables, not psychological constants’ (Goldthorpe 1968 p.178).

As a result of the differences of each staff , company should apply a motivation policy so as to encourage an individual behavior and characteristic of its staff. To motivate people with different need and different characteristics is difficult but it would be rewarding and challenging. It can be said that hope is the magic component of motivation.

The motivation factors help staffs to do a better job and to increase productivity(Steinberg 1976 p.123) ( Kamin 2002 p.87). The theorists propose that there are four strongest motivation factors which are the achievement : feeing personnel accomplishment for having done a job well , the recognition : being recognized for doing your job well ; for example , being complimented by your boss and receiving an award , the participation : being involved in your work ; having some responsibility for making decisions and the growth : having the opportunity for challenge in the job, such as the chance to learn skills and knowledge. (Kamin 2002 p.87). Manager not only should translate attitude and knowledge into action but also recognize that people have diverse motivations for asking to join a team (Nieto 2006 p.56).Therefore , manager should to be understand in how theories and models can be translated into useful practices (Currie and Procter 2003 p.14) in next step on training and practical skill

Motivation Factors

Achievement

The work itself

Recognition

Responsibility

Growth

Advancement

Satisfaction No Satisfaction

Hygiene Factors

Supervision

Company policy

Relationship with supervisor

Working conditions

Salary

Relationship with peers

Status

Security

Dissatisfaction No dissatisfaction

Figure 2.3: Motivation-Hygiene theory

2.2 Training

2.2.1 Definition of training

Training has been defined as the planned activities on the part of an organization to increase job knowledge ,skills or to modify the attitudes and social behavior of the members in ways consistent with the goals of the organization and the requirements of the job (Robin 2003 p.1219)(Anderson and Neil 2001 p.280)

Development has been defined as any attempt to improve managerial effectiveness through a planned and deliberate learning process .

Methods of training needs / analysis needs. (Wilson 2005 p.149)

Job analysis.

Job description.

Interview with the job holder.

Interview with the manager / supervisor.

Performance objective.

Analysis of competencies.

Reasons for training

Poor performance and /or productivity.

A change in working methods.

Introduction of a new technology or equipment requiring new /different skills.

Changed or new product range ,after sales etc;

Replacement of employees who have been promoted or transferred, and training the employees who are all promoted and replaced.

To improve workplace safety.(Ferris, et al 1995 p.154)

2.2.2 Training Methods

2.2.2.1 Attitude training

An attitude training is an individual’s characteristic way of doing or responding to a object or a situation. It is based on the experience and leads to certain behavior or the expression of certain opinions.

2.2.2.2 Methods of attitude training

On the job experience placing the trainee within a group whose attitudes are thought to be appropriate .This socialization process tends to produce the desired attitude in the trainee.

On the job training :This may involve “Shadowing� or being attached to a senior employee who has the desired attitudes and personal qualities to influence the employee .(Bohlander 2001 p.235)

On the job counseling ‘s senior member of the organization with the desired qualities and attitudes is appointed as the mentor to the employee.

Off the job training :A group of employees engage on case study activity intended to emphasize relevant and desirable attitudes.

Off the job exercises : Role-playing exercises.

2.3 Customer service

The small companies should emphasize on creating positive relationships with their customers. Customers with positive dealings with companies are likely to be loyal. There are three fundamental idea which lead to the focus on delivering an outstanding customer service. Firstly, the high level of customer service increases customer satisfaction. Secondly, customer satisfaction leads to customer loyalty. Thirdly, small companies have a possibility in delivering greater customer service than large companies. From those three fundamental idea , it can be concluded that by not concentrating on customer service may endanger the achievement of customer satisfaction and customer loyalty. (Longenecker 2005 p.289)

In general , good customer service is to meet customers’ expectations by giving the importance and value to them. Their experience in companies’ service will decide that not only they want to continue doing the business with companies but also what will they give a word of mouth about companies’ service. The good customer service is decided by customers who is given the service. As each customer has different needs and expectations. Therefore, companies need to designed service for individual customers.

2.3.1 Why customer service is important

There are a research shows that when employees have a poor view of customer service , this will result in high turnover in companies. Therefore, to increase the quality of service could lead to increase employee retention and customer loyalty.

Some people would like to do good work. They may lack skills and so they appear unmotivated, or they may be job-hopping because they have not found work environment that support their talents. By giving the support and training as well as service environment which focus on customer staffs could have tools they need to give customers what they want and deserve. (Kamin 2006 p.1)

In addition ,training is important part to improve quality. Good staffs understand that training is crucial for being successful on the job and for future career opportunity.

2.3.2. The value of good service

Service is important to customers as well as it is important for business development. The aim of companies by creating more value for customers is to retain customer to their companies. Everyone in companies should help to build value as well as their jobs aim at serving customers. When everyone understand their role in serving customers, there will be the results which are creating goodwill and increasing companies’ reputation , decreasing in the case of poor quality , improving the chances of cross –selling and up – selling , gaining in the number of customer retention , reducing employee turnover , making more profit , establishing the goal and performance measure , having competitive advantages and being differences from competitors.(Zemke and Wood 1999 p.12)

2.3.3 How to provide good customer service

Most customers have common expectations. They need companies to deliver an outstanding service , solve and realize their problems as well as make an apology if anything went wrong. To determine customer satisfaction companies need to meet their customer’s needs. Moreover, there are some methods which could help to build customer satisfaction. Firstly , companies should give the attention to customers all the time. Secondly, companies have to listen to customers in the way of understanding what they really need.( Aguilar and Stokes 1995 p.3-7)

2.4. Customer Loyalty

As the purpose of increasing profit by continually satisfying customer’s need becomes more prevalent, the significance of meeting customers' satisfaction and increasing their loyalty becomes more important in the competitive business (Disney 1999 p.491). As a result, business owner who want to be successful in the long term should encourage customers' visits and make more sales. Good business owner have known and understood this situation well and devoted much of their consideration to ongoing and increasing sales through a variety of marketing activities. Business owner of subtle products should do the same for supporting competitive advantages( Disney 1999 p.491)(Grönroos 1990 p.3).

Moreover , since the need of focusing marketing attempt on maintaining existing customers grow to be the principle of marketers (Grönroos 1990 p.3), the topic of customer loyalty, which aim to increase the regularity of a customer's behavior and the possibility of cross-selling, has been received more consideration recently (Buttle and Burton 2002 p.217; Dick and Basu 1994 p.99). In this part, the customer loyalty, the different types of loyalty, characteristic of service and service loyalty and the benefits which companies may gain by increasing customer loyalty, plus the related factors which may affect customer loyalty, will be discussed.

2.4.1 The Origin and Meaning of Customer Loyalty

The first approach is that loyalty is a surrogate of retention; in other words, a customer who keep on buying one product or service is a loyal customer. However, the second approach regards customer loyalty as a mental conception with an affective or attitudinal component, which could in fact reflect the essence of retention ( Buttle and Burton 2002 p.217;Ennew and Binks 1996 p.219).

Loyalty is unlike repeat buying behavior; loyalty includes an attitudinal component which should firstly come to mind before repurchasing products or services (Buttle and Burton 2002 p.217; Dick and Basu 1994 p.99). Therefore , loyalty is a state of being faithful and honest to a particular product or service, and proving such faithfulness and honesty. On the other hand ,repeating purchase only represents frequent occurrence of the purchasing behavior which persists in a given period of time.

The meaning of loyalty and repurchase have common characteristics because of the frequency of use increasing when there is a high level of loyalty (Liddy 2000 p.351). Consequently, frequent customer should not be regarded as loyal customer because frequent customer possibly purchases product or service from several different companies. Moreover, customers' purchasing behavior could be changed by different situational factors. Buttle and Burton (2002 p.217) stated a characterization of loyalty from a company's head of customer relationship division: "It's about having had experiences of things that you feel are important.

Putting it in personal terms, you build loyalty to your friends through personal experiences you've shared. Customer loyalty really is like friendship (p. 218)". This argument implied that although many customers may carry on to purchase with particular sellers, they could be unfaithful to the product or service sellers. Hence, by explaining the knowledge of customer loyalty, many attempts has been dedicated to classify the different types of customer loyalty.

Moreover, to understand the differences between customer loyalty to goods and services as well as the typologies and the origins of customer loyalty, the benefits that businesses could obtain from increasing customer loyalty have been suggested by many authors. With the knowledge of both the characteristics of service loyalty and the promising benefits received from increasing customer loyalty as well as the importance of retaining existing customers could be obtained.

2.5 Customer Satisfaction

Generally , most customers do not criticize about their dissatisfying experiences of product or service. However , they could change to another sellers ( Boshoff 1999 p.236). If the seller cannot offer what customer want, there are many other different sellers which provide similar products or services in the market. To sum up, sellers who want to attract or retain customers have to meet customers' needs and satisfaction (Oliver 1998 p.14 ).

Customer satisfaction has become increasingly to seller’s attention during the past decades. Nevertheless, customer satisfaction has been one of the most unquestionable theory of the modern management field (Oliver 1996 p.11-12 ). The idea of customers satisfaction have a clear, reasonable concept. Moreover, it is commonly understood that customer satisfaction could lead to customer loyalty as well as result in higher future profit(Oliver 1996 p.11-12). In many business industries, customer satisfaction has been used as the guiding principle for developing CRM strategies as well as organizing business activities.

However, customer satisfaction should not be an objective by itself. Customer satisfaction should be employed as a method for developing the company's performance (Martensen et al. 2000 p.544-53). A number of empirical researches have revealed a relation between customer satisfaction, customer loyalty, and the economic performance of a company while customer satisfaction has been evaluated in different ways, for example, stock market value, added market value and return on investment (Anderson et al. 1994 p.53-66 ; Eklof et al. 1999 p.514-22).

On the other hand, the topic about the background of customer satisfaction, the relationship between customer satisfaction and customer loyalty as well as customers' post-purchase behavior are presently arguable. To understand the idea of satisfaction undoubtedly and realize the benefits of customer satisfaction, relation between customer satisfaction and related matter are the main significance in this study.

2.5.1 Definition of Satisfaction

Customer satisfaction has developed into one of the main purposes for business since the 1990s. Johnson and Fornell (1991 p.267-86) termed satisfaction as a general assessment of customer’s purchasing and consuming experience. In a few years later, Oliver (1996 p.11-12) provided the recognized definition of satisfaction, which he stated to be linkage with the theoretical and empirical evidence to date: "Satisfaction is the consumer's fulfillment response. It is a judgment that a product or service feature, or the product or service itself, provides (or is providing) a pleasurable level of consumption-relate fulfillment, including levels of under or over-fulfillment( p. 13)".

As a result of the importance of satisfaction, many businesses initiate to assign their job to evaluate how satisfied their customers are and to observe how satisfaction ratings affect customer retention and their profit (Bolton 1998 p.45-65).

2.5.2 Importance of Customer Satisfaction

In 1990s, there was a prevalent knowledge that satisfaction ratings has been in fact a process to reach strategic purposes, for example, customer retention which is understood to have an effect on companies' profits directly (Jones and Sasser 1995 p.88-101). To concentrate on increasing satisfaction is necessary since satisfied customers have more potential to come back the same shop or repurchase the same product or service (Reichheld 1996). Furthermore, customer satisfaction is regarded as condition for customer retention and loyalty, and apparently it is important to understand economic target such as market share, return on investment and profitability(Hackl and Westlund 2000 p.820-25).

However, To establish a relationship between satisfaction ratings and repurchase behavior has been intricate in many businesses, as well as an area which needs to be considered more scrupulously. Oliver (1998 p.14) stated that customers with increasingly satisfying experiences are probably to build up to the positive attitudes and the preference of particular product or service businesses. Narayandas (1998 p.1-4) research presented evidence which has shown that those positive attitudes are vastly valuable for most businesses.In addition , research showing national satisfaction index in both Sweden and the US implied that satisfaction has an important positive impact on the market value and the investing returns (Anderson et al. 1994 p.53-66).

As a result, customer satisfaction need to be regarded as a key factor for businesses in developing to increase customer loyalty and better business performance( Gronholdt et al. 2000 p.509-14). In fact, customer satisfaction has been accepted by many researchers as a customers' general attitude towards organizations and these attitude lead to a significant decision of customers' behavior in the future (Narayandas 1998 p.1-4 ). Moreover , Oliver (1996 p.11-12) referred satisfaction as a crucial process in loyalty development. On the other hand, the relation between satisfaction and other processes are not as simple as we think.

Many researches showed the insufficiency of linkage between customer satisfaction and customer loyalty (Romano 1995 p.13-18; Wood 1998 p.62). Romano (1995 p.13-18) research opposed that even if 65 - 70 percent of seller could meet or even exceed customer’s needs , this may lead to the low impact on attracting customer loyalty. Consequently, satisfaction deems to be a crucial predecessor of loyalty , even if it is insufficient by itself.

Furthermore, both Romano (1995 p.13-18) and Wood (1998 p.62) stated that although customers have satisfaction with the present product or service providing , the businesses have to make more effort on the other related matter in order to promote customer loyalty. The conclusions which are implied from those researchers are that high level of customer satisfaction may not lead to customer loyalty and may not be the most important condition in developing customer loyalty.

2.5.3 Problems about Measuring Satisfaction

Many practitioners used to rely on the consequences of customer satisfaction surveys (Dahlsten 2003 p.73-77). Nevertheless, the method which is a measurement of something should not take a preference over what is measured and what is discovered( Dahlsten 2003 p.73-77). The validity of the methods employed for discovering what is important to customers is needed to take into account more than the reliability and efficiency of the method applied in conducting market research.

To go beyond the collective customer satisfaction numbers that has been vastly gathered by most people, the most important issue is to develop a learning relationship between customers and sellers. Although the previous saying that "what gets measured gets done" is not entirely correct, the means of evaluating customer satisfaction will undeniably have an effect on how the customer satisfaction principle is employed by organizations. In fact, businesses need to observe customers’ response to particular products and services. Nevertheless, emphasizing on its solely may fail to address long-term customer expectations.

To sum up, the value of the customer satisfaction knowledge being acquired relies on how it is employed and valued within organization. Two companies in the same business could have an access to the same important information; but these information is employed in different method. This situation would lead to different outcomes - one company achieves the competitive advantage while another does not (Dahlsten 2003 p.73-77).Consequently, the procedure of conducting a customer satisfaction survey should be taken into consideration critically.

Satisfied customers may repurchase and come back repeatedly . On the other hand, it is not sufficient to emphasize only on satisfied customers. Since businesses wishing to be successful in the long term, they are required to satisfy customers at a profit. Many researches stated that satisfaction itself is insufficient to establish loyalty (Fornell 1992 p.6-18; Oliva et al. 1992 p.83-95), even if it has been commonly approved that these two factors are closely connected.

Reichheld (1993 p.64-73) argued that customer satisfaction is not a surrogate for customer loyalty; that is, rising in customer satisfaction figure may not necessarily result in developing customer loyalty to product , service, or business. To obtain further approaching on the relationships between customer satisfaction and relevant factors, this study includes some other factors to illustrate the entire picture of customer satisfaction and reveal its effects on businesses' operational performance.

2.5.4 Advantages of Improving Customer Loyalty

By improving customer loyalty and retaining customer may result in either up-selling or making more profits for businesses (Edvardsson et al. 2000 p.917-27). The advantages of building customer loyalty may result from retaining existing customers and attracting new customers. These advantages lead to increased sales and profitability of businesses. Firstly , loyal customers are likely to rely on the particular products or service providers for a long period of time, and are probably to cross-purchase(Oliver 1996 p.11-12).

Secondly, most researches broadly supports the suggestion that to attract a new customer is much more expensive than retaining an existing one (Blattberg and Deighton1996 p.136-44; Vandermerwe 1996 p.770-82). Moreover, loyal customers express their loyalty by spending money on high-valued brands of products and services providers and by giving positive word-of-mouth (Reichheld 1996). Therefore, the profitability of the businesses may be affected by those behaviors. The principle of organizational climate popularized by Schneider and Bartlett (1968 p.323-33) may also help to understand the importance of employees behaviors on customer loyalty from the internal viewpoint.

2.5.5 Organizational Climate and Its Implications

Organizational climate is defined as an ongoing collective assessment based on the aspects of how present developments affect members in terms of their needs and expectations (Schneider 1985 p.573). Even though an employee's perception and behavior are closely related (Schneider and Bowen 1985 p.573), it needs more effort and time to build a customer loyalty and to make a company’s internal procedures actually approachable to customers’ expectations, market share, opportunities, and profitability.

Consequently, if employees can work within the same company for long periods of time, they will better improve long-term personal relationships with customers. While customers will be more fulfilled as they would obtain better service. Therefore, by developing customer satisfaction may lead to improve employee satisfaction (Ennew and Binks 1996 p.219-30) also stated that internal marketing activities, which could satisfy the internal customers (employees) of a company, are the significant factor in developing this self-reinforcing relationship between employees in the same company.

In fact, an effective internal marketing strategy could help to build and maintain a customer-oriented service climate in the company through attracting employees' perceptions of their roles in building long-term relationships with customers (Bowen and Schneider 1983; Grönroos 1990 p.3-11; Schneider 1985 p.573-611). Nonetheless, service climate data in a particular company can be gathered from the employees in that company; the recent study takes an out-side-in perspective which does not measure the influence of organizational climate.

2.5.6 Factors Affecting Customer Loyalty

To clarify customer loyalty, there are several factors which influence customers' decisions of being loyal to a particular product and service providers. These factors will be specified in this part. Fredericks and Salter (1995p.29-33) explained the topic of customer loyalty and proposed that customer loyalty has been determined by customers' perceptions of value presented by the product and service provider. Their proposition stated that by presenting valuable products and services would establish customer loyalty.

Five major part o f the customer value perceptions which are price, product quality, service quality, innovation and image has been specified in their model structure (Fredericks and Salter 1995 p.29-33). The model showed that the individual customer’s expectations and personality including the nature of business environment have an effect on customers’ value perception. However, Geller (1997 p.58-62) accepted that there are 15 elements which are essential to establish customer loyalty.

The quality and value of the product and service , the impression or image portrayed, the dynamism of the organization, communication and achieving the unexpected for customers have been the most important elements. Kandampully (1998 p.431-43), customers would remain being loyal if the value perception of products and services was comparatively better than that of competitors' presenting.

2.6. Relationship between Customer Satisfaction and Customer Loyalty

Customer satisfaction has been the issue of attention in the past ten years. Nonetheless, the old method in evaluating customer satisfaction have not been sufficient to ascertain the important of satisfaction because of its narrow scope (Oliver 1980 p.209-32). The scale of customer’s opinion was too wide , most measuring implements ,therefore, were not appropriate to be applied in this case.(Abdullah et al. 2000 p.826-29).

Furthermore, by evaluating customer satisfaction the range of perceptions could not be measured by traditional methods because these methods did not provide a broad way to evaluate the perceptions which may have an effect on customer's subsequent behavior(Oliver 1998 p.14). Consequently, the relationship between customer satisfaction and its impact on increasing loyal customer and companies’ operational performance has been acknowledged by business studies (Dick and Basu 1994 p.99-113).

The reviewed literature proposed that customer loyalty is an attitudinal concept reflecting value, trust, and commitment within the company-customer relationship. Satisfaction was thought to be one of the antecedents of customer loyalty (Buttle and Burton 2002 p.217-27). Nonetheless, customers with satisfaction may not necessarily have a loyalty to a particular company (Oliva et al. 1992 p.83-95). Stratigos (1999p.74-76) argued that "loyal customers will go to the mat for their solution of choice (p. 74)�.

This statement implied that the loyal customers could make a positive word of mouth which would refer to their preferred companies. Strategies (1999 p.74-76) also stated that there might be an emotional relationship connected between company and its loyal customers. Following to the individual-level model of customer satisfaction proposed by Oliver (1980 p.209-32), there are many researches have been discussed and observed about a strong relationship between customer satisfaction and customer loyalty (Anderson and Sullivan 1993 p.125-43).

Other researchers concluded that a primary factor leading to determine loyalty was a satisfaction. (Oliver and Linda 1981 p.88-93). These researches aimed to support Reichheld's (1993p.64-73) argument that even though there is a close connection between customer satisfaction and customer loyalty , the customer satisfaction is not a surrogate for customer loyalty. To sum up, the companies need to satisfy their customers beforehand in order to establish customer loyalty to product, service and company.

The satisfaction-profit chain

Figure 3.1 The satisfaction-profit chain

Source:Exigene W.Anderson and Vikas Mittal, “Stengthening the satisfaction-profit chain,� Journal of Service Research 3,no 2 (November 2000):107.

Chapter 3: Methodology

3.1 Introduction

Generally, there is a difficulty in deciding the appropriate approach for principles researches and methods. Sekaran (2003 p. 64) establishes that “A good literature survey provides the foundation for developing a comprehensive theoretical framework from which hypotheses can be developed for testing.� .The literature review is, debatably, the best source for identifying significant variables that are probable to influence all factor in hand. The review of prior literature existing in Chapter 2 provides the main topic of this research, which concentrates largely on the managing customer relationships strategies .

By designing and examining methodology there have been many ways to achieve. However, by achieving the goal , there are many different means not just one to conduct since individual research and its objective is needed the different methods. In addition , determining the most appropriate methodology for research must rely on the accessibility of resources. This research contains research design, data collection method, questionnaire design, and the sample design.

The research purpose aims at obtaining the prediction , explanation and understanding, and control of phenomenon. Bagozzi (1994 p 222). Botha at el (2005 p.313) state that “Research design framework or blue print for conducting a marketing research. It indicates the details of the measurement required in collecting information in order to structure and solve research problems�.

This research focuses on the relationship between customer relationship management and strategies of company which are employed relating to customer satisfaction in the case of Catering UK company in United Kingdom. In this chapter, justification and discussion of the research and its methodology undertaken will be provided.

3.2 Research design

Hussey and Hussey (1997 p.51-58) suggested that to plan the procedure for conducting research the research design is provided so as to obtain appropriate result. Also , the research design can be applied for data collection and analysis planning. Moreover, research design could save researchers from wasting their time on establishing research direction as well as help researchers to accomplish the research purpose directly.

According to the research process, to understand , observe and reach the aims the descriptive structure was applied to the relationship between customer satisfaction and customer loyalty and the factor that is employed to improve the effectiveness by companies because the descriptive structure is functional by explaining the problem from initially broad to narrow down as the research progresses. (Saunders et al., 2003 p.5).

3.3 Data collection

The data and information collected in this research will be divided into two, primary data and secondary data in order to achieve the objectives of this research effectively.

3.3.1 Primary data

Remenyi et al.(2005 p.141-142) stated that the new data could be created by primary data while secondary data is not provided to respond to research questions. To obtain the fact relating to the topic of research it can be found on the primary data. The primary data can be found by many processes ,for example, an interview , survey and observation which is conducted by telephone , post , online questionnaire or distributed questionnaire ( Easterby-Smith et al.,2004 p.130-135) and consist of the material that you have gathered yourself ( Jankowicz 2005 p.59) The data and information collected in this research using primary data methods is a questionnaire which is the means to collect the quantitative data.

By determining to apply a method of questionnaire there are many factors that influence the researcher ; low admin cost , speedy return , simple way in collecting data.

3.3.2 Secondary data

Saunders et al. (2003 p.189), Veal (1997 p.147) stated that secondary data has been regarded as the information that has already been presented and collected for some other objectives. There have been several advantages of secondary data. It is easily accessible, relatively inexpensive and quickly obtained since it has already been existed. In this research, the secondary data was collected from many resources such as the academic textbooks, news, the internet for the latest news about customer service management, the company annual reports, and journals that are related to the research topic ( Jankowicz 2005 p.59).

However, the secondary data in form of document accessibility may be limited with the specific aims of the study (Veal, 2006 p.68). In addition, it cannot provide all the answers and might not be up-to-date the current situation or may lack in accuracy .To overcome these, this research will use both primary and secondary data with the data collection process. However, the disadvantages of secondary data are units of measurement, class definitions and publication currency etc.(Remenyi et al., 2005 p.141-142).

3.4 Questionnaire design

Questionnaire is defined as “a set of questions designed to generate the data necessary to accomplish the objectives of the research project; it is a formalized schedule for collecting information from respondents� (McDaniel and Gates, 2006). As questionnaire plays the important role in the data collection process, it is used to be one of the essential tools for gathering data in this research and then go through the process of finding data.

Since the purpose of this research in examining the strategies which are employed by restaurant to improve the effectiveness of customer relationship management , the questionnaire is applied to this case. The questionnaire is used to obtain data and information of customer satisfaction and related factor. The question also focused on the staff satisfaction of company’s training and policy.

3.4.1 Questionnaire structure

The questionnaire consists of two sections. The first part of six questions included general introductory questions to filter the interviewees by asking general in order to reduce the respondents' uncertainty and increase their confidence. The second part of three questions relates to customer target of restaurant. The second part of four question of first part asks about customer satisfaction regarding to food and service. Questions were also included to allow the respondents to express their likelihood of recommending the restaurant to their friends and relatives. The measurement is implemented using a five point Likert scale with scores of 1 "strong disagree" to 5 "strong agree" for each of the answer related to . this scale along with semantic differential are the most important scaling methods for satisfaction measurement because they are effective in measuring consumer attitudes and are easy to construct and manage) and give the highest reliability (Westbrook and Oliver, 1980 p.94).

The second section was designed to measure directly and subjectively the training and motivation of employees in companies.

In this research, there are 2 versions of questionnaire, which are English and Thai version. As these questionnaires were distributed in UK, Thai version was conducted in order to clearly understand for employees and Thai customer (see Appendix1 -2). Conducting Thai version is restriction of missing communication.

Questionnaire for Catering group’s customers

Part 1

Question 1-5 ask about the demography and personal data, for example, gender, age of the respondent (i.e. customer), marital status , working status ,income per annum and basically information. such as how customer find or know the restaurant.

Wording

1. Gender: Male or Female

2. Age.

3. Marital status

4. Working status

The above four questions mentioned on gender, age ,marital and working status .The groups will be kept control. Each age group will also be divided into balance the methodology analysis. The respondent with age group and gender that do not match with the require or has already exceeded the questionnaires will be avoided.

5. Income per annum

This question consider in term of salary of respondent.

Wording

- How did you find this restaurant

6. This question consider in term of the way that customer receive restaurant’s data

Part 2

7. asked about

Wording

-How long have you been at Thai Square restaurant

8. asked about

Wording

-How many times do you eat at Thai Square restaurant per month

9. asked about

Wording

-How you rank yourself as a customer of Thai Square restaurant

10

PART 3

3.5 The sample design

3.5.1 Define the target population

To identify the aimed group is a significant part of research because the wrong selection of respondents results in an ineffective outcome or misleading at worst (Malhotra and Birks, 2006). In this case, the target population chosen was “Thai square restaurant customer�

This research is about what are the strategies employed by restaurant ,which is thai square restaurant to improve its effectiveness. Therefore , variable customers of restaurant are target group of this research. As the questionnaire was set up , the set of questionnaire was sent out to 100 key customers of restuarant. These set of questionnaire was distributed to particularly target group in order to get the relevant data .

Collis and Hussey (2003p.187) indicated that by conducting research the grouping of people from populations is the sample. For the research questions about motivation of staff in the second part , it was conducted in Thai square restaurant by sending out the question to 20 staffs.

3.5.2 Select a sampling technique

There are two types of sampling technique; probability sampling and non-probability sampling .Zikmund (2000 p. 350) stated that the probability sampling is a technique which samples are selected by chance. It includes simple random sampling, systematic sampling, stratified sampling and cluster sampling. Non-probability sampling relies on the decision of the researcher. As a result ,non-probability sampling was chose as being the most suitable method for this research, again because of time and budget restraints, and rather than allowing generalization to become critical (Sekaran, 2003). Non-probability sampling is compounded by convenience sampling, judgmental sampling and quota sampling (Wrenn at el 2006 p.184) .

Furthermore, this research project express non-probability sampling with convenience sampling technique that select the closest and most convenient peoples to do as respondents. Therefore, it is a cheap and easiest process to put on examples and object to represent the total population by using questionnaire (Saunders et al. 2003 p.327).

Therefore, in this research, researcher has specific chosen the respondents at 100 people both male and female who live in London and over 15 year-old. . The questionnaires will be distributed to customer who walk into the restaurant .It is stated that proper size of research, which use to solve any problems is 100 copies in generally. . It can help the researcher to receive the validity data and reliability data from the right feedback. Moreover, it usually help to answer the questions of what strategies are employed by Thai restaurant in London to manage customer relationships .

3.6 Data analysis

This research contains a quantitative data with statistical analysis. To analyze the questionnaires survey the Microsoft office excel (Excel) will be used in this process. This program can normally be used to code data from the questionnaires. Excel is a numerical data file that contains a worksheet that is set a variables for analyzing the collected data. Excel provides more effectiveness of the data analysis. Moreover, it is a multifunctional device for data analyzing.

Therefore, descriptive statistics is the means of data analyzing which may be indicated as means score , frequencies , percentage. Correlation is calculated to identify relationship between two groups .(Foster 1998 p.24-26) This research also used Statistical Package for Social Science (SPSS) Version 14.0 to analyze data. This program also can analyze the completed questionnaires into the easiest interpretable format. Descriptive statistics consists of the frequency and percentage in order to describe each variable that is associated with respondent data. (Foster 1998 p.24-26)

Many types of pie charts , tables, bar charts contained data is also used in this research. From the collected data and questionnaire analyzing , researcher can make a conclusion in order to respond to the research question as well as reach the research purposes and objectives. The researcher is acknowledged that finding the answers of the research questions while analyzing the data is an important process. To analyze data is the outcome to achieve this research. Moreover, the significant factors are the quality of data and the interpretations.

3.7 Validity and Reliability

Validate the sample

Sample validation focuses on justify the error sampling frame by screening the respondents in the data collection phrase (Malhotra and Birks, 2006). In order to avoid the problem of elemental errors, it is considered prudent to ask the respondents some screening questions before they are invited to participate. The respondents should have at least some basic knowledge or past experience of eating Thai square restaurant in order to make their opinions worthwhile.

3.8 Summary

The purpose of the chapter is to explain the research methodology, to discuss how the study is conducted, the procedures used to gather and organize the data and the methods that are used to analyze these data. Relationships among the proposed indications of research are presented.

The research process entails implementation and examination of the result as well as development of theories. The central research of this study concentrate on the theoretical concept of managing customer relationship strategies and its performance, and improve company service in term of customer satisfaction . In addition, the research is to examine the application of strategies in the company, particularly, Catering company (UK). To sum up, this research emphasizes the current situation of company, strategies implementation, and the life after the implementation.

Chapter 4

Data Analysis

Statement of the design analysis

This research will employ the possession of primary data with the use of a structured questionnaire. Some of the questionnaire survey techniques include personal administration, by mail to respondents(regular customer), or electronic distribution. The sample size of this research will cover ages in four groups which are group of under20 year, 21-30 year, 31-40 year,41-50year,51-60year, and 60 years up. The questionnaire will be printing out at the rate 200 copies.

The results will be analyzed by using Microsoft office excel program (Excel) to achieve the reliability and validity of the results. When the data has all been collected, SPSS is the computer program, which will be used to calculate collected data. The data analysis part can be divided into three sections which are demographic factors, consumer behaviour and Satisfaction with restaurant. Personally administered questionnaires are considered to be the best method for conducting. This research, since it has the advantage of efficiency in that the respondents come to the interviewer rather than the interviewer having to find the respondents.

The survey will take place around restaurant (Thai square) near Aldgate station. The plan is to randomly capture customers outside, around 1 or 2 meters away from the entrance to restaurant, the selection will not restrict in any way customers coming in or out of the restaurant. After asking if they are willing to take part in the survey, the questionnaire will hand to the respondents to complete on their own without any interference from the researcher.

Section 1

Questionnaire Analysis for Employee Responses

The figure below shows the level of overall satisfaction from employee to company.

Customer service department has the high value of mean (see appendix 3), which describe that employees in this restaurant satisfied most with the management system implemented in company. The functions provided in Customer relationship area are relevant to strategic management such as motivate staff ,training staff ,customer service lead to customer satisfaction and customer loyalty. These data collected from questionnaires can use to analyze the relationship between customers and the managing customer relationships strategies in restaurant.

No.

Statement

5

4

3

2

1

Strongly agree

(Percentage)

agree

(Percentage)

neutral

(Percentage)

disagree

(Percentage)

Strongly disagree

(Percentage)

1.1

you think the induction training given by restaurant is useful.

9(45%)

9(45%)

2(10%)

0(0%)

0(0%)

1.2

You understand your tasks, duties and responsibilities.

8(40%)

9(45%)

2(10%)

1(5%)

0(0%)

1.3

you understand the objectives of restaurant and how to achieve these objectives?

6(30%)

4(20%)

8(40%)

2(10%)

0(0%)

1.4

you can adapt knowledge and skill obtaining from job training to your performance?

5(25%)

6(30%)

7(35%)

2(10%)

0(0%)

Table 4.1 Percentage of achievement from employee’s response.

Figure 4.1 Report of percentage overall achievement from employee response

Q1.1 : you think the induction training given by restaurant is useful?

According to this question ,the number of staffs who understand induction training that restaurant provides for the new staff the results illustrated that there are 45% of staffs who strongly agree while the number of staffs who agree are 45%. The number of staffs who understand induction training are neutral which are 10%. On the other hand, no result for disagree and strongly disagree. It can be concluded all staff understand the basic beginning process for working.

Q1.2 : you understand your tasks , duties and responsibilities?

According to the chart, there are 8 staffs who strongly agree substituted by 40% and 9 staffs who agree substituted by 45% respectively understand their tasks , duties and responsibilities. While there are 2 staffs who are neutral substituted by 10% and only 1 staff who disagrees.

Therefore ,it is supposed that most staff understand their ta


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