According to Hansemark and Albinsson(2004), satisfaction is an overall customer attitude towards a service provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfilment of some need, goal or desire. Customer loyalty, on the other hand, according to Anderson and Jacobsen (2000) is actually the result of an organisation creating a benefit for a customer so that they will maintain or increase their purchases from the organisation. True customer loyalty is created when the customer becomes an advocate for the organisation, without incentive.
To be successful, organizations must cater to the needs, wants and demands of their customers. That is the reason why many companies have continuously focused on the importance of customer satisfaction and loyalty. Moreover, it has a positive effect on an organisation's profitability.
There is also a close and positive connection between customer satisfaction and loyalty. Therefore, customer satisfaction and loyalty are all very important for an organization to be successful.
Many researchers have looked into the importance of customer satisfaction. Kotler(2000) defined satisfaction as: a person's feelings (pleasure or disappointment) resulting from comparing a product performance in relation to his or her expectations. Hoyer and MacInnis (2001) said that satisfaction can be associated with feelings of acceptance, happiness, relief, excitement, and delight. There are many factors that affect customer satisfaction. According to Hokanson (2001), these factors include: friendly employees, courteous employees, knowledgeable employees, helpful employees, accuracy of billing, billing timeliness, competitive pricing, service quality, good value, billing clarity and quick service.
In order to achieve customer satisfaction, organisations must be able to fulfil their customers' needs and wants (La Barbera and Mazursky, 2000). Customers' needs state the felt deprivation of a customer (Kotler, 2000).Whereas customers' wants, according to Kotler (2000) refer to the form taken by human needs as they are shaped by culture and Individual personality.Get help with your essay from our expert essay writers...
However, Bowen and Chen (2001) said that having satisfied customers is not enough, there has to be extremely satisfied customers. This is because customer satisfaction leads to customer loyalty. Bansal and Gupta (2001):Building customer loyalty is not a choice any longer with businesses: it's the only way of building sustainable competitive advantage. Building loyalty with key customers has become a core marketing objective shared by key players in all industries catering to business customers. The strategic imperatives for Building a loyal customer base is as:
- Focus on key customers
- Proactively generate high level of Customer satisfaction with every Interaction
- Anticipate customer needs and respond to them before the competition does
- Build closer ties with customers
- Create a value perception
Sivadas and Baker-Prewitt (2000) said there is an increasing recognition that the ultimate objective of customer satisfaction measurement should be customer loyalty. Fornell (2002) said high customer satisfaction will result in increased loyalty for the firm and that customers will be less prone to overtures from competition. This view was also shared by Anton (2002) who said that satisfaction is positively associated with repurchase intentions, likelihood of recommending a product or service, loyalty and profitability.
Loyal customers would purchase from the firm over an extended period of time. (Evans and Berman, 2003). Guiltinan, Paul and Madden (2001) said that satisfied customers are more likely to be repeat (and even become loyal) customers.
Sivadas and Baker-Prewitt (2000)
Satisfaction also influences the likelihood of recommending a departmental store as well as repurchase but has no direct impact on loyalty. Thus satisfaction in itself will not translate into loyalty. However, satisfaction will foster loyalty to the extent that it is a prerequisite for maintaining a favourable relative attitude and for recommending and repurchasing from the
Store. Once customers recommend a department store it shows loyalty towards that store. Thus the key to generating loyalty is to get customers to recommend a store to others. Also, customers are likely to recommend a department store when they are satisfied with that store and when they have a favourable relative attitude towards that store. Evans and Berman (2003): Companies with satisfied customers have a good opportunity to convert them into loyal customers - who purchases from those firms over an extended period.
Based on the views and research, it can be concluded that customer satisfaction is very important. Thus, though customer satisfaction does not guarantee repurchase on the part of the customers but still it plays a very important part in ensuring customer loyalty .This point has been echoed by Gerpott et al. (2001) when they said customer satisfaction is a direct determining factor in customer loyalty, which, in turn, is a central determinant of customer retention. Therefore, according to me, organisations should always strive to ensure that their customers are very satisfied.
- Anderson, H. & Jacobsen P. N., 2000, Creating Loyalty: Its Strategic Importance in Your Customer Strategy.
- Bansal, S. & Gupta, G., 2001, Building Customer Loyalty Business-to-Business Commerce.
- Bowen, J. T. & Chen, S. L., May 2001, the Relationship between Customer Loyalty and Customer Satisfaction, International Journal of Contemporary Hospitality.
- Evans, J. R. & Lindsay, W. M., 2003, the Management and Control of Quality. 3rd Ed.
- Guiltinan, J. P., Paul, G. W. & Madden, T. J.,2001, Marketing Management: Strategies and Programs
- Hansemark, O. C. & Albinson, M., 2004, Customer Satisfaction and Retention: The Experiences of Individual Employees, Managing Service Quality.
- Hoyer, W. D. & MacInnis, D. J., 2001, Consumer Behaviour. 2nd Ed.
- Hokanson, S., January 2, 2001, The Deeper You Analyse, The More You Satisfy Customers
- Kotler, P., 2000, Marketing Management. 10th Ed.
- LaBarbera, P. A. & Mazursky, D., 2000, A Longitudinal Assessment of Consumer Satisfaction.
- Sivadass, E. & Baker-Prewitt, J. L., 2000, An Examination of the Relationship Between Service Quality, Customer Satisfaction, and Store Loyalty.