Factors Influencing Customer Satisfaction Marketing Essay

Most companies are out to make profits. However, beyond this aim, there is the need to make sure that the customer is satisfied as well whilst doing so. By not compromising the customer’s satisfaction in the organization’s quest to make profits, the satisfied customer is likely to come back again and if possible bring along with them new customers the next time. Through word of mouth therefore an organization is likely to cut down on its marketing expenses since most of it will be done for them by a satisfied customer. The more customers are brought on board the more money the business makes. The reverse is also very true that if a customer is dissatisfied with an organization’s service he/she is likely to not return and will most likely discourage others from patronizing the organization’s services. This will most definitely not augur well for the organization since it will have to spend extra in trying to convince the customer again.

Gupta and Zeithaml, 2006 upon several research works arrived at the conclusion that improving customer satisfaction had a significant and positive impact on an organization’s financial performance. They indicated also that a 1% drop in customer satisfaction often led to a 5% drop in return on investment. Lee and Hwan 2005 named customer satisfaction as an antecedent to corporate profitability having conducted a research on Taiwanese firms. Achieving customer satisfaction was identified as one of the ways by which a firm could increase its financial return and market value as well. (Luo and Bhattacharya,2006). An integral model developed to link customer satisfaction, service quality and perceived value revealed that customer satisfaction and perceived value were two (2) very important determinants of post purchase behavior which included future recommendations and repurchase intentions.(Tam, 2004). He also added that the measurement and analysis of customer satisfaction were very relevant in establishing successful customer relations. Since it is in the organization’s own interest to ensure the satisfaction of their customers, it is also imperative therefore, that they are able to clearly ascertain what the definition of customer satisfaction is, the areas of the business that will ensure the customer is satisfied and lastly the best approach to be adopted in finding out from its customers that their expectations are being met and what needs to be improved if necessary.

Thus in competitive marketing environments where most businesses tend to compete for customers, customer satisfaction tends to become a distinctive element amongst businesses and thus a key component of business strategy. (McDaniel et al,2005).Research surveys conducted for close to 200 senior marketing managers indicated that 71% of them were in consonance with the idea of customer satisfaction being used as a useful metric for monitoring and measuring their business performances.(Pfeifer et al, 2010). The relevance of customer satisfaction as an important performance indicator for business continuity should therefore not be downplayed.

“Within organizations, customer satisfaction ratings can have powerful effects. They focus employees on the importance of fulfilling customers’ expectations. Furthermore, when these ratings dip, they warn of problems that can affect sales and profitability. These metrics quantify an important dynamic. When a brand has loyal customers, it gains positive word-of-mouth marketing, which is both free and highly effective.”(Pfeifer et al, 2010).

2.2 CUSTOMER SATISFACTION

2.2.1 Customer

According to the online business dictionary (2013) a customer can be defined in two ways;

“As the party that receives or consumes goods or services and also has the ability to make choices between different products and suppliers”.

Alternatively, the customer is “the entity within a firm who establishes the requirement of a process (example, accounting) and receives the output of that process (example, financial statement) from one or more internal or external suppliers”. However, this definition more inclined towards the area of quality control.

The customer could also be defined to be anyone who receives a product – either a good or service – from an organization. (Riley,2012). He further acknowledges the fact that the customer has to pay in most cases in order to obtain the product. Customers can be grouped as internal and external customers.

2.2.1a Internal Customers

“They are the members of staff or outside suppliers who contribute towards the service provided to the external customer.”(Riley,2012). Examples include colleagues, managers and staff in other functional departments. It is also worthy of note that good customer service to internal customers translates into good working relationship amongst staff which is vital for the business to function effectively. Howard J. Ross attests to this when he writes “Employees who feel satisfied and happy at their jobs naturally tend to be more helpful and considerate towards customers. It’s simple logic. If I like my job and the company I work for, I’m going to communicate to customers that we have a good product.”

2.2.1b External Customers

These are the people who patronize an organization’s products or services. They are the class of people commonly referred to as customers. It is worthy of note that businesses make contact with external customers beyond the point where the transaction takes place. Riley, 2012 also indicated the following as instances are when contact can be established with the external customer;

Customer enquiries about a product

Taking a customer’s order or payment

Product delivery

Handling of customer complaints

Carrying out of maintenance works and

After-sales services

In conclusion thence, adopting a more holistic (internal and external customers) definition for who the customer is will be to view the customer as one with a stake (not in a legal context) in a business.

2.2.2 Definitions

Oliver, 1980 defined customer satisfaction to be a post service evaluative judgment of a service encounter that results in a pleasurable end-state, based on combined assessment of the performance service factors that constituted that service.

“Satisfaction is an overall attitude towards a product provider or an emotional reaction to the difference between what customers expect and what they actually receive regarding the fulfillment of a need”. (Hasemark and Albinsson,2004).

Kotler(2000); Hoyer and MacInnis (2001) also defined satisfaction to mean one’s feeling of pleasure, excitement, delight or disappointment which results from comparing a products perceived performance to his or her expectations.

It is a step in the right direction to liken satisfaction to the contentment felt by a person when he or she fulfills a desire or a need or meets an expectation. It can also be a measure of how happy a customer is with a service or product of an organization. “Customer satisfaction is the single most important factor in the successful pursuit of customer referrals and customer loyalty. Every experienced business owner and senior executive worth his salt knows the value of repeat business and referrals to the long-term growth of his business.”(Frisch,2006).

The happiness of a customer in business can therefore be thought to be of immense value to an organization since it is likely to keep them coming back for more, facilitates their recommendation to others and ensures the going concern of the business.

“Customer satisfaction is also the overall evaluation of the service performances or utilization.”(Ciavolino & Dahlgaard, 2007). In marketing literature customer satisfaction is the customer’s overall evaluation of his or her purchase experience of a good or service. (Namkung,2008). Furthermore, the customer’s perception of service quality is dependent on his assessment of the product’s performance which is associated with the consumer experience.

Gerson, 1993 in his book Measuring Customer Satisfaction defined customer satisfaction as the customer’s perception that his or her expectations have been met or surpassed. He goes on further to point out that the center of a successful business today is by ensuring customer satisfaction. He writes “If your customer is not satisfied, he or she will stop doing business with you. All the things you do to achieve quality and provide excellent service are not important at all if you do not work to satisfy the customer.” Research further goes on to point out that customer satisfaction is commonly deemed a prerequisite for customer retention and loyalty as well as increasing profitability and market share.(Masroujeh, 2009).

Gerson’s notion of making sure that the customer is satisfied all the time is buttressed by EnhancePlus’ research into why customer satisfaction is so important today. The literature identifies significant changes in the attitude of customers over the last 10 years. It indicated the following that;

Some time past customers were less critical and vocal if they were not completely satisfied when doing business

Secondly, he indicated that in the past there existed a limitation in the choice of whom and where to go when doing business. Thus the concept of customer satisfaction was uncommon as a result of scarcity.

However, the literature goes on to point out that the above listed trends are changing and as a result this is what is happening now;

Customers are now becoming increasingly more demanding, less tolerant and very critical when their expectations are not met.

Customers also have a lot more choices as to whom and where to conduct business. Hence the customer has more power now in deciding whom to deal with if an organization does not satisfy their demands.

Other definitions for customer satisfaction include: Satisfaction is “the favorability of the individual’s subjective evaluation (Westbrook, 1980, p. 49); an overall customer attitude towards a service provider (Levesque and McDougall, 1996, pp.14); is a judgment that a product or service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfillment, included levels of under- or overfulfillment (Oliver,1997, p. 13); an emotional reaction to the difference between what customers anticipate and what they receive (Zineldin, 2000)”.

For the purposes of this study however, the customer satisfaction definition that it “is an experience-based assessment made by the customer of how far his own expectations about the individual characteristics or the overall functionality of the services obtained from the provider have been fulfilled (Homburg and Bruhn, 1998)” will be adopted.

This definition is most relevant to emphasize that customers assess mobile services based on their user experience and their evaluation is in reference to mobile service attributes only. Thus, the satisfaction of the Ghanaian MTN subscriber in this study is with regards to their user experience in the areas of network coverage, network quality, promotion, billing/pricing,validity period and customer service.

2.2.3 Factors Influencing Customer Satisfaction

Oliver’s definition of customer satisfaction in 1980, suggests that customer satisfaction is achieved after the combined assessment of the service factors that constituted that service. This therefore goes to point out the relevance of identifying the various antecedents that best influences a customer’s experience and improving upon them at all times. It has been proven also that there is the need to always aim to affect both the expectations and experiences of customers when seeking to attain customer satisfaction leadership. This assertion is true because research shows that customer service interaction first begins with what the customer’s expectations are. These expectations are subject to change over time as the customer makes use of the service. Past encounters of the customers will shape the most, the customer’s future expectations.(Budi, 2010).

Satisfaction is influenced by many factors including friendly employees, courteous employees, knowledgeable employees, and helpful employees, accuracy of billing, competitive pricing, service quality, good value and quick service. (Hokanson,1995). Howard J. Ross also writes “The single most important factor that affects customer satisfaction is employee satisfaction.” The subject matter (factors that affect customer satisfaction) is very contextual as shown by research. Research by Lukoma and Phuc, (2011) pointed out that customer satisfaction in the supermarket industry was influenced by location, additional services, product quality, service quality, facilities, reliability, processes, value for money, staff and personnel service. (Marjo, 2009) in his research work on customer satisfaction was of the view that expectation and experiences were the most influential factors in customer satisfaction. He goes on further to point out that the customer’s expectations can be classified as ideal expectations, pre-expectations and minimum expectations, commonly referred to as the tri-partition of expectations. Cheolho Yoon, (2010) found that customer satisfaction in the online banking business in China was influenced by factors such as ease of use, design, speed, security, information content and customer service support whereas Budi, (2010) reported that branding, service quality, promotion and customer experiences were the most important determinants of customer satisfaction in the online ticketing industry.

Investigations by Leelakulthanit and Hongcharn(2011) into the determinants of customer satisfaction revealed the following after interviewing four hundred mobile phone users in Thailand, that promotional value, quality of customer service at shops and corporate image were the most important factors.

Another research conducted in Bangladesh showed that brand image and perceived call rate were the two most influential. (Alom, Khan & Uddinl, 2010).

Customer satisfaction in the telecom industry of Bahrain revealed that 61% of the customers were somewhat satisfied, 34% were satisfied and 5% were dissatisfied. The factors that accounted for the following included attractive offers, signal quality, fair charges and voice quality proved to be the most influential.(Almossawi,2012).

The factors that affect customer satisfaction seem to vary from industry to industry and also seem to be influenced by the culture of the people. However, some factors are true in most cases that for the customer to be satisfied their expectations should be met. Thus, the antecedents suggested by Taylor and Baker,1994 and Rust and Oliver,1994 will appear to be more generalized and suitable in most cases. Some of which will be touched on further below.

2.2.3a SERVICE QUALITY

Service quality is “the difference between customer expectations and perceptions of service” or alternatively as “the customer’s satisfaction or dissatisfaction formed by their experience of purchase and use of service.” (Gronroos, 1984 and Parasuraman et al,1988).

Parasuraman, Zeithaml and Berry,1988 developed the SERVQUAL tool for the measurement of service quality as a determinant of customer satisfaction. The tool is helpful in analyzing service quality and describes customer satisfaction to be the gap between the customer’s expectations and their actual experiences. Parasuraman, 1985 therefore proposed that service quality(Q) be measured by subtracting the customer’s perception scores(P) from the customer’s expectations(E). Service quality is thus Q=P-E. The tool is a widely accepted standard for analyzing the various dimensions of service quality.(Buttle,1994). Service quality was realized to comprise five dimensions. (Parasuraman et al.,1988). These dimensions were;

Reliability; This is the ability to perform the promised services dependably and accurately.

Tangibles; The appearance of physical facilities, equipment, personnel and communication materials. It also covers all physical products involved in service delivery and even other customers.

Assurance; the knowledge and courtesy of employees as well their ability to convey trust and confidence.

Empathy; It is the provision of caring and individualized attention to customers.

Responsiveness; This describes the willingness to be at the service of customers, provide prompt service and how fast that service is given.

Zeithaml suggested the addition of four other factors to the five dimensions already proposed by Parasuraman for a more comprehensive assessment of service quality. They included;

Communication; The propensity to communicate with the customer in a way they understand and deem natural as well.

Credibility; This is being able to trust the supplier

Courtesy; This refers to the demeanor of the supplier, that is how polite or kind they are.

Access; It is ease with which the customers can reach the supplier. It factors in business opening hours, business availability, position etc.

The SERVQUAL tool was criticized for not including price and expectations in the measurement of service quality.(Boulding, Kalra et al, 1993). The SERVPERF model was later developed to cater for the lack of a clear linkage between satisfaction and perceived service quality. It was developed on research that showed that service quality was not dependent on expectations, and could be measured directly by simple performance based measures of service quality.(Cronin and Taylor, 1994).

2.2.3b PERCEIVED VALUE

Perceived value is the consumer’s overall assessment of the utility of a product based on the perception of what is received and what is given.(Zeithaml,1988). She also added that the subject matter is a subjective one and varies from one customer to the other. The view commonly shared by most researchers is the look at value as the subjective perception of the trade-off between multiple benefits and sacrifices relative to competition.(Ulaga,2003;Dall’Olmo Riley,2000; Walter et al,2001). The benefits mentioned took into account the customer’s desired value e.g quality.(Monroe, 1990). Sacrifices on the other hand was in reference to the monetary (price) and non-monetary (time, effort etc.) considerations of the customer.(Cronin et al,2000; Dodds, Monroe & Grewal,1991; Monroe,1990). Monroe, (1990) went on further to identify two (2) very important ideas that could be formed in the discussion of customer perceived value which includes;

A culmination of the consumer’s pre-purchase perception (expectations), evaluation during the transaction (expectation versus the received) and the post-purchase assessment (expectation versus received).

Secondly, the measure of the lag between the benefits received and the sacrifices made by the customer.

The customer’s perceived value can therefore be best maximized by increasing the customer’s perceived value or decreasing their sacrifice.

Research also goes to show that customers who are perceived to have received value for money are satisfied as compared to those who are thought to have not.(Zeithaml,1988). Anderson, Fornell and Lehman(1996), shared the same opinion in the research they conducted to determine the relationship among customer satisfaction, market share and profitability. They proposed that value had a direct impact on how customers related with their suppliers.

Studying perceived value is important because, unlike perceived quality, it has a more direct bearing on the consumer’s willingness to buy.(Dodds and Munroe,1985). Also, the need to provide value to customers on a regular basis and in an effective manner is for creation and retention of satisfied customers.(Schiffman and Kanuk,2004).

2.2.3c INTERNAL CUSTOMER SATISFACTION

Research has shown that employees who are satisfied with their jobs tend to be more considerate and helpful to customers.(Ross,2010). Hill and Alexander, 2000 also reported that “employees that are more motivated to achieve customer satisfaction tend to be more flexible in their approach to their work, make fewer mistakes and use more initiative.” Satisfied employees are likely to demonstrate higher commitment levels to their job as well as team effort.(Kohli and Jaworski,1990). Schlesinger and Heskett, 1991 were also of the opinion that employee satisfaction could be achieved through incentive, training and frontline choices in the organization.

Wilson and Frimpong,2004 through Isen’s findings were able to prove that satisfied employees were more helpful to each other and this in turn impacted positively on quality and customer satisfaction. Band, 1988 and George 1990 wrote that employee satisfaction is a strategic weapon for achieving service quality and higher customer satisfaction.

Research by Sears Roebuck et al revealed that, a 5 point increase in employee attitudes led to a 1.3 rise in customer satisfaction which in turn translated to a 0.5 rise in revenue. Brooks,(2000) concluded that depending on the segmentation of the market and the type industry, about 40 to 40% of customer satisfaction and loyalty can be attributed to employee attitudes and customer related variables. Adding to that, Vilares and Cohelo, 2000 found that perceived employee satisfaction, perceived employee loyalty and perceived employee commitment impacted greatly on perceived product quality and perceived service quality. It can be said therefore that employee satisfaction not only traverses employee commitment and loyalty but directly and indirectly impacts on critical customer satisfaction related variables. Fig. 2.1 below summarized Vilares and Cohelo’s suggestions.

Fig. 2.1 Vilares and Cohelo, 2000

To conclude, the relationship that exist between employee satisfaction and customer satisfaction can best be accounted for, for the following reasons;

Employees that interact with customers are best suited to develop awareness of and respond to customer goals and needs

The satisfied employee is a motivated one and is in a better position to deliver adequate effort and care.

Satisfied employees are empowered (that is they are resourceful, have the requisite skills) to understand and serve customer needs and demands.

The satisfied employee is also very willing to give good service. At the very least they can deliver a more positive perception of the service or product being provided.””