CUSTOMER SATISFACTION

Customer Satisfaction has always been in the central themes of service industry. Zeithaml et al.
(1993) proposed that customer satisfaction is a function of customers evaluation of service
quality, product quality and price. Ostrom & Iacobucci (1995) defines customer satisfaction as “a
relative judgement that takes into consideration both the qualities and the benefits obtained
through a purchase as well as the costs and efforts borne by a customer to obtain that purchase”.
Again, satisfaction can be regarded as the rating of consumers experience with the outcome of
the service (Mittal & Lassar, 1998). Giese &Cote (2000) after reviewing the literature about
customer satisfaction from 1969 to 1997found out that customer satisfaction consisted of three
basic elements: response, focus and time. Based on these findings, White & Yu (2005) define
satisfaction as an “affective summary response” towards the consumed product or service.

Gilbert & Veloutsou (2006) argue that customer satisfaction is derived from the customers
comparison of the expected and actual experience. Such expectations are obtained from both
ideal and comparative principles. Ideal principle is what the service should be; while,
comparative is what customer can realistically expect based on their previous experiences.
However, there is no real means for measuring the customer satisfaction as it is completely
characteristic that is it is defined uniquely from individual to individual.

Customer satisfaction with an organizations products or services is often seen as the key to an
organizations success and long-term competitiveness (Athanassopoulos et al.,2001). Retaining
the cost-effective consumers has become increasingly complicated in the present competitive
business world (Leverin & Liljander, 2006) and hence, the marketers and organizations are not
ready to compromise on customer satisfaction. The major concepts on which the customer
satisfaction is been built upon is the wants, needs and expectations of the customers (Kotler et
al., 2008). These attributes are in turn derived from other factors such as price, quality, choice,
convenience, appeal and previous experiences.

Types of Customer Satisfaction

Jones & Suh (2000) suggest that two diverse types of customer satisfaction exist: the transaction
specific and overall satisfaction. Transaction specific satisfaction is associated with an explicit
encounter with the firm. This perspective by focusing on customer emotional behavior to specific
service attributes or service encounters, suggests that organizations connect the performance of
precise service elements or variations of them to specific psychological group (Olsen & Johnson,
2003). The authors argue that overall satisfaction is a better indicator of customer intentions and
behavior. Overall satisfaction is accumulative sum of satisfaction with specific services or
products of the organization along with other factors of the company (Garbarino & Johnson,
1999). So, overall satisfaction could be viewed as a general outlook the consumer has to the
company or specific products or services. Auh et al. (2003) suggest that this overall feeling of
satisfaction is comparatively stable over time and is less sensitive to transition specific reactions.
However, Johnson (2001) identifies these two perspectives as more complementary than
competitive.

Again, there are certain characteristics that have an unhelpful impact on customer satisfaction on
not delivering them, but still only have negligible positive impact even if they are improved to a
satisfactory level (Conklin et al., 2004). These features known as the ³mustbe´ attributes have a
multiplicative relationship with the overall customer satisfaction as the failure of delivering these
³must be´ attributes could cause decline in the overall satisfaction (Conklin et al., 2004). Hence
these could be considered as key dissatisfiers. It is a major challenge for marketing managers to
identify these and nullify the effects or reduce it.

Satisfaction and Loyalty

Keeping customers satisfied is what leads to customer loyalty (Douglas et al., 2006). Customer
loyalty is a big worry for managers and thus it is becoming a major topic in marketing research.
This increasing concern is due to the extreme competition in the business field and due to the
emergence of relationship marketing (Bodet, 2008). Customer satisfaction drives customer
loyalty and customer loyalty in turn is the driving factor of profitability and growth of the
organization (Heskett et al., 1994). Based on the purchasing habits of customers, Srinivasan et al.
(2002), divides loyalty into four various categories:(1). Undivided loyalty, (2). Divided loyalty,
(3). Unstable loyalty and (4). No loyalty. Initially customer loyalty was considered strictly
behavioral. But later, scholars failed to explain certain characteristics of customers and were
unable to distinguish true and fake loyalty (Bodet, 2008). The influence of situational, intrinsic
and cultural factors in the behavioral patterns forced the marketers to add an attitudinal content
in customer loyalty (Berné et al.,2001; Bandyopadhyay & Martell, 2007). Thus Jones & Suh
(2000) designed the mediation model in which it is shown that overall satisfaction is being
derived from transaction- specific satisfaction and finally overall satisfaction leads to attitudinal
customer loyalty.

Jones & Sasser (1995) grouped three diverse ways for measuring customer loyalty:

(1) intend to repurchase: It is about asking the customer about the future intentions of
repurchasing. Even though these are mere indications of future and there is no assurance, these
could be used as crucial factors while measuring customer satisfaction.

(2) Primary behavior: Companies have often access to transaction information of customers and
can measure factors such as decency, frequency, amount, retention and longevity. These are
indicators of genuine repurchasing actions.

(3) Secondary behavior: Word of mouth is one of the most significant aspects in attracting new
customers. Also, customer referrals and endorsements are also part of this secondary behavior.
However, these soft measures of behavior are difficult to evaluate and to link with the actual
customer loyalty and satisfaction.
According to Gremler & Brown (1996), customer satisfaction is not the only factor which
directly influences the customer loyalty; switching costs and inter personal relationships has also
got their voice in the process. However, the authors argue that the loyalty begins only after a
certain level of customer satisfaction is reached. Reinartz &Kumar (2002) claims that it costs
less to serve loyal customers while they are willing to pay higher prices for the same bundle of
goods; and the authors identify the loyal customers can market the company in an effective way.

Another important term associated with customer satisfaction and customer loyalty is the
profitability of the firm. Profit is an accounting figure and is revenue minus cost in simple
mathematical terms. King & Geursen (2001) developed a three-domain model of cash flow in
organization and in that the author argues the significance of cash flow from operations act as a
catalyst for other functions in the firm. Customers are the main source of cash flow in most of
the organization and increasing them by obtaining new customers or retaining the existing
customers becomes very crucial. Hence customer satisfaction becomes an important part in the
profitability of a firm. Customer satisfaction raises the future cash flow and reduces its
variability (Gruca & Rego, 2005). A loyal customer is more likely to involve in repeat
purchasing (Mittal & Kamakura, 2001; Olsen, 2002). Also, pricing can be used to enhance
profitability if the firm have loyal and satisfied customers. Research proves that highly satisfied
customers are willing to pay premium prices (Luo & Homburg, 2007; Homburg etal., 2005)

Measuring Customer Satisfaction

In this environment of extreme competition, businesses and organizations are trying hard to
survive by overcoming the growing unemployment and less disposable income of customers. So,
a customer oriented approach becomes important for both the profit and non-profit firms. To
understand the customer and to change according to their requirements companies need to
analyze themselves in the eyes of customers and measuring customer satisfaction provides this.
To the question why measure customer satisfaction, Harmon (2009) provides the following
answers: (1). To understand the customer quality expectations;(2). To improve existing products
and services; (3). To implement an environment of constant enhancement; (4). To create
customer loyalty; (5). To gain recognition; (6). To substantiate claims of success in market. If
you want to measure the customer satisfaction, you need to have a clear idea of what is to be
measured. For that the researcher need to know and feel like a customer in a shopping mall, on a
public transport, in the bank or anywhere. Hill et al. (2003) view customer satisfaction as the
measure of how an organizations total product and service performance in the scale set by the
requirements of the customer. So, to measure the customer satisfaction it is important to measure
both the expectation part and the satisfaction part.
Like other projects, the process of measuring customer satisfaction also should start with setting
the objectives. Identifying the customer requirements is the most crucial factor in this. There will
be a lot of important things from the perspective of a customer, but the key is to recognize the
critical ones. The next step is to measure the satisfaction that is how satisfied the customers are
with the performance of the organization comparing with the requirements. Comparing
themselves with a competitor can provide a benchmark in performance as the customers will do
this either consciously or subconsciously. Hence carrying out a customer
satisfaction measurement in isolation is never complete as the results or conclusions will not be
conveying the clear picture. However, this comparison should not necessarily be with the direct
competitors, it should be with other organizations that the customers deal with more often (Hill
et al., 2003). For example: customers going to a supermarket in their neighborhood out of three
or four supermarkets; not usually compare it with the other supermarket where they not go, but
with other organizations and services which is used to them.

Walk-through audit

Quality and delivery of a service should meet the customer expectations from the beginning to
the end of the experience. Being a part of the service process, the customer impressions of all
parts of the service experience is vital in the final service quality and thus in turn to customer
satisfaction and loyalty. A walk-through audit is a customer intensive study to discover the
ranges of enhancement (Fitzsimmons & Fitzsimmons, 2008). It’s an ecological audit which can
be used as an everyday managing tool for the organized assessment of a customer’s opinion of
the service provided. To do so first a flowchart is prepared of customer relations with the overall
services they are getting. In the case of this research, it starts with approaching the Sports direct
store in Liverpool One, walking into the store, the cleanliness and ambience of the store, the ease
of finding what the customer is searching for, the order in which the items are showcased, the
staff interactions, waiting in the queue for making the payment and finally, paying the bill and
receiving the item purchased. The researcher needs to include all the necessary variables to
analyze the customer satisfaction of that service. The walk-through audit is a chance to analyze
the service experience from the customers point of view (Fitzsimmons & Fitzsimmons, 2008),
because customers are more likely to be aware of flaws that the managers might have ignored.

Mystery Customers

According to Shepherd (2004), providing the customer with a customer experience which can
create a genuine customer loyalty is the hardest battleground business had ever faced. Mystery
shopping is a form of participant observation aiming to monitor the consistency of processes and
procedures used in the delivery of system (Wilson, 2001). According to Market Research Society
(MRS, 2008), “mystery customer can be defined as the use of individuals trained to experience
and measure any customer service process, by acting as potential customers and in some way
reporting back on their experience in a detailed and objective way”. In the context of service
industry, mystery customer will be able to provide information on the service experience in the
order it unfolds and will helps develop better knowledge of the experimental nature of service
(Wilson, 2001). Mystery shopping not only can used to measure the quality of service delivery
but also to benchmark by sending mystery guests to branch offices of competitors (Van der
Wiele et al., 2005). Mystery shoppers will be well trained and thus will know the procedures and
will be able to critically measure the services.

Customer Satisfaction Survey and Focus Group

These may be the most common methods used to measure customer satisfaction and/or service
quality. These aim to draw accurate information from the customers or the participants. In the
case of a questionnaire will be designed according to the needs of the survey and will be
distributed among the participants for completion. Focus group is used for a semi-structured
interview process and will include the customers, managers, front line staff etc.