The Relationship Between Customer Satisfaction and Loyalty

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INTRODUCTION

Customers are becoming ever more demanding, and in most markets they have more options to choose from than ever before. . A customer is a person who becomes accustomed to buying from you. Without a strong track record of contact and repeat purchase, this person is NOT your customer; he is a buyer. A true customer is grown over time. The satisfaction a customer gets from the consumption of an organization’s product or service pre-empts his or her subsequent decisions on the same products and services. 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.
Customer satisfaction involves an orientation that says, "take care with all parts of the process that develops a good or service for the ultimate customer." The process orientation allows an organization to look at what the contributions of all departments are in satisfying the multiple customers.
A well designed customer satisfaction approach can eliminate much of the guesswork regarding how customer satisfaction directly affects business outcomes. It can provide direct estimates of the bottom line improvements you would achieve from specific increases in satisfaction levels. A Customer Satisfaction program helps you determine:

▪ Key drivers of satisfaction ▪ Items that make the greatest contribution to the driver ▪ Components of the driver that should be invested in ▪ Overall level of satisfaction ▪ Overall satisfaction level’s effect on business outcomes

According to Jill Griffin, a consultant and also corporate



References: ▪ Anderson, H. & Jacobsen P. N., 2000, Creating Loyalty: Its Strategic Importance in Your Customer Strategy. In S. A. Brown, ed., Customer Relationship Management, Ontario, John Wiley, 2000, pp. 55-67. ▪ Anton, J., 1996, Customer Relationship Management: Making Hard Decisions with Soft Numbers, Upper Saddle River, Prentice-Hall. ▪ Bansal, S. & Gupta, G., 2001, Building Customer Loyalty Business-to-Business Commerce. In J. N. Sheth, A. Parvatiyar& G. Shainesh, eds., Customer Relationship Management. New Delhi, Tata McGraw-Hill, 2001, pp. 3-25. ▪ Clarke, K., 2001, What Price on Loyalty When a Brand Switch is Just a Click Away Qualitative Market Research: An International Journal, 4 (3), pp. 160-168. ▪ Coldwell, J., 2001, Characteristics of a Good Customer Satisfaction Survey. In J. N.Sheth, A. Parvatiyar & G. Shainesh, eds.,Customer Relationship Management, New Delhi, Tata McGraw-Hill , 2001, pp. 193-199. ▪ Fornell, C., 1992, A National Customer Satisfaction Barometer: the Swedish Experience, Journal of Marketing, Vol. 56, pp. 1-18. ▪ Hoyer, W. D. & MacInnis, D. J., 2001, Consumer Behaviour. 2nd ed., Boston, Houghton Mifflin Company. ▪ Jill, Griffin, 2002, Customer Loyalty, How to Make, How to Earn it, Jossey-Bass, A Wiley Imprint, San Francisco ▪ Kotler, P., 2000, Marketing Management ▪ LaBarbera, P. A. & Mazursky, D., 1983, A Longitudinal Assessment of Consumer Satisfaction, Dissatisfaction: the Dynamic Aspect of Cognitive Process, Journal of Marketing Research, Vol. 20, November, pp. 393-404 ▪ McIlroy, A ▪ Reichheld, F. F., 1996, The Loyalty Effect: The Hidden Force Behind Loyalty, Boston, Harvard Business School. ▪ Sivadass, E. & Baker-Prewitt, J. L., 2000, An Examination of the Relationship Between Service Quality, Customer Satisfaction, and Store Loyalty, International Journal of Retail & Distribution Management, 28 (2), pp. 73-82. ▪ Zairi, M., 2000, Managing Customer Dissatisfaction Through Effective Complaint Management Systems, The TQM Magazine, 12 (5), pp. 331-335.

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