The importance of customer satisfaction in service

Explain the Importance of customer satisfaction In service organizations The alma of this essay Is to explain the Importance of customer satisfaction In service organizations. Clear meaning of the customer satisfaction has been provided along with the causes and results from the effective implementation. J. Heist’s “service- profit chain” model has been used in order to understand the relationships between profitability of a service organization with customer satisfaction and loyalty and the outcomes of this relationship.

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Examples has been illustrated based on the first five ass study from Livestock’s book “Services Marketing: A European Perspective” (See appendix 1). Furthermore the identification of methods and techniques of customer satisfaction measurement has been illustrated. Finally techniques and strategies for customer satisfaction Improvement have been discussed. More and more service organizations nowadays recognize that customer satisfaction Is crucial for business success.

Additional, understanding and anticipating what customers want and require for the future, has led service organizations scrupling for possible service features and managerial factors that will enable them to template a positive response and astonish their customers. However, a question has been raised of which service attributes and qualities are decisive for the satisfaction of the customer and which features merely prevent dissatisfaction (Matter et al. , 1996). Various model have been developed attempting to clarify the meaning of customer satisfaction, what causes It and what results from It. J.

Highest et al. Has developed the service-profit chain (appendix 2), which establishes relationships between profitability, customer loyalty and employee satisfaction, loyalty and productively . Moreover, Keno’s (1984) model of customer satisfaction (appendix 3) delightfulness between three types of product requirement, which Influence customer satisfaction in different ways when met. Must-be requirements, one-dimensional requirements and attraction requirements (Matter et al. , 1996). Furthermore, in his journal “Customer satisfaction and the internal market: Marketing our customers to our employees”, Engel F.

Pierce re-examines the belief that customer satisfaction lies at the heart of all the endeavourers of all organizations by analyzing the internal and external customer satisfaction, internal and external quality of service and the relationship between internal and external markets (Pierce, 1 995) . Although the models, mentioned above, have been useful materials for understanding the concept and meaning of customer satisfaction, for the purpose of this essay more attention will be given on J. Heist’s “service-profit chain” model, as little emphasis has been given to the service organizations by the other two models products (I. . Cars, PC’s, etc. ). However, there are companies that their core products re tangible such as “Sullivan Motor World” but at the same time there are services that support these products (supplementary services) such as after sales support and service and there is a need to be studied also, as they are part of the organization’s overall process and will affect the customers’ opinion for the company. As it can be seen in appendix 2 there are several links in the service profit chain that have to be carried out effectively in order to bring about in generating customer satisfaction.

The factors that have to be considered in each link along with their exults either positive or negative will cause either customer satisfaction or dissatisfaction. For example, beginning from the first link, the internal service quality, and referring to “Sullivan Motor World” case study, it can be realized that the lack of the appropriate workplace design in the service department along with the lack of new sophisticated computer systems made the service work process time consuming and hard in contributing to the overall image of the company.

Scarcely customers are becoming satisfied if the working environment does not contribute the most to employee satisfaction. For that reason, if Mrs. Costa was not satisfied with her Job, colleagues, working environment and the bank as a company, she would not handle Mr. Malaise’s problem with such professionalism. Employees feeling enthusiastic about their Job not only communicate this feeling both verbally and non-verbally, but are also eager to work hard towards satisfying their customers (Van Alloy, 1998).

The basic rationale of generating positive internal quality in services organizations depends on the overall management perspective which should guide decisions by managing the quality as an integral part of the whole organization and developing ND reinforcing its personnel to commit their selves to company’s goals and strategies. The effective management of the internal service quality will in turn increase employee satisfaction and thus reducing employee turnover. “Estimates suggest that separation, replacement and training costs are 1. 5 to 2. Times annual salary for each person who quits (Solomon, 1988), which means that the departure of a middle manager usually costs an organization around $75,000 (Dalton et al. , 1993)” . These figures, however, only begin to illustrate the value of retaining loyal employees. Long- inured employees develop personal relationships with customers. “These relationships are the foundation for a reinforcing cycle of positive interactions between employees and customers (Richened, 1993; Richened and Gasser, 1990; Schlesinger and Highest, 1991)” . Employees who perceive relationships with customers provide better service.

Customers who receive better service express fewer complaints and thereby create fewer problems for employees. Employees in turn react more favorably to encounters with customers as they are satisfied and these reactions result in better service and low level of employee turnover, which gain leads to higher customer satisfaction. Employee satisfaction sequentially will mean that employee retention and loyalty Where employees remain in the organization for several years, customers can experience continuity and at the same time the firm spends less on recruitment, selection, training and service familiarization.

In “Euro Disney: an American in Paris” case study there has been mentioned a problem of employee turnover and retention, which was not effectively handled and affected several problems to the company’s management. It is quite difficult for Euro Disney to expect from those employees who interact with the customers face-to-face to be retained and consequently be productive when they are not satisfied with their working conditions.

Something unmanageable can cause this kind of problem as the weather but employee’s needs and wants must be fulfilled as well, in order to be productive and for that reason the notion of employee as customer has been previously developed. For example, Berry (1981) states that whether managing customers or employees “the central purpose remains the same: the attraction of patronage through the satisfaction of needs and wants” (Rust et al. ).

In both cases individuals and organizations are involved in exchange. The nature of what is exchanged may vary, but the importance of satisfying needs and wants remains constant, meaning that the management of employees is often similar to the management of customers. In turn, employee retention and loyalty will result to the outcome of efficient productivity by employees. Positions must be designed so that employees can perform several Jobs if necessary.

For example from “Behindhand comes to London” case study can be understood that the effective scheduling programmer along with the reservation system and the layout of the restaurant have helped outlet’s management to enhance productivity with the best way and at the same time to keep customers satisfied. The appropriate and integrated implementation of the links in the service profit chain mentioned above will result to the external service value for the customer meaning that all the functions must be operated in a manner that the overall service concept will give the ultimate image of the company.

Singapore Airlines can be considered as the company with one of the best-integrated service concepts that influence the ultimate image of the company to their customers. For example the contemporary airplanes updates, ASIA employees’ philosophy and service culture with the appropriate training and recruitment as well as supportive tools and encouraging Job design facilitate the company’s efforts in producing the most suitable external service value for its customers which will influence the feelings and attitudes of their customers towards its services either positive or negative.

This will determine if our customer is either satisfied or dissatisfied. So far, the factors that cause customer satisfaction in a service organization have been examined with the illustration of a number of examples for a better understanding. Creating a satisfied customer by offering a superior external service value, the organization can gain a number of benefits including customer loyalty, company’s profitability and growth. It used to be thought that the differences in behavior between customers who are unnoticeable.

In reality the differences are truly significant and if are not implemented with the write manner the implications for the organization that is complacent would be catastrophic. The customer who is merely “satisfied” is between seven and ten times more likely to move to our competitors than a customer who is “very satisfied” (JIM study text, 2002). For that reason Xerox puts its effort to create the so-called “Apostles”, customers so satisfied that they convert the uninitiated to a product or service and avoid creating “Terrorists” customers so unhappy that they speak out against o poorly delivered service at every opportunity.

Terrorists can reach hundreds of potential customers and with the word of mouth even discourage them to try the service (Highest et al. ). It is the “very satisfied” customer who is genuinely loyal to the company and will repurchase the product. According to JIM study text if the organization makes a mistake or delivers unusually or service it is the “very satisfied” customer that will forgive the organization arguing that the mistake or the poor service was an unfortunate aberration, which will soon be corrected.

Operating since the late ass ASIA has achieved to create loyal customers by stressing the importance of the company’s customer philosophy and service culture. The underlying principle that the customer comes first was carried out through at all levels of the organization all these years. The endeavourers of ASIA to create loyal (lifetime) customers has led the organization to achieve high profits as “the lifetime alee of a loyal customer can be astronomical, especially when referrals added to the economic retention and repeat purchases of related products” .

Naturally when an organization achieves high profits through lifetime and satisfied customers, growth inevitably follows. Having examined the service profit chain model it can be concluded that the corporate culture within the organization will affect the production of superior external service that will lead the company to the mastication of its profits through the customer satisfaction. However, a common concern has been developed the last cascade of how the customer satisfaction can be measured. According to B.

Van Alloy et al. The level of customer satisfaction is the result of a customer’s comparison of expected service quality with perceived service quality. If the overall service quality meets customer’s expectation than the company has created a satisfied customer but also if the service quality exceeds the expectations, the service organization has Just created a delighted customer. However measuring the service customer’s satisfaction levels is still one of the most subjective and difficult parts for management.

According to Lovelace et al. A survey research instrument called SURVIVAL has been developed by Chitchat and her colleagues based on the premise that customers can evaluate a firm’s service quality by comparing their perceptions of its service with their expectations. “Although SURVIVAL has been widely used by service organizations, doubts have been expressed with regard to both its conceptual foundation and methodological limitations” . In order for the company to measure the customer satisfaction.

Focus groups can facilitate the company to acquire information on changes in customer tastes and acquirement and reasons of using its services resulting to the fulfillment of these factors for the creation of a satisfied customer. Also focus groups attempt to uncover the underlying motivations behind consumers’ opinions, attitudes, perceptions and behavior (Beanies & Chinstrap, 2002) helping the service manager to identify the attribute and qualities that make the customer satisfied I. E. The perceived service quality.

On the other hand projective techniques and depth interviews might be costly and time consuming for the company resulting though to a more coherent connotations. Also service organizations that operate in an ever-changing environment can proceed to sophisticated quantitative methods such as observation and retail shop audit and to carry out continuous surveys monitoring the service customer’s satisfaction level. Conducted properly, customer satisfaction measurement can provide a wealth of information directly related to an organization’s strategic plan.

Improperly conducted, such measurement do little more than provide interesting but not very useful information. In order for a service organization’s managers to improve the customer satisfaction a number of techniques and strategies must be considered for further planning of maintaining and enhancing the customer satisfaction. As it has been discussed earlier there are a number of links in the service profit chain, which have to be implemented together effectively, in order to cause customer satisfaction.

For that reason service organizations have to adapt a corporate service culture that will help all the links in the model work together effectively and in an integrated manner. A well-known and well-understood vision should be provided to employees explaining them what the organization is trying to achieve. Employees should respect everyone’s contribution as well as the customer. Through an honest and open approach of the every day work, the contribution will arrive easier and the solution of the problems will be responded promptly.

In order to keep employees in a certain manner the need of a successful, valuable and passionate leader is needed who will be open to suggestion, face direct the customer and understanding the front-line employees. Furthermore initiatives must be encouraged especially for the front line employees when dealing with customers. This can be achieved by the appropriate recruitment, training and enhancement of relationships of employees.

Moreover the dedication of company to team work can be observed as another tool of improving customer satisfaction. “For example in ASIA, the 6,600 crew members are divided into teams, with a team leader in charge of about 13 people who are restored to fly together as much as possible” . Furthermore companies can make use of a mixture of financial and non-financial reward systems, usually linked to various performance measures but with the focus on customer satisfaction as the key goal.

However, all the above were strategies and techniques for the appropriate implementation of the links that cause customer satisfaction. Also it has to be mentioned some strategies that will increase customer satisfaction. Reward promotional tools, short-term fads which give something for nothing (Van Alloy, 1998). Also Van Alloy identifies another strategy called: the learning-relationship strategy in which the company learn about the specific characteristics and requirements of individual customer and then capture these data for use as needed.

This can be achieved with the today’s advanced technology and the building of database that enable organizations to customize their services. Finally, management need to consider the importance of customer satisfaction in service organizations. Successful organizations, irrespective of nature or size, have one thing in common – the loyalty of their customers. Organizations that spend time, effort and money on anticipating and fulfilling customers’ needs and requirements will undoubtedly reap the benefits from loyal customers by enhancing customer satisfaction.