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This section will guide you into my customer satisfaction research p models.
Customer satisfaction is addressed as a strategic business developm satisfaction does have a positive effect on an organization's profita customers form the foundation of any successful business as custom leads to repeat purchase, brand loyalty, and positive word of mouth customers are most likely to share their experiences wi th other peo perhaps five or six people. Equally well, dissatisfied customers are another ten people of their unfortunate experience. Research has d even a difference between a totally satisfied custom er and a somew customer could lead to an increased revenue contribution of a facto
B2B organisations could definitively taken advantage of a proven sy satisfaction model. The challenge for most organisations is to imple standardized customer satisfaction process across their business m BU's. Ultimately it will lead to more loyal customers and more profi
For that reason (and many others), customer satisfaction should be quality improvement objective for B2B organisations.
"As far as customers are concerned you are the company. This is the core of your job. You hold in your hands the power to keep cu back, perhaps even to make or break the company."
A study in customer satisfaction and customer satisfaction models
Customer satisfaction is addressed as a strategic business development tool. Customer satisfaction does have a positive effect on an organization's profitability, satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty, and positive word of mouth. Satisfied customers are most likely to share
their experiences with other people to t he order of perhaps five or six people. Equally well, dissatisfied customers are more likely to tell another ten people of their unfortunate experience. Research has demonstrated that even a difference between a totally satisfied customer and a somewhat sa tisfied customer could lead to an increased revenue contribution of a factor 2.6.
B2B organisations could definitively taken advantage of a proven systematic customer satisfaction model. The challenge for most organisations is to implement and secure a standardized customer satisfaction process across their business models and across all BU's. Ultimately it will lead to more loyal customers and more profitable business. For that reason (and many others), customer satisfaction should be on eof the strategic quality improvement objective for B2B organisations.This research paper is all about customer satisfaction and causal customer satisfaction models for international B2B organisations. From a best practice point of view relevant research findings are copied and reused in this research study. I have not placed content and citations between quotation marks and have not given adequate source references of the original (paper , thesis, and dissertation) author to improve overall readability. I will add source references foot notes. I have not copied text or taken ideas from someone else's work in order to use that as if they were my own, notwithstanding the fact that it could have been my reflection of that specific topic. For that reason this research document should be valued as a research paper completed with a collection of research findings. Having said that, this research paper needs to be treated as it is. Hence it is only applicable for limited use and "free"distribution is not allowed as this would implicate plagiarism.
I have studied and examined academic papers, thesis and dissertations regarding relevant customer satisfaction and customer satisfaction modeling. All documents where public (free) available. Most important research documents used incl download link
My literature study and empirical research took off with the assignment of developing a customer satisfaction model for B2B organisations. Any organization has to listen to its external customers and stakeholders. A number of studies have shown that the long-term success of a corporation is closely related to its ability to create and maintain loyal and satisfied customers, adapt to customer needs and changing preferences. Customer satisfaction is a crucial goal for most organizations. In order to monitor customer satisfaction, and to take action for improving it, a number of different methods have been developed and tested. However, for the purpose of developing tangible applications for results a number of criteria have to be fulfilled in any such measurement system, not least if the ambition is to compare and benchmark. This is the spirit in which the research initiative of customer satisfaction was initiated. With my research I aim to to develop and/or advise a corporate B2B customer satisfaction model for B2B organisations based on proven customer satisfaction models and an advice for further improvement on the design of the corporate customer satisfaction. To this end, causal models are assessed and compared on the bases of the criteria and antec edents of customer satisfaction. To guide me through the process of research, I have reflected my logical and sequential steps in a conceptual model of research. This conceptual model starts with studying of scientific theories and concepts of customer sat isfaction, studying of academic papers, thesis and dissertations,
. customer expectations. In the research the emphasis lays on customer satisfaction and antecedents where the Rovaha Brand Equity (RBE) model applies. My literature research has revealed that customer satisfaction can be defined as an overall customer attitude towards a service provider. The groups built up the interface where latent variables. such as corporate image & brand image. commitment. The R BE model is used to classify the collected data onto the criteria and to keep the research synoptic. perceived product value. The challenge for most organisations is to implement and secure a standardized customer satisfa ction process across their business models and across all BU's.to create a common understanding of customer satisfaction. goal or desire. and customer loyalty are developed or even damaged. cognitive variables. affective variables. regarding the fulfillment of some need. being supported by three groups of variables. Ultimately it will lead to more loyal customers and more profitable business. or an emotional reaction to the difference between what customers anticipate and what they receive. To fulfill my research I have formulated the following questions: Which are the criteria for appraisal of customer satisfaction and how to classify these into antecedents? Which are the interdependencies of customer satisfaction models? What are the results of the comparison of different causal customer satisfaction models? Which recommendations can lead to improvement of customer satisfaction and th e effectiveness and efficiency of business development? B2B organisations could definitively taken advantage of a proven systematic customer satisfaction model. Satisfaction represents a veritable key of modeling the acquisition behavior of the customer. conative variables. perceived service value. customer satisfaction. perceived value.
Customer satisfaction is most often related to purchase. loyalty and retention behavior with a effect on an organizations profitability. and circumstances (time. My literature study has delivered an extensive source of customer satisfaction knowledge. Customer satisfaction is a highly variable personal assessment that is greatly i nfluenced by individual expectations based on his/her own information. Customer satisfaction involves the sum of personal (product and service) experiences dr iven by its antecedents. satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase. dissatisfied customers are more likely to tell another ten people of their unfortunate experience. Equally well. 1. My literature research exposed four general characteristics of custom er satisfaction involving features or qualities related to customer satisfaction serving to identify this phenomenon among other customer relationship management propositions. expectations. direct contact and interaction. thesis and dissertations in customer satisfaction and customer satisfaction models. location and environment). brand loyalty.6. I have chosen for a qualitative empirical r esearch study taken from a singular desk research angle which incorporates a study of academic papers. Satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people. Customer satisfaction does have a positive effect on an organization's profitability. . 3. 4. Customer satisfaction characterizes itself by a high degree of word -of-mouth where satisfied customers are most likely to share their experiences with other people to the order of 2. and positive word of mouth.Customer satisfaction is addressed as a strategic business development tool. Research has demonstrated that even a difference between a tot ally satisfied customer and a somewhat satisfied customer could lead to an increased revenue contribution of a factor 2.
The objective of all customer satisfaction models is to provide results that are relevant. In other words. causal construct. so called user requirement specifications. Customer satisfaction research should be done with greatest care. The purpose of each customer satisfaction construct is to be a structural equation mode l for standard measurement for evaluation of customer satisfaction based on a set of latent variables determined by a set of manifest constructs. and valid and have predictive financial capability. what it all comes down to is that they need to do some things differently. . the level of each latent variable estimated. Most B2B organisations will not succeed by simply doing more of what they are doing now. consistent. Each latent variable is measured. the relevant connections betwee n the latent variable established and the magnitude of the connections estimated. All models have an academic/scientific. Equally well.perhaps five or six people. Measuring customer satisfaction must be a continuously. This is where a corporate customer sati sfaction approach becomes a powerful strategic business development tool for B2B organisations. Desk research into the four most known causal customer satisfaction models (SCSB. NCSB. Being conscious of the aggressive and competitive B2B playing field B2B organisations should undertake direct action to avoid serious hindrance of th eir business development over the coming five years. timely. ACSI. adoption of a model needs to be guided by a set of objective selection criteria. we often are not aware of the extent of satisfaction / dissatisfaction as long as we do not ask. ECSI) have shown fundamentally similarities. Nevertheless they have some obvious distinctions in model's structure and variable's selection so that their results cannot be compared with each other. It is important to realize that many customers will not complain. accurate and reliable process. reliable. dissatisfied customers are more likely to tell another ten people of their unfortunate experience. Therefore.
2. Standardize process flow and reporting structures. 1. The means by which (customer) satisfaction is build may differ from time to time and from customer group/segmentation. For that reason I recommend to carry out the following strategic proposition. 3. 5. product. country. Customer satisfaction survey on a monthly base. business unit. Secure process ownership and process managers. 4. Implement a causal customer satisfaction model. or demographic culture is not relevant as long as accountable managers and marketers understand the relevance of each model latent and manifest variable in relation to the target group. B2B would benefit from a well-defined customer satisfaction model.Theory and best practices have proven that sustainable customer satisfaction models needs to be built on well-defined transparent processes and on a consistent approach. Ronald van Haaften Content Preface Executive summary List of Figures 1 Research formulation . whether this is based on geographic zone. Standardize multi lingual survey questionnaire. I shall emphasis my advi ce and recommendation on a structured causal customer satisfaction model. . As a consequence of the above.
1 Justification of customer satisfaction research .1. 1. 2 Theory of customer satisfaction .18.104.22.168 Consumers' formation of expected value 2.4 Multi-dimensional nature of perceived value 22.214.171.124.2. 1.2 Customer satisfaction 126.96.36.199 Conceptual design 188.8.131.52.4 Structure and classification . 1. 2. 2.7 Antecedents of perceived value and purchase intentions 2.1. 1.1 Which general characteristics of customer satisfaction can be defined? 184.108.40.206.1.9 Conclusion perceived value 2.3 Problem definition. 1.3 How to classify the criteria of customer satisfaction into antecedents? 3 Empirical research structure .4 Central questions.5 Perceived value 2.2 Preliminary analysis .5.1 Literature study 2.5. thesis and dissertations reviewed 2.5.2 Consequences of customer satisfaction and Dissatisfaction 2.5.5. 2.6 Corporate brand image 220.127.116.11.1 Which are the criteria for appraisal of customer satisfaction and how to classify these into antecedents? 18.104.22.168 Four types of value 22.214.171.124 Customer loyalty and customer retention 2.6 Classification of purchase -related costs and benefits.126.96.36.199 Introduction and reason for research .2 Literature research reflection 2. 188.8.131.52 Customer expectations 2.3 Conceptual research model.1 Academic papers.2 Definitions of perceived value 2.1.5 Research limitations 1.2.3 Context-dependent nature o f perceived value.2 Which criteria can be drawn from the theory of customer satisfaction? 2.2.8 Product value and product choice 184.108.40.206.1 Effect of customer satisfaction on profitability 2.
1 Document analyses 5 Analyses 5.2 Standardize multi lingual survey questionnaire. 7.1.1 Customer satisfaction index (CSI) models 5.3 Secure process ownership and process managers.1 The Swedish Customer Loyalty Barometer (SCSB) 5.1.1 Most important similarities and differences among the models .1 Implement a causal customer satisfaction model 7. 5.1 Empirical desk research 4 Data gathering 4.2 Comparison of customer satisfaction models. 3.5 Standardize process flow and reporting structures 7.4 Customer satisfaction survey on a monthly base.3 The Norwegian Customer Satisfaction Barometer (NCSB) 5. 7.2 Research objectivity and reliability .1.1 Research strategy and method 3.1.3. 7. 3.3 Research data collection. 6 Conclusion 7 Advice and recommendations 7.2.6 Critical success factors and pitfalls 8 Literature list .2 The American Customer Satisfaction Index (ACSI) 5.4 The European Customer Satisfaction Index (ECSI) 5.3.
220.127.116.11.6 Customer Satisfaction 9. Figure 2 Conceptual research model Figure 3 Rovaha Brand Equity model (RBE model) Figure 4 Research paper model Figure 5 Factors that affect customer satisfaction Figure 6 Performance measures reflecting long -term profitability Figure 7 Intrinsic.6 The Net Promotor Score 9.3.3 How to calculate 9.1 Customer Satisfaction Process 9.2 Customer Expectations of Rovaha Engineering 9. use and utilitarian value Figure 8 Customer value hierarchy model (woodruff 1997) Figure 9 Base model of channel purchase intentions Figure 10 Importance of brand functions in B2B versu s B2C Figure 11 Clasification of customer satisfaction criteria Figure 12 Research strategy and method Figure 13 The original Swedish Customer Satisfaction Barometer model Figure 14 The American Customer Satisfa ction Index model Figure 15 The Norwegian Customer Satisfaction barometer model Figure 16 The European .3.2 Survey equation model 18.104.22.168 The Mode 9.8 The variance List of Figures Figure 1 Quality improvement communication model derived from EFQM.2 The Median 9.2.1 The Mean 9.5 Customer perceived value of Rovaha Engineering 9.3 Customer Perceived Product Quality of Rovaha Engineering 22.214.171.124.1 Survey Model Questions 126.96.36.199.1 Internet sources 9 Appendix 9.1. exchange.3.7 Customer Loyalty 9.1.4 The range 188.8.131.52 The standard deviation 9.4 Customer perceived service quality of Rovaha Engineering 9.2.1 Image of Rovaha Engineering 184.108.40.206 The score per latent variable 9.2.
and to take action for improving it.Customer Satisfaction Index model Figure 17 Recommended SCI model .1 J us tifi ca tio n of c us tome r sa tis fac tion r ese arc h.2 Conceptual design 1 . .ECSI / EPSI model 1 Re s e a r c h f o r m u l a t i o n . 1. A number of studies have shown that the long-term success of a corpo ration is closely related to its ability to create and maintain loyal and satisfied customers. to create. Obviously customer satisfaction is often one of the strategic objectives of the corporate marketing communication st rategy plan. a number of different methods have been developed and tested. build and maintain the right set of brand associations as an enabler for future business. adapt to customer needs and changing preferences. not least if t he ambition is to compare and benchmark. In order to monitor customer satisfaction. for the purpose of developing tangible applications for results a number of criteria have to be fulfilled in any such measurement system. 1. However. Customer satisfaction is a crucial goal for most organizations. This is the spirit in which the research initiative of customer satisfaction was initiated.2 .1 Introduction and reason for research. Any organization has to listen to its external customers and stakeholders. Customer satisfaction is about the relationsh ip between the firm and its customers.
Motivation for developing surveys to measure customer satisfaction is based on the EFQM Excellence Model shown in figure 1. The practicality and applicability of this research adds knowledge to B2B organization. Thus a good knowledge of the level of customer satisfaction is vital for good performance. Accurate and relevant information of customer behaviour can only be accomplished by using sound scientific principles for measuring c ustomer behaviour. This research certainly will contribute in a positive manner to business development plans and quality improvement of B2B organisations and therefore will represent a considerable benefit. Figure 1 Quality improvement communication model derived from EFQM. . From this model it can be seen that "Customer Results" is one of the most important drivers to obtaine good performance of companies and institutions. The focus of customer satisfaction research is found in the "customer results" section of the model.
quarter or year).2 Pr e limi na r y an alysis . month. Hence. customer satisfaction surveys (CSS) will measure the latest .2 . Initial objective is to measure customers' satisfaction on periodic bases (once per week.1 . Customer satisfaction is often embedded in ISO quality management processes among mature B2B organisations.
accurate and reliable process. do. timely. Objective of this research is to develop and/or advise a corporate B2B customer satisfaction model for B2B organisations based on proven customer satisfaction models. department. Customer satisfaction research should be done with greatest care in order to capture reliable data and to avoid upset/anoy customers with "loose end" survey questionairs. consist an objective.experience and perception of the customer over the last (survey) period.2 . Measuring customer satisfaction must be a continuously. Survey results collected should be (quantitatively) analyzed and reported into the organization. In other words: a momentary snapshot of a given situation. The problem definition as I have defined. etc) need to address. With that in mind. check. execute and administrate actions to develop/improve their customer quality processes (plan. act). CSS managers (divisional. It should deliver a deepening of B2B customer satisfaction knowledge and a pragmatic contribution to custom er satisfaction management for B2B organisations. consistent. Four control questions concerning relat ed to the research objective: Is it relevant? It aims at a deepening of customer satisfaction. QHSE manager and MT. These central questions have been diverted into sub -questions that will guide the examination through the research process. the . and three central questions. 1 .3 Pro b le m d efi ni tio n . The research can complete actual knowledge with new insights and additional knowledge. Closing the deming cycle is the hard part as it needs a solid implemented operating model and an aligned organization to establish a high level of customer experience.
2 . Which are the interdependencies of customer satisfaction models? . The objective has been decisi vely formulated. 1 . a conceptual model has been formed and three central questions have been formulated with additional sub questions: 5.research delivers a relevant contribution. Is it feasible? The research will be carried out on an objectively and independently manner. With that. All these necessary reso urces are within a hand reach to realize the research. Actual literature is sufficient and relevant knowledge can be drawn out of that. Is it unambiguous? Objective and cause of research are clear defined. the research has been addressed and recognized as a critical factor of B2B communication strategy. it generates additional information. it is clear which type knowledge and information is going to be generated . From that perspective. Which are the criteria for appraisal of customer satisfaction and how to classify these into antecedents? Which general characteristics of customer satisfaction can be defined? \ Which criteria can be drawn from the theory of customer satisfaction? How to classify the criteria of customer satisfaction into antecedents? 6. In continuation on the objective. There is a sufficient B2B organizational basis for research. with that the research is unambiguous. Does it generate additional information? The objective refers to a deepening of B2B customer satisfaction models.4 C e ntr a l q ues tion s .
I have reflected my logical and sequential steps in a conceptual model of research. With my research I aim to recommend a corporate customer satisfaction model and an advice . To fulfill my research. thesis and dissertations on the basis of the latest scientific literature as published by the most influential experts of customer satisfaction theory.2 . I will not try to achieve a comprehensive summary of customer satisfaction in all facets. What are the results of the comparison of different causal customer satisfaction models? Which are the most important similarities and differences among the models? Which conclusions can be drawn out of the results? Which recommendations can lead to improvement of customer satisfaction and the effectiveness and efficiency of business development? 1 . See figure 2. The playing field of customer satisfaction is simply too broad and too deep.5 Res ea rc h limi tat io ns I have chosen to study public academic papers. 1. With a strong focus on my research questions.To what extent do causal customer satisfaction models meet the assessed criteria and antecedents? How can the customer satisfaction be measured? 7. which could contribute to B2B organisations.3 Conceptual research model. This does not mean that I allow myself to restrict my research to the extent of what I am familiar with. I will limit myself to the most relevant theory of customer satisfaction.
To this end. In the research the emphasis lays on customer satisfaction and antecedents where the Rovaha Brand Equity (RBE) model (Ronald van Haaften. The RBE model is used to classify the collected data onto the criteria and to keep the .for further improvement on the design of the corporate customer satisfaction of B2B organisations. thesis and dissertations. study of academic papers. Figure 2 Conceptual research model This conceptual model can be formulated as follows: Study of scientific theories and concepts of customer satisfaction. causal models are assessed and compared on the bases of the criteria and antecedents of customer loyalty. criteria to evaluate and compare the current cause and effect customer satisfaction model s on which models can examined. 2008) applies see figure 3.
The four sequential RBE steps provide a functional platform to identify the factors and criteria within different perspectives. I have subdivided the structure and classification of my research in four segments. Figure 3 Rovaha Brand Equity model (RBE model) 1.4 Structure and classific ation.research synoptic. (1) Theoretical .
.framework. (2) Research. Figure 4 reflects the research model. customer loyalty. (4) Syntheses. customer retention. This chapter explores what can be understood of customer satisfaction. Figure 4 research paper model 2 Theory of customer sat isfaction The objective of this chapter is to come to a deeper understanding of customer satisfaction. (3) Results.
and .1 Literature study In the literature research the emp hasis applies to customer satisfaction and integrated variables and antecedents to identify the factors and criteria within different customer satisfaction perspectives. th esis an d d iss er ta tions r evi e wed From a best practice point of view relevant research findings are copied and reused in this research study. 2 . complaints and corporate i mage.1 . I have not placed content and citations between quotation marks and have not given adequate source references of the original (paper. this justifies studying the theory of customer satisfaction from different point of views.perceived values. In continuation on the objective and the conceptual model the literature study will an swer the first central question of this thesis and under laying sub questions: Which are the criteria for appraisal of customer satisfaction and how to classify these into antecedents? Which general characteristics of customer satisfaction can be defined? Which criteria can be drawn from the theory of customer satisfaction? How to classify the criteria of customer satisfaction into antecedents? I start my literature study by an introduction into customer satisfaction. thesis. 2. Interdependencies and antecedents of customer satisfaction subjects will lead to models and vice versa. followed by an investigation of what researchers and experts have written about customer satisfaction theories and customer satisfaction models. The study focus primarily on the theories of cause-and-effect models.1 Aca de mic p ap ers .
For that reason my research should be valued as a res earch paper blended with a collection of research findings. service quality. helpful employees. knowledgeable employees. or an emotional reaction to the difference between what customers anticipate and what they receive. According to Hokanson (1995).1 . There are many factors that affect customer satisfaction. 2 . "satisfaction is an overall customer attitude towards a service provider.2 C us tom er sa ti sfac tio n Kotler (2000) defined satisfaction as: "a person's feelings of pleasure or disappointment resulting from comparing a product's perceived performance (or outcome) in relation to his or her expecta tions".dissertation) author to improve overall readability. these factors include friendly employees. According to Hansemark and Albinsson (2004). regarding the fulfillment of some need. notwithstanding the fact that it could have been my reflection of that specific topic. Further distribution is not allowed without appropriate comments and references as this would implicate plagiarism. happiness. competitive pricing. relief. Having said that. I have choosen to place a download link towards the original document in the footer of the web page wherever appli cable. I have not copied texts or taken ideas from someone else's work in order to use that as if they were my own. This is shown in figure 5 below. this research paper needs to be treated as it is. courteous employees. accuracy of billing. and delight. Hence it is only applicable for limited use. excitement. goal or desire". Hoyer and MacInnis (2001) said that satisfaction can be associated with feelings of acceptance. billing clarity and quick service. good value. billing timeliness. .
1 Effect of customer satisfaction on profitability Customer satisfaction does have a positive effect on .2. 2000). Whereas customers' wants.1. Customers' needs state the felt deprivation o f a customer (Kotler. 1983). 2.Figure 5 Factors that affect customer satisfaction In order to achieve customer satisfaction. according to Kotler (2000) refer to "the form taken by human needs as they are shaped by culture and individual personality". organisations must be able to satisfy their customers' needs and wants (La Barbera and Mazursky.
6 times as much revenue to a company as a somewhat satisfied customer. Equally well. 10.8 times what a totally satisfied customer contributes to a business". it is important to realize that many customers will not complain and this will differ from one industry sector to another. brand loyalty. dissatisfied customers are more likely to tell another ten people of their unfortunate experience. A totally satisfied customer contributes 17 times as much revenue as a somewhat dissatisfied customer. Coldwell (2001): "Growth Strategies International (GSI) performed a statistical analysis of Customer Satisfaction data encompassing the findings of over 20. satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase.000 customer surveys conducted in 40 countries by InfoQuest. Lastly. Zairi (2000): "There are numerous studies that have looked at the impact of customer satisfaction on repeat purchase. . The conclusion of the st udy was: A totally satisfied customer contributes 2. loyalty and retentio n. Aaker (1995) said that the strategic dimension for an organization includes becoming more competitive through customer satisfaction/brand loyalty. if people believe that dealing with customer satisfaction/complaint is costly. Satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people. They all convey a similar message in that: 8. they need to realize that it costs as much as 25 percent more to recruit new customers". 9.an organisation's profitability. and positive word of mouth. According to Hoyer and MacInnis (2001). A totally satisfied customer decreases revenue at a rate equal to 1. Furthermore.
product/service quality. relative cost. new product activity. brand/firm associations. According to Hoyer and MacInnis (2001). Figure 6 Performance measures reflecting long -term profitability 220.127.116.11 Consequences of customer satisfaction and Dissatisfaction The consequences of not satisfying customers can be severe. dissatisfied consumers can decide to: . and manager/employee capability and performance (Figure 6).
1 . 2 .3 C us tom er lo ya lt y an d c us tom er r e te ntio n According to Hoyer and MacInnis (2001). . This is because customer satisfaction must lead to customer loyalty. customer retention is "the practice of working to satisfy customers with the intention of developing long -term relationships with them". without incentive". 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.Discontinue purchasing the good or service Complain to the company or to a third party and perhaps return the item Engage in negative word -of-mouth communication. According to Anderson and Jacobsen (2000) "loyalty is actually the result of an organization creating a benefit for a customer so that they will maintain or increase their purchases from the organization'. Bowen and Chen (2001) said that having satisfied customers is not enough. Oliver (1997) said that custome r loyalty refers to "a deeply held commitment to re -buy or repatronize a preferred product or service consistently in the future despite situational influences and marketing efforts having the potential to cause switching behavior". However. Customer satisfaction is important because. there has to be extremely satisfied customers. according to La Barbera and Mazursky (1983). True customer loyalty is created when the customer becomes an advocate for the organization. "satisfaction influences repurchase intentions whereas dissatisfaction has been seen as a primary reason for customer defection or discontinuation of purchase". Zineldin (2000) said that retention can be defined as "a commitment to continue to do business or exchange with a particular company on an ongoing basis".
Also. 1997). satisfaction will foster loyalty to the extent that it is a prerequisite for mai ntaining a favorable relative attitude and for recommending and repurchasing from the store. loyalty and profitability". The strategic imperatives for building a loyal customer base are 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. Thus the key to generating loyalty is to get customers to recommend an organization to others. 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. likelihood of recommending a product or service.Building loyalty with key customers has become a core marketing objective shared by key players in all industries catering to business customers. customers are likely to recommend an organization . Fornell (1992) said "high customer satisfaction will result in increased loyalty for the firm and that customers will be less prone to overtur es from competition". Thus satisfaction in itself will not translate into loyalty. Sivadas and Baker-Prewitt (2000) said "there is an increasing recognition that the ultimate objective of customer satisfaction measurement should be customer loyalty". This view was also shared by Anton (1996) who said that "satisfaction is positively associated with repurchase intentions. However. Loyal customers would purchase fro m the firm over an extended time (Evans and Berman. Guiltinan. Once customers recommend an organization it fosters both repatronage and loyalty towards that organization. Paul and Madden (1997) said that satisfied customers are more likely to be repeat (and even become loyal) customers.
when they are satisfied with that organization and when they have a favorable relative attitude towards that organization. Customers may change providers because of price. or because the competitor is offering new opportunities. "a business that focuses exclusively on customer satisfaction runs the risk of becoming an undifferentiated brand whose customers believe only that it meets the minimum performance criteria for the category. in order to ensure that customers do not defect. As far as organizations a re concerned. it must be able to create loyalty amongst customers. Evans and Berman (1997): "Companies with satisfied customers have a good opportunity to convert them into loyal customers who purchases from those firms over an extended period". 65 to 85 percent of customers who defect to competitors' brands say they were either satisfied or very satisfied with the product or service they left. According to Storbacka and Lentinen (2001). they want their customers to be loyal to them and customer satisfaction does not guarantee this. Long -term customer retention in competitive markets requires the supplier to go beyond mere basic satisfaction and to look for ways of establishing ties of loyalty that will help ward off competitor attack". Clarke (2001) said that customer satisfaction is really no more than the price of entry to a category. According to Reichheld (1996). For satisfaction to be effective. Sivadas and Baker -Prewitt (2000) also said that it is not merely enough to satisfy a customer. or simply because the y want some variation (Storbacka and Lentinen. customer satisfaction is not necessarily a guarantee of loyalty. They said that in certain industries up to 75% of customers who switch providers say that they were ‘satisfied' or even ‘very satisfied' with the previous provider. Clarke (2001) said. Therefore. 2001). Bowen and Chen are correct to say that customers must to be extremely satisfied. Sivadas and Baker-Prewitt (2000): "There is increasing recognition that the ultimate objective of customer satisfaction .
loyal customers cost less to serve. purchasing their goods and services repeatedly. McIlroy and Barnett (2000) said that loyalty cannot be . but it is hard to have loyalty without satisfaction". McIlroy and Barnett (2000). The increased profit comes from reduced marketing costs. and recommending the services and products to friends and associates". "in a business context loyalty has come to describe a customer's commitment to do business with a particular organization. we can have satisfaction without loyalty. Finally. convenience or quality elsewhere. Satisfaction is a measure of how well a customer's expectations are met while customer loyalty is a measure of how likely a customer is to repurchase and engage in relationship activities. Therefore loyal customers not only require less information themselves.measurement should be customer loyalty". Bowen and Chen (2001): "It is commonly known that there is a positive relationship between customer loyalty and profitability. In other words. marketers are seeking information on how to build customer loyalty. increased sales and reduced operational costs. They said that true customer loyalty is created when the customer becomes an advocate for the organization. Therefore. Satisfaction is a necessary but not a sufficient condition of loyalty. Loyalty is vulnerable because even if custo mers are satisfied with the service they will continue to defect if they believe they can get better value. in part because they know the product and require less information. without incentive. customer satisfaction is not an accurate indicator of loyalty. McIlroy and Barnett (2000): "An important concept to consider when developing a customer loyalty program is customer satisfaction. they also serve as an information source for other customers". They even serve as part-time employees. Anderson and Jacobsen (2000) said customer loyalty is actually the result of an organization creating a benefit for a customer so that they will maintain or increase their purchases from the organization. Today.
Bowen and Chen (2001): "The result of our study supported the cont ention that there is a positive correlation between loyal customers and profitability.taken for granted. Day (1994) said that the identifica tion and satisfaction of customer needs leads to improved customer retention. Increased purchases of the existing In order to ensure that there is customer loyalty. organizations must be able t o anticipate the needs of their customers (Kandampully and Duffy. product. According to Kandampully and Duffy (1999). They said that it will continue only as long as the customer feels they are receiving better value than they would obtain f rom another supplier. 12. According to the study done by Bowen and Chen (2001). powered by: 11. . It is vitally important to understand the factors that impact on customer retention and the role that it can play in formulating strategies and plans". 1999). 14. Anton (1996): "When you can increase customer loyalty. Reduced operating cost because of familiarity with your service system. a customer's interest in maintaining a loyal relationship is depended on the firm's ability to anticipate customer's future needs and offeri ng them before anyone else. Price premium due to appreciation of your added-value services. Loyal customers indeed provide more repeat business and were less likely to shop around for the best deals than non-loyal customers". a beneficial ‘flywheel' kicks in. Positive word-of-mouth in terms of referring other customers to your company". Clark (1997): "Customer retention is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today's ev er increasing competitive environment. it supported the contention that there is a positive correlation between loyal customers and profitability. 13. 15. Cross-purchase of your other products.
1 . the very fact that customers can so readily assess the competing services and products on offer and then so easily make the new purchase does in itself give added weight to the importance of building strong ties of loyalty with customers". while on the other side of the coin there is a high cost -penalty to low loyalty. Yet the evidence shows that the old rules of successful and profitable management still hold good: customer retention is still a key to long -term profits. Expectations represent both prior consumption experience.at the touch of a button. Indeed. which includes some non-experiential information like advertising and word-of-mouth.Clarke (2001): "The notion of customer loyalty may appear at first sight to be outmoded in the era of the Internet. and a forecast of the company's ability to deliver quality i n the future.e.5 Pe rce iv ed v alue It is essential to know what consumers value.1 .4 C us tom er exp ec ta tio ns Customer expectations are a measure of the customer's anticipation of the quality of a company's products or services. when customers are able to explore and evaluate competing alternatives as well as checking reports from others . i. a tradeoff between the perceived benefits and costs derived from using certain suppliers for purchasing. before one can truly understand purchase intentions and choice. What do customers really want from their purchase experiences? What attributes are most important in their judgments of value? What drives them to use one supplier over another? This research proposes that the purchase intentions depend on the expectations of value. The concept of . 2 . 2 .
of the species as a whole". Third.. 19.regardless of whether or not such highly valued objects of consumption really contribute to his or her well being".5. Second. as it represents a customer's overall assessment of the utility based on perceptions of what is received and what is given (cf. to strive or exchange for". This is a more collective/objective interpretation of value. it means "what a so ciety collectively sees as important. 18. value is "what is of true worth to people in the broad context of the well -being and survival of individuals. The next section provides a background on four different types of value. and by extension. 17. similar to the ‘human values' of Rokeach (1973). Fourth. Zeithaml 1988). In comparison with the second definition. value refers to "what the individual holds to be worthwhile to possess. There are many ways to describe value. consumption and disposition of products and services. Here value is reflected by the values consumers strive for in life.1 Four types of value . value refers to "the amount of utility that consumers see as residing in a particular object an d they aim to maximize out of a particular act of buying or consuming. 2. Woo (1992) identified four general meanings of value for people. this is more individual and subjective.. First. it can provide insights in how value is.1. Perceived value is expected to significantly influenc e purchase intentions. This study focuses on the fourth definition. and by measuring its predictors. This last definition refers to the value that is derived from the purchase. 16.perceived value is chosen.
Intrinsic value Intrinsic value refers to the objective-based value that resides within the product. which largely depends on the market circumstances (e. scarcity). then it becomes an intrinsic value. or during use. In this respect. and on whether value should be seen in light of market characteristics and/or consumer sacrifices. For example. utilitarian value is also subject-based. people attribute value to oil through an economic constant. or just after use. Exchange value. Use value. then it remains a quality.Woodall (2003) reviewed the extensive literature on perceived value. collective). Frondizi (1971) argued that all objects have ‘qualities' but if a quality is not valued. This objective value assessment is made when people analyze the intrinsic product characteristics before. and is thus highly subj ective. According to Woodall (2003).' Here value is seen as the outcome of a personal comparison of sacrifices and benefits. Utilitarian value Finally. If it is valued.g. Intrinsic value. independent from market circumstances. but influenced by market circumstances. It is associated with the rewards persons individually derive from using the product.e. but now refers to the point when intrinsic value and/or use value are compared with the sacrifice the person made in order to experience those forms of value. Exchange value Exchange value is also objectbased. He distinguished four types of value. individual vs . the utilitarian approach is to balance ‘all the good and the bad. or as he calls it ‘value for the customer. Based on whether the value assessment is subject based or object-based (i. Use value Use value is subjective -based and is perceived as individuals evaluate the product during. Utilitarian value. an outcome that .' He used a historical perspective to describe how value has been treated in the fields of economics and philosophy.
The utilitarian approach assumes that th e value derived by one individual is likely to be different from the value derived by another. Holbrook 1999). Figure 7 shows Woodall's (2003) conceptual model. The four types of value illustrate the diversity in meanings of value. quality of life. nor exchange. belongingness) guide consumers in their daily decision making by affecting the criteria by which value judgments are made. it is neither my view. nor your view. which represents the different types of values and the impact of human values on these types of value. As such. human values are seen as influencers of value (Woodall 2003). Woodall complicates the issue of what constitutes value by arguing that "value is neither use. and only exists on the c onsumers' terms (Piercy 1997). according to the situation itself and the individual consumer's value system.g. exchange. Value is here solely determined by the individual consumer (Woodruff 1997." He proposes that the types of value may play a more (less) substantial role in the formation of value. Zeithaml 1988). it is all of these things. use an d utilitarian value . it is neither object based. It is assumed that human values (e. nor subject-based. and the difficulty of conceptualizing the concept of value (cf. Figure 7 Intrinsic.is essentially utilitarian in nature. because of the personal attribution of value.
De Ruyter et .2 Definitions of perceived value Researchers used different terms to define the construct of perceived value. Woodall (200 3) found eighteen different names for the value consumers derive from buying and using the product. Woodruff 1997).5. customer value (e. Based on ninety marketing-related articles. Monroe 1990). 1991.g. value (Berry and Yadav 1996. Oh 2000. Chang and Wildt 1994.1.2. 1996. Holbrook 1994. Dodds et al. Anderson and Narus 1998. The most commonly used marketing terms of value: perceived value (e.g. Dodds 1999. although most of them meant the same concept (Woodruff 1997).
1996). 1997.g. Grönroos value for the customer (e.al. 1994). 27) service value (e. 1991). expected value (Huber et al. 1997). 21. . 1998. 22.g.g. 28. 1999).g. consumer value (e. Holbrook 1999). customer perceived value (e.g. 326) a consumer's perception of the net benefits gained in exchange for the costs incurred in obtaining the desired benefits 7. 6. There are a number of perceived value definitions that have been used in the literature. Treacy and Wiersema 1993). Lai 1995). acquisition and transaction value (Grewal et al. 25. p. Holbrook (1994. Less frequently used value terms are: 20. 24. p. 23. 2003) 32. 30. Slater and Narver value for customers (e. 1997). Chen and Dubinsky (2003. 26. Bolton and Drew perceived customer value (Chen and Dubinsky 2003. Parasuraman and Grewal 2000). Brynjolfsson et al. Reichheld 29. 1998. Ostrom and Iacobucci 1995) value for money (Sirohi et al. Butz and Goodstein 1996). Newman and Gross 1991). net customer value (e.g. consumer surplus (e. perceived service value (LeBlanc and Nguyen 2001).g. Sweeney et al. 27. 31. consumption value (Sheth.g. buyer value (e.
p. of any or all of these. Schechter (1984). presence of benefit (perceived as either attributes or outcomes). 46) a tradeoff between the quality or benefits they perceive in the product relative to the sacrifice they perceive by paying the price 9. and can occur as reduction in sacrifice. p. McLaughlin and Wittink (1998. both qualitative and quantitative. 228) what you [consumer] get for what you pay 12. cited in Zeithaml Spreng. Monroe (1990.an interactive relativistic consumption preference experience 8. over time. Woodall (2003. the resultant of any weighted combination of sacrifice and benefit (determined and expressed either rationally or intuitively). p. (1988) all factors. attribute performances. or an aggregation. 51) a consumer's anticipation about the outcome of purchasing a product or service based on future benefits and sacrifices 10. and consequences arising from use that facilitate (or block) achieving the customer's goal and purposes in use situations Sirohi. p. 142) a customer's perceived preference for and evaluation of those product attributes. personal perception of advantage arising out of a customer's association with an orga nization's offering. Dixon and Olshavsky (1993. Woodruff (1997. 13. that make up the complete shopping experience 11. . 21) any demand-side. p. subjective and objective.
Zeithaml 1988). Woodall 2003. Parasuraman 1997. Mathwick et al.1. Zeithaml 1988). or the same qualities to different degrees (Heskett et al. Even for the same product. the construction of perceived value differs between objects (product types). the following commonalities among these definitions stand out: 1. 2002. Despite the varying terms and definitions. individuals. 2. in order to accomplish a desired purpose or goal 15. Zeithaml (1988. 2. individual consumers value different qualities. but also regarding the evaluations of the same product (Overby. 20) a customer's perceived perception of what they want to happen in a specific use situation. Gardial and Woodruff 2004. and circumstances (time. with the help of a product and service ordering. That is. Perceived value is inherent in or linked through the use to some product. 14) a consumer's overall assessment of the utility of a product based on perceptions of what is received and what is given. Perceptions of value typically involve a tradeoff between what the consumer receives and what he or she gives up to acquire and use a product or service (Woodruff 1997). Holbrook 1999. Francis and White 2004. service or object.3 Context-dependent nature of perceived value. Holbrook 1994. Previous research has unanimously confirmed the context-dependent nature of perceived value (Bolton and Drew 1991.5. location. . and environment). p. 1997. 3. Perceived value is something perceived by consumers rather than objectively determined.14. Woodruff and Gardial (1996: p. Not only do consumers differ in their evaluation of value between products and services (Zeithaml 1997).
Consumers may experience additional pleasure if they feel they get a bargain (e. use and disposition Transaction value. . (1998a) distinguished between. Woodall (2003) explained that consumers can construct value before purchasing (ex ante value). Even when the same individual evaluates value. Other authors also classified types of value based on the timing of evaluation. Redemption value. Spreng et al. In-use value. now €150). Acquisition value. The predicted value is based on the expected benefits and costs related to product purchase. Grewal et al. and after use/experience (disposition value). at the point of purchase and/or direct experience (transaction value). Redemption value relates to the residual benefit at the time of disposing the product or terminating the service (Grewal et al. 1993.Parasuraman 1997. Zeithaml 1988). 1998a). In-use value involves the utility derived from using the product/service by evaluating the actual benefits and costs related to its use.g. Acquisition value refers the consumer's net gain (or tradeoff ) from acqui ring the product or service. after the purchase (ex post value). he or she value may the product differently in time. Transaction value can be derived at the point of purchase when consumers experience the pleasure of getting a good financial deal (Thaler 1985). It is associated with the benefits consumers think they are going to receive by acquiring the product/service relative to the monetary costs given up to acquire the product. was €200.
that is. whereas during use they evaluate value predominantly on the consequences of use. consumers are more concerned with the performance of the chosen product in specific use situations. which in turn may differ from the determinants of va lue during long-term use. Thus. Gardial et al. Consumers update evaluations and the importance of criteria through sequential purchases (Bolton 1998). Zeithaml. in-use and redemption value may become salient during later stages of product/service usage. i. In a similar vein. 1988). During and after use. Parasuraman (1997) put forward that the attributes that motivate a consumer's initial purchase of a product may differ from the criteria that define value during use right after purchase.The nature and determinants of perceived value may change over the various consumer cycle stages (Parasuraman 1997). the relative emphasis on each component may change over time. Purchasing involves choosing. the consequences become more salient. While acquisition and transaction value dominate the first stages. and consequences from using a product . Consumers then learn about value in the form of preferred attributes. attribute performances. use value. Woodall 2003. the attributes that motivate a consumer's initial use of a channel may be . Woodruff (1997) explained that consumers may consider different attributes and consequences and value them differently in time. they form evaluative opinions about the actual value of using a product.e. during or after use. the antecedents or compo nents of perceived value will differently impact consumers' evaluations of value at different points within the consumption process (De Ruyter et al. and that requires consumers to distinguish between product alternatives and evaluate which alternative is preferred. 1997. such as when purchasing versus when using a product. (1994) showed that consumers at the time of purchase rely more on the product attributes than they do during or after use. In line with this reasoning. In this respect. Thus. In contrast. during the choice task consumers predict value by relying heavily on the product attributes.
Thus. Epistemic value (cu riosity-driven benefits) Epistemic value refers to the surprise or novelty aspect of a product. Although they may have no experience with the exact consequences.5. A broad approach is offered by Sheth et al. Emotional value (experiential or emotional benefits) Emotional value refers to the utility derived from the feelings. such as status. they distinguished between five dimensions of valu e: Functional value (attributed -related. it can be expected that differences exist in the construction of value between experienced and less experienced consumers. the literature also confirmed its multi dimensional nature. they will probably have expectations about its use based on the channel attributes and opinions of o thers. 2. Social value (social or symbolic benefits) Social value is the utility derived from the product's ability to enhance social self concepts. utilitarian benefits) Functional value is concerned with the utility derived from the product quality and product performance. (1991).different from the criteria after using it.4 Multi-dimensional nature of perceived value Apart from the context-dependent nature of perceived value. or affective states that a product generates. These perceptions are likely to drive intentions and behavior.1. as such. consumers that have not used a particular purchase channel are still capable of expressing their expectations of the use of that channel. This research uses pre -purchase value perceptions because. Researchers tried to classify the underlying dimensions with regard to purchasing and consumption. referring to m ultiple axiological dimensions or components of value. a product's .
PERVAL) to measure perceived value. The two components (quality and price) have different effects on perceived value for different consumers. specific situations such as Valentines Day and weddings can strongly enhance the perceptions of value. (1991) is characterized as benefit -driven because it onlydiscusses the benefits without explicitly linking it with the costs consumers bear (Duman 2002). whereas others perceive value when there is a balance between quality and price. Conditional value (situation -specific benefits). whereas epistemic value was left out because the novelty or surprise aspect might only be apparent for hedonic products rather than for a wider product range. Based on the work of Zeithaml (1988). The scale was tested based on the consumers' perceptions of a consumer durable and . Based on the classification of Sheth et al. Consequently. while also complementing meals and enhancing the taste of food (functional value). emotional value and social value. they split up functional value into quality and price arguing that some consumers perceive value as low price.capacity to arouse curiosity. price/value for money. Moreover. the perceived value scale comprised four dimensions: quality/performance. Sweeney and Soutar (2001) developed a multiple item scale (i. The classification of Sheth et al. Conditional value refers to the situation in which the value judgment is made.e. Products often deliver a mixture of these types of values. as they were seen as less critical for a general measure of perceived value. offer novelty or satisfy a desire for knowledge. For example. (1991). consumers sometimes seek to heighten their status by being knowledgeab le about wines and to create a favorable impression within a social atmosphere (social value). wine can act as an occasion (conditional value) and/or celebration enhancement (emotional value). Conditional value was omitted because it arises from situational (temporary) factors. For example. They omitted conditional value and epistemic value.
(1991) only discusses benefits. price).e. emotional and epistemic value from their shopping activities. functional value refers to the instrumental product-related and shopping -related benefits and costs consumers obtain from using the channel. service quality vs. such as self-confidence and status.1. The logical dimension concentrates on the evaluation of the benefits against its costs (i.5. The value of using channel s under specific situations can obviously attenuate or increase value (conditional value). whereas the social value refers to the utility derived from the channel's capability to enhance so cial concepts.found to be reliable and valid in a prepurchase and postpurchase situation. practical and logical value. 1997. Lemmink. 2. These abstract value dimensions that were originally designed to elicit the product or service value dimensions can also be translated to a channel context. When consumers use channels for purchasing. These classifications clearly broadened the concept of value by going beyond the functional value of purchasing and/or consuming products. De Ruyter and his colleagues (De Ruyter et al. In doing so.5 Consumers' formation of expected value Although the axiological value dimensions are very beneficial in classifying the possible costs and benefits. While the classif ication of Sheth et al. this classification takes into account the costs. It made clear that consumers also derive social. The emotional value dimension represents the emotional or affective side of the consumption experience. whereas the practical dimension refers to the functional consumption -related benefits. De Ruyter and Wetzels 1998) used the following value dimensions for services: emotional. Other classifications have also been used to represent the axiological value dimension s. they are rather abstract and do not show . they may also derive emotional value through experiencing affective feelings and/or epistemic value through surprises and curiosities.
such as quality in life. and are linked with the consequences. Consumers have their own personalized set of human values. which guide them in their daily shopping behavior (Rokeach 1973. and social recognition (cf. Woodruff 1997. they can be both negative and positive (Woodruff and Gar dial 1996). a consumer that scores high on being kind to the environment may refrain from buying a particular brand that is harmful to the environment. Gutman 1982. Woodruff 1997). Woodall 2003). Consumers form expectations of value based on lower -level abstractions in a means -end way: concrete attributes are the means to achieve the more abstract consequences. Past research also tried to explain how consumers form value expectations of buying and using their products (cf. Consumers are expected to purc hase their products in order to help attaining their end goals or human values. Howard 1977. In accordance with this means -end approach that explains how consumers evaluate products in terms of . Attributes are the concrete descriptions that show what the product entails/possesses. which are used to achieve the human values or end goals (cf. and product attributes at the lowest level (Parasuraman 1997. Consequences refer to the outcomes from these product attributes. world at peace. the consequences in the middle. Rokeach 1973). These outcomes refer to what the product or object can do for the consumer. The studies of Woodruff (1997) and Zeithaml (1988) concentrate on the formation of value for products. Values refer to the most abstract end goals or human values.how consumers form judgments of expected value. Woodruff 1997. Zeithaml 1988) Figure 8 Customer value hierarchy model (woodruff 1997) Figure 8 shows that goals are organized hierarchically with the consumer's end goals or human values at the highest level. For in stance. Zeithaml 1988).
Berry and Parasuraman 1996).1. evaluate the value of services. Most authors agree that perceived value refers to a tradeoff between all salient costs and benefits (e. 2. When consumers. the way the service is delivered (i. 1985. Zeithaml 1988). Bolton and Drew 1991). when evaluating retailers.value. information availability) to more abstract consequences such as service quality. this approach is still limited as it ignores the sacrifices made (Cronin et al. "what you get for what you pay. and defined perceived value as the tradeoff between product quality and price (Monroe 1990). Early research focused on explaining perceived value of products. Jain and Howard 1992). Grönroos 1982. process value) is pivotal to the evaluation of service quality.5. outcome value).g. Zeithaml. Parasuraman et al. Even though this distinction helped researchers to better predict the consequences of service quality (cf. 1988) indicated that apart from what is delivered (i. Next." Some authors addressed t hat viewing value as a tradeoff between only quality and price is too simplistic (e.e. Sirohi et al. Baker et al. for instance. as well as merchandise quality . 2002. opening hours. and may help consumers attain their personalized set of human values. 2000). consumers evaluate service quality. other criteria are needed to explain the apparent benefits and costs.6 Classification of purchase -related costs and benefits. Kerin. The service literature (e. consumers also link lower-level store attributes (e. navigation perceptions.g. particularly when products are not the focal point of interest. merchandise quality. These consequences refer to the perceived costs and benefits of shopping online or offline. The next section tries to classify the main costs and benefits consumers consider when purchasing.e.g. Monroe 1990. or as a value-for-money assessment (Dodds and Monroe 1985). (1998) call this value -for-money assessment. and perceptions of value (cf. To understand what constitutes value researchers have tried to classify these perceived benefits and costs.g.
Dodds (1999) argued that retailers provide most value when the product is of the highest quality. Consumers evaluate more than just the quality of the product and the additional services delivered in relation to price. it is often placed among the costs. Dodds et al. Value judgments are predominantly influenced by evaluations of perceived quality (product and service -related benefits). Next. as consumers often do not evaluate the exact price. and hedonic shopping benefits. and offered at the lowest price. Monroe 1990: Teas and Agarwal 2000). In doing so. ‘reasonable' or ‘expensive' based on their internal reference price (Zeithaml 1988).(Mazursky and Jacoby 1986). as the net effect of price on perceptions of value seems to be negative (Dodds et al. (1992) argued the importance of the shopping experience in explaining the value perceptions of a retailer. Studies investigat e perceived price rather than the objective price. 1991. Monetary costs refer to the price consumers have to pay. supported by the best service quality. 1991). they optimize the full process of decision making (procedural rationality). consumers endure monetary and nonmonetary costs when buying products. Bettman and Johnson 1993). In this context. Kerin et al. resulting from product and service related benefits. Perceived quality refers to the consumer's judgments about a product's or service's overall excelle nce or superiority. Zeithaml (1988) views perceived pri ce as costs. monetary and nonmonetary costs. Price is a financial sacrifice. but other authors claim that price has a dual effect (Agarwal and Teas 2001. but it also positively influences perceptions of value through increased product quality perceptions. It acts as a global assessment. . Additionally. This research uses Zeithaml's (1988) classification and insights from shopping literature to classify the purchase-related costs and benefits. but rather encode it as ‘cheap'. However. not just the outcomes (substantive rationality) (Simon 1976). they generally make a tradeoff b etween the cognitive efforts and decision accuracy (Payne.
Babin and Darden 1995. In this respect. 1994. To improve utilitarian shopping value. consumers are more concerned with entertainment and enjoyment value. purposive. Hirschman and Holbrook 1982) indicated that consumers also derive positive feelings from purchasing. but shopping literature (e.Apart from monetary costs.g.g. Some authors leave out enjoyment because nonmonetary costs are assumed to have a much stronger impact on consumer behavior (e. The hedonic dimension represents the experiential val ue consumers derive from the shopping process. 1991). consumers make other types of sacrifices to obtain or use the produ ct or service (Becker 1965). Sheth et al. This research. takes . Babin et al. they experience hedonic shopping benefits. 1997. These nonmonetary costs particularly refer to the time and effort -both mentally and physically. 2002). In her classification. it refers to emotional and epistemic value (cf. Zeithaml 1988). Although time/effort expenditures a nd psychological costs are conceptually related constructs (e. they engage in experiential behavior that is likely to be hedonic. however. they experience utilitarian and hedonic value. and task-specific (Hoffman et al. Zeithaml (1988) mainly focused on the shopping costs. uncertainty.g. This stream of research addresses that consumers evaluate shopping experiences along utilitarian and hedonic dimensions. researchers have treated them as distinct (cf. frustration. anger. 2002).g. whereas time and effort costs refer to the non-emotional investments made by the consumers (Baker et al. ritualized and reflects nonlinear search (Hoffman and Novak 1996). consumers must save time and/or reduce effort by engaging in goal -directed behavior that is instrumental. crowding can result in more time usage and psychological discomfort). 2002). The utilitarian dimension reflects whether consumers achieve their shopping goals with minimum investments in time and effort. The psychological costs refer to the co nsumer's mental stress or emotional labor during the shopping experience. 2002. Baker et al. De Ruyter et al. Baker et al.and the psychological costs (e. fear) made by the consumer.
Consequently. anxiety. social value and epistemic value are expected to be partly captured by shopping enjoyment. the influence of conditional value is seen as less important because the survey asks customers to give their general prepurchase evaluations without referring to a special occasion. Next. i. this study does not classify the shopping benefits related to social value (value derived from social approval and enhancement of self-image). Yet.into account the emotional value dimension by suggesting that enjoyment has a distinctive positive effect on purchase intentions. Analogous to the work of Sweeney and Soutar (2001). epistemic value (value derived from curiosity and novelty) and conditional value (value derived from a particular situation). Particularly for hedonic. it includes the functional and emotional value aspects of shopping. stress. Table 1 Classification of purchase -related perceived costs and benefits Cost Monetary Perceived price Nonmonetary Time and effort expenditures Psychological cost.frustration) Functional / Utilitarian Product quality Service quality Benefit N Enjo . (risk. value derived from shopping activities. experiential products. the affective side of shopping experience plays a pivotal part. Table shows the classification of the purchase -related costs and benefits that constitute shopping value. It focuses on the utilitarian and hedonic shopping value derived from the transaction itself.e.
Zeithaml et al. they often treated the benefits and costs both as antecedents and as components of value (see Dabholkar et al. 1998. perceived value is seen as the (weighted) summation of its components. Contrast ingly. Here. it is not possible to capture the effect or importance of each dimension (Dabholkar et al. functional value. It focuses on construct definition.g. denoting what perceived value includes or comprises (Rossiter 2002).1. Most authors in this field used Zeithaml's classification of perceived costs and benefits to predict perceived value and purchase intentions (e. Baker et al. a considerable body of literature has empirically investigated the antecedents that determine product value and product choice (e.5. Baker et al. and as antecedents of value. 2002 .g. Donovan et al. referring to the determinants and consequences of (the components of ) value. the benefits and costs sometimes act as components of value. 2000. this observation is explained. Before addressing the criteria consumers use for their purchasing. 1996).g. This type of research focuses on understanding the relationships between constructs. Zeithaml 1988). Sirohi et al. emotional value) focuses on the components or constituents of value. Sirohi et al. Over the years. Research on value dimensions (e. Swee ney et al. Sweeny and Soutar 2001). scholars have tried to find common predictors of perceived value to understand what constitutes value and purchase intentions. In this respect. 1994. and store value and store choice (e. 2000).g. 2002.7 Antecedents of perceived value and purchase intentions Although perceived value is highly personal and idiosyncratic (Zeithaml 1988). For instance. 1999). 1998. Bolton and Drew 1991. research has also addressed how the concept of perceived value behaves in retail settings.2. When these components are not related to an overall measure of perceived value. As such. time and effort costs are seen as antecedents of perceived value .
risk and functional and technical service quality defined perceived value. risk . Agarwal and Teas 2001. They concluded that consumers do not only consider the immediate benefits and sacrifices. and use the identified costs and benefits without explicitly addressing whether they are used as components or predictors of value (e. it was found to be a significant mediator of this relationship. research on the value dimensions cannot explain the dual effect of price (cf. a study by Sweeney et al. including performance and financial risk. 1 . Perceived risk played an important role in the quality value relationship. 2002. 5 . the complex nature of the perceived value concept sometimes necessitates researchers to model benefits/costs simultaneously as antecedents and components of value. Additionally. The results s howed that product quality. the mediating role of perceived value was questioned. but also contemplate about the longer-term implications of the product's ownership. The second stream of research provides us additional insights int o how customers evaluate value. relative price (i. whether it was necessar y to include perceived value as a mediator. Baker et al. A number of studies investigated how value perceptions are formed and how these perceptions influence product choice. Baker et al.e. 2 . merchandise quality. Perceived risk is considered a sacrifice. as it involves psychological costs. affected perceived product value. However.g. (1999) showed the role perceived risk has in the quality-value relationship for durable goods. which. relative to products with similar features).(Zeithaml 1988). Dodds et al. 2002). For example. thus. 8 Pr o d u c t v a l u e a n d p r o d u c t c h o i c e . For example. Cronin et al 2000). or whether it was possible to directly link service quality. Studies focusing on the interrelationships often take a more practical view. 1991). in turn. but can also simultaneously act as a component of value (cf. Product and service quality reduced perceptions of risk.
as well as perceived quality (dual effect of price). Teas and Agarwal (2000) also researched the antecedents of perceived product value.and relative price with willingness -to-buy. (2002) Bolton and Drew (1991) Chang and Wildt (1994) Chen and Dubinsky (2003) Perfor risk f l r Time/ ef fort costs Sacrifice Interperson al service quality Service quality Merchandise quality Monetary price Psychi Quality Price Customer service Product qu ality Product price Valence of exper ience Percei s . The results indicated that perceived value was found to be significant mediator a nd should be included. Perceived quality was negatively related to performance risk. Their model included perceived quality and perceived sacrifice that indirectly influenced perceived value through perceptions of performance and financial risk. The results demonstrate that perceived quality and perceive sacrifice have an indirect effect on perceived product value through performance risk and financial risk. Table 2 Study & research of value perception Study Service quality Merchandis e quality Product qu ality Monetar y price Price Time/ effort cost Psygo l c Agarwal and Teas (2001) Baker et al. whereas price was positively associated with financial sacrifice.
involves a tradeoff between the salient perceived benefits and costs.1. which are likely to affect purchase intentions and customer satisfaction. is something perceived subjectively. The marketing literature confirms that perceived value is linked through the use to some product. service or object. Prior research reported the context dependent and multi-dimensional nature of perceived value. Although perceived value is highly personal and . (2000) Dodds.Cronin et al.9 Conclusion perceived value Reviewed perceived value identified the dimensions and/or and antecedents of value. McLaughl in and Wittink (1998) Sweeney. Jain and Howard (1992) Sirohi.5. Soutar and Johnson (1999) Teas and Agarwal (2000) Service qu ality Product quality Sacrifice Sacrifice Merchandise quality Price Shopping Service qu ality Merchandise quality Relative price and promotio ns Relative price Technical and functi onal servic e quality Perceived quality Product qu ality Perfor / fin ri Sacrifice 2. Monroe and Grewal (1991) Kerin. a nd.
2000). Dabholkar et al. it. research ers have tried to classify common purchase -related costs and benefits. the construct of perceived va lue (i. this stream of research sees perceived value as the (weighted) summation of the identified components. as it provides addit ional insights into the relative effects of the antecedents of perceived value and purchase intentions. it fits better with how consumers actually make evaluations of shopping online and offline (cf. Next. value for money) has been found to frequently act as a mediator between the components and purchase intentions (e. depicted in the square box. 1999).g. introduces enjoyment as an additional predictor of purchase intentions. Enjoyment. however. Note that this treats the shopping experience costs and benefits. Monetary price. Psychological costs. The conceptual model itself is well founded in the literature. Figure 9 displays the antecedents of perceived value and purchase intentions.idiosyncratic (Zeithaml 1988).e. A review of the product an d store value literature showed the following classification of purchase -related costs and benefits: Service quality. Time/effort costs. Merchandise quality. rather than as predictors of the value construct . In addition to this. Consumers are expected to consider these seven criteria when evaluating online and offline stores. as components of value. This study follows the last stream of research. A stream of research focuses on the axiological dimensions or components of perceived value. Another stream of research is more interested in understanding the interrelationships and sometimes allows the benefits and costs to act as components and antecedents of value. Sweeney et al.
2 . but may vary in their performance scores and weights they attach to them (see Verhoef et al. McKinsey and MCM have performed an empirical survey of more then 750 deciders in 18 representative German business markets. Despite of the German impact the approach and general implications can be applied on international level.6 Co rpo ra te bra nd imag e It is imperative to understand the most important brand functions in B2B environments. closely followed by information efficiency (41%). Figure 10 Importance of brand functions in B2B versus B2C . Apparently r isk reduction is the most important brand function (45%).1 . Image benefit will close the group with a minor 14% (Kotler & Pfoertsch. 2006:46-47).Figure 9 Base model of channel purchase intentions This study argues that this model holds for both the online and offline co ntext: consumers consider the same benefits and costs. 2005). See figure 10.
but one that omits corporate attributes and focuses exclusively on perceiver images (Ster et al. corporate image. Thus . it is also one of the most important tools for diverging among competitors. Grönroos 1984). It is hoped that any consumer starts its purchase process by evaluating the image of something or by remembering the old ones (mainly the positive ones).. Therefore. was early identified as an important factor in the overall evaluation of the service and the company (Andreassen and Lindestad 1997. Initiating on the company level. 2001) starts to appear . Moreover. image has been defined as "perceptions of an organization reflected in the associations held in consumer memory" (Keller 1993). Image benefits become important as soon as the purchase involves publicly visible product s and services. The history of corporate image definition reveals convergence on a gestalt mean ing. the process is developed between the brand stimulus and the consumer perceiver. . In this meaning. in the service marketing literature.Brands reduce risk involved in the buying process and increase information efficiency for the purchase of (very) complex and capital intensive products.the transactional process.
As a practical terms. Johnson and Fornell 1991). more this affective aspect will create a positive corporate image in the customer cognitive system. What is really being collected is a customer's perception of the company's or brand's corporate image.Customer satisfaction has a positive influence on corporate image.. 1997).2 Literature research reflection High customer loyalty is one of the most important indicators of good performing companies. The effect of satisfaction on corporate image reflects both the degree to which customers' purchase and consumption experiences enhance a product's or service provider's corporate image and the consistency of customers' experiences over time. with a fast attendance) could generate a positive corporate image. this corporate image will have been affected by the customer's more recent consumption experiences. Based on the transaction driven nature of satisfaction experience. or customer satisfaction. (Johnson et all. The cross-sectional nature of national customer satisfaction data means that pre -purchase expectations are collected post purchase. or at the same time that satisfaction is measured.g. 2001). What is needed is a way of measuring customer satisfaction in an inter-relational environment where relevant factors for determining satisfaction and also . In fact. Since customer satisfaction is direc tly linked to customer loyalty it is evident that measuring customer satisfaction without taking customer loyalty into account and vice versa would be misleading. corporate image is established and developed in the consumers' mind through communication and experience (Andreassen and Lindestad. Moreover. it could mean that a determinate degree satisfaction (e. several writers claim that corporate image is a function of the cumulative effect of customer (dis)satisfaction (Fornell 1992. 2. It suggested that when more the customer is satisfied.
1 Whi ch ar e th e cr it er ia fo r a pp rais al of c us tom er sa tis fac tion a n d ho w to c lass if y t he se i n to a n te ce de nts ? Satisfaction is an overall customer attitude towards a service provider. 2 . It is a highly personal matter for the customer. based on the emotion s produced to the customers. or an emotional reaction to the difference between what customers anticipate and what they receive. based on the qualitative superiority of the products given by the performance. In this approach the analysis is based on applying a micro economic model for determining satisfaction. Customer satisfaction is a multidimensional concept. This is best done using a causal model approach where the drivers of satisfaction as well as its resulting effects on loyalty are explicitly introduced. Measurement of customer satisfaction thus needs to take a num ber of interrelated factors into account. The findings and answer to the first central question is segregated over the following four sub questions.2. goal or desire.2 . which is influenced by a number of factors. based on the interaction between the provider and the customer in the buying act. The approach outlined below offers such a framework.1. Conative variables.1 Which general characteristics of customer satisfaction can be defined? General characteristics involve features or qualities . 2. being supported by three groups of variables: Cognitive variables. Satisfaction represents a veritable key of modeling the acquisition behavior of the customer.loyalty are measured simultaneously. Affective variables. regarding the fulfillment of some need.
related to customer satisfaction serving to identify this phenomenon among other customer relationship management propositions. 33. Customer satisfaction is a highly variable personal assessment that is greatly influenced by individual expectations based on his/her own information, expectations, direct contact and interaction, and circumstances (time, location and environment). 34. Customer satisfaction involves the sum of personal (product and service) experiences driven by its antecedents. 35. Customer satisfaction is most often related to purchase, loyalty and retention behavior with a effect on an organizations profitability. A totally satisfied c ustomer contributes 2.6 times as much revenue to a company as a somewhat satisfied customer. A totally satisfied customer contributes 17 times as much revenue as a somewhat satisfied customer. A totally dissatisfied customer decreases revenue at a rate equal to 1.8 times what a totally satisfied customer contributes to a business. 36. Customer satisfaction characterizes itself by a high degree of word -of-mouth where satisfied customers are most likely to share their experiences with other people to the orde r of perhaps five or six people. Equally well, dissatisfied customers are more likely to tell another ten people of their unfortunate experience.
18.104.22.168 Which criteria can be drawn from the theory of customer satisfaction?
A criterion for this purpose is seen as dimensions for the customers' satisfaction assessment. I have drawn the following 23 criteria from the theory as studied: 16. Product quality
17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38.
22.214.171.124 How to classify the criteria of customer satisfaction into antecedents?
The criteria can be classified in multiple groups which could fulfill a significant antecedent function in causal models towards customer satisfaction. See figure 11.
Product functionality Product availability / range Product knowledge Accessibility / location Access time / opening hours System of access Service provision Brand / company reputation Brand / company status Brand / company assurance Competitive price level Negotiation /discount policy Terms of payment Perceived value Accuracy of service Dependability of service Promptness of service Competence and treatment Employee behavior Operational performance Expected value Service degree
Figure 11Clasification of customer satisfaction criteria
3 Empirical research structure
In chapter two I have captured a literature study of scientific theories and concepts of customer satisfaction to create a common understanding of customer relation management and all facets of customer satisfaction in particular. The literature study has formed the basis of my empirical research structure. This chapter describes the empirical research structure by its type, strategy and method, objectivity and reliability, data collection, data processing, and research assessment.
3.1 Research strategy and method
Research strategy and research method need to comply with the research questions, if not, they will not enable the researcher to find the right answers. Accordingly I have chosen for a cross -sectional non-
Cross-sectional research refers to data collection across multiple sources. A momentary snapshot of a given situation. . See figure 1 2. using examination and document research techniques. It differs from longitudinal research which monitors sources over a course of tim e (Wikipedia). without time discrimination.558) Figure 12. Research strategy and method.experimental research strategy. Kerlinger and Lee define this as follows: "Nonexperimental research is systematic empirical inquiry in which the scientist does not have direct control of independent variables because their manifestations have already occurred or because they are inherently not manipulable. 2000. individuals. Inferences about relations among variables are made." (Kerlinger and Lee. without direct intervention. from concomitant variation of independent and depende nt variables. and so on. Non experimental stands for a systematic empirical and research independent approach.
I classify the obtained data as reliable. As a consequence. to find methodical answer on the research question.2 Research objectivity and reliability. . both empirical and literature study are research worker independent and independently reproducible over time. Using the latest theoretical valid knowledge will legitimate my research objectivity. I have examined the research with an open attitude instead using my own standards and perspective. Therefore.3. My research is controllable and traceable driven by the above mentioned research strategy and methodology.
In this chapter I will describe how the relevant dat a is collected.3 Research data collection. 4 Data gathering In chapter three I have captured the empirical research structure by its type.3. using desk research metho ds. and justify among who the data is acquired with a direct relation to internal document.1 Document analyses I have studied and examined over 30 academic papers. I have gathered my research data from different angles. 3 . notwithstanding the fact that it could have been my reflection of that specific topic. thesis and dissertations where public available and free to download on the internet. I have not copied texts or taken ideas from someone else's work in order to use that as if they were my own. data collection. thesis and dissertations regar ding relevant customer satisfaction and customer satisfaction modeling.1 Emp ir ica l d es k r es ear ch From a best practice point of view relevant resear ch findings are copied and reused in this research study.3 . customer satisfaction. I have researched customer satisfaction models to determine how existing cause and effect models comply against my set of model criteria within the (six) model categories. and research assessment. strategy and method. Most important studied and examined documents: A comparative Study on Several National Customer Satisfaction . objectivity and reliability. data processing. 4. All papers. which data is gathered.
An analysis of the New Norwegian Customer Satisfaction Barometer (New NCSB) in a Supermarket Context Customer satisfaction and customer value Customer Satisfaction and Stock prices Customer satisfaction surveys Guidance Collecting Customer Satisfaction Measuring customer satisfaction and loyalty Measuring Online and Offline Shopping v alue perception National Customer Satisfaction Measurement- Past and Future Relation management and customer satisfaction in B2B The evolution and future of national customer satisfaction index models The Importance of Customer Satisfaction in Relation to Customer Loyalty and Retention The one number you need The six laws of customer experience Why satisfied customers defect
In chapter four I have described how the relevant data is collected and which data is gathered. In it I j ustify how the data is acquired and the direct relation to customer satisfaction and possible customer satisfaction models. In this chapter I will analyze four national customer satisfaction models against the gathered data in my literature study and answe r the central thesis questions as formulated in chapter 1.2.4 section 2; 2. Which are the interdependencies of customer satisfaction models? 2.3. To what extent do causal customer satisfaction models meet the assessed
criteria and antecedents? 2.4. How can the customer satisfaction be measured
5.1 Customer satisfaction index (CSI) models
Since 1970s, researchers of consumer behavior and marketing in developed countries have begun to make comprehensive studies on customer satisfaction (e.g. Oliver (1977), Churchill and Suprenant (1982), Olshavsky (1993)). In 1989, Fornell and his colleagues in Michigan University helped Sweden build the first nation-level measurement system of customer satisfaction - Swedish Customer Satisfaction Barometer (SCSB) (Fornell, 1992). The SCSB became a uniform, cross company, cross -industry national measurement instrument of customer satisfaction and evaluations of quality of products and services. The basic model for estimating these indices is a structural equation model which links customer satisfaction to its determinants namely perceived quality, customer expectations and perceived value, and, in turn, to its consequences, namely customer loyalty and customer complaints. Later in 1994, American Customer Satisfaction Index (ACSI) was launched (Fornell, 1996). In ACSI model customer expectation, perception of quality, perceived value were introduced as the antecedents of customer satisfaction and customer loyalty and customer complaint as consequences. In the middle of 1990s, CS I was gradually recognized by governments and companies worldwide as a good instrument to gauge a nation's or company's output quality. Till now, nation-level CSIs have Swedish Customer Satisfaction Barometer (SCSB), American Customer Satisfaction Index (A CSI), European Customer Satisfaction Index (ECSI), Norwegian Customer Satisfaction Barometer (NCSB), German Barometer, Swiss Index of Customer satisfaction (SWICS), Korean Customer Satisfaction Index (KCSI), Malaysian Customer Satisfaction Index (MCSI). In
addition, Brazil, Argentina, Mexico, Canada, Australia, Hong Kong and some regions like Taiwan, are striving to build their own CSI systems. Although these CSIs are fundamentally similar in measurement model (i.e. causal model), they have some obvious distinctions in model's structure and variable's selection so that their results cannot be compared with each other. On the other hand, for nations who are attempting to construct their own CSIs, only to take full advantages of other nations' CSI experiences can they establish the CSIs which are suited for their nation's characters. Therefore, a comparison and analysis of the differences among these existed CSIs seems to be indispensable and valuable. Four influential national customer satisfaction index models are evaluated from three perspectives; The latent and manifest variables in CSI models A manifest variable (or indicator) is an observable variable - i.e. a variable that can be measured directly. A manifest variable can be continuous or categorical. A latent variable describes an unobservable construct and cannot be observed or measured directly. Latent variables are essential elements of latent variable models. A latent variable can be categorical or continuous. The exogenous and endogenous variable s in CSI models Exogenous variables in causal modeling are the variables with no causal links (arrows) leading to them from other variables in the model. In other words, exogenous variables have no explicit causes within the model. The concept of exogeno us variable is fundamental in path analysis and structural equation modeling. The relationships among latent variables. Endogenous variables in causal
modeling are the variables with causal links (arrows) leading to them from other variables in the model . The relationships among variables. More specifically. or the perceived level of quality received relative to the price or prices paid. American Customer Loyalty Index (ASCI) 1994 39. endogenous variables have explicit causes within the model. or value. The basic prediction is that as perceived value increases. Norwegian Customer Loyalty Barometer (NCSB) 1996 European Customer Loyalty Index (ECSI) 2000 5 . 1992).1 T he Swe dis h C us tom er Sa tisf ac tion Barom e te r (SC SB ) The original SCSB model (Fornell. Quality per dollar. shown in Fig. satisfaction increases. 13. is a common denominator that consumers use to compare brands and categories alike (Emery. perceived performance is equated with perceived value. contains two primary antecedents of satisfaction: perceptions of a customer's recent performance experience with a product or service. 37. and customer expectations regarding that performance.1 . Figure 13 The original Swedish Customer Satisfaction Barometer model The other antecedent of satisfaction is how well the customer expected the product or service to perform. The selected national CSI models are known as the most sophisticated and influential CSI models. 1969). Swedish Customer Loyalty Barometer (SCSB) 1989 38. Customer expectations are defined as that which a customer predicts ("will" expectations) rather than a normative standard or benchmark ("should" . In other words.
1980). The organization discovers its failure to provide satisfaction via two feedback mechanisms. Increased satisfaction should also increase customer loyalty (Bloemer and Kasper. Loyalty is the ultimate dependent variable in the model because of its value as a proxy for actual customer retention and subsequent profitability. An increase in satisfaction should decrease the incidence of complaints. customer expectations capture a customer's prior consumption experience with a firm's products or services as well as advertising and word -of-mouth information. 1992). or voices its complaint of dissatisfaction to the firm in an effort to receive restitution. Finally. or stops buying from the firm. 1993). Because expectations forecast a firm's ability to provide future performance. the original SCSB includes a relationship from complaint behavior to customer loyalty.. These expectations are argued to positively affect customer satisfaction because they serve as cognitive anchors in the evaluation process (Oliver. it is argued to have a positive effect on satisfaction in the SCSB model (Fornell. This captures customers' abilities to learn from their experience and predict the level of performance they will receive. 1995). The theory describes situations in which a client or customer becomes dissatisfied with the products or services that an organization provides. exit and voice. The consequences of satisfaction in the original SCSB model are derived from Hirschman's (1970) exit -voice theory. the immediate consequences of increased satisfaction are decreased customer complaints and increased customer loyalty. Boulding et al. the direction and size of this relationship provides some diagnostic information as to the efficacy of a firm's . The custom er either exits. which is a customer's psychological predisposition to repurchase from a particular product or service provider.expectations. expectations should be positively related to perceived performa nce (value). Accordingly. While perceived performance captures more recent experience. Finally. Although no prediction is made regarding this relationship.
When the relationship is positive.customer service and complaint handling systems (Fornell. Table 4 Latent and manifest variables SCSB Latent variables Perceived performance Manifest variables 40. When negative.2 T he Am eric an Cu s tome r Sa tisf ac tion Ind ex (AC SI) The ACSI model. price 39. Price paid for quality received 41. developed in 1994 and illustrated in . 1992 ). Customer expectations Customer satisfaction Customer complaints Customer loyalty 4. Quality received for paid Expectations of performan (as it will be) Overall satisfaction Fulfillment of expectations Complaint handling Repurchase behavior Quantity of registered complain Table 5 Exogenous and endogenous variables SCSB Exogenous variables Customer expectation Endogenous variables Perceived quality Customer satisfaction Complaint Customer loyalty 5 . complaining customers are predisposed to exit. a firm may be successfully turning complaining customers into loyal customers.1 .
In 1996 the ACSI survey and model were expanded to delineate two general types of perceived quality. In every case. builds upon the original SCSB model specification. the measurement variables are specified as reflective indicators of the latent constructs in the model. The survey questions are all rated on 1 to 10 -point scales with the exception of price tolerance (described below) and complaint behavior (a dichotomous variable indicating whether the customer has complained or not). This change was made only for manufacturing durables as they contain both a large product and a large service component. 1988) delineate two primary components of the quality experience. The model is estimated for each of the approximate 200 firms in the survey based on a random sample of approximately 250 of the firm's customers. see figure 13. Juran and Gryna.Fig. 1981. (By deleting the perceived quality construct and its relationships from figure 13. (For details of the ACSI survey and model see Fornell et al.1996). reliability quality. Asking customers to rate customization quality. product (physical good) quality and service quality.) Quality experts (Deming. The survey questions used in . the reader can readily see the original SCSB model specification in figure 13. as distinct from perceived value. 14. the degree to which a product or service provides key customer requirements (customization) and how reliably these requirements are delivered (reliability). and overall quality allows the ACSI model to deline ate a distinct quality construct that is separate from perceived value. and the addition of measures for customer expectations.. A total of 15 survey questions are used to operationalize the 6 constructs in the model. Figure 14 The American Customer Satisfaction Index model The main differences between the original SCSB model and the ACSI model are the addition of a perceived quality component.
(1996) argue that the inclusion of both perceived quality and perceived value into the ACSI model provides important diagnostic info rmation. The second measure is constructed from two survey ratings: the degree to which a firm could raise its price(s) as a percentage before the customer would definitely not choose to buy from that firm again the next time (given the customer has indicated that he or she is likely to repurchase). price is a more important determinant of satisfaction. Overall perception of quality 43. expected customization. Table 6 Latent and manifest variables ACSI Latent variables Perceived overall quality Manifest variables 42. There are two measures of customer loyalty in the ACSI model. a rating of the price or prices paid for the quality received and a rating of the quality received for the price or prices paid. and expected reliability). As quality is a component of value. The first is a rating of repurchase likelihood. Expected customization and expected reliability were also added to the survey to measure customer expectations using three survey measures (overall expectations. The ACSI model predicts that as both perceived value and perceived quality increase. customer satisfaction should increase. Fornell et al.other sectors to measure perceived quality (customization. Perception of . reliability. As the impact of value increases relative to quality. The perceived value construct is operationalized using the same two survey questions as in the original Swedish model. and overall quality) are asked separately for both the product a nd service aspects of the offering. the model also links quality directly to value. and the degree to which a firm would have to lower its price(s) as a percentage before the customer would definitely choose again from that firm the next time (given the customer has indicated that he or she is unlikely to repurchase).
6. features 40. Customer expectations 5.reliability 44. reliability 7. feature Perceived value Price paid for quality received Quality received for paid price Customer satisfaction Overall satisfaction Fulfillment of expectations Comparison with ideal Customer complaints Customer loyalty Quantity of registered complaints Complaint handling Repurchase behavior Tolerance of price Expectations for Overall expectations Expectations for Perception of Table 7 Exogenous and endogenous variables ACSI Exogenous variables Customer expectation Endogenous variables Perceived quality Perceived value Customer satisfaction Complaint Customer loyalty .
and (5) includes complaint handling as a driver of both satisfaction and loyalty. Corporate image should. 1972). 1971. The new model: (1) replaces the value construct with a "pure" price construct. affect behavioral intentions such as loyalty. in turn.5 .1 . These associations are similar to schemas in cognitive psychology (Brandsford and Franks. According to Fishbein and Ajzen (1975). (4) incorporates the potential for direct effects of price on loyalty. (2) replaces customer expectations with corporate image as a consequence of satisfaction. Selnes (1993) hypothesized and documented these effects for brand reputation (a large part of overall corporate image) in a study of four companies from different industries. Andreassen and Lindestad (1998a. which predict behavior. .3 T he No rwegi an C us tom er Sa tisf ac tion Barom e te r (NC SB ) The first NCSB model was identical to the original American model with the exception that it included corporate image and its relationships to customer satisfaction and customer loyalty. in two studies related to the impact of corporate image on customer intent. Finally. corporate image should be updated as schemas. (3) includes two aspects of relationship commitment as well as corporate image as drivers of loyalty. are changed. attitudes are functionally related to behavioral intentions. Brandsford and Johnson. As a type of attitude. These changes are part of the proposed model that is illustrated in figure 15. including customer satisfaction. Figure 15 The Norwegian Customer Satisfaction barometer model Key to perceptions of corporate image is the organization-related associations held in a customer's memory. 1998b) found a positive correlation between the constructs.
the NCSB model was expanded over time to include a relationship commitment construct. The commitment constructs are modeled as mediating the effects of satisfaction on loyalty (behavioral intentions). Table 8 Latent and manifest variables NCSB Latent variables Affective commitment Manifest variables 45. Reliability Responsive Assurance Switching cost Product price Expected price Overall image Image of branches Image in friends eyes Customer satisfaction Complaint handling Overall satisfaction Expectation of disconfirmation How complaints are handled How complaints are resolved Customer loyalty Repurchase behavior Intentions to recommend . 47. Trust 46.In keeping with the evolution in marketing from a transactional to a relational orientation among service providers. 48. While the affective component is "hotter" or more emotional. The construct has evolved to focus on both the affective and calculative components of commitment. the calculative component is based on "colder" aspects of the relationship such as switching costs. 41. Calculative commitment Perceived price / index Corporate image 8.
. and customer loyalty constructs are modeled the same as in the ACSI. perceived quality. perceived value. See figure 16. customer satisfaction. 2000). The survey questions are also all rated on 1 to 10 -point scales.4 T he Euro pe an Cu s tome r Sa tisf ac tion Ind ex (EC SI) The ECSI represents another variation on the ACSI model (Eklöf. The customer expectations.Table 9 Exogenous and endogenous variables NCSB Exogenous variables Price index Complaint handling Quality drivers Tangib le Reliabi lity Respo nsive Assura nce Empat hy Endogenous variables Customer satisfaction Corporate image Calculative commitment Affective commitment Customer loyalty 5 .1 .
42. EOQ (European Organization for Quality) and IFCF(International Foundation for Customer Focus). As described subsequently. the ECSI model does not include the incidence of complaint behavior as a consequence of satisfaction. Second. For the ECSI the loyalty measures include likelihood of retention. 10. 51. There are two more fundamental differences between the ACSI and ECSI models. Image of branches Ethics Overall expectations Interactive . The measures of customer loyalty are also somewhat different. Overall image 50. Customer expectations 9. satisfaction and loyalty. Corporate image is specified to have direct effects on customer expectations.Figure 16 The European Customer Satisfaction Index model The distinction between service quality and product quality in a subset of ACSI indu stries is standard in the ECSI. The EPSI Rating is run under the umbrella of a European not-for-profit organization. there is good reas on for this change. First. in keeping with the original NCSB. the ECSI model incorporates corporate image as a latent variable in the model. and whether the amount customers are likely to purchase will increase. ESCI has b een renamed EPSI which stands for European Performance Satisfaction Index. This has been done in order to open in for other performance measures like employee satisfaction and society trust. Table 10 Latent and manifest variables ECSI Latent variables Corporate image Manifest variables 49. likelihood of recommending the company or brand. associated throughout its history and by its approach with the following leading European quality organizations EFQM (European Foundation for Quality Management.
expectations Perceived value Value for money Comparison with competitors Perceived service quality Overall quality perception Meet requirements Service quality Reliability and accuracy provided Perceived product quality Overall quality perception Meet requirements Technical product quality Reliability Customer satisfaction Overall satisfaction Fulfillment of expectations Comparison with ideal Customer loyalty Repurchase behavior Intention to buy addition Intentions to recommend Table 11 Exogenous and endogenous variables ECSI Exogenous variables Corporate image Perceived product quality Perceived service quality Endogenous variables Customer expectation Perceived value Customer .
The objective of all CSI models is to provide results that are relevant. The Latent variables comparison (table 12) The Endogenous and exogenous variables compariso (table 13) CSI comparison . causal model). they have some obvious distinctions in model's structure and variable's selection so that their results cannot be compared with each other.2 Comparison of customer satisfaction models. the level of each latent variable estimated. Table 12 Latent variables comparison table .satisfaction Complaint Customer loyalty 5.1 Mos t im por ta n t sim ilari ti es a nd d iff er e nces amo ng t he m od e ls . reliable.generic qualities (table 14) National CSI model platforms versus Energyst locations (table 15) 5 .e. All models have an academic/scientific.2 . causal construct. The national CSI models are eva luated from four perspectives. The purpose of each CSI construct is to be a structural equation model for standard measurement for evaluation of customer satisfaction based on a set of latent variables determined by a set of manifest constructs. The four CSI models are fundamentally similar in measurement model (i. Each latent variable is measured. valid and have predictive financial capability. the relevant connections between the latent variable established and the magnitude of the connections estimated.
Customer expectations Perceived overall quality Perceived performance Perceived service quality Perceived product quality Quality drivers Affective commitment Calculative commitment Corporate image Perceived value Price index Complaint handling Customer complaints Customer satisfaction Customer loyalty SC SB Yes Yes AC SI Yes Yes NC SB EC SI Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Table 13 Endogenous and exogenous variables comparison table SC SB Exo AC SI Exo NC SB EC SI En do Customer expectations .
Perceived overall quality Perceived performance Perceived service quality Perceived product quality Quality drivers Affective commitment Calculative commitment Corporate image Perceived value Price index Complaint handling Customer complaints Customer satisfaction Customer loyalty End o End o End o End o End o En do En do Exo End o End o End o End o End o End o End o End o End o Exo En do End o End o En do En do .
or an emotional reaction to the difference between what customers anticipate and what they receive.generic qualities SC SB Linked to quality organizations Causal equation model Yes Publish national results Publish sector results Computer aid telephone Yes survey/interview Table 15 National CSI model platforms versus Energyst locations SC SB Norway Sweden Denmark Finland Russia Baltics Iceland Czech Republic Greece UK Ireland Germany Netherlands Belgium France USA Yes AC SI Yes Yes Yes Yes Yes NC SB Yes EC SI Yes Yes Yes Yes Yes Yes AC SI NC SB Yes EC SI Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes 6 Conclusion My literature research has revealed that customer satisfaction can be defined as an overall customer attitude towards a service provider.Table 14 CSI comparison . regarding the .
and positive word of mouth. being supported by three groups of variables: Cognitive variables. based on the emotions produced to the customers. Affective variables. perceived service value. My literature study has del ivered an extensive source of customer satisfaction knowledge. based on the interaction between the provider and the customer in the buying act. perceived product value. Customer satisfaction does have a positive effect on an organization's profitability. I have chosen for a qualitative empirical research study taken from a singular desk research angle which incorporates a study of academic papers. perceived value. commitment. Research has demonstrated that even a difference between a totally satisfied customer and a somewhat satisfied customer could lead to an increased revenue contribution of a factor 2. dissatisfied customers are more likely to tell another ten people of their unfortunate experience. Satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people. and customer loyalty are developed or even damaged. Equally well. The above groups built up the interface where latent variables. My literature research exposed four general characteristics of customer satisfaction involving features or qualities related to customer satisfaction . satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase.fulfillment of some need. Conative variables. Customer satisfaction is addressed as a strategic business development tool. thesis and dissertations in customer satisfaction and customer satisfaction models. customer expectations. customer satisfaction. brand loyalty.6. Satisfaction represents a veritable key of modeling the acquisition behavior of the customer. goal or desire. based on the qualitative superiority of the products given by the performance. such as corporate image & brand image.
. Equally well.serving to identify this phenomenon among other customer relationship management propositions. The objective of all customer satisfaction models is to provide resul ts that are relevant. dissatisfied customers are more likely to tell another ten people of their unfortunate experience. so called user requirement specifications. 54. Desk research into the four most known causal customer satisfaction models (SCSB. Customer satisfaction is a highly variable personal assessment that is greatly influenced by individual expectations based on his/her own information. the relevant connections between the latent variable established and the magnitude of the connections estimated. causal construct. and circumstances (time. 53. loyalty and retention behavior with a effect on an organizations pro fitability. reliable. 52. Customer satisfaction involves the sum of personal (product and service) experiences driven by its antecedents. All models have an academic/scientific. adoption of a model needs to be guided by a set of objective selection criteria. Therefore. location and environment). Nevertheless they have some obvious distinctions in model's structure and variable's selection so that their results cannot be compared with each other. the level of each latent variable estimated. Customer satisfaction is most often related to purchase. ECSI) have shown fundamentally similarities. and valid and have predictive financial capability. ACSI. NCSB. Each latent variable is measured. expectations. direct contact and interaction. 55. The purpose of each customer satisfaction construct is to be a structural equation model for standard measurement for evaluation of customer satisfaction based on a set of latent variables determined by a set of manifest constructs. Customer satisfaction characterizes itself by a high degree of word -of-mouth where satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people.
In other words. and to take action for improving it.Customer satisfaction research should be done with greatest care. This is where a corporate customer satisfaction approach becomes a powerful strategic business development tool for B2B organisations. 7 Advice and recommendations My literature study and empirical research took off with the assignment of developing a customer satisfaction model for B2B organisations. Any organization (B2B and B2C) has to listen to its external customers and stakeholders. Most B2B organisations will not succeed by simply doing more of what they are doing now. timely. what it all comes down to is that they need to do some things differently. not least if the ambition is to compare and benchmark. A number of studies have shown that the long -term success of a corporation is closely related to its ability to create and maintain loyal and satisfied customers. Measuring customer satisfaction must be a continuously. accurate and reliable process. Being conscious of the aggressive and competitive B2B playing field B2B organisations should undertake direct action to avoid serious hindrance of their business development over the coming five years. Customer Satisfaction is a crucial goal for most organizations. . a number of different methods have been developed and tested. for the purpose of developing tangible applications for results a number of criteria have to be fulfilled in any such measurement system.It is important to realize that many customers will not complain. consistent. However. adapt to customer needs and changing preferences. we often are not aware of the extent of satisfaction / dis satisfaction as long as we do not ask. In order to monitor customer sa tisfaction. This is the spirit in which the research initiative of customer satisfaction was initiated.
whether this is based on geographic zone. so called . country.1). Customer satisfaction survey on a monthly base (see section 7. For that reason I recommend B2B organizations to carry out the following strategic proposition. Theory and best practices have proven that sustainable customer satisfaction models needs to be built on well-defined transparent processes and o n a consistent approach. As a consequence of the above.3). Standardize (multilingual) survey questionnaire (see section 7. Implement a causal customer satisfaction model (see section 7.For that reason I would like to finalize my research with advice and recommendations that could lead to improvement of customer satisfaction and an increase of the effectiveness and strength of B2B customer portfolio.2).1 Implement a causal customer satisfaction model Selecting or redesigning a customer satisfaction model. requires a set of objective selection criteria. Accordingly I have set twelve design criteria at which a customer satisfaction mode l should comply.4). Standardize process flow and reporting structures (see section 7. or demographic culture is not relevant as long as accountable managers and marketers understand the relevance of each model latent and manifest variable in relation to the target group.5). business unit. 7. The means by which customer satisfaction is build may differ from time to time and from customer group/segmentation. B2B organizations would benefit from a well -defined customer satisfaction model. product. Secure process ownership and process managers (see section 7. I shall emphasis my advice and recommendation on a structured causal customer satisfaction model.
61. A lot of B2B business models are built on consultative selling.model user requirement specifications (model -URS). Implementable model. 60. 59. The model should be easy to understand and free of ambiguous criteria and processes. Feasible model. The model should fit in a B2B environment regardless the type of industry. The model should be a causal construct with a high correlation between the latent and manifest variables. "Keeping customers first". 58. The model should fit within a QHSE and Marketing communication strategy. regions and . Proven model. Problem solving model. Bench marking The model should support internal benchmarking across countries. The model should be accepted and/or known in literature and industry. The model should lead to improvement of customer satisfaction challenges and an increase of the effectiveness and strength of business development. Tracking performance over time The model should serve for each individual organizational entity and/or country/region and for a group as a organizational total. 57. For that reason the model should have an out-side-in paradigm. 63. The model should be applicable within the bounds of B2B strategy and business objectives 62. Generic B2B model. Transparent and specific model. 56. Comprehensive model.
The model must deliver objective and measurable criteria for customer satisfaction management On the basis of the above criteria I recommend to implement the European Customer Satisfaction Index model (ECSI) as processed and renamed by EPSI. see figure 17. Figure 17 Recommended SCI model . Result orientated model The model should have a logical and result driven process flow. The model should support external bench marking across nations.ECSI / EPSI model .1. The model includes the latent corporate image variable which fulfils a significant role in risk reduction and information efficiency. Perc eived product quality and perceived service quality two other important latent variable which fulfil an important function in most B2B consultative selling organisations. Diagnosing the effects of various quality initiatives The model should be applicable for diagnosing of product quality. 64. The European Customer Satisfaction Index (ECSI).business models. industries and sectors.4. see figure 17. See chapter 5. 65. The model is described in my literature study and it comply with the above ten criteria. The model has a strong European focus. 66. Measurable model. serv ice quality and overall quality initiatives.
The participating countries conduct nat ional studies based on comparable models and methods. analyze and present results from all these dimensions and relate them to key performance indicators. the EPSI model is able to explain the major part of the variation in customer satisfaction based on the five specified drivers in the model. Sweden. EPSI Research entity with office in London. The general strict anticipation within EPSI is that the econometric mod el should be able to explain around two thirds of what drives customer satisfaction. In each of the . In general. England and the main operational office in Stockholm. coordinates Pan European EPSI program. EPSI is characterized by independence and a scientific background. rich international benchmark database and new areas of research offered by the market and society. The EPSI approach is based on a casual model. These are combined with regularity in surveys.The ultimate objective of the Pan European program is to generate. The network of EPSI national platforms and clients is active in around 20 European countries. proven quality of methods and results.
The survey questionnaire is composed in Appendix chapter 9. to achieve maximal benchmarking opportunities for multi-national users. perceived quality of products and services? How satisfied are customers? How loyal are customers? Is customer satisfaction and perceived quality improving or declining? How is the organisation performing relative to competitors in the industry? And relative to companies in other industries. sectors and countries? What are the manifest variables of customer satisfaction and customer loyalty? What is the impact of the different drivers? What is the optimal allocation of resources across the manifest variables? What will the consequence to improve customer satisfaction? The survey questionnaire should cover all latent variables with two or more manifest variables (composite index) to increase reliable and become less volatile using a singular question. by the R&D offic e in Stockholm. . 7. perceived value. The entire operation is coordinated and harmonized.2 Standardize multi lingual survey questionnaire.4 Survey questions.countries one or more industries are included. The questionnaire should answer: What are customers' perceptions of: corporate image. With the ECSI / EPSI model in mind the survey questionnaire should be applicable for all multiple countries in their own native language to ensure a full understanding of the questions and answers.
act Deming cycle. reminders and closure 68. and a dedicated central Customer Satisfaction Manager who nurtures and protects the customer satisfaction process. do. Plan (Central Customer Satisfaction Manager) Establish the survey objectives and processes necessary to deliver results in accordance with the expected output. \ Analyze survey response data Compile customer satisfaction reports 70. Plan survey invitations. Do (Central Customer Satisfaction Manager) Implement and execute the survey processes 69. should res ult in effective action. Efficient custo mer satisfaction management requires a long term vision and strategy. Act (Local Customer Satisfaction Manager) . It both emphasizes and demonstrates that the customer satisfaction program should start with careful planning. check. 1.7.3 Secure process ownership and process managers. Because of that I recommend to assign a Marketing Manager to the central customer satisfaction manager role and BU Directors/Managers to the BU customer satisfaction manager role. To coordinate continuous improvement efforts all activities should be processed according a plan. Check (Central Customer Satisfaction Manager) Measure the processes and compare the results against the expected results to ascertain any differences. For consistency and transparent survey processes it must be clear for t he organization which manager is responsible for the customer satisfaction process. should measured and checked to move on again to careful planning in a continuous and consistent cycle: 67.
The me ans by which customer satisfaction is build may differ from time to time.5 Standar dize process flow and reporting structures Reporting customer satisfaction must be a continuously. 7. Each employee is accountable for satisfied and loyal customers. Therefore I recommend executing the survey on a monthly base after month closure for closed purchase cycles/projects. Determine where to apply changes that will include improvement. consistent. Each will be part of either one or more of the P-D-C-A steps. accurate and reliable process. When a pass through these four steps does not result in the need to improve.Analyze customer satisfaction reports. and after use/experience (disposition value). accurate and reliable process. at the point of purchase and/or direct experience (transaction value). from purchase experience to point of use experience. Measuring customer satisfaction must be a continuously. therefore each employee should have . Therefore I advise to standardize the reporting structure and process flow. after the purchase (ex post value). consistent. Customers can construct value before purchasing (ex ante value). Next to that organizations sho uld eliminate "communication stops". Customer satisfaction research should be done with greatest care. select focal areas and determ ine their cause. timely.4 Customer satisfaction survey on a monthly base. 7. timely. refine the scope to which PDCA is applied until there is a plan that involves improvement.
Regional management support and trust. You hold in your hands the power to keep customers coming back. . accountability and responsibility. MT Management support and trust. Critical success factors can be addressed as. Implementing without proper preparation. Nonetheless I am fully confident that all above mentioned recommendations will contribute significantly to better customer satisfaction performance and to a more structured and transparent marketing and communication organization. Effectiveness of implement ation. internal servers.6 Critical success factors and pitfalls Whether all recommendations will lead to instant success depends on many factors. Doing nothing and continuing today what we have done yesterday. Implementing without full understanding and support of MT and BU managers. milestones and Deming -cycles Implementing without ownership. Last but not least I would like to emphasize both size of the coin by highlighting the critical success factor and pitfalls.access to the reports .CRM. but the core of your job. perhaps even to make or break the company. This is not a burden." 7. Willingness of employees. Understanding of urgency and reason for change. "As far as customers are concerned you are the company. etc. Pitfalls can be addressed as. intranet.
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vovici.1 Image of Rovaha Engineering 9.1.com 9 Appendix Customer satisfaction model & survey appendix: 126.96.36.199 Customer Satisfaction Process Figure 17 shows a standard customer satisfaction survey process.2 Survey equation model 9.5 The score per latent variable 9.harvardbusiness.com http://www.2.zbc.2.6 The Net Promotor Score 9.7 Customer Loyalty 9.4 The Net Promotor Score 188.8.131.52.1.8 The variance 9.1.org http://ww w. Invitation process.5. Incase you do not process the invitation you need to administrate the main reason to legitimate your decision.rating.5.5 Customer perceived value of Rovaha Engineering 184.108.40.206 The range 9.4 Customer perceived service quality of Rovaha Engineering 9.3 The Mode 9.com http://www.1 The Mean 9. Selection process of survey invitations After you have delivered the goods and/or service you should invite your customer to participate in your survey.2.word press.2.1.1 Survey Model Questions 9.7 The standard deviation 9.2.nu http://experiencematters. The main process is driven by the Plan-Do-Check-Act cycle. Each initation should be personalized with a reference to his/her latest purchase .5.5.1. in this case email invitations.2 The Median 9.5 How to calculate? 9.2.5.com http://hbr.n u http://www.6 Customer Satisfaction 9.3 Customer Perceived Product Quality of Rovaha Engineering 9.foreseeresults. devided over four sub processes.2 Customer Expectations of Rovaha Engineering 9.1 Customer Satisfaction Process 9.zbc.
Reporting process The system should be able to produce the right reports for each level of decision making. This alert will be automatically generated as soon as an exceptional bad or good survey is submitted. (convert the negative perception into a positive experience) How your specific architecture will look like is highly dependend of the type of applications and software solutions you utilize. it will even integrate feedback data to/from CRM.experience. Maximum three reminders will be send untill the survey has been completed and submitted. and so on. 9. Exceptional good feedback will higly motivate your (sales)team and bad feedback enables you to undertake direct action towards your customer. saved. A very important report is the email alert. and restarted. Image Customer Customer Customer Customer Customer Customer Expectations Perceived Product Quality Perceived Service Quality Perceived Value Satisfaction Loyalty The components are viewed as latent variables . For example. Survey questionair process Once activated the survey can be started.2 Survey equation model For measuring Customer Satisfaction in a wider context a structural equation model has been developed based on the components. Vovici Enterprise Feedback Management (EFM) online survey software will integrate all processes. HRIS and other systems with standard integrati on options. demonstrating a clear sense of accountability and commitment towards your customer.
2 . The objective is to provide results that are relevant. the level of each component estimated. Each questionair need to be tailored and validated to its specific business. How do you find it generally rated (and perceived) among people in terms of . 73. 9 . The model demonstrates also the interdep endencies between sales (the promise/proposition) and operations (delivery of goods/service). Survey audience (survey invitations) qualified on the basis of delivered projects to customers of Rovaha engineering. Mobile Phones. state -of the. 74... 9 . Being a reliable engineering company? Providing excellent customer service? Offering good value for money? Being a professional. reliable. 71...engineering company? . Each component is measured. 72. 1 .determined by a set of manifest constructs for each component.1 Surve y Mo de l Qu es ti ons . valid and have predictive financial capability. 1 I m a g e o f Ro v a h a E n g i n e e r i n g Think about the general image of Rovaha Engineering in your business. Having said that let's review a draft set of 25 basic c ustomer satisfaction survey questions that could have been designed for (a dummy) company: Rovaha Engineering . the rel evant connections between the components established and the magnitude of the connections estimated. 2 . a technical B2B engineering organization trading "A-class" waste recovery installations. See also the ECSI questionaire as used in 2007 for the Master Questionnaire B2C f or Telecommunications.
1 . during the last year). and 10 "much more than expected". Your overall expectations considering all aspects that you find important to be fulfilled by an A Class engineering company? Use the scale where 1 means "very low" and 10 means "very high". Providing a reliable and accurate servi ce? 46.. 2 C u s t o m e r E x p e c t a t i o n s o f Ro v a h a Engineering Think about your own expectations of Rovaha Engineering (based on your previous experience. delivered by Rovaha Engineering? The reliability of our waste recovery machines? The technical features of our machines? The representability of Rovaha Engineering installations on your plant? Technical documentation offered by Rovaha Engineering? Use the scale where 1 means "very low". 9 .. and 10 "very high". Fulfillment of expectations 11.Use the scale where 1 means "very low" and 10 "very high". 3 C u s t o m e r Pe r c e i v e d Pr o d u c t Q u a l i t y o f Ro v a h a E n g i n e e r i n g How would you rate your own experience c oncerning the product quality during the last rental project. 9 . 43. Your expectations on Rovaha Engineering products and services offered? 44. 1 . To what degree do you consider tha t Rovaha Engineering presently fulfils all your expectations? Use the scale where 1 means "much less than expected". Your expectations on customer service? 45. 2 . 2 . .
To what degree do you consider that Rovaha Engineering presently fulfils all your expectations? . How do you rate this in rela tion to the costs? The Rovaha Engineering products are good value for money? The Rovaha Engineering service charges are good value for money? The Rovaha Engineering overall project value is good value for money? Use the scale 1 meaning "very low value for money". 1 .2. and 10 "very high value for money". 5 C u s t o m e r p e r c e i v e d v a l u e o f Ro v a h a Engineering Consider the products (functions) and service you have access to from Rovaha Engineering. delivered by Rovaha Engineering? The quality of the service and advice offered by employees of Rovaha Engineering? The quality of the services delivered by Rovaha Engineering? The overall quality of the services delivered by Rovaha Engineering? Use the scale where 1 means "very low". Consider all your expectations. 9.1.6 Customer Satisfaction Considering all your experience of Rovaha Engineering. 9 .4 Customer perceived service quality of Ro v a h a E n g i n e e r i n g How would you rate your own experience concerning the service quality during the last waste recovery project.2.1. 2 . and 10 "very high".9. How satisfied are you? Use the 10-point scale where 1 means "not at all satisfied" and 10 "very satisfied".
etc) . How close to this ideal would you rate Rovaha Engineering? Use the 10-point scale where 1 means "not close to ideal" and 10 "very close to ideal". and 10 "very likely". expectations.3 How to calculate This section will inform you about the way you can calculate the different results.a. In case the question does not apply he/she is able to select the n.2.1. option (not applicable). For all survey question counts that you need to ask your customer to rate your organisation on a linear scale for 1 -10. Why do you feel that way about recommending Rovaha Engineering? Open comment box. . *Net Promoter Score question by asking customers a single (loyalty) question. How likely is it that you would buy from Rov aha Engineering again? How likely is it that you recommend Rovaha Engineering to a friend or colleague?* Use the scale 1 meaning "very unlikely".Use the 10-point scale where 1 means "falls short of expectations" and 10 "exceeds expectations". 9.7 Customer Loyalty If you were to buy waste recovery installations. Think of an ideal engineering company. The mean The median The mode The range The score per latent variable (image.
8. 44. Example (1) 47.1 T he Me an Example: 75. Four tests results: 15. the median is equal to the sum of the two middle (after sorting the list into increasing order) numbe rs divided by two. 44.3 . 9. 17.The net promotor score Standard deviation Variance 9 . middle) Example (2) 12. Find the Median of: 9. 3. Thus. 15 (Odd amount of numbers) Line up your numbers: 3. 6 (Even amount of numbers) Line up your numbers: 3. 17. 18. When the totals of the list are even. the middle number is the median! Be sure to remember the odd and even rule. 6. When the totals of the list are odd. Find the Median of: 8.75 76. 44 Add the 2 middles numbers and divide The Median is: 15 (The number in the . 17. remember to line up your values. 12. 20 The sum is: 75 Divide 75 by 4: 18. 17. the median is the middle entry in the list after sorting the list into increasing order. 15.2 T he Me dia n The Median is the 'middle value' in your list. 44 (smallest to largest) 48. 22. 3. The 'Mean' (Average) is 18. 12.3 .75 9 .
15. 17. 17. 3. 17 .3 . The Mode is 15 (15 occurs the most at 3 times) *It is important to note that there can be more than one mode and if no number occurs more than once in the set. 15.3 . 15. 3. 40. 17. 44. 9 . 44. The range is 41. 27. 3. 15. You'll never forget that one! Example: Find the mode of: 9. . 40. 8. Example: if your set is 9. 9. 8.by 2: 8 12 = 20 ÷ 2 = 10 13. The Median is 10.Mode. 44. Most frequently . 3. The ra nge is simply the the smallest number subtracted from the largest number in your set. 14. 44. 15. 27.4 T he ra ng e Ocasionally in Statistics you'll be asked for the 'range' in a set of numbers. 44. then there is no mode for that set of numbers. 15. 9 . A trick to remember this one is to remember that mode starts with the same first two letters that most does. 6 The range would be 44-3=41.3 T he Mo de The mode in a list of numbers refers to the list of numbers that occur most frequently. 15. Put the numbers is order for ease: 3.
88 Mean question 4 = 6. The weighting factors are equally distributed.98 These mean values from the data set must first be transformed to the value on a 0 to 100 scale.3 . Computing the score is done in three steps: Compute the mean of each question Compute the 0 to 100 scale value for each question Compute the latent variable score Example: perceived product quality The survey has four question and you have determined that each question is equaly important Each question weight (100% : 4 =) 25%.31 -1) : (10-1)) * 100 = 81. This is done by subtracting 1 from the mean values (sample approach N-1).5 T he sco re pe r lat e n t va ria ble The score of each latent variable is a weighted index score computed from the customer responses to a small set of required questions per variable with an answering scale 1 to 10 value. dividing the result by the scale minus 1 and multiplying the whole by 100. The total score of a variable represent the weighted sum of the set of questions which are transformed into 0 to 100 scale value.23 Mean question 3 = 7. Compute 0 to 100 value score for each question: Score question 1 = ((8.31 Mean question 2 = 8. Meaning each question w eights the same as we have set the importance and relevance of each question at the same level.9 . let us assume: Mean question 1 = 8.25 .
50 * 25% = 16.88 -1) : (10-1)) * 100 = 76.46 Score question 4 = ((6. Firms with the highest net-promoter scores consistently garner the lion's share of industry growth. Passives (7 -8 rating).50 Compute the weighted variable score: Score value question 1 = 81.46 * 25% = 19.08 Score value question 3 = 76.12 Score value question 4 = 66.14 9 .31 Score value question 2 = 80.25 * 25% = 20.3 .6 T he N et Promo to r Sc or e You obtain a Net Promoter Score by asking customers a single (loyalty) question on a 0 to 10 rating scale: "How likely is it that you would recommend <our organization> to a friend or colleague?" Based on their responses. customers can be categorized into one of three groups: Promoters (9-10 rating).98 -1) : (10-1)) * 100 = 66. and Detractors (0 -6 rating).23 -1) : (10-1)) * 100 = 80.32 * 25% = 20. Tracking net promoters-the percentage of customers who ar e promoters of a brand or company minus the percentage who are detractors -offers organizations a powerful way to measure and manage customer loyalty. Example (1): .Score question 2 = ((8. The percentage of Detractors is then subtracted from the percentage of Promoters to obtain a Net Promoter score.32 Score question 3 = ((7.62 The score of the perceived product quality is the sum of the above = 76.
It is the first step in calculating the standard deviation. s² is the most commonly used measure of variance. By far the most common formul a for computing variance in a sample is: Where: s² = standard deviation X = value M = mean N = sample size Since samples are usually used to estimate parameters.7 T he sta nd ard devi at io n The standard deviation is the sum of squared deviations (or errors) of a data set with respect to the mean divided by the number of data. Calculating the variance is an impor tant part of many statistical applications and analyses.Company ABX Detractors : 20% Passives : 30% Promotors : 50% The net promotor score : 50 -20 = 30 Example (2): Company XYZ Detractors : 30% Passives : 50% Promotors : 20% The net promotor score: 20 -30 = -10 (minus 10) The score does not follow a 0 -100 scale but a 100% to +100% scale 9 . Example: .3 .
It is the most commonly used measure of spread. Many formulas in inferential statistics use the standard deviation. 1 2 3 4 6 8 2 4 1 1 1 1 1 1 6 M XM 4 3 4 2 4 1 4 0 4 2 4 4 (XM)² 9 4 1 0 4 16 34 Sample size N = 6 (frequency) The mean : 24/6 = 4 The sum of (X-M)² : 34 The standard deviation is 34/6 = 5. 3. 8 we can compute the standard deviation as follow: X Fre q. 2. The standard deviation has proven to be an extremely useful measure of spread in part because it is mathematically tractable.67 9 . In a normal distribution.if your set is 1.8 T he va ria nc e The standard deviation formula is very simple: it is the square root of the variance. 6. . it is possible to compute the percentile rank associated with any given score. 4.3 . about 68% of the scores are within one standard deviation of the mean and about 95% of the scores are within two standard deviations of the mean. An important attribute of the standard deviation as a measure of spread is that if the mean and standard deviation of a normal distribution are known.
67 The variance is 2.Example: If your standard deviation is 34/6 = 5.38 .
38 .5.67 The variance is 2.
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