Theme / Topic :
Customer Loyalty as long-term business profitability.
Title :
Why do cutomers switch? The dynamics of satisfaction versus loyalty.
Author :
Banwari Mittal
Marketing
Faculty Member, Northern Kentucky University, Highland Heights,
Kentucky, USA
Walfried
M. Lassar
Assistant
Professor of Marketing, University of New Hampshire, New Hampshire,
USA
Year :
1998
Background and Problems : In the literature, the company must know the marketing
strategy that's right for his efforts so that customers can faithfully on
goods/services produced. Although companies are realizing
the value of keeping customers loyal, no one knows for sure how to do it.
Companies measure customer satisfaction, and hope that if the satisfaction
scores are good, the customers will stay with the firm. But even satisfied
customers leave for the lure of a competitor’s offer. Service industries
present a more difficult setting for understanding customer disloyalty as
opposed to manufactured goods industries. This is because, for service firms,
the basis of consumer choice and continued patronage are less obvious. Services
are intangible, and they cannot be completely standardized. At the minimum,
they vary according to the mood of the service provider and service customer at
the moment of service delivery. Thus, in service businesses, what is given and
received is relatively intangible. Consequently, customer evaluative criteria
are less well articulated, and the appraisal of the value received is much more
subjective Therefore, to understand customer disloyalty for service businesses.
Research Purposes :
- Does customer satisfaction always ensure customer loyalty? Is satisfaction merely a necessary prerequisite for loyalty, or a sufficient one? Or are satisfaction and loyalty entirely independent?
- Is service quality related to satisfaction? Is it related to loyalty? Is it related more to loyalty than to satisfaction, or vice versa?
- Do different components of service quality (such as functional and technical quality) influence satisfaction differently than they influence loyalty?
- And, finally, does this pattern of influence differ across high contact versus low contact service industries?
Methodology
Variable :
variables used is the measures of
overall satisfaction, intention to switch, technical quality, functional
quality, and the SERVQUAL scale. Satisfaction was measured by this item:
Overall,
with this facility, I am: (1) Extremely dissatisfied. (2) Somewhat
dissatisfied. (3) Feel neutral. (4) Somewhat satisfied. (5) Extremely
satisfied. Loyalty was measured by this item: If there was another____ that you
could go to, would you switch over to it? (1) no; (2) perhaps; and (3)
definitely. Technical quality was measured by this item: The overall quality of
work performed by this ____ is: (1) Very poor. (2) Poor. (3) Average. (4) Good.
(5) Excellent. Functional quality was measured by this item: The overall
quality of the service at this ____ is: (1) Very poor. (2) Poor. (3) Average.
(4) Good. (5) Excellent.
For
SERVQUAL, we used its latest, 21-item, version (Parasuraman et al.,
1994), all items measured as perceptions on 5-point Likert scale; (1) strongly
disagree; (2) disagree; (3) feel neutral; (4) somewhat agree; to (5) strongly
agree.
Data : The data used is the primary data .
instrument of research using a questionnaire. Respondents over 30 years of age
were 70 percent, over 40 were 28 percent, and over 50 were 12 percent.
Twenty-five percent had high school as their highest grade, and 63 percent had
college degrees. Twenty-seven percent had income less than $25,000, and 20
percent had income exceeding$60,000.
Research Phase : In this research the analysis done by the
consumer response to collect by providing questionnaires to health clinics or
service facility repair cars. Respondents
were recruited from PTA organizations,
mailbox drops, and mall intercepts in two US cities. One hundred and ten customers answered the survey for a
car repair service, and 123 for
a health care facility they utilized within the past one year.
Research models : Model research conducted using the
discriminant analysis method and image.
Results and Conclusion
The results show that for health care services, functional quality played a
more significant role than did technical quality (discriminant coefficient 0.679
for the former versus 0.444 for the latter). In contrast, for car repair services,
technical quality played a more significant role than did functional quality
(signified by the discriminant coefficient of 0.755 for the former
compared
to 0.333 for the latter).
In SERVQUAL, Reliability can be deemed to represent “technical quality,”
whereas the Responsiveness, Assurance, and Empathy dimensions reflect “functional
quality”. Therefore, these three dimensions were combined to compute a total
score. In fact, for health care services, Reliability fails to enter the
discriminant function; that is, it does not make a significant contribution
beyond the determinant role played by Responsiveness/ Assurance/Empathy.
Notwithstanding the popularity of satisfaction surveys in service
industries, the dynamics of satisfaction and loyalty defy intuitive assumptions
managers typically make. It turns out that the relationship between
satisfaction and loyalty is asymmetrical: while dissatisfaction nearly
guarantees switching, satisfaction does not ensure loyalty.
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