Satisfaction and

Loyalty

Customer Satisfaction versus Loyalty

SatisfactionSatisfaction = Meeting minimum expectation

Loyalty Loyalty = Exceeding customers expectation and securing future commitment

RetentionRetention = Satisfaction + Loyalty

Outcomes:– Sales to increase revenues– Less price sensitivity– Lower organization’s costs– Positive word of mouth

Satisfaction:Feelings from experience

Loyalty:Choice of brand

over others

Expectancy Disconfirmation

• Performance expectations are compared to actual product performance.– If quality falls below expectations,

emotional dissatisfaction results– If performance is above expectations,

emotional satisfaction occurs– If performance is not perceived as different

from expectations, expectancy confirmation occurs

Satisfaction - Loyalty links

Zone of affection

Zone of indifference

Zone of defection

1

20%

40%

60%

80%

100%

Loyalty

Satisfaction5

Apostle

Terrorist

Hostages

Mercenaries

Determinants of Dissatisfaction

0%

5%

10%

15%

20%

25%

30%

35%

40%

45% Core service value (mistakes, billing errors,harm,…)Service encounter failures (impolite,unresponsive, unknowledgeable,…)

Pricing (high price, unfair pricing, deceptivepricing,…)Inconvenience (location, waiting time,…)

Responses to service failures (negativeresponse, reluctant,…)Attraction by competitors (more personable,reliable, …)

Ethical problems (dishonest, intimidating,…)

Involuntary switching (customer moves, thirdparty,…)

Disssatisfaction Responses

• Take no action -> Less favorable attitude

• Take action ->1. Complain to store/manufacturer

2. Stop buying

3. Warn friends

4. Complain to private or government agencies

5. Legal action

Brand loyalty . . .

. . . is the degree to which a customer holds a positive attitude towards a brand, has a commitment to it, and intends to continue purchasing it in the future.

Brand-Loyal Behaviors...• Proportion of purchases method• Undivided Loyalty• Occasional switch• Switch loyalty• Divided loyalty• Brand indifference

Brand Loyalty Continuum

Undivided

LoyaltyAAAAAAA

Brand

IndifferenceABCDACDBCABC

OccasionalSwitchAABAAACAADAA

Switch LoyaltyAAAAAABBBBB

DividedLoyaltyAAAABBBAABBB

Customer Satisfaction, Repeat Purchases, and Customer Commitment

Hawkins, Best & Coney

Total Buyers

Satisfied Buyers

Repeat Purchasers

Committed

Customers

Repeat Purchasers

continue to buy the same brand though they do not have an emotional attachment to it

because

switching costs(the cost of finding, evaluating & adopting another solution)

too high

vulnerable to competition

Committed Customersconsumer loyal to brand

has an emotional attachment to the brand or firm• Expression:

“I like this brand”“I like this outlet”“I believe in this firm”

• Arise:– Brand reflects and reinforces self concept– Performance above expected (delighted)

1. Unlikely to consider additional information2. Resistant to competitors3. More receptive to line extension4. Forgive occasional failure

Relationship MarketingAn attempt to develop an ongoing, expanding exchange relationship with a firm’s customers.

5 levels1. Basic marketing

simply sells2. Reactive marketing

sells + call if they have comments, questions, complaints3. Accountable marketing

phone customer4. Proactive marketing

contact from time to time5. Partnership marketing

work continuously with customer

Traditional Marketing Conceptvs

Value and Retention-Focused Marketing1. Make only

2. Do not focus

3. Market product

4. Research consumer

5. Understand the purchase

6. Realize

7. Segment the market

8. Target large group

9. Use one way promotions

10. Create loyalty program

11. Encourage customers to stay

12. Determine marketing budget

13. Conduct customer satisfaction surveys

14. Crete customer trust

1. Use technology

2. Focus

3. Utilize

4. Research the levels

5. Understand customer

6. Make each customer

7. Use hybrid

8. Invest in technologies

9. Use interactive communication

10. Create customer tiers

11. Make it very unattractive

12. Base your marketing budget

13. Conduct customer satisfaction surveys

14. Create customer intimacy