The Important of Customer Satisfaction and Loyalty in Business.

1.0 Introduction

Customer satisfaction and loyalty is two important keys to be success in the business. It must be implement in all business areas such as servicing, hospitalisation, health care and others. In business environment, quality improvement have become part of everybody life and not a task or duty anymore. (Mehra & Ranganathan, 2008). It is not enough if only focus to satisfy the customer and it won’t be good to business until get the repurchase power from customer.(Kandampully & Suhartanto, 2000)

Lot of research on customer satisfaction and loyalty has been done, especially on retention and economic performance.(Kristensen & Martensen, 1996; Rucci, 1998; Duboff & Heaton, 1999; Edvardsson, 2000; Bernhardt, 2000; Eskilden & Kristensen, 2013). More than that, this two keys also play role in business for revenue improvement, profitability and cash flows.(Heskett, 1994; Reichheld & Teal; 1996, Itner & Larcker; 1998; William & Nauman, 2011). This to make sure company has more than enough fund, can expend and become stronger.

We will see how important this two keys in order to make business running smooth and at the same time can achieve company target. At the end, customer will get what they expected and business will get positive impact and avoid something bad from appear.

2.0 Customer Satisfaction and Customer Loyalty

2.1 Customer satisfaction definition.

Most of the research that have been done, strongly said that customer satisfaction related to repurchase power from customer.(Oliver, 1980; Anderson & Sullivan, 1993; Boulding, 1993; Zeithaml; 1996; Bolton, 1998; Mittal & Kamakura, 2001; William & Naumann, 2011). In other opinion customer satisfaction means individual feeling for quality of product or service that meet customer expectation.(Schiffman & Kanuk, 2004; Torres & Kline, 2013)

Customer have piece of comfort zone in their thinking process to get the satisfaction. To make sure the comfort zone is covered, expectation of customer satisfaction must meet level that been set by them.(Keinningham, 1999; Torres & Kline, 2013). This comfort zone is not easy to handle, each company must have good strategy to tackle this emotional issue. Meanwhile successful customer retention starts with the first contact to customer and continues throughout the entire lifetime of a relationship. The ability to attract and retain new customer also important to meet customer expectation and also to cover the comfort zone, so is not only related to its product or services, but also related to the way it services its existing customer and the reputation it creates will also affect customer thought..(Ashley, 2011; Sheng, 2012)

2.2 Customer loyalty definition.

Loyalty comes from customer purchase behaviour and attitude for product or service offered.(Dick & Basu, 1994; Leverin & Liljander, 2006). It also can elaborate to customer intention to repurchase same brand for own needs in future. So company must have good strategies to avoid from potential to cause switching behaviour.(Oliver, 1999; Leverin & Liljander, 2006). Trust or belief is the right word to explain customer loyalty to product or services.

Building relationship with loyal customer is a good strategy and investment, towards this loyalty is one of sacrifice in business improvement.(Ndubisi, 2004; Ndubisi, 2007). Then it go to commitment, this will show how strong the loyalty and relationship can hold to achieve target for future purchase. So every companys must have good representative to make it worth for customer and business.(Dwyer, 1987; Morgan & Hunt, 1994; Gundlach, 1995; Ndubisi, 2007). Commitment also a measurement used in buyer-seller relationship research that been done in other research before.(Wilson, 1995; Ndubisi, 2007)

3.0 Important of Customer Satisfaction and Customer Loyalty

The reason why customer satisfaction and loyalty important is the impact to marketing on firm value. Company financial is the key to maintain and be successful in world of business. This mean relation between customer satisfaction and firm value give big impact in business cash flow.(Gruca & Rego, 2005; O’Sullivan & McCallig,2012). The growth and the stability for future cash flow also need to be monitor so it won’t drive to negative site.(Srivastava, 1998; O’Sullivan & McCallig, 2012).

When the cash flow monitor closely, income and earnings will go positive and easy to planned for future strategy such as for advertising, branding, company expanding and other that related.(Kormendi & Lipe, 1987; O’Sullivan & McCallig). As we know income and earnings are very important for company establish, but it also can be one of proof that investors use as data or information for business reference.(O’Sullivan & McCallig, 2012). Data or information in record will also show margin and sales performance for each business. From that investors can make decision whether want to make investment in that type of business or not.

In long term business success, repeat customer is important and that show the satisfied customer is loyal and the repeat purchase power in future is high.(Bennett & Rundle-Thiele, 2004). With this company can see customer behaviour on selected brand and can do improvement needed from all aspect. So to secured the long term business success, good strategy and company representative must know what the customer needs and like.

Loyal customer not easy to switch to other product because of the product price and their purchase power is more than non loyal customer.(Reichheld & Sasser, 1990; Bowen & Chen, 2001). Loyal customer also will help in advertising the product or service and they can be describing as fantastic marketing force because of the positive word-of-mouth.(Raman, 1999; Bowen & Chen, 2001)

Other than that, from customer satisfaction company can also do research on their products or services, such as improvement or product development. This is because with the products or services it can be the starting point to attract new customer and at the same time to make customer satisfy and maintain their loyalty. (Moraga, Parraga & Gonzalez, 2008). For inexperienced customer, products or services with user friendly instruction can attract to it because it is easy to understand and easy to use. So satisfy customer is very important in any business plan. (Reynolds & Beatty, 1999; Moraga, Parraga & Gonzalez, 2008)

4.0 Factor Influence in Customer Satisfaction and Loyalty

There are several factors that influence in customer satisfaction and loyalty. It is trust, bonding, communication, shared value, empathy and reciprocity. This factor will lead to strong relationship between buyer and seller and also to satisfaction and loyalty.(Wilson, 1995; Yau, 2000; De Ruyter & Wetzels, 2000; Winklhofer, 2006; Le & Liem, 2012). The influences of these factors drive company to be more alert and sensitive to customer needs so company can plan proper strategy to tackle the customer.

Trust is one of the important parts to achieve customer satisfaction and loyalty also a successful relationship between company and customer.(Berry, 1995; Le & Liem, 2012). Trust mean reliability and confidence level in willingness to exchange partner.(Moorman, 1993; Morgan & Hunt, 1994; Le & Liem, 2012) In other words customer belief on perception on the exchange facts such as quality and low price.(Dunn & Schweitzer, 2005; Palmatie, 2009; Le & Liem, 2012). When the trust level between company and customer higher, the greater customer satisfaction and loyalty.

Bonding is an emotion development in relationship between company and customer for selected brand and to perform success.(Callaghan, 1995; Sin, 2005; Le & Liem, 2012). Company must secured customer emotion in additional way to successful buyer-seller relationship because bonds is like a seeds that need a good care to make sure it transform into good and quality output.(Palmatier, 2008; Le & Liem, 2012) Customer are more satisfied through bonding and it will increase to stronger relationship.(Gutek, 1999; Le & Liem, 2012).

Communication is channel for information distribution between company and customer.(Mohr & Nevin, 1990; Le & Liem, 2012). The channels refer to formal and informal of exchanging and sharing information from time to time.(Sin, 2005; Le & Liem, 2012). Communication very important in this relationship, and it also a strategy to perform cooperation and trust. So company and customer can get quality information, create new opportunity and satisfaction is secured with this strategy.(Anderson & Narus, 1990; Le & Liem, 2012). Shared value refers to area covered on belief in common that refers to important of goals, policies and behaviours.(Morgan & Hunt, 1994, Sin, 2005; Le & Liem, 2012). When shared value level of expectation is high, it will give impact in long term relationship between company and customer.(Mukherjee & Nath, 2007; Le & Liem, 2012) It also show the higher shared value in this relationship, the better result we get in customer satisfaction and loyalty.

Empathy is more to understand what customer want such as goals and what customer needs.(Sin, 2005; Le & Liem, 2012) It is what company need to know from customer perspective so company can make research or data collection on what customer want and don’t want, like and don’t like or anything that can make the business run smooth and meet customer satisfaction. Empathy related to communication between buyer and seller. With communication the empathy understanding will be easier such as to get good and quality data or information and also how the business running.(Coulter & Coulter, 2003; Le & Liem, 2012). Customer satisfaction will meet the higher level when empathy and communication run as a one process and with good implementation in business nature.

Reciprocity means the process in communication between buyer and seller. This process lets customer to interact and share information or data with company and company will be able to respond to customer immediately.(Jayachandran, 2005; Le & Liem, 2012). With communication, company must enable to respond to problem address by the customer with good solution and at the same time must support own business.(Jayachandran, 2005; Le & Liem, 2012). The reciprocity will show how important customer to seller based on the action taken and how effective the company to solve the problem address. In other words is customer complaints.

Tesco Clubcard can be an example for satisfied and loyal customer. This scheme is a loyalty program, it give major impact in Tesco sales revenue. The scheme is one of the approaches by UK retailer Tesco to satisfied customer and at the same time to see the loyalty of the customer.(East & Hogg, 1977; Broadbent, 2000; Uncles, Dowling & Hammond, 2003)

5.0 Discussion for future research.

Customer complaint is very often in business nature. But only few of research or study has been done for this issue, especially which related to customer satisfaction.(Dube & Menon, 2000; Neira, Casielles & Iglesias, 2010). Service failure can also bring to customer complaint; each complaint that not handles carefully will goes to unsatisfied customer. Research for satisfaction can start from causes related to dissatisfaction.(Grandinetti, 2001; Vukmir, 2006). For future study we can look at level of unsatisfied customer with the complaint handling by company and what the negative impact into business also relationship between buyer and seller. With the information shared from customer it can help to improve a lot in business. So don’t take easy in handling customer complaint.

Service quality and customer satisfaction considers related to each other.(Oliva, 1992; Pantouvakis & Bouranta, 2013). But some opinion stated that service quality more to meet customer needs and expectations, while customer satisfaction refer to product or service price and is it worth for them. (Kotler & Levy, 1969; Pantouvakis & Bouranta, 2013). Meanwhile other researcher perfection of service quality based on namely product, delivery and environment.(Rust & Oliver, 1994; Zhang, Zhang & Law, 2013) For further research on this topic, in long term business what the most important factor to maintain and improve the service quality and achieve customer satisfaction.

6.0 Conclusion

Customer satisfaction is linked with customer loyalty and must have commitment in the relationship. This is because satisfied customer will use positive word-of-mouth to other customer. This is to show how loyal they are. Satisfied and loyal customer also forgiving. They still can tolerate if there is unsatisfied incident they faced.(Ndubisi, Malhotra & Chan, 2009)

All company must focus on customer’ demands and needs.(Fecikova, 2004) This mean company must give full commitment to get customer satisfaction. To satisfy customer must be goals and vision in business. All company must have representative with good knowledge to understand customer’s needs and expectations. Not to forget info shared by customer or called customer complaint. Be more responsive and efficient to solve the complaint. Any issue on dissatisfaction rise by the customer must solve in positive ways. Try to communicate with the customer regarding the complaint and try to be polite in handling the complaint.

From customer satisfaction company can learn more about own strength and weakness. So company can do necessary action for company and customer. Other than that, it will show how serious the company to make customer satisfy with the service or product rather in quality service or product delivery. At the same time company can determine competitor strength and weakness. So company can plan what strategy to use to get the purchase power from customer and can increase cash flow position. Company also must take immediate action for any problem that come from internal problem, such as not enough stock or late on product delivery. This is company responsibility to avoid this from happen, level of customer switching to other competitor maybe high and can give bad impact to company.

In business good communication between customer and seller is very important. To make sure continuous level of interaction maintains. At the end customer satisfaction and loyalty cannot be separate, because it needs to run at the same time, and it is very important in business to monitor the level of customer satisfaction and loyalty. Satisfy customer will be loyalty customer if company do take more effort and have good strategy.