Satisfaction and Loyalty

Customer Satisfaction versus Loyalty Satisfaction Satisfaction = Meeting minimum expectation Loyalty Loyalty = Exceeding customers expectation and securing future commitment Retention Retention = 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 Satisfaction 5 Apostle Terrorist Hostages Mercenaries

Determinants of Dissatisfaction

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 Loyalty AAAAAAA Brand Indifference ABCDACDBCABC Occasional Switch AABAAACAADAA Switch Loyalty AAAAAABBBBB Divided Loyalty AAAABBBAABBB

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 Customers consumer 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 information 2.Resistant to competitors 3.More receptive to line extension 4.Forgive occasional failure

Relationship Marketing An attempt to develop an ongoing, expanding exchange relationship with a firm’s customers. 5 levels 1.Basic marketing simply sells 2.Reactive marketing sells + call if they have comments, questions, complaints 3.Accountable marketing phone customer 4.Proactive marketing contact from time to time 5.Partnership marketing work continuously with customer

Traditional Marketing Concept vs Value and Retention-Focused Marketing 1.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