Satisfaction and Loyalty Customer Satisfaction versus Loyalty Satisfaction

Satisfaction and Loyalty

Customer Satisfaction versus Loyalty Satisfaction = Meeting minimum expectation Loyalty = Exceeding customers expectation and securing future commitment Retention = Satisfaction + Loyalty

Satisfaction: Feelings from experience Loyalty: Choice of brand over others Outcomes: – – Sales to increase revenues Less price sensitivity Lower organization’s costs Positive word of mouth

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 Hostages Apostle 100% Zone of affection 80% Zone of indifference Loyalty 60% 40% Zone of defection 20% Terrorist 1 Satisfaction 5 Mercenaries

Determinants of Dissatisfaction

Disssatisfaction Responses • • Take no action -> Less favorable attitude Take action -> 1. 2. 3. 4. 5. Complain to store/manufacturer Stop buying Warn friends Complain to private or government agencies 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 Brand Loyalty AAAAAAA Indifference ABCDACDBCABC Occasional Switch Loyalty Divided Loyalty AABAAACAADAA AAAAAABBBBB AAAABBB

Customer Satisfaction, Repeat Purchases, and Customer Commitment Total Buyers Satisfied Buyers Repeat Purchasers Committed Customers Hawkins, Best & Coney

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. 2. 3. 4. Unlikely to consider additional information Resistant to competitors More receptive to line extension 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. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Make only Do not focus Market product Research consumer Understand the purchase Realize Segment the market Target large group Use one way promotions Create loyalty program Encourage customers to stay Determine marketing budget Conduct customer satisfaction surveys Crete customer trust 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Use technology Focus Utilize Research the levels Understand customer Make each customer Use hybrid Invest in technologies Use interactive communication Create customer tiers Make it very unattractive Base your marketing budget Conduct customer satisfaction surveys Create customer intimacy