Customer Satisfaction and Customer Loyalty

Customer satisfaction is a result of a positive service quality, and customer loyalty is a result of customer satisfaction. Managing the quality of a service and improving it is a complicated process, when compared to managing the quality of a product, service quality management leads the complexity ladder due to its intangibility and the concurrent production and delivery of the service.

The definition and evaluation of service quality aids businesses to deliver high-quality service which apparently leads to customer satisfaction. Studies indicated service quality as a state of action or attitude related but not equal to customer satisfaction, and service quality is a product of the difference between customer expectation and the degree of service performance.

The quality of a service is measured based on the gap between customer expectations and customer perception on the delivered service, nevertheless, it is not possible to effectively eliminate the gap between customer expectation and customer perception, however, businesses attempt to reduce the extent of the gap aiming to achieve a senior level of service quality.

Although the correlation between service quality and customer satisfaction is still under simulation in literature, service organizations are keen to invest in the improvement of service quality attempting to achieve customer satisfaction. Companies are required to control customer satisfaction on an ongoing basis, hence justifying the need to invest vital resources for the survival and growth of the company.

Along with service quality and customer satisfaction, customer loyalty is another factor captured by the simulation net in literature. Customer loyalty is a necessary marketing model as it provides an indication on the overall performance of the company concluded that a 5% increase in the degree of customer loyalty could yield up to 20-85 % increase in the service business revenue.

Customer loyalty is a dimensional measure argued in literature. One-dimensional loyalty was the dominant theory in literature and practice. Researchers defined customer loyalty as a behavioral factor which is a function of customer behavior only, hence loyalty is only measured based on the total number of purchases, purchase repetition, and the structure of purchases.

Two-dimensional loyalty model concluded that customer loyalty is a function of customer behavior and customer attitude. Someone can argue that both behavior and attitude reflect the same measurement, however, behavioral and attitudinal elements exhibit a different degree of customer loyalty.

Researchers argued that purchase repetition on its own does not accurately reflect the degree of customer loyalty. The argument was later elaborated in a sense that purchase repetition could be the result of lack of interest from customer end to look for an alternative service or a product, hence such a factor does not provide a reliable indication on the service performance or perhaps the degree of customer satisfaction.

Recent studies concluded that one of the most important factors driving customer loyalty is the customer being completely satisfied with the service. The correlation between loyalty and satisfaction is proportional, in a sense that customer loyalty is a function of customer satisfaction and they should display the same increase/decrease trend.

Customer satisfaction is justified as the degree of meeting customer requirements while customer loyalty is the customer willing to engage again with the service, hence they stated that it is not possible for the customer to demonstrate loyalty if the requirements are not met, therefore, it is impossible to gain a loyal customer without first being a satisfied customer.

Reference

Al-Refaie, A., Bata, N., Eteiwi, D. and Jalham, I., 2014. Examining Factors that Affect Passenger's Overall Satisfaction and Loyalty: Evidence from Jordan Airport. Jordan journal of mechanical & industrial engineering, 8(2). Bitner, M.J. and Hubbert, A.R., 1994. Encounter satisfaction versus overall satisfaction versus quality. Service quality: New directions in theory and practice, 34(2), pp.72-94. Bitner, M.J., Booms, B.H. and Tetreault, M.S., 1990. The service encounter: diagnosing favorable and unfavorable incidents. Journal of marketing, 54(1), pp.71-84.