Customer Satisfaction and Loyalty of Term Paper

  • Length: 27 pages
  • Sources: 25
  • Subject: Business
  • Type: Term Paper
  • Paper: #80641661

Excerpt from Term Paper :

The results of the data analysis are presented below in both tabular, graphic and narrative analyses formats.

Validity

Validity refers to the establishment of evidence that the measurement is actually measuring the intended construct. Measures can be reliable without being valid, but cannot be valid without being reliable. To develop a model by which validity issues could be assessed we used the validation model developed by Chandler and Lyon (2001) in which there are several approaches for establishing construct validity, including (a) content validity, (b) the substantive component of construct validity, - the structural component of construct validity, and (d) external validity.

Reliability

Reliability refers to the consistency and stability of a score from a measurement scale (Chandler and Lyon, 2001). For the purposes of this study, reliability was gauged using the responses from the like categories of the online survey.

Chapter 2: Review of Related Literature

Background and Overview.

In order to successfully compete in the unending race for a customer's business, in an economic manner, an organization and its management must develop a competitive edge; such a competitive edge may come in the form of understanding how a company's customers value a given quality dimension (relative to the other quality dimensions) and when and if that quality dimension can increase (or decrease) in importance over time (Crosby, De Vito and Pearson, 2004). Moreover, as Shankara, Smith and Rangaswamy (2002) emphasize, "The rapid growth of online transactions in service industries raises important research questions about the levels of satisfaction and loyalty in the online environment, and the relationship between satisfaction and loyalty online relative to offline. Compared to the offline environment, the online environment offers more opportunities for interactive and personalized marketing" (p. 153). To this end, both Web-based and traditional travel companies have started establishing their own online virtual community sites to attract potential customers to their homepages (Kim, Lee and Hiemstra, 2004).

Today, consumers are able to link to virtual communities within company homepages to interact with other people who have similar interests. Establishing a place to make online virtual community members interact with each other in this new Internet world through the online virtual community has long been expected to be a potentially powerful way to increase customer loyalty (Kim, Lee and Hiemstra, 2004). For travel companies, virtual communities have broadened their marketing capabilities, and are having a great impact on sales, product and service development, supplier network, information quality, and distribution channels (Kim et al., 2004). In order to increase the customer loyalty, the online virtual community site within the company homepage should stimulate level of member's participation such as chat rooms and bulletin boards where members can share their previous experience, increase member's interest, and provide more opportunities to suggest individual ideas (Kim et al., 2004).

According to Jun and Yang (2002), the superior approach for Internet companies is to improve and maintain all service quality attributes that satisfy both existing and potential customers' needs and wants; however, because resources are by definition limited for both large and small online companies, priorities must be established among alternative service attributes in making investment decisions based on a company's business strategies. These authors suggest that, "If online companies can understand the similarities and differences of key service quality dimensions perceived by Internet purchasers and Internet non-purchasers, different service offering strategies can be applied to retain existing Internet customers and attract potential customers. Therefore, it is necessary to understand both Internet purchasers' and non-purchasers' perceptions of service quality attributes related to Internet purchasing" (Jun & Yang, 2002, p. 19).

In their analysis of the perceived service quality dimensions of online services compared with traditional outlets, these researchers identified six underlying service quality attributes that were perceived by Internet purchasers: (a) reliability, (b) access, - ease of use, (d) personalization, (e) credibility, and (f) security; likewise, seven dimensions were identified for the Internet non-purchasers: (a) security, (b) responsiveness, - ease of use, (d) availability, (e) reliability, (f) personalization, and (g) access. These quality dimensions are described further in Table ____ below.

Table ____.

Six underlying service quality attributes perceived by Internet Purchasers.

Service Quality Dimension

Description

Reliability

Both Internet purchasers and Internet non-purchasers require online companies having the ability to perform the promised service accurately and in a timely manner. They expect to be billed and charged correctly. Of equal importance is order delivery. The quality of delivery should include promptness and ensure that both correct and intact products and services are delivered, in ordered quantities, at times convenient to customers. Consumers will not tolerate goods arriving late or damaged, being misplaced, or having the wrong product shipped to them in error. Consumers also prefer to have increasing access to information about the progress of their order.

Responsiveness.

Consumers expect Internet retailers to respond to their inquiries promptly. Prompt responses help consumers resolve their problems and make decisions in a timely fashion. However, compared with physical stores, Internet retailers often lack real-time interaction with customers. For instance, e-mail is a very common means for online consumers to communicate with retailers; but a recent study shows that 42% of the top-ranked Web sites took longer than five days to respond to a customer's e-mail inquiry, never responded, or were not accessible by e-mail. Other unique aspects concerning the responsiveness dimension include information retrieval speed and Internet speed. Internet consumers want to find desired information quickly and accurately. Studies have revealed that there is a significant positive correlation between information download speed and Web user satisfaction; the negative effects of slow information download can be minimized by providing the consumer with notice of download duration time wherever download waiting occurs and by reducing unexpected waiting occasions and times to a minimum.

Access

Both Internet purchasers and Internet non-purchasers have a desire to access various sources provided by Internet companies for help. Consumers expect that a site will have a street and an e-mail address, plus a toll free phone and fax numbers available for them to contact customer representatives easily. In addition, online consumers favor multiple order channels, such as phone and mail order. Finally, accessing help from other consumers is very important in the sense that consumers tend to acquire knowledge from each other. Therefore, providing both traditional and online communication channels such as chat rooms and bulletin boards is a necessity.

Ease of Use

Ease of use is a prominent factor in determining customers' decision to adopt a new information technology; therefore, Web-based stores should make it easy for customers to proceed through the whole purchasing process by minimizing technical difficulties.

Personalization.

Consumers long for personalized or individualized attention and expect to receive a personal "thank you" note as confirmation after they place an order. A message area in which consumers may ask questions and post comments is also a necessity. The lack of real-time interaction tends to prevent potential customers from purchasing through the Internet. Only by managing all forms of interaction -- Web hits, e-mails, phone -- and fax-based contacts -- in a single framework, can Internet companies shift their staffing and service priorities as customer preferences change. In other words, it is critical for businesses to engage customers in personalized dialogue and to learn more about their needs to better anticipate their future preferences. Certain techniques such as a "rules engine" that can drive personalization based on information from the database, are critical to satisfy individual customers. In addition, to show a human face to customers, Internet companies may add personal support to staff telephones, answer e-mail, and train customers in the use of the Internet medium.

Credibility.

Consumers are well aware of the history of online retailers and whether they receive special rewards and discounts offered is an important index for evaluating the credibility of online retailers. Given the intensive competitive business environment, the history of an online business is a good indicator of its prospects. Providing special rewards and discounts for consumers as promised often…

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