Anda di halaman 1dari 94

The Relationship between Service Quality and

Customer Satisfaction
(Applied on Beirut Restaurant)

Submitted By:

1. Abdelrahman Ahmed Abdelgawad 4. Omar Ayman Mohamed

2. Mohammed Ahmed Rezq 5. Omar Hassan El Nahass
3. Noran Naif Anwer

Supervised by:
Dr. Marwa Sayed

Assistant Lecturer:
Sara El Menawy

May, 2017

It is with utmost pleasure that we convey our gratitude to the following

people in our modest acknowledgement.

This project could not have been written without Dr. Marwa Sayed for
her invaluable help and for her guidance, advice, constructive feedback
and positive comments.

In addition, we would like to acknowledge Ass.lect. Sara El- Menawy for

her continuous support, insightful comments and encouragement.
Table of Contents
PART ONE: GENERAL FRAMEWORK .......................................... 1
CHAPTER ONE: GENERAL FRAMEWORK ............................................2
1.1. Introduction ............................................................................................. 2
1.2. Literature review ...................................................................................... 4
1.3. Importance of research ............................................................................ 6
1.4. Problem statement................................................................................... 6
1.6. Research objective ................................................................................... 8
1.7. Research methodology ............................................................................. 9
PART TWO: THEORETICAL FRAMEWORK ................................ 10
CHAPTER TWO: SERVICE QUALITY ................................................... 11
2.1. Services Marketing - Definition and Characteristics ................................ 11
2.2. Services Marketing - Definition and its Importance ................................ 13
2.3. The 7 P’s of Services Marketing............................................................... 15
2.4. Services Marketing - Moment of Truth ................................................... 17
2.5. Customer’s Expectations and Delight ...................................................... 18
2.6. Maintaining Service Quality .................................................................... 21
2.7. Measuring Service Quality ...................................................................... 22
2.8. The Changing Face of Services Marketing ............................................... 23
CHAPTER THREE: CUSTOMER SATISFACTION ................................... 25
3.1. Customer Relationship Management - What is CRM?............................. 25
3.2. Origin of CRM.......................................................................................... 27
3.3. Features of CRM ..................................................................................... 29
3.4. Importance of Customer Relationship Management .............................. 31
3.5. What is Customer Relationship? ............................................................. 33
3.6. Different Types of Customers ................................................................. 35
3.7. Quality of Relationship with Customers .................................................. 37
3.8. Need of Relationship with Customers ..................................................... 39
3.9. Customer Life Cycle................................................................................. 41
3.10. Customer Loyalty - Meaning and its Important ..................................... 43
3.11. Customer Loyalty and Satisfaction ........................................................ 45
3.12. Drivers of Customer Loyalty .................................................................. 47
3.13. Customer Loyalty Breakers ................................................................... 49
3.14. Tracking Customer Loyalty .................................................................... 51
3.15. Increasing Customer Loyalty ................................................................. 53
3.16. What is Customer Satisfaction? ............................................................ 55
3.17. Why Dissatisfaction in Customers? ....................................................... 57
3.18. Measuring Customer Satisfaction ......................................................... 59
3.19. Methods of Measuring Customer Satisfaction ...................................... 61
3.20. Factors affecting Customer Satisfaction ................................................ 63
3.21. Meaning and Scope of Marketing Research .......................................... 65
CHAPTER FOUR: SURVEY METHOD ................................................. 68
PART THREE: APPLIED STUDY .................................................. 73
CHAPTER FIVE: APPLIED STUDY....................................................... 74
5.1. History of Beirut restaurant .................................................................... 74
5.2. Questionnaire analysis ........................................................................... 75
5.3. Conclusions ............................................................................................ 82
5.4. Recommendations.................................................................................. 82
REFERENCES ............................................................................. 83
APPENDIX ................................................................................. 88

1.1. Introduction
In today’s world, service industry is dominating the business world. Now Service
Industry is largest growing area of business in developing countries.
During the past few decades customer satisfaction have become major areas of
attention to researchers. Improve service leads to greater satisfaction and
ultimately increase profitability. There must be different strategies that can be used
by restaurant’s owners in order to attract and retain customers and to gain a
sustained competitive advantage. The restaurant business is one of the service-
oriented businesses, which is very popular in Egypt as well.

There are various factors that relates to the customer satisfaction in a restaurant
industry. We take 4 factors that are most important in customer satisfaction study
that is employee performance, food quality, physical environment and price. We
have selected Beirut Restaurant that provides food items with unique taste and at
low prices and in a comfortable environment.

Restaurant is place where people can eat and drink and make themselves relaxed
and entertained due to a comfortable environment. The groups of people, which
are dealing with the customers, are known as the internal customers (employees)
and these internal customers should be satisfied in order to delight the external
customers, which ultimately increase the profit of the restaurant. In our study this
restaurant is satisfying the customers by providing high quality of food at low prices
in comfortable environment. Hence the aim of this study was to find out that how
employee performance, price, food quality and physical environment are related
with customer satisfaction in restaurant industry.

Consumers all over the world have become more quality conscious; hence there
has been an increased customer demand for higher quality service. Service
operations worldwide are affected by this new wave of quality awareness and
emphasis . Therefore service-based companies like the resturants are compelled to

provide excellent services to their customers in order to have sustainable
competitive advantage, especially in the current trend of globalization.
High patronage of services depends on the satisfaction customers derived from a
service. Sales are directly related to customer satisfaction; sales increase requires
improvement in the quality of service delivery to encourage continuous patronage.
Generally, it is believed that services which continuously and consistently delight
customers make them happy and satisfied. In such situation, they become loyal
customers and will continue to demand the service which in turn will result in profit
and growth of an organization.
service quality remains critical in the service industries, as businesses strive to
maintain a competitive advantage in the marketplace and achieving customer
satisfaction. The financial services, particularly resturants, compete in the
marketplace with generally undifferentiated products; therefore service quality
becomes a primary competitive weapon. Literature has proven that providing
quality service delivery to customers retains them, attracts new ones, enhances
corporate image, lead to positive referral by word of mouth, and above all
guarantees survival and profitability
Good customer service quality is the main factor that will determine, in the future,
whether the businesses will survive or fail. Maintaining effective customer service
helps to build and maintain customer’s relationship that is the key success. In order
to satisfy customer’s needs, many companies need to set up web sites that provide
quality information and services to customers.

1.2. Literature review
Over the past few decades, the concept of customer satisfaction has attracted the
attention of researchers. Although mostly, used as a business performance
&consumer choice indicator (Lou and Homburg, 2007) there are different views as
to what this multidimensional concept mean. Some researchers have conceptualize
this concept as an emotional response to an evaluative process (Oliver, 1997)
This has been observed since decades that the business world has been dominated
by services. Now a day’s service industry is largest, rapidly growing and more
profitable industry in the developing countries due to the reason of cross culture
encounter ships of business and worldwide company cultures. The only industry
which even survives in recession is the restaurant industry. The result for restaurant
industry to boom is, people don’t have to cook and can eat out. Now days, people
have meal outside not only on planned occasions even more as an afterthought
(Mogelonsky, 1998).

One study shows that delivering high quality services and increasing customer
satisfaction are widely known as key factors boosting the performances of
companies in the restaurant industry (Barsky &Labagh, 1992; Le Blanc, 1992,; Le
Blanc et al., 1996; Stevens et al., 1995, Opermann, 1998). Restaurants with best
service quality will leads to greater profitability (Oh & Parks, 1997).

During the dining experience, customers are affected by a various mechanic clues,
as shown by research in environmental psychology and marketing. Physical
environment have a strong effect on people’s cognition, emotions, and behavior
(Mehrabian and Russell1974; Spangenberg, Crowley, and Henderson
1996).Another research shows that environment can influence feelings that
encourage people to remain in or to leave the environment. (Mehrabian and
Russell 1974). Bitner (1992) had presented a model for understanding how the
physical surroundings of a service organization may impact individual satisfaction.
The dimensions include variables such as noise, music, lighting and temperature,
layout which includes the arrangement of furniture and equipment etc. The

physical environment (Wall and Berry, 2007) can affect customers’ physical
comfort. On the contrary, Voon et al, (2007) found that physical environment have
no effect on customer physical comfort.

The restaurant industry of Egypt has become more competitive due to high quality
services and it has a direct impact on profitability and success that is why many
local fast food restaurants are competing with international fast food chains and
restaurants. In Egypt these restaurants provide quality services at affordable prices
(Siddiqi, 2007).
Service researchers tends to measure the relationships among service quality and
customer satisfaction (e.g. Dabholkar et al., 2000; Kueh & Voon, 2007; Qin and
Prybutok, 2008; Zeithaml et al., 1996).Service quality perceived by customer is
found to be positively related to loyalty. Other researchers (e.g. Dabholkar et al.,
2000; Brady and Robertson, 2001; Tam, 2004) found that customer satisfaction
interven the effect of service quality on behavioral intentions. The role of food
quality is also considered as one of the major determinant of customer satisfaction.
Good quality of food can be helpful to satisfy and retain the youth customers who
enjoy eating tasteful food. There are many youth customers who prefer hot and
spicy food available in fast food restaurants. Researchers have found that the
quality of menu items affects customer’s intention to dine at the restaurant (e.g.
Qu, 1997; Kivela et al., 2000; Soriano, 2002; Zopiatis and Pribic, 2007).
Pricing is another factor that has been studied in relation to customer satisfaction.
Furthermore, post-purchase intentions were more strongly influenced by
perceived value (Tam, 2004). Qin and Prybutok (2008) also investigated the role of
price/value in determining customer satisfaction for fast-food restaurants but did
not find it to be of significance. But for the youth who are not economically strong
may find that price is important to attract them to restaurants.

1.3. Importance of research
Every study has two parameters, one is theoretical contribution and the other one
is applied aspects. Theoretical contribution is that either it is contributed by or it is
a contribution to the body of knowledge.
Applied aspects are that who is going to benefit from this research. The results and
findings of the study would be applicable to the industry so that by taking this into
account they can improve their productivity also. If the service quality effects
negatively then it will decrease the productivity and as a result, profitability of
Beirut Restaurant will decrease.

1.4. Problem statement

Service quality is defined as the gap between expected service and perception of
service actually received. A number of studies suggest that there is a significant
positive relationship between customer satisfaction and Service quality (Anderson
and Sulivan, 1993; Cronin, Brady & Hult, 2000; Shemwell, 1988;Taylor & Baker,
1994). This study will then try to determine the factors influences customer

By asking a critical question: To what extent Service Quality dimensions is used

for enhancing customers’ Satisfaction?

1.5 Research Model
In this research, we will study the effect of Service quality on the customers’
Satisfaction examining the variables as follow:
Independent variable Dependent variable

Service Customer
Quality Satisfaction
Responsiveness Employee
Food Quality

Tangibility Physical



Customer satisfaction can be measured with the help of these following factors:
1. Employees performance
2. Food quality
3. Physical environment
4. Price

1. Employees performance: Performance criteria are standards for employee

behavior at work. This criteria contains much more than how an employee does
the work. Employees are rated on how well they do their jobs compared with a set
of standards determined by the employer. By Marcia Moore, M.S.S.W., Based in
Dallas, Texas, Marcia Moore has been writing business-related materials since

1974.Her articles have appeared in the "Journal of Clinical Social Work" and
various corporate newsletters.
2. Price: Price in terms of value in the sense of desirability, estimation, subjective
value (including cases in which value is merely said to be reflected in some degree
by price, or is merely in the background of the thought).(Frank A. Fetter published
by American Economic Association Vol. 2, No. 4 (Dec., 1912), pp. 783-813)
3. Food quality: The total sum of product’s features that ascribe its suitability to
meet all expressed and implied consumer’s needs as determined by the product’s
conditions of use and its purpose. Quality also incorporates the product’s
defectives and its impacts on environment. Juozas Ruzevicius , Jurate Sauciuniene,
Quality models and systems and their influence to the business, 2006 m. Nr2(11).

4.Physical environment: Which environs and surrounds; surrounding conditions,

influences or forces, by which living forms are influenced and modified in their
growth and development. Heidarzadeh Hanzaee, A review of the role of utilitarian
values on customer satisfaction and behavioral intentions, Inter disciplinary Journal
Of Research In Business, vol 1(5), May 2011, pp (34-45)

1.6. Research objective

 To explore the relationship exist among these factors, employee
performance, food quality, price, physical environment and Service quality
with the help of literature review.

 To understand this relationship we have investigate through data collection

from youth in a restaurant named Beirut.

 To test the relationship if any between the two variables , service quality
and customer satisfaction.

1.7. Research methodology
The primary and secondary data were collected for the survey. Primary data were
collected through questionnaires and secondary data were collected from books,
journals, and magazine.
The study limited to customers of Beirut Restaurant which is located in Maadi.
Convenience sampling method has been adopted to select customers. Researcher
circulated (60) questionnaires to customers but only (40) customers responded Out
of sixty customers.

1.8 Organization of the Research

This research consists of five chapters:

Chapter One: General Framework to the study

Chapter Two: Service Quality

Chapter Three: Customer Satisfaction

Chapter Four: Survey Method

Chapter Five: Applied Study


2.1. Services Marketing - Definition and Characteristics

The world economy nowadays is increasingly characterized as a service economy.
This is primarily due to the increasing importance and share of the service sector in
the economies of most developed and developing countries. In fact, the growth of
the service sector has long been considered as indicative of a country’s economic
Economic history tells us that all developing nations have invariably experienced a
shift from agriculture to industry and then to the service sector as the main stay of
the economy.

This shift has also brought about a change in the definition of goods and services
themselves. No longer are goods considered separate from services. Rather,
services now increasingly represent an integral part of the product and this
interconnectedness of goods and services is represented on a goods-services

Definition and characteristics of Services

The American Marketing Association defines services as - “Activities, benefits and
satisfactions which are offered for sale or are provided in connection with the sale
of goods.”
The defining characteristics of a service are:

Intangibility: Services are intangible and do not have a physical existence. Hence
services cannot be touched, held, tasted or smelt. This is most defining feature of
a service and that which primarily differentiates it from a product. Also, it poses a
unique challenge to those engaged in marketing a service as they need to attach
tangible attributes to an otherwise intangible offering.

1. Heterogeneity/Variability: Given the very nature of services, each service
offering is unique and cannot be exactly repeated even by the same service
provider. While products can be mass produced and be homogenous the
same is not true of services. eg: All burgers of a particular flavor at
McDonalds are almost identical. However, the same is not true of the service
rendered by the same counter staff consecutively to two customers.
2. Perishability: Services cannot be stored, saved, returned or resold once they
have been used. Once rendered to a customer the service is completely
consumed and cannot be delivered to another customer. eg: A customer
dissatisfied with the services of a barber cannot return the service of the
haircut that was rendered to him. At the most he may decide not to visit that
particular barber in the future.
3. Inseparability/Simultaneity of production and consumption: This refers to
the fact that services are generated and consumed within the same time
frame. Eg: a haircut is delivered to and consumed by a customer
simultaneously unlike, say, a takeaway burger which the customer may
consume even after a few hours of purchase. Moreover, it is very difficult to
separate a service from the service provider. Eg: the barber is necessarily a
part of the service of a haircut that he is delivering to his customer.

Types of Services
1. Core Services: A service that is the primary purpose of the transaction. Eg: a
haircut or the services of lawyer or teacher.
2. Supplementary Services: Services that are rendered as a corollary to the sale
of a tangible product. Eg: Home delivery options offered by restaurants
above a minimum bill value.

Difference between Goods and Services
Goods Services
A physical commodity A process or activity
Tangible Intangible
Homogenous Heterogeneous
Production and distribution are Production, distribution and
separation from their consumption consumption are simultaneous
Can be stored Cannot be stored
Transfer of ownership is possible Transfer of ownership is not possible

2.2. Services Marketing - Definition and its Importance

Stated simply, Services Marketing refers to the marketing of services as against
tangible products.

As already discussed, services are inherently intangible, are consumed

simultaneously at the time of their production, cannot be stored, saved or resold
once they have been used and service offerings are unique and cannot be exactly
repeated even by the same service provider.

Marketing of services is a relatively new phenomenon in the domain of marketing,

having gained in importance as a discipline only towards the end of the 20th

Services marketing first came to the fore in the 1980’s when the debate started
on whether marketing of services was significantly different from that of products
so as to be classified as a separate discipline. Prior to this, services were
considered just an aid to the production and marketing of goods and hence were
not deemed as having separate relevance of their own.

The 1980’s however saw a shift in this thinking. As the service sector started to
grow in importance and emerged as a significant employer and contributor to the
GDP, academics and marketing practitioners began to look at the marketing of

services in a new light. Empirical research was conducted which brought to light
the specific distinguishing characteristics of services.

By the mid 1990’s, Services Marketing was firmly entrenched as a significant sub
discipline of marketing with its own empirical research and data and growing
significance in the increasingly service sector dominated economies of the new
millennium. New areas of study opened up in the field and were the subject of
extensive empirical research giving rise to concepts such as - the product-service
spectrum, relationship marketing, franchising of services, customer retention etc.

Importance of Marketing of Services

Given the intangibility of services, marketing them becomes a particularly
challenging and yet extremely important task.

 A key differentiator: Due to the increasing homogeneity in product

offerings, the attendant services provided are emerging as a key
differentiator in the mind of the consumers. Eg: In case of two fast food
chains serving a similar product (Pizza Hut and Domino’s), more than the
product it is the service quality that distinguishes the two brands from each
other. Hence, marketers can leverage on the service offering to differentiate
themselves from the competition and attract consumers.
 Importance of relationships: Relationships are a key factor when it comes to
the marketing of services. Since the product is intangible, a large part of the
customers’ buying decision will depend on the degree to which he trusts the
seller. Hence, the need to listen to the needs of the customer and fulfill them
through the appropriate service offering and build a long lasting relationship
which would lead to repeat sales and positive word of mouth.
 Customer Retention: Given today’s highly competitive scenario where
multiple providers are vying for a limited pool of customers, retaining
customers is even more important than attracting new ones. Since services
are usually generated and consumed at the same time, they actually involve

the customer in service delivery process by taking into consideration his
requirements and feedback. Thus they offer greater scope for customization
according to customer requirements thus offering increased satisfaction
leading to higher customer retention.

2.3. The 7 P’s of Services Marketing

The first four elements in the services marketing mix are the same as those in the
traditional marketing mix. However, given the unique nature of services, the
implications of these are slightly different in case of services.

1. Product: In case of services, the ‘product’ is intangible, heterogeneous and

perishable. Moreover, its production and consumption are inseparable.
Hence, there is scope for customizing the offering as per customer
requirements and the actual customer encounter therefore assumes
particular significance. However, too much customization would
compromise the standard delivery of the service and adversely affect its
quality. Hence particular care has to be taken in designing the service
2. Pricing: Pricing of services is tougher than pricing of goods. While the latter
can be priced easily by taking into account the raw material costs, in case of
services attendant costs - such as labor and overhead costs - also need to be
factored in. Thus a restaurant not only has to charge for the cost of the food
served but also has to calculate a price for the ambience provided. The final
price for the service is then arrived at by including a mark up for an adequate
profit margin.
3. Place: Since service delivery is concurrent with its production and cannot be
stored or transported, the location of the service product assumes
importance. Service providers have to give special thought to where the
service would be provided. Thus, a fine dine restaurant is better located in a
busy, upscale market as against on the outskirts of a city. Similarly, a holiday

resort is better situated in the countryside away from the rush and noise of
a city.
4. Promotion: Since a service offering can be easily replicated promotion
becomes crucial in differentiating a service offering in the mind of the
consumer. Thus, service providers offering identical services such as airlines
or banks and insurance companies invest heavily in advertising their services.
This is crucial in attracting customers in a segment where the services
providers have nearly identical offerings.

We now look at the 3 new elements of the services marketing mix - people, process
and physical evidence - which are unique to the marketing of services.

5. People: People are a defining factor in a service delivery process, since a

service is inseparable from the person providing it. Thus, a restaurant is
known as much for its food as for the service provided by its staff. The same
is true of banks and department stores. Consequently, customer service
training for staff has become a top priority for many organizations today.
6. Process: The process of service delivery is crucial since it ensures that the
same standard of service is repeatedly delivered to the customers.
Therefore, most companies have a service blue print which provides the
details of the service delivery process, often going down to even defining the
service script and the greeting phrases to be used by the service staff.
7. Physical Evidence: Since services are intangible in nature most service
providers strive to incorporate certain tangible elements into their offering
to enhance customer experience. Thus, there are hair salons that have well
designed waiting areas often with magazines and plush sofas for patrons to
read and relax while they await their turn. Similarly, restaurants invest
heavily in their interior design and decorations to offer a tangible and unique
experience to their guests.

2.4. Services Marketing - Moment of Truth
Every business knows that in order to thrive it needs to differentiate itself in the
mind of the consumer. Price has proved inadequate since there is a limit to how
much a firm can cut back on its margins. Product differentiation is also no longer
enough to attract or retain customers since technological advances have resulted
in products becoming almost identical with very few tangible differences from
others in the same category. Consequently, marketers have realized the
importance of service differentiation as a sustainable strategy for competing for a
portion of the customer’s wallet.

Service Encounter / Moment of Truth

A moment of truth is usually defined as an instance wherein the customer and
the organization come into contact with one another in a manner that gives the
customer an opportunity to either form or change an impression about the firm.
Such an interaction could occur through the product of the firm, its service offering
or both. Various instances could constitute a moment of truth - such as greeting
the customer, handling customer queries or complaints, promoting special offers
or giving discounts and the closing of the interaction.

In today’s increasingly service driven markets and with the proliferation of multiple
providers for every type of product or service, moments of truth have become an
important fact of customer interaction that marketers need to keep in mind. They
are critical as they determine a customer’s perception of, and reaction to, a brand.
Moments of truth can make or break an organization’s relationship with its

This is more so in the case of service providers since they are selling intangibles by
creating customer expectations. Services are often differentiated in the minds of
the customer by promises of what is to come. Managing these expectations

constitutes a critical component of creating favorable moments of truth which in
turn are critical for business success.

Moments of Magic and Moments of Misery

Moments of Magic: Favorable moments of truth have been termed as ’moments
of magic’. These are instances where the customer has been served in a manner
that exceeds his expectations. Eg: An airline passenger being upgraded to from an
economy to a business class ticket or the 100th (or 1000th) customer of a new
department store being given a special discount on his purchase. Such gestures can
go a long way in creating a regular and loyal customer base. However, a moment
of magic need not necessarily involve such grand gestures. Even the efficient and
timely service consistently provided by the coffee shop assistant can create a
moment of magic for the customers.

Moment of Misery: These are instances where the customer interaction has a
negative outcome. A delayed flight, rude and inattentive shop assistants or poor
quality of food served at a restaurant all qualify as moments of misery for the
customers. Though lapses in service cannot be totally avoided, how such a lapse is
handled can go a long way in converting a moment of misery in to a moment of
magic and creating a lasting impact on the customer.

2.5. Customer’s Expectations and Delight

In today’s ultra competitive business environment merely meeting customer
expectations is not enough. In order to effectively differentiate themselves from
the competition, service providers need to focus on exceeding customer
expectations to create customer delight and create a pool of loyal customers.
Therefore, when deciding on a service delivery design, it is imperative for the
service provider to consider the targeted customer base and their needs and

expectations. This will help in developing a service design that will help the provider
to effectively manage customer expectations leading to customer delight.

Customer Needs and Expectations

Customer needs comprise the basic reason or requirement that prompts a

customer to approach a service provider. For instance, a person visits a restaurant
primarily for the food it serves. That is the customer’s need. However, the customer
expects polite staff, attentive yet non intrusive service and a pleasant ambience. If
these expectations are not properly met the guest would leave the restaurant
dissatisfied even if his basic requirement of a meal being served has been met. Thus
knowing and understanding guest expectations is important for any service

Customer Satisfaction, Dissatisfaction and Delight

Based on the quality of the service experience a customer will either be satisfied,
dissatisfied or delighted. Knowing a customer’s expectation is instrumental in
developing a strategy for meeting and exceeding customer expectations.

1. Customer Dissatisfaction: This is a situation when the service delivery fails

to match up to the customer’s expectations. The customer does not perceive
any value for money. It’s a moment of misery for the customer.
2. Customer Satisfaction: In this case, the service provider is able to match the
customer’s expectations and deliver a satisfactory experience. However,
such a customer is not strongly attached to the bran and may easily shift to
a competing brand for considerations of price or discounts and freebies.

3. Customer Delight: This is an ideal situation where the service provider is able
to exceed the customer’s expectations creating a Moment of Magic for the
customer. Such customers bond with the brand, are regular and loyal and
will not easily shift to other brands.

Meeting and Exceeding Customer Expectations

Exceeding customer expectations is all about creating that extra value for the
customer. The hospitality industry specializes in creating customer delight.

Example, most 5 star hotels maintain customer databases detailing room order
choices of their guests. So if a guest has asked for say orange juice to be kept in the
mini bar in his room, the next time that he makes a reservation at the hotel, the
staff ensures that the juice s already kept in the room. Such small gestures go a long
way in making customers feel important and creating customer delight.

Another novel way of exceeding guest expectations is often demonstrated by travel

companies. Since, they usually have details on their customers’ birthdays, they
often send out an email greeting to their guests to wish them. This not only makes
an impact on the guest but also helps to keep the company acquire ‘top of the mind
recall’ with the guest.

2.6. Maintaining Service Quality
After having attained the desired service level, the next great challenge faced by
service providers is to maintain service standards at levels of excellence. This is as
important, and as tough, as establishing service standards and attaining to them in
the first place.

There are basically two approaches that any organization can have towards
maintaining service standards - a proactive approach or a reactive approach.

Proactive: A proactive approach entails actively reaching out to customers and

trying to gather their feedback on service quality and suggested areas of
improvement. This can be done by way of

 Surveys and administering questionnaires

 Gap Analysis, and
 Staff training

a. Surveys and questionnaires: Such an approach helps a brand to anticipate

customer demands and expectations and align its service offering
accordingly. Also, the findings of such surveys can help to identify common
issues and demands of customers hence helping a company to customize its
service offering.
b. Gap Analysis: Another approach that is adopted for analyzing service quality
is that of the gap analysis. The company has an ideal service standard that it
would like to offer to its customers. This is contrasted with the current level
of service being offered. The gap thus identified serves both as a measure
and as a basis for planning a future course of action to improve the service
c. Staff Training: Another crucial aspect of the proactive approach is staff
training. Companies nowadays spend generously on training their personnel
to adequately handle customer queries and/or complaints. This is
particularly true if a company is changing its service offering or going in for a

price hike of its existing services. For example, when a fast food chain
increases the price of its existing products, the staff has to handle multiple
customer queries regarding the hike. Lack of a satisfactory explanation
would signify poor service standards and lead to customer dissatisfaction.

Reactive: A reactive approach basically consists of resorting to a predetermined

service recovery mechanism once a customer complains about poor service quality.
It usually starts with apologizing to the customer and then taking steps to redeem
the situation. The fundamental flaw with this approach is that, here the customer
has already had a bad experience of the brand’s service.

2.7. Measuring Service Quality

Another crucial element to be kept in mind while seeking to maintain service
quality is to have in place a metric for ‘measuring’ quality. The particular
parameters selected would depend on the type of business, service model and the
customer expectations. For example: at a customer service call center of a telecom
provider, the metric for measuring service quality could be the average time taken
for handling a call or rectifying a complaint. For a fast food outlet, the metrics for
measuring service quality of the sales staff could be the number of bills generated
as a percentage of total customer footfalls or the increase in sales month on month.
Once a system is put in place for measuring quality, a standard can then be
mandated for the service standard the organization is seeking to maintain.

2.8. The Changing Face of Services Marketing

Marketing of Services has emerged as an important sub discipline of marketing in its own right.
It has evolved phenomenally to emerge as a major field of study with far reaching
implications in today’s increasingly service driven economies. It is then, only
natural, to wonder what is the future course that this field of study is most likely to

At first glance, one can see that there are as yet many opportunities available for
Services Marketing to evolve and gain in relevance as the role of the service
economy continues to expand. A large chunk of Third World economies are now
beginning to move into the service domain. The role and share of the service sector
in these economies is growing with an increased monetization of services

However, there are several challenges also. There has been a change in the basic
nature of services. Services, today, can no longer be described according to the
parameters of - intangibility, heterogeneity, inseparability and perishability. These
changes are detailed below:

1. Intangibility: While services maybe intangible, the process of delivery and

even the customer experience of the service is not necessarily so. Thus while
service providers focus on pre purchase behavior they often fail to pay
attention to customer experience during the process of service delivery, the
nature of output (which may manifest in an observable physical change) or
the learning outcomes of the delivery process.
2. Heterogeneity: Heterogeneity of services is also not applicable to the
services domain today. Across sectors and industries we see an increased
pressure for standardization of services. This is being achieved in some
instances through automation such as through ATM’s and vending machines.
Even in cases where automation is not possible there is greater focus on
standardizing the service delivery process by way of service scripts and strict
adherence to service cycles. For example, most fast food outlets and quick

service restaurants follow the & steps of the service cycle that starts with
greeting the customer (using standard phrases) through to saying good bye.
3. Inseparability: Even this criterion does not hold true for all services
rendered. Inseparability implies that the production and consumption of
services is simultaneous. Thus, consumers need to be present and/or
involved in the production process. In reality however, there are several
services that are separable. Example: insurance, repair and maintenance
where production happens prior to consumption and the customers need
not necessarily be present at the time the service is rendered. The same is
witnessed in the phenomenon of outsourcing of services.
4. Perishability: even though this is true for a lot of services, there are several
notable exceptions. In today’s information era there are several information
based services that can be recorded and saved in electronic media and
reproduced on demand. Moreover, for greater clarity in this regard it is
necessary to have a distinction between the perishability of productive
capacity, of customer experience and of the output.

Thus the definition of services is not as clear cut as it was once assumed to be.
Consequently this is one of the major challenges lying ahead for the field of Services

3.1. Customer Relationship Management - What is CRM?

Every business unit emphasizes on spurting a long term relationship with customers
to nurture its stability in today’s blooming market. Customer’s expectations are
now not only limited to get best products and services, they also need a face-to-
face business in which they want to receive exactly what they demand and in a
quick time.

Customer Relationship Management is an upright concept or strategy to solidify

relations with customers and at the same time reducing cost and enhancing
productivity and profitability in business. An ideal CRM system is a centralized
collection all data sources under an organization and provides an atomistic real
time vision of customer information. A CRM system is vast and significant, but it be
can implemented for small business, as well as large enterprises also as the main
goal is to assist the customers efficiently.

Usually an organization consists of various departments which predominantly have

access to customer’s information either directly or indirectly. A CRM system piles
up this information centrally, examines it and then makes it addressable within all
the departments.

Lets take an example of an international call center which uses a CRM tool called
‘xyz’ and is integrated with a phone and a computer system or laptop. Now this
system automatically perceives which customer is calling. Before the executive
attends the phone the CRM system brings forth the customer details on the
computer or laptop screen and also indicates what the opportunity of deals is with
that particular customer, what the customer had already purchased or ordered in
past and what is the probability of buying in future. Not only this, it can also
highlight what all products best suit this customer. For finance department it may
show the information regarding the current balance and for accounting
department it may pop out the information regarding the recent purchases by the

customer. All these pieces of data are stored in the CRM database and are available
as and when it is needed.

According to this example, CRM system provides a well defined platform for all
business units to interact with their clients and fulfill all their needs and demands
very effectively and to build long-term relationship.

Wangling this kind of relationship with customers is not easy to manage and it
depends on how the systematically and flexibly a CRM system is implemented or
integrated. But once it’s accomplished it serves the best way in dealing with
customers. In turn customers feels gratitude of self-satisfaction and loyalty which
results in better bonding with supplier and hence increasing the business.

A CRM system is not only used to deal with the existing customers but is also useful
in acquiring new customers. The process first starts with identifying a customer and
maintaining all the corresponding details into the CRM system which is also called
an ‘Opportunity of Business’. The Sales and Field representatives then try getting
business out of these customers by sophistically following up with them and
converting them into a winning deal.

Customer Relationship Management strategies have given a new outlook to all the
suppliers and customers to keep the business going under an estimable
relationship by fulfilling mutual needs of buying and selling.

3.2. Origin of CRM
CRM originated in early 1970s when the business units had a manifestation that
it would be advisable to become ‘customer emphatic’ rather that ‘product
emphatic’. Birth of CRM was because of this heedful perceptiveness.

The famous writer and management consultant Peter Drucker wrote; ‘The true
business of every company is to make and keep customers’. Traditionally every
transaction was on paper and dependent on goodwill which created hindrance in
clutching customers. People used to work hard in entertaining customers by
presenting new products with astonishing services; they were ready to work
overtime for grasping more and more customers for increasing business. This too
resulted in customer satisfaction and loyalty up to some extent, but at the end of
the day there was no such bonding or relation between the two to carry on with
future business smoothly.

Previously business was quite easy as it was mere a one-to-one dealing without any
specific process. But with time, due to incoming complexities in communication, it
found itself in troubled waters. Emerging of new strategies and technologies in
global marketplace and a mammoth degree of competition in business, the
approach needed to be changed to proactive rather than reactive. Origination of
CRM turned out to be a piece of cake for all suppliers and customers due to its
advantages. Customer relationship management came as a process that dealt
with relationships with customers surpassing the whole business.

Originally customer relationship management was based on three major principles;

shielding the current customers, fostering new customers and enhancing asset
value of all the customers. With the advent of CRM which was integrated with high
end software and technology, business perspectives were totally changed. A CRM
system eventually emerged as consisting of company-full of information which is
depicted sophistically to increase business profit and meliorate customer
satisfaction and loyalty, on the same hand reduces business cost and investment.

The outgrowth in origin of CRM as a strategic approach is a result of some of the

following important perspectives:

1. The belief that customers are the real assets and not just the people in the

2. The maturation of one-to-one transaction advent.
3. Extensive use of software and technologies to maintain useful information
and no manual labor.
4. The realization of the benefits of utilizing information proactively and not
5. The change of business view to relationship approach rather than
transactional approach.
6. The approach of concentrating more on customer values rather than
concentrating on how the product is delivered to the customer.
7. The approach of focusing on customer satisfaction and loyalty rather than
focusing self satisfaction and profit.
8. The acceptance of the fact that using high end technologies and software the
cost can radically be decreased without compromising on quality and service
of products.
9. The increasing tendency to retain existing customers and trying to get more
and more business out of them.
10.The realization that the traditional trends of marketing and selling are
increasingly fading out in the current economic scenario.

These additive approaches helped a lot in building up consequently the modern

CRM. Today we have well defined and sophisticated CRM systems into being which
are always in process of improvement.

3.3. Features of CRM
Customer Relationship Management is a strategy which is customized by an
organization to manage and administrate its customers and vendors in an efficient
manner for achieving excellence in business. It is primarily entangled with following

1. Customers Needs- An organization can never assume what actually a

customer needs. Hence it is extremely important to interview a customer
about all the likes and dislikes so that the actual needs can be ascertained
and prioritized. Without modulating the actual needs it is arduous to serve
the customer effectively and maintain a long-term deal.
2. Customers Response- Customer response is the reaction by the organization
to the queries and activities of the customer. Dealing with these queries
intelligently is very important as small misunderstandings could convey
unalike perceptions. Success totally depends on the understanding and
interpreting these queries and then working out to provide the best solution.
During this situation if the supplier wins to satisfy the customer by properly
answering to his queries, he succeeds in explicating a professional and
emotional relationship with him.
3. Customer Satisfaction- Customer satisfaction is the measure of how the
needs and responses are collaborated and delivered to excel customer
expectation. In today’s competitive business marketplace, customer
satisfaction is an important performance exponent and basic differentiator
of business strategies. Hence, the more is customer satisfaction; more is the
business and the bonding with customer.
4. Customer Loyalty- Customer loyalty is the tendency of the customer to
remain in business with a particular supplier and buy the products regularly.
This is usually seen when a customer is very much satisfied by the supplier
and re-visits the organization for business deals, or when he is tended
towards re-buying a particular product or brand over times by that supplier.
To continue the customer loyalty the most important aspect an organization

should focus on is customer satisfaction. Hence, customer loyalty is an
influencing aspect of CRM and is always crucial for business success.
5. Customer Retention- Customer retention is a strategic process to keep or
retain the existing customers and not letting them to diverge or defect to
other suppliers or organization for business. Usually a loyal customer is
tended towards sticking to a particular brand or product as far as his basic
needs continue to be properly fulfilled. He does not opt for taking a risk in
going for a new product. More is the possibility to retain customers the more
is the probability of net growth of business.
6. Customer Complaints- Always there exists a challenge for suppliers to deal
with complaints raised by customers. Normally raising a complaint indicates
the act of dissatisfaction of the customer. There can be several reasons for a
customer to launch a complaint. A genuine reason can also exist due to which
the customer is dissatisfied but sometimes complaints are launched due to
some sort of misunderstanding in analyzing and interpreting the conditions
of the deal provided by the supplier regarding any product or service.
Handling these complaints to ultimate satisfaction of the customer is
substantial for any organization and hence it is essential for them to have
predefined set of process in CRM to deal with these complaints and
efficiently resolve it in no time.
7. Customer Service- In an organization Customer Service is the process of
delivering information and services regarding all the products and brands.
Customer satisfaction depends on quality of service provided to him by the
supplier. The organization has not only to elaborate and clarify the details of
the services to be provided to the customer but also to abide with the
conditions as well. If the quality and trend of service go beyond customer’s
expectation, the organization is supposed to have a good business with

Let it be a newly brought up enterprise or a well established organization the above

aspects prove to be of prime importance in dealing with a genuine customer
through a well organized CRM system.

3.4. Importance of Customer Relationship Management

Customer Relationship management is the strongest and the most efficient

approach in maintaining and creating relationships with customers. Customer
relationship management is not only pure business but also ideate strong personal
bonding within people. Development of this type of bonding drives the business to
new levels of success.

Once this personal and emotional linkage is built, it is very easy for any organization
to identify the actual needs of customer and help them to serve them in a better
way. It is a belief that more the sophisticated strategies involved in implementing
the customer relationship management, the more strong and fruitful is the
business. Most of the organizations have dedicated world class tools for
maintaining CRM systems into their workplace. Some of the efficient tools used in
most of the renowned organization are BatchBook, Salesforce, Buzzstream, Sugar
CRM etc.

Looking at some broader perspectives given as below we can easily determine

why a CRM System is always important for an organization.

1. A CRM system consists of a historical view and analysis of all the acquired or
to be acquired customers. This helps in reduced searching and correlating
customers and to foresee customer needs effectively and increase business.
2. CRM contains each and every bit of details of a customer, hence it is very
easy for track a customer accordingly and can be used to determine which
customer can be profitable and which not.
3. In CRM system, customers are grouped according to different aspects
according to the type of business they do or according to physical location
and are allocated to different customer managers often called as account
managers. This helps in focusing and concentrating on each and every
customer separately.
4. A CRM system is not only used to deal with the existing customers but is also
useful in acquiring new customers. The process first starts with identifying a

customer and maintaining all the corresponding details into the CRM system
which is also called an ‘Opportunity of Business’. The Sales and Field
representatives then try getting business out of these customers by
sophistically following up with them and converting them into a winning
deal. All this is very easily and efficiently done by an integrated CRM system.
5. The strongest aspect of Customer Relationship Management is that it is very
cost-effective. The advantage of decently implemented CRM system is that
there is very less need of paper and manual work which requires lesser staff
to manage and lesser resources to deal with. The technologies used in
implementing a CRM system are also very cheap and smooth as compared
to the traditional way of business.
6. All the details in CRM system is kept centralized which is available anytime
on fingertips. This reduces the process time and increases productivity.
7. Efficiently dealing with all the customers and providing them what they
actually need increases the customer satisfaction. This increases the chance
of getting more business which ultimately enhances turnover and profit.
8. If the customer is satisfied they will always be loyal to you and will remain in
business forever resulting in increasing customer base and ultimately
enhancing net growth of business.

In today’s commercial world, practice of dealing with existing customers and

thriving business by getting more customers into loop is predominant and is mere
a dilemma. Installing a CRM system can definitely improve the situation and help
in challenging the new ways of marketing and business in an efficient manner.
Hence in the era of business every organization should be recommended to have a
full-fledged CRM system to cope up with all the business needs.

3.5. What is Customer Relationship?
In CRM the alphabet ‘R’ means relationship. But there is always an ambiguity to
understand the actual meaning of this relationship. This relationship between
supplier and customer is not a personal relationship or a one-time transaction
relationship; for example buying a refrigerator from a consumer’s outlet would not
be called as a relationship.

Relationship between any two parties is actually the interaction or transaction

done between the two over-times or consists of a continuous series of synergistic
episode of interaction many a times. This relationship only exists when the two
parties diverge from a state of autonomy to mutual or interdependent.
Occasionally having a cup of tea from a café does not mean that there is a
relationship. If the customer returns to the café and orders the same tea again
because he likes the environment and taste or the method of making tea, more
looks like a relationship.

Relationship with customers can change from time to time because it is evolved
under distinguished situations. Following are the stages from where the
relationship with customers can evolve-

 Exploration- Exploration is the process when customer investigates or tests

the supplier’s capabilities and performance or cross verifies the product’s or
brand’s usefulness. If the test results fail to satisfy customer’s demands, the
relationship can drastically come to an end.
 Awareness- Awareness is the process when the customer understands the
motivational values of supplier or the products he sells.
 Expansion- Expansion is the process when the supplier wins customer’s faith
and customer falls under huge interdependence of the supplier. This is time
when there are more chances of business with that particular customer and
expand business.
 Commitment- Commitment is a powerful stage when suppliers learn to
adapting business rules and goal to excel.

 Dissolution- Dissolution is a stage when customer requirement suddenly
changes and he looks for better perspectives. This sudden change is the end
of relationship.

Relationship can come to an end due to many reasons like - customer is not
satisfied with the services of supplier or customer diverges to other better brands
and products. Suppliers can also prefer to break relationships due to customer
failing to be a part to increase sales volume or when the suppliers are entangled
with fraud cases.

Broadly there can be two distinguished attributes of a developed relationship

between supplier and customer:

1. Trust: Trust means confidence and security in any relationship and can be
treated as the biggest investment in building long term relationships. Trust
is developed between the two parties when they experience flawless and
satisfied motives between each other. As a result of knowing more about
each other, all the doubts and risks are minimized and leads to inevitably
smooth business. Lack of trust on the other hand weakens the relationship
foundation and chances of uncertainty and conflicts increases.
2. Commitment: Commitment is yet another milestone that should be
achieved to set a long term mutual relationship. Commitment can only be
attained when there is mutual trust and the two parties share each other’s
values. In a committed relationship both suppliers and customers strive to
uphold the relationship and never want to exit which in turn results in
building the relationship stronger and sharper. There is, in fact, huge cost
which is incurred in switching from committed relationships of one supplier
and build new relationships with other suppliers from scratch.

Relationship is always mutual or reciprocal so it is important for both supplier and

customers to stick to common guideline to attain better relationship among each
other. There is lot of involvement of cost, efforts and time in striving developed
relationships between the two parties but the outcome is always inevitable.

3.6. Different Types of Customers
Customers play the most significant part in business. In fact the customer is the
actual boss in a deal and is responsible for the actually profit for the organization.
Customer is the one who uses the products and services and judges the quality of
those products and services. Hence it’s important for an organization to retain
customers or make new customers and flourish business. To manage customers,
organizations should follow some sort of approaches like segmentation or division
of customers into groups because each customer has to be considered valuable and

Customers can be of following types:

1. Loyal Customers- These types of customers are less in numbers but promote
more sales and profit as compared to other customers as these are the ones
which are completely satisfied. These customers revisit the organization over
times hence it is crucial to interact and keep in touch with them on a regular
basis and invest much time and effort with them. Loyal customers want
individual attention and that demands polite and respectful responses from
2. Discount Customers- Discount customers are also frequent visitors but they
are only a part of business when offered with discounts on regular products
and brands or they buy only low cost products. More is the discount the more
they tend towards buying. These customers are mostly related to small
industries or the industries that focus on low or marginal investments on
products. Focus on these types of customers is also important as they also
promote distinguished part of profit into business.
3. Impulsive Customers- These customers are difficult to convince as they want
to do the business in urge or caprice. They don’t have any specific item into
their product list but urge to buy what they find good and productive at that
point of time. Handling these customers is a challenge as they are not
particularly looking for a product and want the supplier to display all the

useful products they have in their tally in front of them so that they can buy
what they like from that display. If impulsive customers are treated
accordingly then there is high probability that these customers could be a
responsible for high percentage of selling.
4. Need Based Customers- These customers are product specific and only tend
to buy items only to which they are habitual or have a specific need for them.
These are frequent customers but do not become a part of buying most of
the times so it is difficult to satisfy them. These customers should be handled
positively by showing them ways and reasons to switch to other similar
products and brands and initiating them to buy these. These customers could
possibly be lost if not tackled efficiently with positive interaction.
5. Wandering Customers- These are the least profitable customers as
sometimes they themselves are not sure what to buy. These customers are
normally new in industry and most of the times visit suppliers only for
confirming their needs on products. They investigate features of most
prominent products in the market but do not buy any of those or show least
interest in buying. To grab such customers they should be properly informed
about the various positive features of the products so that they develop a
sense of interest.

An organization should always focus on loyal customers and should expand or

multiply the product range to leverage impulsive customers. For other types of
customers strategies should be renovated and enhanced for turning out these
customers to satisfy their needs and modify these types of customers to let them
fall under loyal and impulsive category.

3.7. Quality of Relationship with Customers
Satisfying customer needs ensures the business survival for an organization. A
periodical check is required to enhance the quality of services and product to build
a quality relationship with customers. For fulfilling this goal organizations must
have a set of rules to measure and improve this quality.

Delivering best quality services to customers is considered the most efficacious way
to ensure that an organization stands out from a group of competitors and avail the
privilege to be known as best among all. The main ingredients that are involved in
a high quality relationship between customer and supplier are trust and
commitment. Trust means confidence and security in any relationship and can be
treated as the biggest investment in building long term relationships. Trust is
developed between the two parties when they experience flawless and satisfied
motives between each other. As a result of knowing more about each other, all the
doubts and risks are minimized and leads to inevitably smooth business. Lack of
trust, on the other hand, weakens the relationship foundation; as a result chances
of uncertainty and conflicts increases.

Commitment is yet another milestone that should be achieved to set a long term
mutual relationship. Commitment can only be attained when there is mutual trust
and the two parties share each other’s values. In a committed relationship both
suppliers and customers strive to uphold the relationship and never want to exit
which in turn results in building the relationship stronger and sharper. There is, in
fact, huge cost which is incurred in switching from committed relationships of one
supplier and build new relationships with other suppliers from scratch.

There are other attributes as well which promote a high quality relationship,
these include the following:

 Courtesy- Many times customers become irritated and uncivil due to some
unpredictable reasons. But it is substantially important for supplier to keep
his calm and deal accordingly. Delivering the responses in calm voice with

courtesy and sympathetic sense could dramatically act as a catalyst in driving
customer’s satisfaction.
 Availability- Manic customers always prefer human responses instead of
electronic emails or messages. Hence, it is important for an organization to
make its executives always available for customers for responding and
dealing with customer queries and needs. Provision of these services always
promotes emotional bonding between customers and suppliers which in the
end is always fruitful and drives to profitable business.
 Responsive- The suppliers should always have prompt, responsive and
experienced executives to serve customers. For example, if a customer calls
and asks about some critical features of any product and the executive fails
to explain it or being non-responsive to most of his questions then the
customer could probably divert his way to some other organization for better
response which could definitely result in end of the deal and relationship
with that customer.
 Intelligent- Many customers are attracted towards good deals which consist
of discounts and feasible prices. A supplier should be intelligent enough to
deal with these situations and offer the best price and deal so that the
customer is not lost to the supplier who is able to make some substantial
profit if not more. This requires predefined strategies to be created and to
respond intelligently towards fulfilling these strategies.
 Futuristic- Always be futuristic to technological changes. The strategies,
types of services and products could gradually deteriorate with time due to
huge competition and higher rate of technological changes. Keeping this in
mind an organization should always focus on renovating business strategies
periodically and convince the customers accordingly.

Inheriting the above quality attributes into business will always improve
quality relationship between customers and suppliers and is always fruitful for

3.8. Need of Relationship with Customers
Building relationship with customers in current market trends is the most
important aspect that an organization should focus on. Distinction and eminence
are now most sustainable and affirm for which developing good relationship with
customers is must. Some of the substantial outcomes of building a quality
relationship is explained below by which need of relationship with customer are

1. Better Customer perceptiveness- As the customer lengthens to deal with a

supplier, the supplier tends to explicate a better insight of customer’s needs
and expectations. By this a high level of relationship can be developed
between them. This will result in selling more products and retain the
business with the customers which finally will lead to profitable business.
2. Lead to Customer Satisfaction- Customer satisfaction is the measure of how
the needs and responses are collaborated and delivered to excel customer
expectation. It can only be attained if the customer has an overall good
relationship with the supplier. In today’s competitive business marketplace,
customer satisfaction is an important performance exponent and basic
differentiator of business strategies. Hence, the more is customer
satisfaction; more is the business and the bonding with customer.
3. Lead to Customer Loyalty- Customer loyalty is the tendency of the customer
to remain in business with a particular supplier and buy the products
regularly. This is usually seen when a customer is very much satisfied by the
supplier and re-visits the organization for business deals, or when he is
tended towards re-buying a particular product or brand over times by that
supplier. To continue the customer loyalty the most important aspect an
organization should focus on is customer satisfaction, hence it can be said
that customer loyalty is also an outcome of good relationship.
4. Lead to Customer Retention- Customer retention is a strategic process to
keep or retain the existing customers and not letting them to diverge or
defect to other suppliers or organization for business and this only possible

when there is a quality relationship between customer and supplier. Usually
a loyal customer is tended towards sticking to a particular brand or product
as far as his basic needs continue to be properly fulfilled. He does not opt for
taking a risk in going for a new product. More is the possibility to retain
customers the more is the probability of net growth of business.
5. Chances of getting referrals- It is always a cost-free advocacy by customers
to provide referrals to supplier when they feel satisfied and encouraged and
when they have a healthy relationship with customers. These referrals or
customer’s reference of other customers acts like a piece of cake for
suppliers as there is no cost and struggle involved in this. This could be
treated as the best outcome of quality relationship what a supplier can think
6. Growth in revenue- When suppliers have healthy relationship with
customers the revenue of the organization always increases as customers
tend to buy more and more. There is possibility that a satisfied customer seek
to buy special category of related products apart from the regular ones from
that particular supplier. For instance if a satisfied and loyal customer has a
home insurance from an insurance company then there are positive chances
that he could also insure his property and car also if he is fully satisfied with
the services of that insurance company. This will definitely result in growth
of business.
7. Cost to serve is low- Cost to serve existing satisfied customers is always very
less for the supplier as they know and understand customers. Customers
never come back with complaints and queries because they know the actual
business flow and completely rely on the relationship with supplier.

By the above substantial outcomes it is prominent that creating and maintaining

relationship with customer is always a key to success.

3.9. Customer Life Cycle
If in an organization, many customers diverge their way to other organizations and
customer acquisition program shows less aggressiveness then the organization
faces terrible cash flow problems. This is the time when tracking the number of
customers in each stage of customer life cycle becomes essential. This helps the
organization to determine the purchasing power and pattern of customer and
coping up the cash flow problem. There are basically following stages of customer
life cycle:

1. Prospects- Prospects are the people who are not actual customers but could
be converted into one. These people should be treated like initial customers
as they have the potential value same as that of a customer. Initially the
prospect makes a set of expectation regarding the products and services
towards the supplier. If supplier wins to meet the expectation of the
customer, the supplier has the golden chance to convert the prospect into
liable customer. During the process it is very important for the supplier to
meet all the cut off’s of the prospect by providing efficient marketing
communications and explaining the value of having business with them.
2. First time buyers- After making the first buy, the customer enters this stage.
Such customers probably have the lowest retention rate as they have not yet
explored all the facets offered by the supplier. They may fall in satisfied
customers’ category but have not yet evaluated the product features. Hence
it is the duty of supplier to convince them more on the product value and
services to meet their second level of expectation. If they succeed in doing
this then customers would continue to buy the products and could be
retained as long as they are overall satisfied. During this process the failure
of meeting even one aspect of customer could cause the customer to defect.
3. Early repeat buyers- Customers will fall into this stage when they make at
least one repeated buy. These customers are more tended towards regular
buying as compared to the first time buyers. Suppliers have chance of getting
more and more business out of them as they have already created influence

on them. However, these are the satisfied customers but still they are in
process to evaluate the relationship between the two parties, hence a small
mishap could lead to defect these valuable customers.
4. Core Customers- Customers are said to be core customers when they are
fully satisfied with the product value and services provided to them as well
as when the supplier is able to maintain a quality relationship with them.
These customers are flexible and considerable as they ignore small mistakes
which they know, will be efficiently and quickly resolved. Having highest
retention rates these customers are the most valuable assets for an
organization and it is important to give special treatment to these customers.
Unless and until there is major problem, these customers do not defect.
5. Core Defectors- There comes a stage when the core customers tend to
switch to different supplier due to some specific reasons. These reasons
include availability of more efficient and competitive products and brands in
market, any of the important service not entertained or any defect not
rectified within a given time-frame, boredom due to same product usage
repeatedly etc. It is difficult to retain customers if above reasons are
pertained. But strategically coping up with the situation could result in
retaining them.

3.10. Customer Loyalty - Meaning and its Important
Every supplier wants to create and retain a loyal customer who engages in
continued profitable business with him. Customer Loyalty is the measure of success
of the supplier in retaining a long term relationship with the customer.
Thus customer loyalty is when a supplier receives the ultimate reward of his
efforts in interacting with its customer. Customer loyalty tends the customer to
voluntarily choose a particular product against another for his need. The loyalty
may be product specific or it may be company specific. When a loyal customer has
repetitive requirement of the same product, such customers may be described as
being ‘brand loyal’. On the other hand he may also require different products of
the same manufacturer. That is to say he makes significant purchases direct from
the same supplier and that counts as the company specific loyalty.

Loyalty also means that customer is sticking to the supplier on certain grounds
though he may be having other options also. It may be possible that the supplier
may not have the best product or the customer may be having some problems with
the supplier in respect of his supply of the product but the customer likes to ignore
other options and prefers to continue with the same supplier as the customer
thinks the supplier provides him more value and benefit than others. Such loyal
customers tend to spend more money buy more, buy longer and tell more people
about the product or supplier. This type of long-term customer loyalty can only be
created by making the customers feel that they are number one priority with the

Some customers are inherently predictable and loyal, irrespective of the supplier
with which they are doing business. They simply prefer long-term relationships with
him. Loyal customers are predisposed to stay with one product or supplier, resisting
competitive offers and also recommend the supplier to others.

In case the business is done directly the relationship is direct so also the loyalty. But
if the selling is through two or more intermediaries then the loyalty has to be
measured at different levels. In that case the end customer loyalty is influenced by

the loyalty of the intermediate customers. Then the supplier has to focus his loyalty
retention plan accordingly and has to judge and analyze the loyalties of the
intermediaries. This process depends on what amount of importance he gives to
each of the intermediaries and how much to the ultimate customer. But it is certain
that well-managed customer retention programs are sure to give the ultimate
customer loyalty.

True, the customers who are targeted by a retention program demonstrate higher
loyalty to a business. Therefore such customer retention programs should include
regular communication with customers, and provide them opportunities to remain
active and choosing to do business with the supplier.

Loyalty is demonstrated by the actions of the customer. But it doesn’t mean that
the customer satisfaction level can measure his loyalty. Customer loyalty is not
customer satisfaction. Customer satisfaction is the basic entry point for a good
business to start with. A customer can be very satisfied with the deal and still not
be loyal. On the other hand a customer may not express satisfaction but wants to
remain loyal to the supplier due to some reasons which keeps him benefited from
that supplier. For the same degree of satisfaction, the loyalty level may also be
different for different suppliers.

On the other hand, loyalty should not be considered as just an attitude. Customer
loyalty should have a direct connection to a company’s financial results. The
supplier should be able to plan a clear and direct economic benefit of some kind,
as the result of the strategies and tactics he employs to increase its customers’

Measuring customer loyalty and developing a retention strategy are of great

importance to an organization’s success.

3.11. Customer Loyalty and Satisfaction
Most of the organizations have murkiness in considering customer loyalty and
satisfaction. They feel that both are same and a satisfied customer is always loyal
to them. But this is not true as the customer can be delightfully satisfied but he may
be or may not be loyal. This is because satisfaction an emotional and slushy feeling
over the job done. But loyalty is related to the action taken by the customer future.
There can be following two combinations of aspect when satisfaction and loyalty
are treated together:

1. Satisfied but disloyal customers: A customer can be fully satisfied but may
not be loyal due to following reasons:
a. Entrepreneur Customer: These types of customers like to experiment
a lot and hence try to create various options for them to get more
benefits. So even if they are satisfied they diverge to other options
available in the market.
b. Pressure from Competitors: Due to the pressure in market the
customer tends to follow the competitors path and divert from the
existing supplier to remain sustain in the global marketplace.
c. Outdated Suppliers: The customer may be satisfied with the existing
customers but sometimes feel that the product and services he is using
are outdated in market. Due to the changing technology there is
always a need to update the technical aspects and product features
even if the old products and services are satisfactory. Focusing on
these facets the customers normally go to other suppliers for his new
2. Unsatisfied but loyal customers: The other abnormal situation is when the
customer is loyal but is unsatisfied. The reasons for this are following:
a. Lack of available options: There can lack of options available for
customers. This situation arises when the existing supplier is having a
monopoly in a particular segment of products or when all other
competitors are worse then the existing supplier. The customer feel

trapped in this type of situation and is forced to be loyal to the supplier
but at the end of the day he will be an unsatisfied customer.
b. Improved Supplier: In another situation the suppliers may take the
customers in confidence by convincing them to provide improved
products and services in the coming future. This is an important tactic
that supplier implement in their marketing strategy to become
customer centric and to have customers stick to them and be loyal. To
remain in a healthy relationship the customers also remain loyal but
have a feeling of dissatisfaction beneath. But finally if the supplier
continuously supply degraded products and services the customer
could easily divert from them in search of better prospects.
c. Customer Inertia: There are some customers who afraid to change the
supplier. Even if they have bad experience with the supplier, they
continue to have business with them. This may be due to the
emotional and business attachments or bonding of customers with
those particular suppliers. Their could be many others reason for this
like, the customers’ feel reluctant to face the complexity of the process
of changing their way to other suppliers and prominently when they
already have a long term relationship with their suppliers. Under this
situation the customer tries to ignore the feelings of being unsatisfied
and remain loyal to them.

For an organization to be in business and make profit it is a very important aspect

for them to gain customer loyalty. Even if high satisfaction may not guarantee
loyalty but it can be literally a prerequisite for it.

3.12. Drivers of Customer Loyalty
It is very important for an organization to identify the factors and facets which drive
customer loyalty. These factors help the organization to manage customer loyalty
in a better and efficient way. Following are the drivers of customer loyalty:

1. Attitude: A customer to bear on his loyalty can have following types of


a. Emotional and sentimental- Some customers stick to a particular

supplier due to the emotional and sentimental attachments with that
supplier. This attachment may be due to the physical location of the
supplier, product pattern provided by the supplier that exactly suits
customer or may be due to the esteemed assistance and services
provided by him. This type of bonding enhances customer loyalty and it
is very difficult to break this bonding under any circumstances.

b. Rational Type- Such type of customer makes purchase decision

rationally. Before making any purchase they evaluate the suppliers and
assess the profitability criteria.

c. Entrepreneur Type- These types of customers have a habit to try new

options. Their decision to choose supplier is normally irrational and can
change their loyalty to other suppliers even if they are satisfied with
existing customers. It’s difficult for the supplier to retain or manage these
types of customers as no situation could bind them.

2. Product and services: Following are the important aspects of product and
services that could substantially help in retaining loyalty of customers.

a. Differentiated Products and Services- Differentiation in products and
services help the organization to reduce competition in market and have
substantial influence on customers’ mindset.

b. Multiple Products for the same customer- By manufacturing multiple

products for the same customer enhances the relationship with customer
which increases loyalty. If the customer is loyal towards any one brand
then there are good chances to retain his loyalty for whole range of

c. High Service Component- The products having a high service component

captures more customer loyalty. This is because the customer does not
want to experiment with other products provided by different supplier.
Hence they become loyal to the existing customer due to the provision of
high service components.

3. Technology: The technological aspects of product manufactured by the

supplier plays a vital role in customer loyalty. The more products are
technologically sound, more is the loyalty.
4. Human Resources: Organizational human resource plays a vital role in
marketing segments where customer comes in direct contact. In some
consumer sectors like household and automobiles, the customer gets a
chance to evaluate capability of organizational human assets. If the customer
evaluates these human assets as useful and is influenced by the aspects then
he develops a positive feeling against the supplier who posses these
enhanced human assets.
5. Supplier’s Culture: Supplier’s culture is most important driver of customer
loyalty. In consumer sector this culture means quality and in core sector it
can be related to technology. For example, in US ‘Friedrich’ has ranked with
good quality, enhanced design and user friendly features which have created
brand loyalty. In Indian the supplier of almost all the dairy product called
‘Amul’ has pursued customer loyalty because of their overall culture. In core
sector the image of the supplier is the biggest driver of loyalty. This image

could add a status symbol for most of the customers. ‘Mercedes’
automobiles and ‘RayBan’ sun-glasses are example of this. The customers
uses these products only for maintaining or enhancing their lifestyle and
always be loyal to them.

3.13. Customer Loyalty Breakers

When customers end up his relationship with suppliers, he breaks the loyalty with
him. Following are the reasons which are responsible for loyalty break ups:

1. Customer dis-satisfaction: Customer dissatisfaction is the primary reason

that results in breaking up the continued loyalty with the supplier. Most of
the unsatisfied customers try to find more prominent alternatives which
results in their migration. In most of the cases the customer does not even
complain about the dissatisfaction and simply divert their way to other

2. Tough competition and new options availability: Vivid competition also

acts as a breaker of loyalty as it gives customers new options which are
exposed in the market and are sometimes better than before. These new
options results in enhancing expectations of customers which leads to
accelerating break ups in relationship between supplier and customers. This
happens because the existing customer’s supplier is unable to fulfill their
demands in an appropriate manner.

3. Enhanced product features and advance technology: Due to the abrupt

change in market conditions, inheritance of advanced technology in all ranges
of products and service is inevitable. If the supplier is unable to follow the
process of continuously updating technological related aspects of products
and services he may loose customers as they divert in search of technological
sound products and services. Apart from the advanced technology, if the

customers get enhanced and user friendly product features then it acts like
additional incentives for them to migrate.

4. Customer expectation: Expectations of customers can go way beyond

expectations of supplier which results in breaking loyalty. If supplier is not able
to meet customers’ expectations then obviously customers would look for
better alternatives. These expectations can be related to cost, quality, product
service, efficiency, durability or any other aspect. Many a times these
expectations could be unrealistic or unreasonable due to the market scenario
or some external business pressure. Under this kind of situation it is becomes
very difficult for an organizations to meet all the expectations which result in
sudden divert by breaking loyalty bond. Any supplier which comes close to
these unrealistic and unreasonable expectations of customers could retain
him easily.

5. Customer Attitude: Customer attitude plays a vital role in breaking up the

loyalty with existing supplier. This is because some customers have a habit to
try new options and change business tactics. Even if they are fully satisfied
with the existing supplier they would attempt a change for the sake of getting
new and better option or because of any change in business rules and tactics.
These types of customers are experimental in nature and try to be innovative
and creative by taking high business risks. These customers are supposed to
be least loyal because they less likely to be attached with any sort of bond
with single supplier. To retain these types of customers is a pain for all the
suppliers and they generally try to change their attitude by inheriting some
business tactics in their marketing strategies.

6. Product Services: Providing products with low or bad service components will
result in ending up loyalty with customers. Customers not only use the
products but also demands valuable and spontaneous service. Hence apart
from manufacturing good and sound products it is very important for the

supplier to provide enhanced service components along with the product
which will act as a roadblock for customer to divert.

7. Market recession: Some unrealistic situation in global market which affects

the allover economy of a country could also be a reason in ending up loyalty
bond with customers. Under this situation called ‘recession’, intense cash flow
problem is seen. This leads customers to cut-off expenses incurred in business
and may lead to divert to other suppliers in search of low cost but reliable
products and services.

3.14. Tracking Customer Loyalty

For maintaining customers’ loyalty it is very important by organizations to track
their loyalty. Following are the two methods of tracking customer loyalty:

1. Loyalty tracking on time scale: Loyalty can be tracked on linear time

scale. This includes preparing time scale graph which shows the loyalty
trend of customers in accordance to time. The graph is normally created
when the supplier evaluates that customer is showing less interest in
buying and the time gap between each buy is gradually increasing. When
the graph goes from secured to lost stage, it is important for the
organization to identify corrective measures to retain the customer back
to track. When the corrective measure works efficiently the graph again
moves towards secured level in the coming future which indicates that
the supplier is gaining customer loyalty again and there are fewer
chances for the customer to divert to other options. This is a simple but
powerful technique to track customer loyalty in-house without
employing external resources. However this is not an accurate method
to track customer loyalty but it shows the trend if the correctives
measure taken to retain customer is working efficiently or not. Changes
in the loyalty is normally seen after tracking loyalty on time scale but the
details are not exactly focused and does not accurately provide the

actually loyalty variation of the customer to supplier. This process is
normally implemented

in the initial stages after the supplier identifies that there are chances that
customer can divert. If corrective measures are not taken at this stage then
it becomes difficult for the supplier to retain the customer.

Loyalty tracking on Volume-Loyalty Matrix: Other way to track loyalty is on

a matrix called volume-loyalty matrix. This kind of tracking includes
determining the loyalty according to the pre-defined matrix quadrants so
that the supplier could judge the customer value and accordingly engage
corrective actions. The quadrant variable could be associated with values
like ‘premium’, ‘neglected’, ‘patrons’ and ‘pitfall’. If the customer value
remains the same but the customer loyalty travels from neglected to
premium quadrant then the customer loyalty is moving in the positive
direction and there are chances that it may cause to increase customer
value as well. If the customer value increases but the customer loyalty
travels from premium to patron’s level then it shows that the loyalty is
declining and needs attention and corrective actions should be taken to
improve customer loyalty. If the customer value increases rapidly but
customer loyalty travels from premium to pitfall level then it indicates that
the loyalty is declining rapidly and serious attention should be taken. Under
this condition the loyalty bond gets weakened and customer can divert at
any time. This is purposeful and powerful tracking method to track loyalty
because end results are focused and the seriousness of whole scenario is
clearly visible. This helps the supplier to make strong and focused strategic
plans to reclaim customer loyalty. Normally this tracking process is
implemented under adverse conditions to get satisfactory results. When the
tracking on time scale graph does not work efficiently supplier implements
volume-loyalty matrix to enhance customer loyalty in an efficient and
efficacious manner.

Tracking customer loyalty is very important process that all the organization should
implement continuously to track customer buying trend and force them be loyal to
them and increase business values and profits.

3.15. Increasing Customer Loyalty

It is necessarily required for an organization to interact and communicate with
customers on a regular basis to increase customer loyalty. In these interactions and
communications it is required to learn and determine all individual customer needs
and respond accordingly. Following are some important aspects which suppliers
should always keep in mind to increase customer loyalty:

1. Emotional attachment: Emotional and sentimental attachment plays a vital

role in increasing customer loyalty. Hence it is important for the suppliers to
identify the factors which force the customers to get emotionally attached
with them and should mould this information accordingly to enhance this
emotional relationship. There can be a range of factors for customers that
develops these emotional attachment with suppliers, some of which are
discussed below:

a. Many customers get emotionally attached because of the high name or

good image of the supplier in the market. They feel highly elicited in status
for having business deals with them which could also substantially upraise
their image. This helps in increasing loyalty of customer with that
particular supplier unless and until customer finds any other high named
supplier who meets all his expectations.

b. Some customers will get attached with supplier just because of the
excellence in technical aspects of product which also includes best service
and healthy organizational culture. These types of customers only believe
in the fact that all the products and services work in accordance to them

and in an efficacious and efficient way. This attachment results in
customer to become loyal.

c. Some customers get highly impressed with the overall behavior of

supplier. Soft spoken and well mannered executive is always a positive
gain for the supplier to get the customers emotionally attached with him.
This behavior could also include provision of spontaneous responses in an
efficient way. All these aspects can increase customer loyalty to much
higher levels.

2. Supplier’s credibility: Supplier’s credibility helps to elevate customer loyalty.

Credibility provides confidence and comfort to the customers regarding the
reliability, durability, quality and performance of products and services. In
industrial sector, the products provided by suppliers are actually used by
customers for production purpose. Hence unavailability, malfunctioning or
low performance of these products could highly affect the profitability in
business. By nullifying all these factors and providing high valued service and
high end products which are available all the time develops a sense of
credibility among the customers. In such case customers develop faith and
belief in supplier which obviously increases customer loyalty.
3. Customer satisfaction: Customer satisfaction is the measure of how the
needs and responses are collaborated and delivered to excel customer
expectation. It can only be attained if the customer has an overall good
relationship with the supplier. In today’s competitive business marketplace,
customer satisfaction is an important performance exponent and basic
differentiator of business strategies. However, a satisfied customer may be
or may not be loyal but an unsatisfied customer potentially seeks other
options and may migrate easily. Hence it is important for the supplier to
identify dissatisfaction factors and develop corrective measures to cope up
with. It is often seen that if these corrective measures are implemented
successfully to improve satisfaction then satisfaction level increases to a
much higher level as compared to a normal satisfied customer. A satisfied

customer mostly tends to be a loyal customer hence customer satisfaction is
an important factor that increases customer loyalty.

3.16. What is Customer Satisfaction?

Business always starts and closes with customers and hence the customers must
be treated as the King of the market. All the business enhancements, profit, status,
image etc of the organization depends on customers. Hence it is important for all
the organizations to meet all the customers’ expectations and identify that they are
satisfied customer.

Customer satisfaction is the measure of how the needs and responses are
collaborated and delivered to excel customer expectation. It can only be attained
if the customer has an overall good relationship with the supplier. In today’s
competitive business marketplace, customer satisfaction is an important
performance exponent and basic differentiator of business strategies. Hence, the
more is customer satisfaction; more is the business and the bonding with customer.

Customer satisfaction is a part of customer’s experience that exposes a supplier’s

behavior on customer’s expectation. It also depends on how efficiently it is
managed and how promptly services are provided. This satisfaction could be
related to various business aspects like marketing, product manufacturing,
engineering, quality of products and services, responses customer’s problems and
queries, completion of project, post delivery services, complaint management etc.

Customer satisfaction is the overall essence of the impression about the supplier
by the customers. This impression which a customer makes regarding supplier is
the sum total of all the process he goes through, right from communicating supplier
before doing any marketing to post delivery options and services and managing
queries or complaints post delivery. During this process the customer comes across
working environment of various departments and the type of strategies involved in
the organization. This helps the customer to make strong opinion about the
supplier which finally results in satisfaction or dissatisfaction.

Customer’s perception on supplier helps the customer choose among the supplier
on basis of money value and how well the delivered products suit all the
requirements. The supplier’s services never diminishes after the delivery as
customer seeks high values post marketing services which could help them use and
customize the delivered product more efficiently. If he is satisfied with the post
marketing services then there are good chances for supplier to retain the
customers to enhance repeated purchases and make good business profits.

It is necessarily required for an organization to interact and communicate with

customers on a regular basis to increase customer satisfaction. In these
interactions and communications it is required to learn and determine all individual
customer needs and respond accordingly. Even if the products are identical in
competing markets, satisfaction provides high retention rates. For example,
shoppers and retailers are engaged with frequent shopping and credit cards to gain
customer satisfaction, many high end retailers also provide membership cards and
discount benefits on those cards so that the customer remain loyal to them.

Higher the satisfaction level, higher is the sentimental attachment of customers

with the specific brand of product and also with the supplier. This helps in making
a strong and healthy customer-supplier bonding. This bonding forces the customer
to be tied up with that particular supplier and chances of defection very less. Hence
customer satisfaction is very important panorama that every supplier should focus
on to establish a renounced position in the global market and enhance business
and profit.

3.17. Why Dissatisfaction in Customers?
When the suppliers are unable to entertain customers or their business strategies
fail to build a good relationship with customers, they probably end up with
customers’ dissatisfaction. There can be many reasons for the customers to
become dissatisfied. Some of these reasons are:

1. Taking example of India, most of the population here are vegetarian. They
do not require a bigger space in their refrigerator for deep freeze option. But
still, following foreign trend of making refrigerators most of the
manufacturers are providing huge capacity deep freezers. If the people are
not able to use this space or option, it is waste for them. Obviously they feel
dissatisfied with this.
2. Vacuum cleaner, one of the modest innovative equipment which was
invented to reduce manual household works on just click of a button. It is a
huge success in European countries where the environment is dusty as
compared to other parts of the world and the cost for managing household
work is pretty expensive. But in countries like United Stated where the
environment is very different and dust free, there is no need for installing
this equipment in house as it would be kept uselessly in house. In India the
environment is lot dusty but the cost exempted for managing the household
work is very cheap and affordable, so why people will go and buy a vacuum
cleaner and invest a lot of money in that, if they can hire a manual cleaner
boy without investing much. If they buy a vacuum cleaner and later on feel
that it is turning out to be expensive and tedious deal then it brings
dissatisfaction among them.
3. The eating tradition in India is very much different from other countries. In
Europe, people usually eat continental food and they have habit of
appetizing the main course with bread, so they usually keep a small plate
(normally called quarter plate) in the left hand side so that the bread is
available to eat in between with left hand. In India, people prefer ‘Roti’
(Indian version of bread) and they like to eat it with right hand so they want

the small plate to be kept on right hand side. But in India, most of the good
restaurants are influenced by European traditions and keep on serving the
small plates on left hand side on the table. This creates uneasiness for the
people to eat food which leads to dissatisfaction.
4. Problem also occurs when the customers get wrongly customized products.
This is because of the communication gaps between supplier and customers
and forcing the customer to become dissatisfied due to this.
5. Apart from delivering good and quality products it is equally important for
the suppliers to provide excellent post deal services. For example, a
customer bought a Fax machine from a supplier and suddenly something
went wrong and the machine stopped sending fax at the time when there
was an urgent fax to be sent. Customer called the supplier and asked for
urgent support but none of the executive at the supplier’s side was available
for fixing this issue. Customer finally took some local vendor’s help to fix as
it was very urgent. Such a situation can develop an irritating gesture for
customers against the supplier and to his dissatisfaction.

Apart from the above examples many more similar reasons could lead to
customer’s dissatisfaction. It is very important for the supplier to concentrate on
customer’s needs and provide him the required products and services. If desired
measures are not taken, customer’s dissatisfaction could possibly build poor
relationships between the two parties which could break anytime.

3.18. Measuring Customer Satisfaction
For improving customer satisfaction it is essential for the supplier to measure it. It
is purely believed that if anything is not measurable then it is not authentic.
Customers are the most important asset for any organization as they are only
responsible to drives the business. Measuring customer satisfaction helps in
identifying specific customer information which is needed to run business
smoothly. Following are the information and details that could be generated after
measuring customers’ satisfaction:

1. Business Related: Measuring customer satisfaction helps an organization to

identify the efficiency of its business strategies and marketing tactics and
encompasses if the organization is customer focused or not. It also provides
analyzed details on how many numbers of customers have defected, how
much loss the business has incurred and up to what extent the profit is
decayed due to customer defect. A customer is usually dissatisfied when his
expectations are not met or the commitments from supplier are not fulfilled
reasonably and within the given time span. This becomes a serious issue for
the customers as the delay will obvious affect their image too. The customer
usually shares these problems and issues with other customers which hiders
the business of the supplier. Some of these unsatisfied customers launch
complaints but most of the other customers simply defect to other suppliers
without even informing which creates a big void in the business processes of
supplier because they did not get chance to analyze the reasons of customer
defection. Loss of customers is directly proportionate to loss of business and
profitability. If an organization is able to measure business related aspects of
customer satisfaction then they become capable to bridge the gaps between
them and customers to enhance more customer satisfaction among their
peer customers.
2. Customer Related: By measuring customer related aspects of customer
satisfaction following details can be entailed:
a. How many total numbers of customers have defected?

b. Specifically which customers have been defected?
c. Reason why they have defected and where exactly they have
d. Measurement of customer satisfaction always helps a supplier to
analyze appropriate reasons of lost of customers and take measures
to avoid this. It also provides analyzed information about the business
loss in the coming future. This actually helps the supplier to be
profitable because cost involved in acquiring a customer is
comparatively higher then the cost involved in retaining an existing
e. It also helps the supplier to identify the value of their products and
services according to the customers’ perception. If customer is
dissatisfied with products and services then there is a need for supplier
to check the performance and quality of the product and services so
that other customers could not complaint regarding the same.
f. It can also analyze the exact need and requirement of customer so that
measures are taken accordingly to satisfy each and every customer.
3. Suppliers Related: Following are the supplier’s specific information that
could be generated while measuring customer satisfaction:
a. It helps the supplier to conclude about his own image, strength and
weak points.
b. It helps the supplier to identify his area of perfection and competency
so that they flourish in monopoly of specific products and services.
c. It helps in encompassing the organization’s position according to the
benchmark possessed in the market by competitors.

The best way to improve customer satisfaction is to first measure it and then apply
methods to enhance it. It helps the supplier to always keep a check on allover
business processes by identifying strong and weak aspects and creating strong
bond with all their customers to enhance business.

3.19. Methods of Measuring Customer Satisfaction
Managing customers’ satisfaction efficiently is one the biggest challenge an
organization face. The tools or methods to measure customer satisfaction needs to
be defined sophisticatedly to fulfill the desired norms. There are following methods
to measure customer satisfaction:

1. Direct Methods: Directly contacting customers and getting their valuable

feedback is very important. Following are some of the ways by which
customers could be directly tabbed:
a. Getting customer feedback through third party agencies.
b. Direct marketing, in-house call centers, complaint handling
department could be treated as first point of contact for getting
customer feedback. These feedbacks are compiled to analyze
customers’ perception.
c. Getting customer feedback through face to face conversation or
d. Feedback through complaint or appreciation letter.
e. Direct customer feedback through surveys and questionnaires.

Organizations mostly employ external agencies to listen to their customers

and provide dedicated feedback to them. These feedbacks needs to be
sophisticated and in structured format so that conclusive results could be
fetched out. Face to face meetings and complaint or appreciation letter
engages immediate issues. The feedback received in this is not uniformed as
different types of customers are addressed with different domains of
questions. This hiders the analysis process to be performed accurately and
consistently. Hence the best way is to implement a proper survey which
consists of uniformed questionnaire to get customer feedback from well
segmented customers. The design of the prepared questionnaire is an
important aspect and should enclose all the essential factors of business. The
questions asked should be in a way that the customer is encouraged to
respond in a obvious way/. These feedback could received by the
organizations can be treated as one of the best way to measure customer

Apart from the above methods there is another very popular direct method
which is surprise market visit. By this, information regarding different
segment of products and services provided to the customers could be
obtained in an efficient manner. It becomes easy for the supplier to know
the weak and strong aspects of products and services.

2. Indirect Method: The major drawback of direct methods is that it turns out
to be very costly and requires a lot of pre compiled preparations to
implement. For getting the valuable feedbacks the supplier totally depends
on the customer due to which they looses options and chances to take
corrective measure at correct time. Hence there are other following indirect
methods of getting feedback regarding customer satisfaction:
a. Customer Complaints: Customer’s complaints are the issues and
problems reported by the customer to supplier with regards to any
specific product or related service. These complaints can be classified
under different segments according to the severity and department. If
the complaints under a particular segment go high in a specific period
of time then the performance of the organization is degrading in that
specific area or segment. But if the complaints diminish in a specific
period of time then that means the organization is performing well
and customer satisfaction level is also higher.
b. Customer Loyalty: It is necessarily required for an organization to
interact and communicate with customers on a regular basis to
increase customer loyalty. In these interactions and communications
it is required to learn and determine all individual customer needs and
respond accordingly. A customer is said to be loyal if he revisits
supplier on regular basis for purchases. These loyal customers are the
satisfied ones and hence they are bounded with a relationship with
the supplier. Hence by obtaining the customer loyalty index, suppliers
can indirectly measure customer satisfaction.

3.20. Factors affecting Customer Satisfaction
Customer satisfaction is the overall impression of customer about the supplier and
the products and services delivered by the supplier. Following are the important
factors that could affect customer satisfaction:

 Departmentwise capability of the supplier. 

 Technological and engineering or re-engineering aspects of products and
 Type and quality of response provided by the supplier.
 Supplier’s capability to commit on deadlines and how efficiently they are
 Customer service provided by the supplier.
 Complaint management.
 Cost, quality, performance and efficiency of the product.
 Supplier’s personal facets like etiquettes and friendliness.
 Supplier’s ability to manage whole customer life cycle.
 Compatible and hassle free functions and operations.

The above factors could be widely classified under two categories i.e. suppliers
behavior and performance of product and services. The supplier’s behavior mostly
depends on the behavior of its senior subordinates, managers and internal
employees. All the functional activities like customer response, direct product and
maintenance services, complaint management etc. are the factors that rely on how
skillful and trained the internal and human resources of the supplier are. The
second category is regarding all the products and services. This depends on the
capability of supplier to how to nurture the products and service efficiently and
how skilled the employees are. It’s all about how the skills are implemented to
demonstrate engineering, re-engineering and technological aspects of the
products and services. The quality and efficaciousness of the products is also an
important factor that enables compatible and hassle free functions and operations.
This bears to lower maintenance and higher life of the product which is highly
admired by the customers.

If the product is having some problem or compatibility issues and requires frequent
maintenance and support than the customers could get irritated and possibilities
of sudden divert is there which lead to supplier’s financial loss. In the same way if
the product is expecting huge amount of financial and manual resources then
customers could get a feeling of dissatisfaction and worry. However, if these
aspects are handled efficiently by giving class services and dealing with complaints
effectively then dissatisfied customers could be converted into long time satisfied
customers and retaining them becomes easy.

It is practically impossible for the supplier to provide all the above explained
features. There are always some positive as well as negative features in products
and services which could lead to delight or irritate customers. The final opinion is
the sum of overall experiences which a customer percept. But it is also true that
more the positive aspects, the more the customer is satisfied. Hence the aim of the
supplier should be always to enhance these positive feelings among all the
customers to increase customer satisfaction. The supplier must identify how to
enhance these positive aspects to maximum level by analyzing the customer’s data
and information using CRM system. The individual liking and disliking of customers
differ from customer to customer. It is hence required to target a customer and
identify individual requirement to make them satisfied.

Having discussed the above factors that affect customer satisfaction we can say
that higher the satisfaction level, higher is the sentimental attachment of
customers with the specific brand of product and also with the supplier. This helps
in making a strong and healthy customer-supplier bonding. This bonding forces the
customer to be tied up with that particular supplier and chances of defection are
very less. Hence customer satisfaction is very important panorama that every
supplier should focus on to establish a renounced position in the global market and
enhance business and profit.

3.21. Meaning and Scope of Marketing Research
According to American Marketing Association, “Marketing Research is the function
that links the consumer, customer and public to the marketer through information-
information used to identify and define marketing opportunities and problems,
generate, refine and evaluate marketing actions; monitor marketing performance;
and improve understanding of marketing as a process.”

Marketing Research is systematic problem analysis, model building and fact finding
for the purpose of important decision making and control in the marketing of goods
and services.

Marketing Research is a well-planned, systematic process which implies that it

needs planning at all the stages. It uses scientific method. It is an objective process
as it attempts to provide accurate authentic information. Marketing Research is
sometimes defined as the application of scientific method in the solution of
marketing problems.

Marketing Research plays a very significant role in identifying the needs of

customers and meeting them in best possible way. The main task of Marketing
Research is systematic gathering and analysis of information.

Before we proceed further, it is essential to clarify the relationship and difference

between Marketing Research and Marketing Information System (MIS). Whatever
information are generated by Marketing Research from internal sources, external
sources, marketing intelligence agencies-consist the part of MIS.

MIS is a set of formalized procedures for generating, analyzing, storing and

distributing information to marketing decision makers on an ongoing basis.

1. While Marketing Research is done with a specific purpose in mind with

information being generated when it is conducted, MIS information is
generated continuously.
2. MIS is continuous entity while Marketing Research is a ad-hoc system.

3. While in Marketing Research information is for specific purpose, so it is not
rigid; in MIS information is more rigid and structured.

Marketing Research is essential for strategic market planning and decision making.
It helps a firm in identifying what are the market opportunities and constraints, in
developing and implementing market strategies, and in evaluating the
effectiveness of marketing plans.

Marketing Research is a growing and widely used business activity as the sellers
need to know more about their final consumers but are generally widely separated
from those consumers. Marketing Research is a necessary link between marketing
decision makers and the markets in which they operate.

Marketing Research includes various important principles for generating

information which is useful to managers. These principles relate to the timeliness
and importance of data, the significance of defining objectives cautiously and
clearly, and the need to avoid conducting research to support decisions already

Marketing Research is of use to the following:-

1. Producers
a. To know about his product potential in the market vis-à-vis the total
b. New Products;
c. Various brands;
d. Pricing;
e. Market Structures and selection of product strategy, etc.
2. Business and Government

Marketing Research helps businesses and government in focusing attention

on the complex nature of problems faced by them. For example:

a. Determination of Gross National Product; Price indices, and per capita


b. Expenditure levels and budgeting;
c. Agricultural Pricing;
d. The economic policies of Government; and
e. Operational and planning problems of business and industry.
3. Market Research Agencies

Marketing Research is being used extensively by professionals to help

conducting various studies in Marketing Research. Most prominent agencies

a. Linta India Ltd;

b. British Market Research Bureau (BMRB);
c. Hindustan Thompson Associate Ltd;
4. Managers


The Survey method is the technique of gathering data by asking questions to people
who are thought to have desired information. A formal list of questionnaire is
prepared. Generally a non disguised approach is used. The respondents are asked
questions on their demographic interest opinion.

Advantages of Survey Method

1. As compared to other methods (direct observation, experimentation) survey

yield a broader range of information. Surveys are effective to produce
information on socio-economic characteristics, attitudes, opinions, motives
etc and to gather information for planning product features, advertising
media, sales promotion, channels of distribution and other marketing
2. Questioning is usually faster and cheaper that Observation.
3. Questions are simple to administer.
4. Data is reliable
5. The variability of results is reduced.
6. It is relatively simple to analyze, quote and interrelate the data obtained by
survey method

Disadvantages of Survey Method

1. Unwillingness of respondents to provide information- This requires

salesmanship on the part of the interviewer. The interviewer may assure that
the information will be kept secret or apply the technique of offering some
2. Inability of the respondents to provide information- This may be due to
a. Lack of knowledge
b. Lapse of memory
c. Inability to identify their motives and provide “reasons why?” for their
3. Human Biases of the respondents are there, for eg: “Ego”
4. Symantec difficulties are there - it is difficult, if not impossible, to state a
given question in such a way that it will mean exactly same thing to each
respondent. Similarly two different wordings of the same question will
frequently produce quite different results.

How to overcome the limitations of Survey Method

1. Careful framing and phrasing of questions.

2. Careful control of data gathering by employing specially trained investigators
who will observe carefully report on subtle reactions of persons interviewed
3. Cautious interpretations by a clear recognition of the limitations of the data
and understating of what exactly the data represents. This is especially true
of responses to questions like - “What price would you be willing to pay for
this product?”
4. Looking at facts in relative rather than absolute terms. For eg - A survey by a
dentist team showed that the number of families in the middle income group
used toothpaste taken by itself in the absolute sense, the results of the
survey are in some doubt. Even though the individual group readings shall
differ say for eg: for upper income group families it could be 90 %. Hence we
should look at the facts in relative rather than in absolute terms

Techniques of Survey Method

There are mainly 4 methods by which we can collect data through the Survey

1. Telephonic Interview
2. Personal Interview
3. Mail Interview
4. Electronic Interview

Telephonic Interview Telephone Interviewing stands out as the best method
for gathering quickly needed information. Responses are collected from the
respondents by the researcher on telephone.

Advantages of Telephonic Interview

1. It is very fast method of data collection.
2. It has the advantage over “Mail Questionnaire” of permitting the
interviewer to talk to one or more persons and to clarifying his
questions if they are not understood.
3. Response rate of telephone interviewing seems to be a little better
than mail questionnaires
4. The quality of information is better
5. It is less costly method and there are less administration problems

Disadvantages of Telephonic Interview

6. They cant handle interview which need props
7. It cant handle unstructured interview
8. It cant be used for those questions which requires long descriptive
9. Respondents cannot be observed
10.People are reluctant to disclose personal information on telephone
11.People who don’t have telephone facility cannot be approached

Personal Interviewing It is the most versatile of the all methods. They are
used when props are required along with the verbal response non-verbal responses
can also be observed.

Advantages of Personal Interview

12.The person interviewed can ask more questions and can supplement
the interview with personal observation.
13.They are more flexible. Order of questions can be changed

14.Knowledge of past and future is possible.
15.In-depth research is possible.
16.Verification of data from other sources is possible.
17.The information obtained is very reliable and dependable and helps in
establishing cause and effect relationship very early.

Disadvantages of Personal Interview

18.It requires much more technical and administrative planning and
19.It is more expensive
20.It is time consuming
21.The accuracy of data is influenced by the interviewer
22.A number of call banks may be required
23.Some people are not approachable

Mail Survey Questionnaires are send to the respondents, they fill it up and send
it back.

Advantages of Mail Survey

24.It can reach all types of people.
25.Response rate can be improved by offering certain incentives.

Disadvantages of Mail Survey

26.It can not be used for unstructured study.
27.It is costly.
28.It requires established mailing list.
29.It is time consuming.
30.There is problem in case of complex questions.

Electronic Interview Electronic interviewing is a process of recognizing and
noting people, objects, occurances rather than asking for information. For example-
When you go to store, you notice which product people like to use. The Universal
Product Code (UPC) is also a method of observing what people are buying.

Advantages of Electronic Interview

31.There is no relying on willingness or ability of respondent.
32.The data is more accurate and objective.

Disadvantages of Electronic Interview

33.Attitudes can not be observed.
34.Those events which are of long duration can not be observed.
35.There is observer bias. It is not purely objective.
36.If the respondents know that they are being observed, their response
can be biased.
37.It is a costly method.


5.1. History of Beirut restaurant
Beirut, bring the familiar Lebanese street Food to Egypt through street 9 Maadi
gate. use only the authentic Lebanese recipes to create simple, flavorful, tasty
meals and sandwiches.

planning to make the staple of Lebanese cuisine a hero by upgrading it and

modernizing it for a new generation.

ambition is to simultaneously modernize, and upgrade offer - adding

convenience, opening up the menu, and creating a space for customers to
experience warmth and hospitality but in a less formal environment.
Founded: 25 april 2016 .

The number of stuff : 14 , and the managers are the owners.

The type of servise : food take away and home delivary.

5.2. Questionnaire analysis
55 or more 3
35 to 54 4
16 to 34 32
Under 16 1

55 or more 7.50%

35 to 54 10%

16 to 34 80%

Under 16 2.50%

The majority of the sample 80% between 16-34 years and the minority 2.5% under
16 years.

Male 22
Female 18

Female 45%

Male 55%

The majority from our sample males 55% and the minority females 45%

Egyptian 28
American 4
European 4
Other 4


10% 10% 10%

Egyptian American European Other

The majority from our sample 70% from egypt

Are you a regular customer in beirut restaurant ?
Yes 32
No 8



The majority of the sample 80% regular customer in beirut restaurant

and the minority 20% not regular customer in beirut restaurant.

Restaurant environment and service
No. Questions Most % Some % Never %
time time
1 I have to queue for a long time 4 10% 19 47.5% 17 42.5%
2 The restaurant is very clean 38 95% 2 5% 0 0
3 The portion sizes are about right 35 87.5% 5 12.5% 0 0
4 The staff are helpful 36 90% 4 10% 0 0
5 The staff are well presented 39 97.5% 1 2.5% 0 0
6 The general service is good 34 85% 6 15% 0 0
7 The quality of the food is excellent 6 15% 34 85% 0 0
8 The food meets the price value 35 87.5% 5 12.5% 0 0
9 The menu has a good variety of items 29 72.5% 11 27.5% 0 0







1 2 3 4 5 6 7 8 9

some of the time most of the time never

the service of beirut restaurant was of moderately high quality

What grade from 1 to 5 would you give to beirut restaurant ?
1 Star 1
2 Stars 0
3 Stars 1
4 Stars 18
5 Stars 20








1 Star 2 Stars 3 Stars 4 Stars 5 Stars

The majority of the sample 50% five stars

You overall satisfied from beirut restaurant ?
Yes 38
No 2



The majority of the sample 95% satisfied in beirut restaurant

and the minority 5% not satisfied in beirut restaurant.

5.3. Conclusions
1-The results shows that the service of beirut restaurant was of moderately high

2-The results found that the respondents of beirut restaurant are quite satisfied
with the restaurant services.

3-The results found that the respondents have loyalty to beirut restaurant and they
will recommend the services of beirut restaurant to their friends and family.

4-Major regular customers in beirut restaurant equal 80% and the minor equal

5-Major age in beirut restaurant 80% from age 16 to 34.

6-Major gender in beirut restaurant 55% from males and the minor gender 45%
from females.

7-Major nationality in beirut restaurant 70% from egypt.

8-Total satisfied respondents equal 95%.

5.4. Recommendations
Based on the analysis and the findings, the following are recommended
to help improve service performance in beirut restaurant.
1-Increase the restaurant space and open new branches.
2-Increase size of sandwiches and increase food quantity.
3-Add new varieties of food grilled chicks , shish barak , man'oucheh zaatar
4-Add breakfast and diet meal and dessert.
5-Home delivery improvements and reduce the delivery price.

































27-(Andaleeb & Conway, 2006; Dominici & Guzzo, 2010; Hanzaee & Khonsari,

2011; Hasan, Subhani, & Rehman, 2011; Josiam, Sohail, & Monteiro, 2007; Kasim

& Minai, 2009; Kau & Loh, 2006; Tian & Wang, 2010; Tronvoll, 2011; Ueltschy,

Laroche, Eggert, & Bindl, 2007; Voon, 2011; Wall & Berry, 2007; Wong & Sohal,


28-Andaleeb, S. S., & Conway, C. (2006). Customer satisfaction in the restaurant

industry: an examination of the transaction-specific model. Journal of

services marketing, 3-11.

29-Dominici, G., & Guzzo, R. (2010). Customer satisfaction in the hotel industry: a

case study from sicily. International Journal Of Marketing Studies, 2(2), 3-


30-Hanzaee, K. H., & Khonsari, Y. (2011). A review of the hedonic and utilitarian

values on customer's satisfaction and behavioural intentions (a case study :

customers of fasham restaurants). Interdisciplinary Journal Of Research In

Business, 1(5), 34-45.

31-Hasan, S. A., Subhani, M. I., & Rehman, A. (2011). Relationship between varios

employee performance recognition techniques and customer satisfaction:

evidence from the restaurants industry of pakistan. European Journal Of

Social Sciences, 26(3), 318-322.

32-Josiam, B. M., Sohail, S. M., & Monteiro, P. A. (2007). Curry cuisine:

perceptions of indian restaurants in malaysia. An International

Multidisciplinary Journal Of Tourism, 2(2), 25-37.

33-Kasim, N. A. A., & Minai, B. (2009). Linking CRM strategy, customer

performance measures and performance in the hotel industry.

Intrernational Journal Of Economics And Management, 3(2), 297-316.

34-Kau, A.-K., & Loh, E. W.-Y. (2006). The effects of service recovery on consumer

satisfaction: a comparison between complainants and non-complainants.

Journal Of Services Marketing, 20(2), 101-111.

35-Tian, R. G., & Wang, C. H. (2010). Cross-cultural customer satisfaction at a

chinese restaurant: the implications to china foodservice marketing.

International Journal Of China Marketing, 1(1), 60-72.

36-Tronvoll, B. (2011). Negative emotions and their effects on customer

complaint behaviour. [Research paper]. Journal Of Service Management,

22(1), 111-134.

37-Ueltschy, L. C., Laroche, M., Eggert, A., & Bindl, U. (2007). Service quality and

satisfaction: an international comparison of professional service

perception. [Research paper]. Journal Of Services Marketing, 21(6), 410-


38-Voon, B. H. (2011). Service enviornment of restaurants: findings from the

youth customers. Journal Of Asian Behavioural Studies, 1(2), 45-56.

39-Wall, E. A., & Berry, L. L. (2007). The combined effects of the physical

enviornment and employee behaviour on customer perception of 4-40-

restaurant service quality. Cornell Hotel And Restaurant Administration

Quarterly, 48(1), 59-69.

40-Wong, A., & Sohal, A. S. (2006). Understanding the quality of relationships in

consumer service: a study in a retail enviornment. [Research paper].

International Journal Of Quality And Reliability Management, 23(3), 244-



Customer Satisfaction Questionnaire
We are constantly striving to provide a good food service. This survey is part of the process. Please help
us to do this by completing this questionnaire.

Please supply the following details about yourself:

Age: under 16 16-34 35-54 55 and over

Sex: male female

Type of work: managerial administrative clerical Other

Nationality: Egyptian American European Other

1. Are you a regular customer in a beirut restaurants?



2. Please tick as appropriate

Most of the time Some of the time Never

I have to queue for a long time

The restaurant is very clean

The portion sizes are about right

The staff are helpful

The staff are well-presented

The general service is good

The quality of the food is excellent

The food meets the price value

The menu has a good variety of items

3. What grade from 1 to 5 would you give to beirut restaurants?

1 2 3 4 5

4. What improvements and comments, if any, would you like to see in the variety of foods on offer?


5. You overall satisfied from beirut restaurant?



Thank you for completing this questionnaire. Results will be treated in confidence