Customer Commitment and Emotions - Assignment Example

Question1 Customer commitment Customers are the pillars of any organization (Gupta and Zeithaml 2006). Lack of customers implies that the organization has no profits and no market value. Literature has detailed several customer metrics for instance customer satisfaction, loyalty, commitment and retention that have profound effects on the financial performance of an organization. Commitment is particularly a vital ingredient in the establishment of long-term relationships with customers. According to Walter et al. (2002) maintaining customer commitment does pay off in willingness to recommend and refer as well as customer retention and increased profits. Commitment has been used under the Interaction Approach of marketing. In business terms, commitment refers to an adaptation process which results from the parties’ intention to engage in a relationship that is founded on positive attitudes towards each other. Gustafsson, Johnson and Roos (2005) believe that customer commitment is beyond creation of social bonds and customer satisfaction. In actual fact, satisfaction and social bonds are simply variables among others that define complex relationships based on commitment. Committed relationships are developed through mutual support of both parties mainly through reconciliation of their personality traits. The key drivers of establishing commitment in customers especially in marketing are adequate provision of resources, avoiding taking advantage of each other, maintaining communication and maintaining standards about value. Commitment keeps customers on track and influences repeated purchase through creation of bias in the information process. How to increase customer satisfaction and loyalty to products or services Academic research indicates that customers tend to become loyal to companies that produce products and services that meet their needs. This creates a high level of satisfaction which ultimately builds loyalty. Even so, the level of satisfaction greatly determines whether a customer will remain loyal or not. Greenwell (2000) states customers who are completely loyal to a product or service are six times more likely to repurchase the product or service than those who are less loyal. Of concern for many companies is ways to keep customers totally satisfied. According to Walter et al. (2002) companies whose products and services are of reasonably good quality have the potential of creating loyal and committed customers. Increasing quality of products and services becomes a critical question for market researchers who intend to establish committed and loyal relationships with their customers. Gupta and Zeithaml (2006) posit that the first step is to understand what your customers exactly look out in your products or services. The most inherent way to achieve this is by listening to customer which is widely used using Customer-Satisfaction indices. The fundamental principal behind these indices is to survey the level of customer satisfaction and thereafter plotting the results to plot ways of improving products and services in order to ensure maximum customer satisfaction. Feedback systems ensure early detection of loopholes and thus subsequent resolution through customer questions, complaints and comments. Market research is also paramount in understanding customer needs. It also serves to identify reasons that might customers to defect from a product. Training front-line personnel (those with directs contact with customers), is an effective way of enhancing customers’ experience with the company thus loyalty. In addition, companies should always take advantage of strategic activities that will actively engage customers in the running of business. For instance, South-West fliers has benefited from committed customers by regularly inviting frequent fliers in first screening of flight attendant. Greenwell (2000) maintains that satisfied customers can be turned into frustrated customers and in the same magnitude frustrated ones can be become loyal. A survey conducted by British Airways showed that majority of customers who encountered problems with the company and aired their complaints did not defect. Such customers actually do companies a big favor and they help them stay in business. Trusting customers also builds trust and commitment in the marketing relationship. Service policies that assume customers are honest and only occasional crooks are capable of dishonest acts set a good pace for lasting relationships. First request services facilitate customer loyalty towards a product or service. Naturally, customers expect to contact a company once to have their problems solved. In disguise, this means that the customer expects the company to remember his order during subsequent visits. Therefore, it is important to keep close contact with customers via e-mails, new-letters, postcards or note-cards and phone calls. Simple etiquette like use of the words than you and please greatly influence customer’s experience. Types of commitment Instrumental commitment This kind of commitment occurs when the customer is guaranteed and fully convinced that what their company offers has no alternative; that is to mean that no other company can do a better job of satisfying their needs. Their latent and express needs are sufficiently supplied. To ensure instrumental commitment, companies need strategically design their products and services in a manner that stands out from that of rivals. For instance, a customer will become loyal and committed to a bank that offers the best products, has the best reputation and offers the lowest interest rates. Relational commitment This basically occurs when customers become emotionally attached to the company’s people. The emotional tie can be formed with the generalized company, work group or individual employees. The most common illustration of relational commitment is when a customer talks of ‘my banker’ or ‘my mechanic’ or ‘my hospital’. This is a mere expression of emotional attachment. Buttle (2004) asserts that relational commitment is achieved by employees who go out of their way to providing customers with maximum satisfaction. They are responsive, empathetic, competent and reliable and in addition always seek to make friends in at-risk customers. They take issues and problems of customers at hearts and deal with them at a personal level. Value-based commitment This occurs when the customer’s values become aligned to those of the company. Value in this case refers to the core beliefs and norms that transcend context and serve to direct and organize behaviors and attitudes (Buttle 2004). Examples of core beliefs held by customers include child-centeredness, independence, child protection, honesty and environmental consciousness. Many of these beliefs reflect cultural norms. Thus, customers tend to become committed to organizations that share these beliefs. Companies that have been mentioned in environmental destruction or in child labor have placed at risk in terms of losing customers. Research supports the argument that there is a hierarchical relationship from values, to attitude, to intention of purchase and finally to purchase. Value-based commitment inherently necessitates a company’s Social Corporate Responsibility (CSR) activities. Measuring commitment According to Cengiz (2010) measuring customer commitment is not merely observing the level of happiness of customers but instead monitoring the level of competitive advantage of the company as well as profitability. It should be a company’s prerogative to routinely monitor and evaluate the level of customer commitment in respect to relationships, services and products. Measuring enables management to identify areas that need improvement, if complete changes are required and to assess if changes have led to improvement. Survey on customer commitment should be designed for all customers alike. That is to mean that all customers should be given an opportunity to participate in the exercise as opposed to market research surveys which rely on sample representatives. Feedback may be required especially to specific problems requiring solutions. The participation of the participants in future surveys is required and thus contacts should be stored safely. In addition, the survey should be conducted as often as possible so as to track improvement or decline of customer commitment. The purpose of the exercise which is to collect information, communicate the organization’s opinions and desires as well as t solve specific problems should be effectively communicated to the customers (Cengiz 2010). References Buttle, Francis. Customer realtionship management. Oxford: Elsevier Butterworth-Heinemann, 2004. Cengiz, Emrah. "Measuring customer satisfaction: Must or not?" Journal of Naval Science and Engineering, 6(2), 2010: 76-88. Greenwell, Lori. The strategic edge. Colorado: American Business Advisors Inc., 2000. Gupta, Sunil, and Valarie Zeithaml. "Customer metrics and their impact in financial performance ." Marketing science, 25(6), 2006: 718-739. Gustafsson, Anders, Michael Johnson, and Inger Roos. "The effects of customer satisfaction, relationship commitment dimensions, and triggers on customer retention." Journal of marketing, 69, 2005: 210-218. Walter, Achim, Thilo Mueller, Gabriele Helfert, and David Wilson. Delivering relationship value: Key determinant for customer commitment. ISBM Report 8-2002, Pennynsylvia state university, 2002. Question 2 The role of emotions in marketing Emotions play a major role in shaping the overall customer decision making process. Emotions operate at different stages of the customer’s decision making process and perform different roles. Bagozzi, Gopinath and Nyer (1999) define emotions as The mental state of readiness that arises from cognitive appraisal of events or thoughts; has phenomenological tone; is accompanied by physiological processes; often expresses physically; and results in specific actions to affirm or cope with the emotion, depending on the nature and meaning for the person having it. Although emotions and moods have been used synonymously in the past, there is clearly a dustinction between the two terms. Unlike emotions, moods are longer lasting, of lower intensity and unitentional.in additon, while moods are not associated with thoughts of explicit actions, emotions tend to go hand in hand with action tendencies. In this regard many markting reseachers have explored the roles that emotions have played in marketing in marketing activities and their theoretical underpinnings. The mediating role of emotions in customer loyalty following recovery DeWitt, Nguyen and Marshall (2008) posit that effective handling of compalits is a cornerstone to establishment of solid relationships with clients. Successful recovery efforts reinforce the relationship while poor recovery foster negative effects of the failure and might lead to customer’s loss of trust towards the organization. the cognitive apparisal theory attempts to explain the mediating role of trust and emotions between justice perception and customer loyalty. Cognitive appraisal basically refers to the process in which an individual evaluates whether his/her encounter whithin a given envirnment or context is relevant to his/her well-being. The cognitive stage in the service recovery context occurs during the stage of resolution of the specific complaint. As a result, the outcomes of the process determine the degree of trust and emotions. Emotional response depends on a number of factors including whether the outcome of a judgment has been attributed by impersonal circumstances, by others or by oneself. For instance, when a customer percieves that a recovery process is unfair, his emotions are likely to intensify moreso if the damage has been caused by the service provider. Research on customers’ negative and positive emotions indicate that a recovery process that is successful often prompt positive emotions like pleasure and happiness and simultaneously reduce negative emotions such as rage and distress. Similarly, poor recovery can diminish positive emotions and exacerbate negative emotions. Emotions and brand attachment As brand attachment/connection is inccreasing important, companies are increasingly developing mechanisms of reinforcing customer attachment to their brands. Researches across the globe have clearly agreed to the argument that brand attachment is only achieved through emotions. Mario and Shaver (2007) maintain that such connections are essential ingredients in creating customer loyalty and ultimately boosting a company’s financial performance. For instance, most cosmetic companies have for many years communicated to their customers that using their porducts will make them more attractive which paints a picture of ideal vision in the minds of these customers and in turn prompts them to buy the products. Of concern for marketers is which strategies to use in strengthening emotional brand attachment. A key concept that has been used to answer this question is the self-congruence which refers to a fit between brand personality/image, and consumer’s self. Self-congruence has been proven to enhance behavioral, attitudinal and effective customer responses to the brand. The emotional component in the customer-brand relationship is of paramount importance. The feeling generated by a brand has the potential to differentiate it from others. In reality, there are very few brands that generate such feelings. There are three main factors that enhance the emotions of a individual towards a given brand: product involvement, self-consciousness and self-esteem. A customer’s level of involvement with an action, object or situation determines the extent to which he believes or percieves it to be personally relevant. Additionally, involvement can be defined in terms of the customer’s level of arousal or interest for a product or service. Once an individual percieves a commodity as personally relavant, then motivational state of his mind id activated which subsequently drives his affective (emotional) responses as well as cognitive behavior (information search, comprehension and attention). Self-esteem is defined as the perception or evaluation of one’s worth as a human being. Individuals with high self esteem regard themselves highly and are positive to imperfections while low esteemed persons have an unfavorable definition of self. In the context of marketing, consumers buy commodities which are congruent with ideal or actual sle-view. Public self-consciousness on the other hand refers to the concern of an individual’s self-appearance and self-image in public. Customers will tend to emotionally attached to products and services that generally shape their public outlook (Lucia, Krohmer and Hoyer 2011). The role of emotional gratitute in relational marketing Palmatier et al. (2009) proposes that the emotional appreciation of benefits, also known as gratitude plays a fundamental role in contructing relational marketing. Since the parties benefit from each other ther is often a desire to reciprocate the favor. Investments geared towards relationship marketing such as personalized notes, gifts and meals generate a customer’s feeling of appreciation which in turn influence them to purchase the product or service again which ultimately results to the sellers enhanced performance. Scholars and reserachers across various disciplines have agreed that one develops a ingrained pressure to give back when afforded a certain benefit and failure to do so might lead to accumulated guilt. As a result, an emotional rewards system develops where the parties feel harwired to repay the providers of the benefits. Aafke (2004) associates the concept of gratitude with an imperative force that compels customers to pay back to the company as part of completing the reciprocity chain. There are two key aspects underlying the concept of gratitude: behavioral and affective (Barlett and David 2006). Under the affective aspect, individuals feel honored for being the recipients of an intentionally rendered benefit and thus feel an obligation to repay. The behavioral component on the other hand is concerned with the actions that develop after the feeling of gratitude. It therefore represents the actual act of giving in return so as to continue contributing to the ongoing construction of the relationship. Even with this knowledge, majority of marketers are still ignorant of the role of emotional gratitude and they have basically relied upon reciprocal behavior. In that case, Emmons (2004) proposes that the concept of gratitude should be viewed as an emotional core and its theoretical conceptualization will produce a strong marketing relationship between the marketer and his customers. References Aafke, Komter. "Gratitude and gift exchange." In The psychology of gratitude , by Robert Emmons and Michael McCullough, 195-213. New York: Oxford University press, 2004. Bagozzi, Richard, Mahesh Gopinath, and Prashanth Nyer. "The role of emotions in marketing." Journal of the Academy of marketing science, 27(2), 1999: 184-206. Barlett, Monica, and Desteno David. "Gratitude and prosocial behavior." Psychological science, 17, 2006: 319-325. DeWitt, Tom, Doan Nguyen, and Roger Marshall. "Exploring customer loyalty following service recovery; The mediating effect of trust and emotions ." Journal of service research, 10(269), 2008. Emmons, Robert. The psychology of gratitude. New York: Oxford University press, 2004. Lucia, Malar, Harley Krohmer, and Wayne Hoyer. "Emotional brand attachment and brand personality: The relative importance of the actual and ideal self." Journal of marketing, article post print, 2011. Mario, Mikulincer, and Phillip Shaver. Attachment in adulthood: Structural, dynamic and change. New York: Guilford Press, 2007. Palmatier, Robert, Cheryl Jarvis, Jennifer Bechkoff, and Frank Kardes. "The role of customer gratitude in relationship marketing." Journal of marketing, 72, 2009: 1-18. Read More