Business Success Is Customer-Driven - Essay Example

Transportation is highly in demand today for two major purposes: business and leisure. The National Summary of U.S. flights for 2007 pegs the number of airline passengers at 660 million. By January 2008, this figure has risen to 679 million (Bureau of Transportation Statistics, 2008). In 1995, the average domestic airfare was $288 but by 2007, the average price has reached $328 (Bureau of Transportation Statistics, 2008). Since air travel is relatively more expensive than other modes of transportation, it is crucial for airline companies to deliver excellent customer service and satisfy their customers. This is to prevent the loss of current business and attract new customers ones at a minimal cost.       This study explores the relationship between customer service, customer satisfaction and the factors that encourage customers to choose and remain with specific airlines. In particular, this study evaluates the customer satisfaction among North American airline passengers and the quality of customer service of corresponding airlines.       A survey was used to gather the feedback of XYZ airline passengers at NYC airport. The survey items focused on the eight factors designated as independent variables. The independent variables considered were X1 – Delays (external forces such as weather), X2 – Culture (company), X3 – Prices/Frequent Flyer Programs, X4– Flexibility, X5 – Schedule, X6 – Employees, X7 – Quality of Product/Services (comfort), and X8 – Security. Business Success is Customer-Driven       The importance of customer service and the corresponding customer satisfaction cannot be undermined. Ventures can succeed only if there are customers. Since they are the ones who keep businesses running by bringing in profit and supplying feedbacks, it is essential to keep them satisfied. Customer satisfaction, also called user satisfaction, is defined simply as “a qualitative measure of performance as defined by customers, which meet their basic requirements and standards” (TechTarget, 2007). This definition has two main implications. First, customer satisfaction is dependent on the performance of the product or service. Second, measuring customer satisfaction involves knowledge of the basic requirements and standards of the customers.       In relation to customer satisfaction, customer service is a term that characterizes what happens when the customer encounters the business (The Times Newspapers Ltd, 2008). Good customer service is significant because gaining a new customer can cost as much as five times the amount of keeping an existing one (The Times Newspapers Ltd, 2008). In short, convincing a new customer to avail of a product or a service is more expensive than having current ones return and buy again. This is where market research comes in. The Royal Statistical Society (n. d.) characterized market research as “a means for providers of goods and services to keep in touch with the needs and wants of those who buy and use the good and services”. Based on this definition, customer service and customer satisfaction are invariably connected and market research is a way of looking into and strengthening this connection.       Referring to an interview with Dianna Booher, president of Booher Consultants, Inc., Reh (2008) wrote that customer service is more important than ever. This is because “customers have more options than ever before” and the competitive advantage now lies on the “ability to keep customers and repeat business” (Reh, 2008). Today, customer service has to go beyond good; it has to be “superior and unexpected”. Thus, good results from customer satisfaction research are reflections of excellent customer service.       To find out whether the wants and needs of the customers are satisfied, companies have to ask them (Reh, 2008). There are several ways of doing this including personal interviews, through phone calls, through snail mail or through e-mail. Most often, customer satisfaction is qualified through surveys (Tanur, 1996). According to Reh (2008), customer satisfaction surveys have to be conducted while the experience with a product or of a service is still fresh in their minds. Consideration of the time factor is important because this ensures that they answer precisely and accurately.       Given that the feedback of customers is vital to the smooth functioning of business, it is necessary to define the questions that will be asked in customer satisfaction surveys. Reh (2008) stated that the essence of a customer satisfaction survey is summed up by the question “Will you buy from me again?” However, he also pointed out that it is easy to get an affirmative answer to this question but it is not as easy to test the sincerity of a customer who answers yes. Thus, other questions have to be asked to be able to predict the collective behavior of customers and to gather information on what to improve, what to change and what to eliminate altogether. Survey Research: Maintaining Business       According to Hoepfl (1997), in general, there are two basic research paradigms: quantitative and qualitative. Qualitative research, also called phenomenological inquiry, uses a naturalistic approach in specific contexts. On the other hand, quantitative research, also called logical positivism, utilizes experiments and quantities to test hypotheses. While quantitative research can result to the discovery of causal relationships, predictions and generalizations, qualitative research can result to “illumination, understanding, and extrapolation to similar situations.” Thus, these two types of researches lead to different kinds of knowledge. Despite conflicting ideas regarding the use of these research methods, Hoepfl (1997) pointed out that quantitative and qualitative methods can be combined to produce an effective research project.       Trochim (Trochim, 2006) provided a detailed argument on how little qualitative and quantitative data differs. While quantitative data is typically in numbers and qualitative data is typically in words, he wrote that “all qualitative data can be coded quantitatively” and “all quantitative data is based on qualitative argument” (Trochim, 2006). For instance, in the survey conducted as a part of this study, the five choices were “Strongly Agree” coded as 1, “Agree” coded as 2, “Agree Somewhat” coded as 3, “Disagree” coded as 4, and “Strongly Disagree” coded as 5. Thus, numbers can represent qualitative descriptions. This helps a lot when it comes to encoding data. The bottom line, Trochim (2006) stated, is that good research uses both the qualitative and the quantitative.       How important are surveys to businesses? According Nelson (2007), marketing survey research regarding public opinion is the most efficient way of collecting information from a large group of people. That is, the researcher collects opinions, perception and observations from a population sample to derive generalizations. In addition, Kenkel (n. d.) asserted that overall, conducting a customer satisfaction survey is the easiest means of developing an actionable strategy, which contributes to the improvement of repeat customer sales.       Cacioppo (2000) listed down the following as the most basic objectives of a customer satisfaction surveying program. First, the expectations and requirements of all the customers must be understood. Second, how well the company and its competitors satisfy such expectations and requirements must be determined. Third, service or product standards must be based on the findings. Fourth ,trends must be examined for timely and appropriate action. Lastly, how well the company achieved its goals must be evaluated.       Three fundamental questions must also be asked before designing the appropriate customer satisfaction survey (Cacioppo, 2000). The first question is “How will the information gathered be used?” This question is concerned with the improvement of the service or the product. The second question is “How will the information gathered lead to action inside the organization?” It focuses on the actions that will be taken by the organization such as the implementation of new marketing strategies. The third question is “How the information should be used to keep existing customers and buy new ones?” This question involves brainstorming and formulation of innovative programs to maintain the business and keep it growing.       After gathering information from customers, the question of what to do with the data remains. Before using the data for improving the product or service or for implementing new strategies, they have to be processed first. In this study, the survey was conducted to test hypotheses regarding the impact of eight factors on customer service and customer satisfaction with airlines.        Any kind of hypothesis testing, whether in the natural sciences or in the social sciences, involves statistical analysis (Stat Trek, Inc., 2007). Statements of both null and alternative hypotheses are required. For instance, regarding the Delay factor (X1) in air travel in the survey conducted, the null hypothesis can be stated as “Travel delay does not affect customer satisfaction.” The alternative hypothesis can be stated as “Travel delay affects customer satisfaction.” Afterwards, an analysis plan has to be formulated and implemented. An analysis plan involves setting the significance level and determining the test method for analysis (Stat Trek, Inc., 2007). After establishing the significance level and deciding what test method to use, statistical analysis programs such as SPSS (Statistical Package for the Social Sciences) can be used to calculate the test statistic. The null hypothesis is rejected and the alternative hypothesis is accepted if the test statistic probability is less than the significance level (Stat Trek, Inc., 2007).       Based on the analysis and interpretation of the survey data gathered in this study, the factor or the combination of factors that affects customer service and satisfaction with airlines can be determined.       Overcoming the Limitations of Survey Research       All research methods have their own strengths and limitations. Survey methods, in particular, are advantageous because they are inexpensive and they collect data regarding a number of variables from large groups of people (Sudan-American Foundation For Education, Inc., n. d.). Such data can then be aggregated and analyzed using the appropriate quantitative method. If combined with proper sampling, survey results can be generalized to large populations. On the other hand, survey limitations involve the validity and reliability of the responses; that is, respondents may not be telling the truth (Sudan-American Foundation For Education, Inc., n. d.).       In this study, the primary data-gathering method was a survey. One limitation of the survey method used was the sampling. The goal was to research customer satisfaction and customer service among North American airline passengers. In particular, eight factors were integrated into ten survey items and the survey was designed to elicit responses regarding customer satisfaction and customer service. However, no sampling was implemented. Sampling reduces the risk of a distorted view of the population (SAS Institute, Inc., 2008) and ensures that a population of interest is adequately represented (Nelson, 2007). The American Association for Public Opinion Research (AAPOR) stated, “In a bona fide survey, the sample is not selected haphazardly or only from persons who volunteer to participate” (American Association for Public Opinion Research, 2007). Thus, some form of random or probability sampling has to be employed and such sampling should be well grounded in the statistical and probability theories.        Given that no sampling was performed in this study, factors such as age groups, socioeconomic status, and purpose of travel were not considered. These factors could have affected the results of the survey. For instance, a wealthy person may be more concerned about the quality of products and services (X7) than the prices (X3). A person who is traveling for business may be stricter about the schedule (X5) than a person who is going on a vacation. Thus, sampling can improve the research design used in this study. Moreover, since the survey items pertain to the airline industry in general (i.e., “The over-all cost of airline travel has an impact on my satisfaction”) and since it was the primary objective of this study to evaluate the customer satisfaction among North American airline passengers, customers of airlines other than XYZ company should also be taken into consideration.       Another way of improving the research design of this study is by revising the questionnaire design and pilot testing it before the actual implementation of the survey. According to Nelson (2007), the survey questionnaire must be designed to obtain objective, unbiased results. The questions should not be leading, they should not be threatening and they should be organized in a logical manner. Nelson (2007) suggested that pilot testing be executed first with a small sample “to reduce the sampling and response error once the survey is given to the true sample.”       An effective research design does not stop with the gathered data. Such data need to be processed statistically to obtain results significant to the business. Thus, in this study, the results of the survey still have to be subjected to statistical analysis. The choice of statistical tests has to correspond with the sampling methods used and has to prove or disprove the hypotheses already formulated.       Make Money, Live Ethics       As was already established, the success of any business, in this case, the airline business, is dependent on the customers. It is important to gain profit but it is equally important that the customers be treated not merely as profit mines but as individuals with rights. Treating customers purely as objects can have severe repercussions including loss of business.       Borrowing from Trochim, Lapolt (1997), defined evaluation as “the systematic acquisition and assessment of information to provide useful feedback about some object”. While this may seem simple, it becomes complicated when the “people” factor is considered. People design ways to evaluate a program, a product or a service. People evaluate. The results of an evaluation affect the perception of people. This holds true for research on customer satisfaction and customer service.       The Economic & Social Research Council (ESRC) provided a comprehensive Research Ethics Framework (REF). Ethical frameworks for research on human subjects have been formulated such as those that address biomedical research. However, according to the ESRC (Economic & Social Research Council, n. d.), such frameworks may be inappropriate when used in the social sciences. Thus, the ESRC (n.d.) proposed six key principles that have to be followed when researching on human subjects. First, the integrity and quality of the research should be ensured. Second, both research staff and subjects should be fully informed about the purpose, methods, possible uses, and risks of the research. Third, confidentiality and anonymity must be respected. Nelson (2007) knew this well and he pointed out that during data collection, the subject must be assured that anonymity and confidentiality are both protected. Fourth, the participants must voluntarily participate and not be coerced in any way. Fifth, harm to the respondents must be avoided. Sixth, conflicts of interest or partiality must be explicit.       According to the AAPOR, among the best practices in conducting a quality survey is the maximization of cooperation or response rates within the limits of ethical treatment of human subjects (American Association for Public Opinion Research, 2007). This can be done by informing the sample individuals in advance, offering monetary or non-monetary incentives to encourage participation, and sending reminders or follow-up calls to those who do not respond initially. The AAPOR (2007) stated, “Unless the respondent explicitly requests otherwise, or waives confidentiality for specified uses, one should hold as privileged and confidential the identity of individual respondents and all information that might identify a respondent with his or her responses”. Upholding and maintaining the confidentiality of the identities of the respondents and their respective responses should also be instilled in interviewers and other research staff. Verification of information should not result to outside disclosure. Consequently, “individual respondents should never be identified or identifiable in survey findings” (American Association for Public Opinion Research, 2007).       In summary, the two main ethical issues that need to be addressed when conducting a survey are confidentiality and informed consent (Kelley, Clark, Brown & Sitzia, 2003). This right to confidentiality, together with legal requirements on data protection, must always be respected. Moreover, the participant should be informed about the aims of the survey, and his or her consent to participate must be obtained and recorded.       The six key principles identified by the ESRC and the best practices recommended by the AAPOR have to be followed in customer satisfaction survey research.  In this study, it was already noted at the beginning of the survey, “Surveys are anonymous and data is being used for school purposes”. Thus, the respondent was assured immediately of identity protection. He or she was also informed about the purpose of the survey. It can be gathered from this that this study followed the basic ethical principles in research. Factors that Define Customer Satisfaction in the Airline Business       A report published by The Business Journal of Milwaukee (2002) discussed why the customer satisfaction of the American people with airlines reached its peak in five years despite longer waiting times and more stringent security. According to the report, improvement of customer satisfaction stemmed from less crowding at the airports. After the September 11, 2001 attacks, there was a decline in the number of passengers, resulting to less-crowded planes and more time and attention for each passenger from flight attendants. Moreover, to fill vacancies, airlines had to slash fares and offer bargains. Based on this report, service quality and airfare affordability are major factors that affect consumer satisfaction.       An annual survey of the world’s best airlines was also conducted in 2005. Administered by the London-based consultancy Skytrax, people were asked to grade airlines through the year, with 12 million responses from citizens of 94 countries (Anderson, 2005). The entire travel process, starting from booking a ticket to arriving at the destination, was considered. Efficiency of check-in and boarding procedures, handling of delays, and rapport with the gate crew were evaluated. The onboard amenities, conditions of the planes, and service while traveling were also assessed. Cathay Pacific of Hong Kong ranked first over-all and according to Skytrax, Cathay was praised not only for its first-class and business-class service; it was also able to satisfy its customers in the cheap seats. From the results of the survey, it was also speculated that cultural factors might be at play since respondents always talk about food and legroom. The only factor that counts when it comes to buying tickets, however, is the price. According to Anderson (2005), what airline customers may be trying to say is “good service is nice but we’ll put up with a lot if it means a cheaper seat.”       Just recently, the J.D. Power and Associates 2007 North America Airline Satisfaction Study evaluated U.S. network carriers (Houston Business Journal, 2007). According to the study, Continental Airlines Inc. had the most satisfied customers. Delta Air Lines Inc. came in second.  Customer satisfaction was evaluated in seven areas: reservations, check-in, boarding/deplaning/baggage, aircraft, flight crew, in-flight services, and cost and fees.       There were eight variables considered in this study namely X1 – Delays (external forces such as weather), X2 – Culture (company), X3 – Prices/Frequent Flyer Programs, X4 – Flexibility, X5 – Schedule, X6 – Employees, X7 – Quality of Product/Services (comfort), and X8 – Security. Based on the previous examples, it is established that X3, X6, and X7 are indeed important factors in gauging customer satisfaction. That is, airfare, the manner of airline employees, and the quality of product/services either in airports or in airplanes, are three major variables that affect customer satisfaction. In contrast, the other five variables need clearer definitions to ensure their effectiveness in measuring customer satisfaction. X1 – Delays initially referred to external forces such as weather. However, airline companies cannot predict or defy the weather. Therefore, the definition of X1 – Delays can be clarified as “how the airline company responds to external factors that affect flights, i.e., weather”. X2 – Culture, based on the 2005 survey by Skytrax, can be defined as “how the airline company caters to the food preferences and spatial needs of its customers”. X4 – Flexibility and X5 – schedule can be combined into a single factor defined as “how flexible airline companies are in allowing transfer of reservations, travel slots, and how efficient they are in scheduling flights”. X8 – Security was not directly mentioned in the examples previously provided. Considering security in this study is advantageous since it can provide a new outlook on how the perception of safety and security affects the satisfaction of customers who travel by air.       Data can be classified either as primary or secondary. Primary data are collected first-hand by the researcher whereas secondary data are collected by other researchers in previous studies and are “re-used” by the researcher (Culbert, 2004). The aforementioned surveys are sources of secondary data. Some of the independent variables needed clarification but in general, the variables chosen for this study were suitable for testing the research hypotheses, as demonstrated by the previous studies given. [1. See writer’s note on this.]       Sound Reasoning: Sound Research       Through the definitions presented and the clarifications made in the previous sections, the sound reasoning of this study was established. The correct premises for the study were ascertained by researching previous studies, which had the same purpose in mind: how customer satisfaction and customer service affects the choice of airlines. Testing connections with assumptions was done by conducting a survey and testing the hypotheses. The hypotheses formulated revolved on which factor or which combination of the eight factors has a strong or weak impact on customer satisfaction.  Claims were made on whether a factor or a combination of factors had significant impact on customer satisfaction. The truth or untruth of such claims can be demonstrated through statistical testing. Afterwards, generalizations can be formulated. Such generalizations should be verifiable by further studies.       The process undertaken in this study is akin to the methodology implemented by Subroto (2003) in the study entitled “Effects of management commitment on service quality to increase customer satisfaction of domestic airlines in Indonesia”. One of the research hypotheses stated that the level of customer satisfaction or dissatisfaction was differentiable by “a) customer’s perception of service quality”, “b) price”, “c) situation”, “d) personality” and “e) conformity between service quality and external communications” (Subroto, 2003). Survey research was used to test the hypotheses and explain causal relationships. Samples consisted of customers from four domestic airline companies. The data gathered were subjected to statistical analyses such as Regression Analysis, Factor Analysis, Discriminant Analysis, and Path Analysis at a significance level of 0.05. The study concluded that rather than price, customer perception of service quality, conformity between service quality and external communications, and situation (on time performance) were the differentiating factors affecting customer satisfaction. Some of the recommendations of the study are as follows.  Enhancing the quality of service can result to enhanced customer satisfaction. Airline companies have to keep the promises they make through external communications (promotional activities). Managers and leaders should promote the people dimension to ensure management commitment to service quality.       The aforementioned research by Subroto (2003) proved that this study has sound reason. However, improvements can still be made on the research design. As already pointed out, sampling and statistical analyses can be implemented to ensure the quality of this study. Should this study reach the level of journal publication, it is best to publish it in business journals. Such business journals include the journals referred to in this paper: the Houston Business Journal and The Business Journal of Milwaukee. Because this study involves customer satisfaction and airlines, it can be helpful to airline companies seeking to improve their services and to businesses aiming to improve the level of satisfaction of their customers.       References American Association for Public Opinion Research. (2007). Best Practices for Survey and Public Opinion Research. Retrieved April 21, 2008, from http://www.aapor.org/bestpractices Anderson, G. T. (2005, June 7). Worlds best: Top 10 airlines named. Retrieved April 20, 2008, from CNNMoney.com: http://money.cnn.com/2005/06/02/pf/goodlife/best_airlines/index.htm Bureau of Transportation Statistics. (2008). Airline Activity. Retrieved April 21, 2008, from RITA-BTS (Research and Innovative Technology Administration - Bureau of Transportation Statistics): http://www.transtats.bts.gov/ Cacioppo, K. (2000). Measuring and Managing Customer Satisfaction. 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Retrieved April 20, 2008, from Statistics and Probability: http://stattrek.com/AP-Statistics-4/Hypothesis-Testing.aspx?Tutorial=Stat Subroto, B. (2003, January 1). Effects of management commitment on service quality to increase customer satisfaction of domestic airlines in Indonesia. Retrieved April 21, 2008, from AllBusiness:A D&B Company: http://www.allbusiness.com/public-administration/national-security-international/468954-1.html Sudan-American Foundation For Education, Inc. (no date). Strengths and Limitations of the Survey Method. Retrieved April 21, 2008, from Methods for Social Researchers in Developing Countries: http://srmdc.net/chapter10/19.htm Tanur, J. M. (1996). Measuring Customer Satisfaction: More on Corporate Surveys as Practice. Retrieved April 20, 2007, from www.lifescapes.org: http://www.lifescapes.org/Papers/measuring_customer_satisfaction.htm TechTarget. (2007). Customer Satisfaction. Retrieved April 20, 2008, from Bitpipe.com: http://www.bitpipe.com/tlist/Customer-Satisfaction.html The Business Journal of Milwaukee. (2002, May 20). Report: Customer satisfaction with airlines soars. Retrieved April 20, 2008, from http://www.bizjournals.com/milwaukee/stories/2002/05/20/daily1.html The Times Newspapers Ltd. (2008). The Importance of Excellent Customer Service. Retrieved April 20, 2008, from The Times 100: http://www.allbusiness.com/public-administration/national-security-international/468954-1.html Trochim, W. M. (2006, October 20). The Qualitative Debate. Retrieved April 20, 2008, from Social Research Methods: http://www.socialresearchmethods.net/kb/qualdeb.htm                      Read More