Customer Loyalty and Retention - Essay Example

Market Research MRKT 20025 Prepared for Melissa Stevenson, Research Head By Wei-Ying HSIAO, Researcher S0136459 September 2009 Central Queensland University Table of Contents Table of Contents 1 Executive Summary 2 1.0Quantitative Information: 3 1.1Needed Information: 3 1.2 Methods to Obtain the Information: 4 2.0Research Hypotheses 5 3.0Research 6 3.1Research Design: 6 3.2Chosen Questionnaire: 6 3.3Reasons for choice: 7 4.0 Scaling and Questionnaire Measurements: 7 4.1 Sampling Design: 8 5.0 Data Collection: 9 5.1 Key Ethical Issues: 10 6.0 Data Analysis: 10 8.0 Conclusions 13 Bibliography 13 Executive Summary Customer loyalty and customer retention are two major aspects of any hotel business. Hence this paper has touched upon these two aspects of the business and a quantitative research plan has been discussed in this paper. It is now needed to assess the various quantitative techniques that might be in use during the research process. This phase is meant to address the issue of quantitative research that might be undertaken to achieve the said objective. A detailed discussion has been provided within the document. Also the expected replies have been anticipated to be in favour of good customer service, personalisation and also interactions with the customers. The paper has been linked to the various literatures that have been provided in the past and this provides a basis for the entire paper. Various aspects like the scaling methods, the data collection methods, and also the data analysis methods have also been discussed herewith in. 1.0 Quantitative Information: 1.1 Needed Information: Conducting a quantitative research is very beneficial as it allows the researcher to gain a better view of its customers and enables the company to improve its services based on these feedbacks that are gained. The market research attempts to find answer to the following questions: a) What is the relative importance of various factors that customer expect from their hotel stay? b) What is the level of customer satisfaction towards their hotel stay in the chosen hotels? Based on the literature analysis of similar studies in the past, the researcher has identified some of the factors that seem to be important as expectations from the customer. Hence the information that is required at this stage of the research is the customer’s views on the following elements of the business: Consistency of performance Willingness of the hotel staff to provide service Good level of competence in the staff Courtesy, polite and friendly nature of the staff Security and safety Name and Rating Reasonable Room Rates Individual Attention Quality of other tangible aspects like beds, sofas etc. 1.2 Methods to Obtain the Information: For the company to be able to attain this information there are a few methods that the hotels can adopt. The methodology used to conduct the research is referred to as the ‘research methodology’. There are a number of different approaches that are available for research methods. The research approaches used in the study comprises a mixture of both the “phenomenological paradigm” which is also referred to as a “qualitative” approach, and the “positivistic paradigm” also known as the “quantitative” approach (Collis & Hussey, 2003, p. 47). With the positivistic paradigm, the emphasis is on using measurement to find out the relationships between facts and causes of the phenomenon. This is “an essential element of the research process under this paradigm” (Collis & Hussey, 2003, p. 57). This approach is useful when there is a need to conduct statistical analysis (Collis & Hussey, 2003, p. 56). A positivistic approach will be used and the researcher will be independent, will not be influenced by the subject of research, and will take “the role of an objective analyst” (Saunders & Lewis & Thornhill, 2000, p. 85). According to Denzin & Lincoln (cited in Silverman 2005), “qualitative investigators think they can get closer to the actor’s perspective through detailed interviewing and observation” (p. 10). For this phase the hotels can hence obtain the information is a combination of an ‘Action Research’ and a ‘Grounded Theory’. This will prove to be very beneficial as it involves collecting data which can be actionable. Hotels can utilise a few sources of information like focus groups, customer surveys and also personal and telephonic interviews. These will be a few of the possible methods that can be used to gain the above mentioned information. 2.0 Research Hypotheses The research hypothesis has been defined as: “an unproven statement that aims to describe a relationship or phenomenon that is relevant to a business”. It is very clear in today’s competitive scenario that customers are the most important part of the business. Hence it is crucial that the businesses understand the ways in which customers have an interaction with the company. Every single interaction with the customer holds equal importance and a careful note of it can help boost the revenue. There are three pillars of effective customer satisfaction leading to customer loyalty resulting in the return of the customer. These are mentioned as below. 1. Customer Insight “Who are my [the] most valuable customers and how do I [service provider] build relationships with them?” 2. Customer Experience “How do I [service provider] create interactions that maximise the profitability of each relationship?” 3. Customer Alignment “How do I [service provider] structure the organization to deliver on the promise of customer-centricity?” (Peppers & Rogers, 2005). As widely known, customer loyalty is always directly proportional to customer satisfaction as well as customer delight. According to Salvati (1999, p6), till a customer remains satisfied with the service, there are no major chances that he/she may drop or switch to another service provider. It is a fact that in a highly competitive atmosphere just as in the telecom sector, customer loyalty is to be given a deep thought. Moreover, actions are to be taken to have a continuous improvement in the level of customer loyalty. Hence as seen the level of customer loyalty is based on the above mentioned factors and in the case of hotels this acts as a major customer retention aspect as well. 3.0 Research 3.1 Research Design: Quantitative methods deal with numerical data obtained from data collection and analysing those using statistical methods and models to give consolidated results. Data collection can be carried out in many ways such as attitude surveys, secondary research on available data, etc. (Jobber, 2004; Hussey & Hussey, 1997). The chief aim of quantitative research is apply mathematical techniques, hypotheses, theories and tools so as to have quantifiable results. The results are measured and scaled indicating the connection between mathematical models and empirical expressions of relationships that are quantitative in nature (Saunders, et al, 2000). 3.2 Chosen Questionnaire: Three types of research are carried out – online and manual data collection using questionnaire surveys and in depth interviews i.e, a methodological triangulation is used. The reason for this multi-method approach is that, “Triangulation can overcome the potential bias and sterility of a single-method approach” (Hussey & Hussey, 1997, p4). 3.3 Reasons for choice: Questionnaires are one of the best forms of research methods as they are relatively inexpensive and have a potential to gain large number of respondents. In a number of cases this is the only suitable method for research and is a feasible way to reach a number of reviewers large enough to allow statistically analysis of the results. It is known that a well designed questionnaire can prove to be very beneficial to the research and can be used effectively to gather information. Also questionnaires with demographic questions can be used to gain correlation information of the participants (Jobber, 2004). There are a number of steps that are involved in designing a questionnaire and each step of the design process needs careful attention and examining to ensure the best results are gained. The various steps that are involved can include, firstly, defining the objectives of the research. Secondly, determining the sample group, then the questionnaires can be written out and the administered following which the results can be interpreted. 4.0 Scaling and Questionnaire Measurements: Scaling is an essential part of the whole research process. It is generally a part of social research studies. Scaling refers to the act of measuring or ordering responses with respect to traits as well as attributes. A majority of the questions in the survey focus on measuring the attitudes towards different aspects of loyalty, care, convenience, relationship attitude and the like. The questions can be measured on a five-point Likert Scale, one of the several non comparative scaling techniques. Likert scale is generally used when the respondents are required to indicate a degree of agreement or disagreement with each of a series of statements about the stimulus objects. It is used in this research to find out the responses of the customers of the customers regarding room tariffs, promotion materials, e-mail marketing, satisfaction from service etc. Traditionally a five-point scale is used, however many researchers advocate using a seven or nine point scale. This research makes use of a five point Likert scale, ranging from “Strongly Agree” to “Strongly Disagree”. The values represented by the five points are listed below. Value Description 1 Strongly Agree 2 Agree 3 Undecided 4 Disagree 5 Strongly Disagree Table 7.4.2 Likert Five-Point Scale 4.1 Sampling Design: The main sample of this research involves all the individuals that have stayed at the hotels. The main focus will be on the adults who have stayed and their views on the hotels and the services provided by the hotels. The number of participants has not been set and is based on the availability of the individuals. 5.0 Data Collection: Collection methods will involve conducting structured face-to-face and telephone interviews and survey research. The subjects of the interviews need to have been guests at the hotel to participate in the survey and interviews. A list of set questions will be asked in all of the interviews and these will not vary from one person to another. This primary data will then be analysed. The advantage of using a structured interview is that it will help to “clarify doubts, and ensure that the responses are properly understood, by repeating or rephrasing the questions” (Sekaran, 2000, p. 230). It is also an opportunity to request “more in-depth information about specific variables of interest” (Sekaran, 2000, p. 233). However, there are disadvantages to face-to-face interviews as some “respondents might feel uneasy about the anonymity of their responses when they interact face to face with the interviewer” (Sekaran, 2000, p. 230). For the telephone interview, selected participants will be known to the researcher either directly or indirectly. As for the face-to-face interviews, the selection will include a combination of participants known by the researcher or randomly selected people in the local city’s high street. This is why the interview needs to be concise and structured to get people to participate. The researcher will use “personal judgement” to decide which participants are selected for phone interviews (Sekaran, 2000, p. 237). In addition, the interview questions will be “open-ended” to allow participants to respond as they wish. They may feel uneasy if the questions are restrictive to yes or no responses, and this is especially applicable in face-to-face interviews. (Sekaran, 2000, p. 237). The data collected will be studied using “inductive” and “deductive” approaches to develop and theoretical framework. First of all, with the inductive approach information is put together from the data that has been collected. Then using the deductive approach allows the researcher to “turn away from the data and think rationally about the missing information and form conclusions based on logic” (Collis & Hussey, 2003, p. 73). The research questions will be answered on the basis of “an informed academic judgement, adopting the conceptual world-view of a perspective or theory and evaluating competing perspectives and theories through the ‘lens’ of this world-view” (Redman, 2006, p. 29). The outcome of the study is to formulate a grounded theory, based on the phenomenon being studied, which throws light on the issue of consumer trust in banking. Indeed, Collins & Hussey (2003) confirm that a study “illuminates the area under investigation” (p. 73). They also define grounded theory as “one of the interpretive methods that share the common philosophy of phenomenology” (Collis & Hussey, 2003, p. 73). 5.1 Key Ethical Issues: Since the topic is one which requires the customers to respond to how they enjoyed their stay, the ethical implications will not be very high. However the only area where an issue might arise is when the customers need to give in personal information like their names or any other information like why they have had to come to the city or the hotel. Apart from these the level of any ethical issues are very low and the chances that the customers feel violated in any manner is close to nil. 6.0 Data Analysis: The responses from both the surveys – online and manual, were combined to form the final data set. In order to eliminate human errors, the responses obtained from the manual survey were entered into the online questionnaires and stored along with the online responses. The entire response set was exported to Microsoft Excel from the ZAP Survey Software. The data was then analysed using SPSS (Statistical Package for the Social Sciences) version 12. Major analyses including Central Tendencies, Cross Tabulations and Regressions were carried out in SPSS. For a part of the analysis, Microsoft Excel was used, including response rate for the different demographic profiles. The use of the SPSS package allows for perfection in terms of the statistics that have been collected. Using the SPSS programs allows eliminating human errors that might occur while calculating the stats manually. The results are provided in graphs and tables which provides a clear view of the data that has been collected and transforms the raw data collected into understandable information. The in-depth interviews were conducted over the telephone and the responses were recorded and a summary of the main findings is produced on paper. Some of the in-depth interviews were conducted online also and the results have been summarized. 7.0 Expected Research Findings Loyalty program is one of the new-fangled concepts that are taking its shape to improve customer satisfaction and enhance customer experiences. Loyalty can be brought in, by knowing the expectations of the customers and trying to exceed them to enrich the overall customer experience. Businesses can try several methods suiting their type of business in order to build the loyalty of their customers. These methods are generally a combination of specific marketing initiatives and improved customer service. Moreover, customer loyalty also takes into consideration the importance of employee loyalty and satisfaction. A few of the factors that affect the Loyalty level of the customers are discussed as following: a) Customer service and support is one of the essential elements of building the relationship of the customer with the company, and a vital part of CRM too. According to Kelly, Hoffman & Davis (1993), a better customer service and support ensures higher customer loyalty. This aspect of the service or product forms an integral part of the strategy for building customer loyalty. It is easy to link with the customer by an efficient and up to the mark customer service and tagging along one particular service representative to a particular customer (Poleretzky, 1999, p78). b) Personalization, is very essential to improve customer experience. According to Scharge (1999), personalization and customization is aimed at fostering higher customer loyalty and resulting in enhanced returns on the investments in marketing. Personalization and “customization also create the perception of increased choice by enabling a quick focus on what the customer really wants.” (Shostak, 1987). Apart from these personalization techniques, building loyalty amongst customers becomes an easy task if the organization has a loyal workforce. The front end staff including the sales people, customer service staff and technical support, which is in direct touch with the customers should be retained. This is because; over a period of time the customers develop bondage with the staff and have a better comfort level. c) Interactions and Contact with current customers happens to be the best way to build their loyalty. This can be done by sending e-greetings that are cost free on birthdays and special occasions. It is a best practise to contact the customer periodically to ensure that the service provided to him/her is satisfactory (Poleretzky, 1999, p78). These will make the customer feel that he/she is being treated as unique by the company. When a customer is in constant touch, loyalty breeds in. 8.0 Conclusions This report has highlighted the various aspects of the quantitative research that can be conducted. Also it does touch upon the various expected results from the research as well. It has been clearly understood that the customer loyalty is a very essential aspect of the business and so is customer retention. Also, in the present times a lot of importance is given to the personalisation aspect of the business, hence this has also been discussed. Bibliography Collis, J. & Hussey, R. (2003) Business Research: A practical guide for undergraduate and postgraduate students. 2nd edn. London: Macmillan Press Ltd. Denzin, N. K. & Lincoln, Y. S. (eds.) (2000) Handbook of Qualitative Research. 2nd edn. London: Sage Publications, Inc. Hussey, J. and Hussey, R., 1997, Business Research: A Practical Guide for Undergraduate and Postgraduate Students, Macmillan, Chippenham Jobber, D., 2004, Principles and Practice of Marketing, 4th Edition, McGraw – Hill, Berkshire Kelley, S. W., Hoffman, D. K. and Davis, M. A., 1993, ‘A Typology of Retail Failures and Recoveries’, Journal of Retailing, p429-452 Peppers, D. and Rogers, M., 2005, ‘Loyalty Programs Must Create Real Value’, 1to1 Magazine, 29th August 2005 Poleretzky, Z., 1999, ‘The call center and e-commerce convergence’, Call Centre Solutions, p76 Redman, P. (2006) Good Essay Writing. 3rd edn. London: Sage Publications. Salvati, T., 1999, ‘The Interactive Imperative’, Banking Strategies, p6-7 Saunders, M. & Lewis, P. & Thornhill, A. (2000) Research Methods for Business Students. 2nd edn. Harlow: Pearson Education Limited Scharge, M., 1999, ‘The Next Step in Customization’, MC Technology Marketing Intelligence, August 1999, p20-21 Sekaran, U. (2000) Research Methods for Business, A Skill-Building Approach. 3rd edn. New York: John Wiley & Sons Inc. Shostak, G. L., 1987, ‘Breaking Free from Product Marketing’, Journal of Marketing, April 1987, p73-80 Silverman, D. (2005) Doing Qualitative Research. 2nd edn. London: Sage Publications. Read More