The Concept of Customer Satisfaction - Literature review Example

? Literature Review and Section # of INTRODUCTION In contemporary times, organizations are undergoing and ever-increasing awareness with regards to having good relations with their clients. Therefore, many industries are endeavoring day and night to devise ways in which they can promote or work on the enhancement of client relationships. Hence, in this regard, both the private and the public sector have devoted considerable attention to the notion of customer satisfaction, which is a rudimentary basic in the customer-company relationship. Naturally, in order to increase the awareness about this concept, administrators have increasingly encouraged their staff to gain knowledge by studying and researching on this phenomenon of customer satisfaction for the welfare and growth of the organization. This paper aims to analyze the literature available on the concept of customer satisfaction; hence it is divided into two major sections for the purpose of defining a flow. Initially a very concise review of the concept itself is provided, in light of the literature available, it is then extended to cover and analyze in detail the parallel notion of service quality which is often at times considered to be in correlation with customer satisfaction. The second section focuses on the specific service industry aspect of E-banking services, the service itself is explained and described, followed by an analysis with regards to service quality in the E-banking sector, and furthermore in order to narrow the case in focus, the service quality of E-banking in the Saudi Arabian banking sector is taken under consideration. All the analysis is in light of the literature available with regards to the topics under study. 1-CUSTOMER SATISFACTION This part of the paper will focus on the wider definition of customer satisfaction which is acceptable amongst researchers, and further extending to include the concept of service quality, also highlighting the distinctness of both the constructs and the correlation amongst them. The last part of this section deals with defining and explaining the notion of service quality in detail, and identifying its dimensions. 1.1- Definition of Customer Satisfaction Customer satisfaction as a concept has occupied a unique position in marketing practice and research on part of the academia, since the initial research and study undertaken by Cardozo (Cardozo, 1965) on the topics of customer efforts, their expectations and most importantly their satisfaction. Regardless of the fact that the researchers and analysts around the globe have put in great effort and numerous attempts have been made at defining the notion of ‘customer satisfaction’ and its measurement, there still exists no consensus amongst them. Customer satisfaction is most commonly regarded as the post consumption feeling and the evaluation on part of the customer about a particular product of service (Gundersen, Heide and Olsson, 1996). It is a judgment based on evaluation of the pre-consumption expectations from a product/service and the performance of the product on that scale of perception according to the post-consumption experience (Oliver, 1980). The concept which is most widely accepted and related to customer satisfaction is the concept is the ‘expectancy disconfirmation theory’, this was a theory devised by Oliver who claimed that satisfaction level is the gap between the expectation and the actual performance of a product. ‘Satisfaction’, which is regarded as the ‘positive disconfirmation’, occurs when the product’s performance is better than the expectation, while on the contrary, when the performance is less than the expectation then it is termed ‘negative disconfirmation’, or in simple terminology as ‘dissatisfaction’ (McQuitty, Finn and Wiley, 2000). Studies throughout time have shown that customer satisfaction has a major impact on business results, and it has been claimed that customer satisfaction has a positive relation with business profitability (Luo and Homburg, 2007). Many researchers are also of the opinion that customer satisfaction increases the chances of customer satisfaction, publicity through a positive word-of-mouth, and a dramatic increase in customer loyalty, thereby boosting the prospects of business success (Dimitriades, 2006; Chi and Qu, 2008). In light of the immense significance of customer satisfaction, it is not surprising that a crucial lot of resources have been attributed to the identification and investigation of the determinants of customer satisfaction. It has been observed that satisfaction measurement can be categorized into subjective (the customer’s needs, emotion etc., which vary from customer to customer) and the objective (the product itself and its features etc., which remain same) (Huiqun and Xin, 2009). These dimensions at some point are affected by the service quality of the product being offered and the way the customer perceives it. 1.2- The Distinct Constructs of Customer Satisfaction and Service quality Literature suggests that many marketing researchers are of the opinion that the concept of customer satisfaction and service quality respectively are two different constructs, but they share a unique and close relationship, hence it is proven through empirical research that their level of correlation is high (Cronin and Taylor, 1992; Oliver,1993). Most of the research conducted in the services field has yielded the results which create a distinction between these two constructs. Most of the researchers in this field have claimed that the two constructs are distinct: Customer satisfaction can be the result of any dimension and it just not centers on quality, but service quality only centers on the quality dimension. Customer satisfaction, as compared to service quality, has more conceptual antecedents. Judgments related to ‘customer satisfaction’ can not be given without experience with the service or the provider; perceptions about quality do not need to have experience about the service or the provider. It is believed that customer satisfaction combines with service quality to increase the prospect of customer repatronage, which is increasing the chance of customer loyalty by ensuring customer retention. Therefore, since customer loyalty and retention is one of the crucial elements which can mark the progress of a business, it undoubtedly makes both the aforementioned constructs of customer satisfaction and service quality extremely important, and makes it necessary for a business to operate with both under consideration in order to execute their visions into reality (Fen and Lian, 2010, 60 – 63). 1.2.1- Definition and Dimensions of Service Quality In the contemporary era, wherein competition is an ever-increasing phenomenon, the concept of ‘service quality’ has been an area academic research which is very popular amongst researchers. It has been recognized as one of the crucial factors in maintaining competitive advantage and for the retention of satisfactory customer-company relationships (Zeithmal et al., 2000). Just like the concept of customer satisfaction, service quality has also been recognized as the level of difference between the expectation and the actual performance. In addition, there are three underlying themes with regard to service quality which have been considered significant to the study: Service quality is a rather difficult measurement for the consumer to evaluate as compared to goods quality. Service quality perceptions are a result of the comparison made between the consumer expectations and the actual level of the service that has been provided, and Evaluations regarding the final outcome of the service are not the only factor which determines the service quality, but the delivery of the service is an important underlying determinant as well. Researchers have made great endeavors in order to identify the global attributes of services which are most relevant to the quality assessment criteria in the conventional service environment (for example, Groroos, 1982 and 1984; Parasuraman et al., 1985 and 1988). It has been observed and claimed that the assessment of service quality should include three major dimensions (Groroos, 1982); The technical quality of the outcome- which, needless to say, is the actual outcome of the service in particular, therefore it is usually measured in an objective manner. The Functional quality of the service experience- this part focuses on the subjective aspect of the service being provided; it is the interaction between the provider and the receiver of the service. It is a feeling based phenomenon and thus is often perceived in a subjective manner. The Corporate image of the service- This part pertains to the consumer’s perception about the organization providing the service. There are many dimensions which frame the corporate image, it includes the first two aforementioned dimensions of service quality along with the price, the location of the business, the external communication, the actual visible appearance of the site of location and also the competency and the behavior of the organization’s employees. Lehtinen and Lehtinen (Lehtinen and Lehtinen, 1982) have also identified these dimensions but have given them different terminologies, but the construct however remain same. Parasuraman (Parasuraman et al., 1985) however identifies ten major dimensions ranging from reliability, responsiveness, competence, access to courtesy, communication, credibility, security, understanding and tangibles respectively. He has recognized reliability to be the most critical dimension with regards to service quality. It can be seen that there are slight distinctions between the concepts of ‘customer satisfaction’ and ‘service quality’, but the initial basis of evaluation is the same, that is the gap between the expectation and the actual performance, hence resulting in a high correlation. 2- E-SERVICE QUALITY IN E-BANKING This part of the paper focuses specifically on the E-Service sector, with special emphasis on the area of E-Banking. Initially the section opens with a detailed and most acceptable definition of E-Services amongst researchers, and the characteristics which are normally associated with it. In addition, this business sector is related to the notion under consideration, and thus the service quality of E-Banking is studied in light of literature available on the topic. Finally this section concluded with a detailed analysis of the service quality of E-services, focusing specifically on E-Banking in the region of Saudi Arabia. 2.1- Definition and Characteristics of E-services The incredible growth of the internet and the reliance of people on the virtual network have dramatically increased over time. The internet has provided managers with new ways of conducting business and increasing sales for their business, in an attempt to compete in an ever-increasing globalizing and competitive world. Hence, as a result of this, the number of research studies being focused on the impact of internet on economic growth and business practices and profitability has undergone considerable increase over time (Venkatraman, 2000). Today, internet is not only a medium of sharing information and e-commerce, but it has served as a mean of delivering services to business and customers worldwide. The type of services offered by this medium range from the more conventional form of services such as online travel reservations and directory services to a more modern service type of outsourcing entire business functions and IT related services (Casati and Shan, 2001, 143). According to the company Hewlett-Packard, the pioneers of the concept, E-service is (Searchcio, 2001): “Modular, nimble, electronic services that perform work, achieve tasks, or complete transaction” 2.2- Studies about E-Service quality in E-banking Service Quality as defined earlier is the evaluation of the customers about the quality of the services being delivered to them in various, mainly three, dimensions. Similarly, E-service quality pertains to the evaluation of the customers pertaining to the services provided to them in the virtual domain of the marketplace of service provision (8). One of the main reasons why the companies focus so much on the quality of e-services as compared to the traditional mode of services is because the company’s website is accessible worldwide, and customers on any part of the globe with access to the internet, can easily compare the company’s services to a competitor, hence the competition in the virtual marketplace is multifold. With regards to E-Service in the form of E-Banking, it has been observed through studies conducted around the globe, in United States of America, Malaysia, India, China and elsewhere, that the dimensions centre around responsiveness, flexibility, and customization. Hence, the e-banking services which mostly comprise of ATM machines and online fund transfers, need to focus on these three dimensions in order to satisfy the customer needs and provide a quality service that would gain a good ‘service quality’ score (Kadir, Rahmani and Masinaei, 2011, 1-3). 2.3- Studies about E-Service qualities in E-banking in Saudi banks This sub-section of the paper has a narrowed down focus on the E-services in the region of Saudi Arabia, and that too specifically with regards to the Banking sector in existence there. Internet banking, or in short form, E-banking has become one of the most major and widely used distribution channels with regards to banking products and services in the developed part of the world. In Saudi Arabia, since the advent of the internet era, Saudi Banks have decided to increase their internet presence. Hence, as a result of this transition, 73% of the Saudi Banks today have their own websites, and more extensively, 25% of the banks are offering full banking services through their websites (Jasimuddin, 1992). With regards to the service quality, this part of the banking industry is very closely linked to competition, and the customers evaluate on the basis of comparison with the services provided by the competitors, and it has been observed according to research and study that most of the Saudi banks do not differ from each other very distinctly, their websites are very closely similar, and hence all the banks providing the e-banking service have to remain proactive and must not go down on the scale of service quality. All the Saudi Banks have to meet the expectations of the customers or else there could be a chance of negative disconfirmation which is definitely not desirable. Nearly about 65% of the banks have provided their customers with the option to launch complaints receive feedback to their complaints in a timely manner and efficiently, since this is what the customers expect of them. According to a research on Saudi Banks operating in the E-banking sector (Jasimuddin, 1992): “The contents that are found in each of the searched Web sites include information about the bank and addresses of ATM/Branches (together with phone and fax numbers), press releases, newsletters, news about the site and welcome letters, hot links, job opportunities, publications, contact and email, feedback, site map, site search, on line form etc. Almost all of them are providing information regarding customer services that incorporate financial market, retail and corporate banking, investment, treasury services, telephone and PC banking.” CONCLUSION In light of the entire argument it can be substantiated that customer satisfaction and service quality are two very closely linked phenomenon and yet they are considered to be different constructs, their basis is essentially the same, however there are a few differences which set them apart. Service quality is a very necessary element in almost all the fields of service provision, since it establishes customer loyalty and customer retention for the organization. There have been debates over the years regarding the most accurate measure of service quality, however due to the subjective part of the criterion, there has been no consensus, and hence the most plausible theories have been accepted. When these concepts are applied to the internet sector, such that e-services are taken into account, which is the provision of services through website etc., then it was observed that service quality becomes increasingly important. With further focus on E-banking, it was observed that responsiveness, flexibility, and customization were the three dimensions which need the most focus in order for a bank to succeed. In Saudi Arabia, the transition from traditional to e-banking services has been dramatic, and a large number of banks now operate online, the competition is very high hence there is no room for a slip in the fast paced contemporary times. References Cardozo, R.N (1965) ‘An experimental study of customer effort, expectation and satisfaction’. Journal of Marketing Research, 2, 244-249 Casati, F. and Shan. M C. (2001) ‘Dynamic and Adaptive Composition of E-Services’. Information Systems, 26, 143-163 Cronin, J. J., and Taylor, S. A. (1992) ‘Measuring Service Quality: A Reexamination and Extension’. Journal of Marketing, 56, 3, 55–68. Dimitriades, Z.S. (2006) ‘Customer satisfaction, loyalty and commitment in service organizations-Some evidence from Greece’. Management Research News, 29, 12, 782-800 Fen, Y. S. and Lian, K. M. (2010) ‘Service Quality and Customer Satisfaction: Antecedents of Customer’s Re-Patronage Intentions’. Sunway Academic Journal, 4, 59 – 73 Groroos, C. 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