Customer Satisfaction

Customer SatisfactionThis section will guide you into my customer satisfaction research project and relevant models.

Customer satisfaction is addressed as a strategic business development tool. Customer satisfaction does have a positive effect on an organization's profitability, satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty, and positive word of mouth. Satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people. Equally well, dissatisfied customers are more likely to tell another ten people of their unfortunate experience. Research has demonstrated that even a difference between a totally satisfied customer and a somewhat satisfied customer could lead to an increased revenue contribution of a factor 2.6.

B2B organisations could definitively taken advantage of a proven systematic customer satisfaction model. The challenge for most organisations is to implement and secure a standardized customer satisfaction process across their business models and across all BU's. Ultimately it will lead to more loyal customers and more profitable business.

For that reason (and many others), customer satisfaction should be on eof the strategic quality improvement objective for B2B organisations.

"As far as customers are concerned you are the company. This is not a burden, but the core of your job. You hold in your hands the power to keep customers coming back, perhaps even to make or break the company."

A study in customer sat is fact ion and customer sat is fact ion models

Customer satisfaction is addressed as a strategic business development tool. Customer satisfaction does have a positive effect on an organization's profitability, satisfied customers form the foundation of any successful business as customer satisfaction leads to

repeat purchase, brand loyalty, and positive word of mouth. Satisfied customers are most likely to share their experiences with other people to the order of

perhaps five or six people. Equally well, dissatisfied customers are more likely to tell another ten people of their unfortunate experience. Research has demonstrated that even a difference between a totally satisfied customer and a somewhat satisfied customer could lead to an increased revenue contribution of a factor 2.6.


For that reason (and many others), customer satisfaction should be on eof the strategic quality improvement objective for B2B organisations.This research paper is all about customer satisfaction and causal customer satisfaction models for international B2B organisations.

From a best practice point of view relevant research findings are copied and reused in this research study. I have not placed content and citations between quotation marks and have not given adequate source references of the original (paper, thesis, and dissertation) author to improve overall readability. I will add source references foot notes.

I have not copied text or taken ideas from someone else's work in order to use that as if they were my own, notwithstanding the fact that it could have been my reflection of that specific topic. For that reason this research document should be valued as a research paper completed with a collection of research findings. Having said that, this research paper needs to be treated as it is. Hence it is only applicable for limited use and "free"distribution is not allowed as this would implicate plagiarism.

I have studied and examined academic papers, thesis and dissertations regarding relevant customer

satisfaction and customer satisfaction modeling. All documents where public (free) available. Most important research documents used incl download link

Execut ive summaryMy literature study and empirical research took off with the assignment of developing a customer satisfaction model for B2B organisations. Any organization has to listen to its external customers and stakeholders. A number of studies have shown that the long-term success of a corporation is closely related to its ability to create and maintain loyal and satisfied customers, adapt to customer needs and changing preferences. Customer satisfaction is a crucial goal for most organizations. In order to monitor customer satisfaction, and to take action for improving it, a number of different methods have been developed and tested. However, for the purpose of developing tangible applications for results a number of criteria have to be fulfilled in any such measurement system, not least if the ambition is to compare and benchmark. This is the spirit in which the research initiative of customer satisfaction was initiated.

With my research I aim to to develop and/or advise a corporate B2B customer satisfaction model for B2B organisations based on proven customer satisfaction models and an advice for further improvement on the design of the corporate customer satisfaction.

To this end, causal models are assessed and compared on the bases of the criteria and antecedents of customer satisfaction. To guide me through the process of research, I have reflected my logical and sequential steps in a conceptual model of research. This conceptual model starts with studying of scientific theories and concepts of customer satisfaction, studying of academic papers, thesis and dissertations, to create a common understanding of customer satisfaction. In the research the emphasis lays on customer satisfaction and antecedents where the Rovaha Brand Equity (RBE) model applies. The RBE model is used to classify the collected data onto the

criteria and to keep the research synoptic. To fulfill my research I have formulated the following questions:

Which are the criteria for appraisal of customer satisfaction and how to classify these into antecedents?

Which are the interdependencies of customer satisfaction models?

What are the results of the comparison of different causal customer satisfaction models?

Which recommendations can lead to improvement of customer satisfaction and the effectiveness and efficiency of business development?


My literature research has revealed that customer satisfaction can be defined as an overall customer attitude towards a service provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfillment of some need, goal or desire. Satisfaction represents a veritable key of modeling the acquisition behavior of the customer, being supported by three groups of variables; cognitive variables, affective variables, conative variables. The groups built up the interface where latent variables, such as corporate image & brand image, customer expectations, perceived product value, perceived service value, perceived value, commitment, customer satisfaction, and customer loyalty are developed or even damaged.

Customer satisfaction is addressed as a strategic business development tool. Customer satisfaction does have a positive effect on an organization's profitability, satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty, and positive word of mouth. Satisfied customers are most likely to

share their experiences with other people to the order of perhaps five or six people. Equally well, dissatisfied customers are more likely to tell another ten people of their unfortunate experience. Research has demonstrated that even a difference between a totally satisfied customer and a somewhat satisfied customer could lead to an increased revenue contribution of a factor 2.6.

My literature study has delivered an extensive source of customer satisfaction knowledge. I have chosen for a qualitative empirical research study taken from a singular desk research angle which incorporates a study of academic papers, thesis and dissertations in customer satisfaction and customer satisfaction models. My literature research exposed four general characteristics of customer satisfaction involving features or qualities related to customer satisfaction serving to identify this phenomenon among other customer relationship management propositions;

1. Customer satisfaction is a highly variable personal assessment that is greatly influenced by individual expectations based on his/her own information, expectations, direct contact and interaction, and circumstances (time, location and environment).

2. Customer satisfaction involves the sum of personal (product and service) experiences driven by its antecedents.

3. Customer satisfaction is most often related to purchase, loyalty and retention behavior with a effect on an organizations profitability.

4. Customer satisfaction characterizes itself by a high degree of word-of-mouth where satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people. Equally well, dissatisfied customers are more likely to tell another ten people of their unfortunate experience.

Desk research into the four most known causal customer satisfaction models (SCSB, ACSI, NCSB, ECSI) have shown fundamentally similarities. All models have an academic/scientific, causal construct. The purpose of each customer satisfaction construct is to

be a structural equation model for standard measurement for evaluation of customer satisfaction based on a set of latent variables determined by a set of manifest constructs. Each latent variable is measured, the level of each latent variable estimated, the relevant connections between the latent variable established and the magnitude of the connections estimated. The objective of all customer satisfaction models is to provide results that are relevant, reliable, and valid and have predictive financial capability. Nevertheless they have some obvious distinctions in model's structure and variable's selection so that their results cannot be compared with each other. Therefore, adoption of a model needs to be guided by a set of objective selection criteria, so called user requirement specifications.

It is important to realize that many customers will not complain. In other words, we often are not aware of the extent of satisfaction / dissatisfaction as long as we do not ask. Customer satisfaction research should be done with greatest care. Measuring customer satisfaction must be a continuously, consistent, timely, accurate and reliable process. Being conscious of the aggressive and competitive B2B playing field B2B organisations should undertake direct action to avoid serious hindrance of their business development over the coming five years. Most B2B organisations will not succeed by simply doing more of what they are doing now, what it all comes down to is that they need to do some things differently. This is where a corporate customer satisfaction approach becomes a powerful strategic business development tool for B2B organisations.

Theory and best practices have proven that sustainable customer satisfaction models needs to be built on well-defined transparent processes and on a consistent approach. The means by which (customer) satisfaction is build may differ from time to time and from customer group/segmentation, whether this is based on geographic zone, business unit, country, product, or demographic culture is not relevant as long as accountable managers and marketers understand the relevance of each model latent and manifest variable in relation to the target group.

As a consequence of the above, B2B would benefit from a well-defined customer satisfaction model. I shall emphasis my advice and recommendation on a structured causal customer satisfaction model. For that reason I recommend to carry out the following strategic proposition;

1. Implement a causal customer satisfaction model.2. Standardize multi lingual survey questionnaire.3. Secure process ownership and process managers.4. Customer satisfaction survey on a monthly base.5. Standardize process flow and reporting structures.Ronald van Haaften

Content

Preface

Executive summary

List of Figures

1 Research formulation .

1.1 Introduction and reason for research . 1.2 Conceptual design 1.2.1 Justification of customer satisfaction research . 1.2.2 Preliminary analysis . 1.2.3 Problem definition . 1.2.4 Central questions . 1.2.5 Research limitations 1.3 Conceptual research model . 1.4 Structure and classification .

2 Theory of customer satisfaction .

2.1 Literature study 2.1.1 Academic papers, thesis and dissertations reviewed 2.1.2 Customer satisfaction 2.1.2.1 Effect of customer satisfaction on profitability 2.1.2.2 Consequences of customer satisfaction and Dissatisfaction 2.1.3 Customer loyalty and customer retention 2.1.4 Customer expectations 2.1.5 Perceived value 2.1.5.1 Four types of value 2.1.5.2 Definitions of perceived value 2.1.5.3 Context-dependent nature of perceived value . 2.1.5.4 Multi-dimensional nature of perceived value 2.1.5.5 Consumers' formation of expected value 2.1.5.6 Classification of purchase-related costs and benefits . 2.1.5.7 Antecedents of perceived value and purchase intentions 2.1.5.8 Product value and product choice 2.1.5.9 Conclusion perceived value 2.1.6 Corporate brand image 2.2 Literature research reflection 2.2.1 Which are the criteria for appraisal of customer satisfaction and how to classify these into antecedents? 2.2.1.1 Which general characteristics of customer satisfaction can be defined? 2.2.1.2 Which criteria can be drawn from the theory of customer satisfaction? 2.2.1.3 How to classify the criteria of customer satisfaction into antecedents?

3 Empirical research structure

3.1 Research strategy and method 3.2 Research objectivity and reliability . 3.3 Research data collection . 3.3.1 Empirical desk research

4 Data gathering

4.1 Document analyses

5 Analyses

5.1 Customer satisfaction index (CSI) models 5.1.1 The Swedish Customer Loyalty Barometer (SCSB) 5.1.2 The American Customer Satisfaction Index (ACSI) 5.1.3 The Norwegian Customer Satisfaction Barometer (NCSB) 5.1.4 The European Customer Satisfaction Index (ECSI) 5.2 Comparison of customer satisfaction models . 5.2.1 Most important similarities and differences among the models .

6 Conclusion

7 Advice and recommendations

7.1 Implement a causal customer satisfaction model 7.2 Standardize multi lingual survey questionnaire . 7.3 Secure process ownership and process managers . 7.4 Customer satisfaction survey on a monthly base . 7.5 Standardize process flow and reporting structures 7.6 Critical success factors and pitfalls

8 Literature list

8.1 Internet sources

9 Appendix

9.1 Customer Satisfaction Process 9.2 Survey equation model 9.2.1 Survey Model Questions 9.2.1.1 Image of Rovaha Engineering 9.2.1.2 Customer Expectations of Rovaha Engineering 9.2.1.3 Customer Perceived Product Quality of Rovaha

Engineering 9.2.1.4 Customer perceived service quality of Rovaha Engineering 9.2.1.5 Customer perceived value of Rovaha Engineering 9.2.1.6 Customer Satisfaction 9.2.1.7 Customer Loyalty 9.3 How to calculate 9.3.1 The Mean 9.3.2 The Median 9.3.3 The Mode 9.3.4 The range 9.3.5 The score per latent variable 9.3.6 The Net Promotor Score 9.3.7 The standard deviation 9.3.8 The variance

List of FiguresFigure 1 Quality improvement communication model - derived from EFQM.Figure 2 Conceptual research modelFigure 3 Rovaha Brand Equity model (RBE model)Figure 4 Research paper modelFigure 5 Factors that affect customer satisfactionFigure 6 Performance measures reflecting long-term profitabilityFigure 7 Intrinsic, exchange, use and utilitarian valueFigure 8 Customer value hierarchy model (woodruff 1997)Figure 9 Base model of channel purchase intentionsFigure 10 Importance of brand functions in B2B versus B2CFigure 11 Clasification of customer satisfaction criteriaFigure 12 Research strategy and methodFigure 13 The original Swedish Customer Satisfaction Barometer modelFigure 14 The American Customer Satisfaction Index modelFigure 15 The Norwegian Customer Satisfaction barometer modelFigure 16 The European Customer Satisfaction Index modelFigure 17 Recommended SCI model - ECSI / EPSI model

1 Research formulat ion.

1.1 Introduction and reason for research.

Any organization has to listen to its external customers and stakeholders. A number of studies have shown that the long-term success of a corporation is closely related to its ability to create and maintain loyal and

satisfied customers, adapt to customer needs and changing preferences. Customer satisfaction is a crucial goal for most organizations. In order to monitor customer satisfaction, and to take action for improving it, a number of different methods have been developed and tested. However, for the purpose of developing tangible applications for results a number of criteria have to be fulfilled in any such measurement system, not least if the ambition is to compare and benchmark. This is the spirit in which the research initiative of customer satisfaction was initiated.

1.2 Conceptual design

1.2.1 Justif ication of customer satisfaction research.

Customer satisfaction is about the relationship between the firm and its customers, to create, build and maintain the right set of brand associations as an enabler for future business. Obviously customer satisfaction is often one of the strategic objectives of the corporate marketing communication strategy plan.

Motivation for developing surveys to measure customer satisfaction is based on the EFQM Excellence Model shown in figure 1. From this model it can be seen that "Customer Results" is one of the most important drivers to obtaine good performance of companies and institutions. Thus a good knowledge of the level of customer satisfaction is vital for good performance. Accurate and relevant information of customer behaviour can only be accomplished by using sound scientific principles for measuring customer behaviour. The focus of customer satisfaction research is found in the "customer results" section of the model.

The practicality and applicability of this research adds knowledge to B2B organization. This research certainly will contribute in a positive manner to business development plans and quality improvement of B2B organisations and therefore will represent a

considerable benefit.

Figure 1 Quality improvement communication model - derived from EFQM.

1.2.2 Preliminary analysis.

Customer satisfaction is often embedded in ISO quality management processes among mature B2B organisations. Initial objective is to measure customers' satisfaction on periodic bases (once per week, month, quarter or year). Hence, customer satisfaction surveys (CSS) will measure the latest experience and perception of the customer over the last (survey) period. In other words: a momentary snapshot of a given situation.

Customer satisfaction research should be done with greatest care in order to capture reliable data and to avoid upset/anoy customers with "loose end" survey questionairs. Measuring customer satisfaction must be a continuously, consistent, timely, accurate and reliable process. Survey results collected should be (quantitatively) analyzed and reported into the organization, QHSE manager and MT. CSS managers (divisional, department, etc) need to address, execute and administrate actions to develop/improve their customer quality processes (plan, do, check, act). Closing the deming cycle is the hard part as it needs a solid implemented operating model and an aligned organization to establish a high level of customer experience.

1.2.3 Problem definition.

The problem definition as I have defined, consist an objective, and three central questions. These central questions have been diverted into sub-questions that will guide the examination through the research process. It should deliver a deepening of B2B customer satisfaction knowledge and a pragmatic contribution to customer satisfaction management for B2B organisations.

Objective of this research is to develop and/or advise a corporate B2B customer satisfaction model for B2B organisations based on proven customer satisfaction models.

Four control questions concerning related to the research objective:

Is it relevant?It aims at a deepening of customer

satisfaction. The research can complete actual knowledge with new insights and additional knowledge. With that in mind, the research delivers a relevant contribution.

Is it feasible?The research will be carried out on an

objectively and independently manner. There is a sufficient B2B organizational basis for research. Actual literature is sufficient and relevant knowledge can be drawn out of that. All these necessary resources are within a hand reach to realize the research.

Is it unambiguous?Objective and cause of research are

clear defined; the research has been addressed and recognized as a critical factor of B2B communication strategy. The objective has been decisively formulated, with that the research is unambiguous.

Does it generate additional information?The objective refers to a deepening of

B2B customer satisfaction models. With that, it is clear which type knowledge and information is going to be generated. From that perspective, it generates additional information.

1.2.4 Central questions.

In continuation on the objective, a conceptual model has been formed and three central questions have been formulated with additional sub questions:

5. Which are the criteria for appraisal of customer satisfaction and how to classify these into antecedents?

Which general characteristics of customer satisfaction can be defined? \

Which criteria can be drawn from the theory of customer satisfaction?

How to classify the criteria of customer

satisfaction into antecedents?

6. Which are the interdependencies of customer satisfaction models?

To what extent do causal customer satisfaction models meet the assessed criteria and antecedents?

How can the customer satisfaction be measured?

7. What are the results of the comparison of different causal customer satisfaction models?

Which are the most important similarities and differences among the models?

Which conclusions can be drawn out of the results?

Which recommendations can lead to improvement of customer satisfaction and the effectiveness and efficiency of business development?

1.2.5 Research l imitations

I have chosen to study public academic papers, thesis and dissertations on the basis of the latest scientific literature as published by the most influential experts of customer satisfaction theory. I will not try to achieve a comprehensive summary of customer satisfaction in all facets. The playing field of customer satisfaction is simply too broad and too deep.

With a strong focus on my research questions, I will limit myself to the most relevant theory of customer satisfaction, which could contribute to B2B organisations. This does not mean that I allow myself to restrict my research to the extent of what I am familiar with.

1.3 Conceptual research model.

To fulfill my research, I have reflected my logical and sequential steps in a conceptual model of research.

See figure 2. With my research I aim to recommend a corporate customer satisfaction model and an advice for further improvement on the design of the corporate customer satisfaction of B2B organisations. To this end, causal models are assessed and compared on the bases of the criteria and antecedents of customer loyalty.

Figure 2 Conceptual research model

This conceptual model can be formulated as follows: Study of scientific theories and concepts of customer satisfaction, study of academic papers, thesis and dissertations, criteria to evaluate and compare the current cause and effect customer satisfaction models on which models can examined.

In the research the emphasis lays on customer satisfaction and antecedents where the Rovaha Brand Equity (RBE) model (Ronald van Haaften, 2008) applies see figure 3. The RBE model is used to classify the

collected data onto the criteria and to keep the research synoptic. The four sequential RBE steps provide a functional platform to identify the factors and criteria within different perspectives.

Figure 3 Rovaha Brand Equity model (RBE model)

1.4 Structure and classification.

I have subdivided the structure and classification of

my research in four segments; (1) Theoretical framework, (2) Research, (3) Results, (4) Syntheses. Figure 4 reflects the research model.

Figure 4 research paper model

2 Theory of customer satisfaction

The objective of this chapter is to come to a deeper understanding of customer satisfaction. This chapter

explores what can be understood of customer satisfaction, customer loyalty, customer retention, perceived values, complaints and corporate image. Interdependencies and antecedents of customer satisfaction subjects will lead to models and vice versa, this justifies studying the theory of customer satisfaction from different point of views.

2.1 Literature study

In the literature research the emphasis applies to customer satisfaction and integrated variables and antecedents to identify the factors and criteria within different customer satisfaction perspectives. In continuation on the objective and the conceptual model the literature study will answer the first central question of this thesis and under laying sub-questions:

Which are the criteria for appraisal of customer satisfaction and how to classify these into antecedents?

Which general characteristics of customer satisfaction can be defined?

Which criteria can be drawn from the theory of customer satisfaction?

How to classify the criteria of customer satisfaction into antecedents?

I start my literature study by an introduction into customer satisfaction, followed by an investigation of what researchers and experts have written about customer satisfaction theories and customer satisfaction models. The study focus primarily on the theories of cause-and-effect models.

2.1.1 Academic papers, thesis and dissertations reviewed

From a best practice point of view relevant research findings are copied and reused in this research study. I have not placed content and citations between quotation marks and have not given adequate source references of the original (paper, thesis, and dissertation) author to improve overall readability. I

have choosen to place a download link towards the original document in the footer of the web page wherever applicable.

I have not copied texts or taken ideas from someone else's work in order to use that as if they were my own, notwithstanding the fact that it could have been my reflection of that specific topic. For that reason my research should be valued as a research paper blended with a collection of research findings. Having said that, this research paper needs to be treated as it is. Hence it is only applicable for limited use.

Further distribution is not allowed without appropriate comments and references as this would implicate plagiarism.

2.1.2 Customer satisfaction

Kotler (2000) defined satisfaction as: "a person's feelings of pleasure or disappointment resulting from comparing a product's perceived performance (or outcome) in relation to his or her expectations". According to Hansemark and Albinsson (2004), "satisfaction is an overall customer attitude towards a service provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfillment of some need, goal or desire".

Hoyer and MacInnis (2001) said that satisfaction can be associated with feelings of acceptance, happiness, relief, excitement, and delight. There are many factors that affect customer satisfaction. According to Hokanson (1995), these factors include friendly employees, courteous employees, knowledgeable employees, helpful employees, accuracy of billing, billing timeliness, competitive pricing, service quality, good value, billing clarity and quick service. This is shown in figure 5 below.

Figure 5 Factors that affect customer satisfaction

In order to achieve customer satisfaction, organisations must be able to satisfy their customers' needs and wants (La Barbera and Mazursky, 1983). Customers' needs state the felt deprivation of a customer (Kotler, 2000). Whereas customers' wants, according to Kotler (2000) refer to "the form taken by human needs as they are shaped by culture and individual personality".

2.1 .2 .1 E f fect o f customer sat is fact ion on prof i tab i l i ty

Customer satisfaction does have a positive effect on

an organisation's profitability. According to Hoyer and MacInnis (2001), satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty, and positive word of mouth. Coldwell (2001): "Growth Strategies International (GSI) performed a statistical analysis of Customer Satisfaction data encompassing the findings of over 20,000 customer surveys conducted in 40 countries by InfoQuest. The conclusion of the study was:

A totally satisfied customer contributes 2.6 times as much revenue to a company as a somewhat satisfied customer.

A totally satisfied customer contributes 17 times as much revenue as a somewhat dissatisfied customer.

A totally satisfied customer decreases revenue at a rate equal to 1.8 times what a totally satisfied customer contributes to a business".

Zairi (2000): "There are numerous studies that have looked at the impact of customer satisfaction on repeat purchase, loyalty and retention. They all convey a similar message in that:

8. Satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people. Equally well, dissatisfied customers are more likely to tell another ten people of their unfortunate experience.

9. Furthermore, it is important to realize that many customers will not complain and this will differ from one industry sector to another.

10. Lastly, if people believe that dealing with customer satisfaction/complaint is costly, they need to realize that it costs as much as 25 percent more to recruit new customers".

Aaker (1995) said that the strategic dimension for an organization includes becoming more competitive through customer satisfaction/brand loyalty, product/service quality, brand/firm associations, relative cost, new product activity, and

manager/employee capability and performance (Figure 6).

Figure 6 Performance measures reflecting long-term profitability

2.1 .2 .2 Consequences o f customer sat is fact ion and Dissat is fact ion

The consequences of not satisfying customers can be severe. According to Hoyer and MacInnis (2001), dissatisfied consumers can decide to:

Discontinue purchasing the good or service

Complain to the company or to a third party and perhaps return the item

Engage in negative word-of-mouth communication.

Customer satisfaction is important because, according to La Barbera and Mazursky (1983), "satisfaction influences repurchase intentions whereas dissatisfaction has been seen as a primary reason for customer defection or discontinuation of purchase".

2.1.3 Customer loyalty and customer retention

According to Hoyer and MacInnis (2001), customer retention is "the practice of working to satisfy customers with the intention of developing long-term relationships with them". However, Bowen and Chen (2001) said that having satisfied customers is not enough, there has to be extremely satisfied customers. Zineldin (2000) said that retention can be defined as "a commitment to continue to do business or exchange with a particular company on an ongoing basis". This is because customer satisfaction must lead to customer loyalty. According to Anderson and Jacobsen (2000) "loyalty is actually the result of an organization creating a benefit for a customer so that they will maintain or increase their purchases from the organization'. Oliver (1997) said that customer loyalty refers to "a deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future despite situational influences and marketing efforts having the potential to cause switching behavior". True customer loyalty is created when the customer becomes an advocate for the organization, without incentive". Bansal and Gupta (2001): "Building customer loyalty is not a choice any longer with businesses: it's the only way of building sustainable competitive advantage.

Building loyalty with key customers has become a core marketing objective shared by key players in all industries catering to business customers. The

strategic imperatives for building a loyal customer base are as:

Focus on key customers

Proactively generate high level of customer satisfaction with every interaction

Anticipate customer needs and respond to them before the competition does

Build closer ties with customers

Create a value perception.

Sivadas and Baker-Prewitt (2000) said "there is an increasing recognition that the ultimate objective of customer satisfaction measurement should be customer loyalty". Fornell (1992) said "high customer satisfaction will result in increased loyalty for the firm and that customers will be less prone to overtures from competition". This view was also shared by Anton (1996) who said that "satisfaction is positively associated with repurchase intentions, likelihood of recommending a product or service, loyalty and profitability". Loyal customers would purchase from the firm over an extended time (Evans and Berman, 1997). Guiltinan, Paul and Madden (1997) said that satisfied customers are more likely to be repeat (and even become loyal) customers. Sivadas and Baker-Prewitt (2000): "Satisfaction also influences the likelihood of recommending a departmental store as well as repurchase but has no direct impact on loyalty.

Thus satisfaction in itself will not translate into loyalty. However, satisfaction will foster loyalty to the extent that it is a prerequisite for maintaining a favorable relative attitude and for recommending and repurchasing from the store. Once customers recommend an organization it fosters both repatronage and loyalty towards that organization. Thus the key to generating loyalty is to get customers to recommend an organization to others. Also, customers are likely to recommend an organization when they are satisfied with that organization and when they have a favorable relative attitude towards that organization. Evans and Berman (1997): "Companies with satisfied customers have a good opportunity to convert them into loyal customers - who purchases from those firms over an

extended period".

Clarke (2001) said, "a business that focuses exclusively on customer satisfaction runs the risk of becoming an undifferentiated brand whose customers believe only that it meets the minimum performance criteria for the category. Long-term customer retention in competitive markets requires the supplier to go beyond mere basic satisfaction and to look for ways of establishing ties of loyalty that will help ward off competitor attack". Sivadas and Baker-Prewitt (2000) also said that it is not merely enough to satisfy a customer. According to Reichheld (1996), 65 to 85 percent of customers who defect to competitors' brands say they were either satisfied or very satisfied with the product or service they left. Therefore, in order to ensure that customers do not defect, Bowen and Chen are correct to say that customers must to be extremely satisfied. As far as organizations are concerned, they want their customers to be loyal to them and customer satisfaction does not guarantee this.

According to Storbacka and Lentinen (2001), customer satisfaction is not necessarily a guarantee of loyalty. They said that in certain industries up to 75% of customers who switch providers say that they were ‘satisfied' or even ‘very satisfied' with the previous provider. Customers may change providers because of price, or because the competitor is offering new opportunities, or simply because they want some variation (Storbacka and Lentinen, 2001). Clarke (2001) said that customer satisfaction is really no more than the price of entry to a category. For satisfaction to be effective, it must be able to create loyalty amongst customers. Sivadas and Baker-Prewitt (2000): "There is increasing recognition that the ultimate objective of customer satisfaction measurement should be customer loyalty".

McIlroy and Barnett (2000): "An important concept to consider when developing a customer loyalty program is customer satisfaction. Satisfaction is a measure of how well a customer's expectations are met while customer loyalty is a measure of how likely a customer is to repurchase and engage in relationship activities.

Loyalty is vulnerable because even if customers are satisfied with the service they will continue to defect if they believe they can get better value, convenience or quality elsewhere. Therefore, customer satisfaction is not an accurate indicator of loyalty. Satisfaction is a necessary but not a sufficient condition of loyalty. In other words, we can have satisfaction without loyalty, but it is hard to have loyalty without satisfaction".

McIlroy and Barnett (2000), "in a business context loyalty has come to describe a customer's commitment to do business with a particular organization, purchasing their goods and services repeatedly, and recommending the services and products to friends and associates". Anderson and Jacobsen (2000) said customer loyalty is actually the result of an organization creating a benefit for a customer so that they will maintain or increase their purchases from the organization. They said that true customer loyalty is created when the customer becomes an advocate for the organization, without incentive.

Bowen and Chen (2001): "It is commonly known that there is a positive relationship between customer loyalty and profitability. Today, marketers are seeking information on how to build customer loyalty. The increased profit comes from reduced marketing costs, increased sales and reduced operational costs. Finally, loyal customers cost less to serve, in part because they know the product and require less information. They even serve as part-time employees. Therefore loyal customers not only require less information themselves, they also serve as an information source for other customers".

McIlroy and Barnett (2000) said that loyalty cannot be taken for granted. They said that it will continue only as long as the customer feels they are receiving better value than they would obtain from another supplier. Anton (1996): "When you can increase customer loyalty, a beneficial ‘flywheel' kicks in, powered by:

11. Increased purchases of the existing product,

12. Cross-purchase of your other products,

13. Price premium due to appreciation of your added-value services,

14. Reduced operating cost because of familiarity with your service system,

15. Positive word-of-mouth in terms of referring other customers to your company".

In order to ensure that there is customer loyalty, organizations must be able to anticipate the needs of their customers (Kandampully and Duffy, 1999). According to Kandampully and Duffy (1999), a customer's interest in maintaining a loyal relationship is depended on the firm's ability to anticipate customer's future needs and offering them before anyone else. According to the study done by Bowen and Chen (2001), it supported the contention that there is a positive correlation between loyal customers and profitability. Bowen and Chen (2001): "The result of our study supported the contention that there is a positive correlation between loyal customers and profitability. Loyal customers indeed provide more repeat business and were less likely to shop around for the best deals than non-loyal customers".

Day (1994) said that the identification and satisfaction of customer needs leads to improved customer retention. Clark (1997): "Customer retention is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today's ever increasing competitive environment. It is vitally important to understand the factors that impact on customer retention and the role that it can play in formulating strategies and plans".

Clarke (2001): "The notion of customer loyalty may appear at first sight to be outmoded in the era of the Internet, when customers are able to explore and evaluate competing alternatives as well as checking reports from others - at the touch of a button. Yet the evidence shows that the old rules of successful and profitable management still hold good: customer retention is still a key to long-term profits, while on the other side of the coin there is a high cost-penalty to low loyalty. Indeed, the very fact that customers can so readily assess the competing services and products

on offer and then so easily make the new purchase does in itself give added weight to the importance of building strong ties of loyalty with customers".

2.1.4 Customer expectations

Customer expectations are a measure of the customer's anticipation of the quality of a company's products or services. Expectations represent both prior consumption experience, which includes some non-experiential information like advertising and word-of-mouth, and a forecast of the company's ability to deliver quality in the future.

2.1.5 Perceived value

It is essential to know what consumers value, before one can truly understand purchase intentions and choice.

What do customers really want from their purchase experiences?

What attributes are most important in their judgments of value?

What drives them to use one supplier over another?

This research proposes that the purchase intentions depend on the expectations of value, i.e. a tradeoff between the perceived benefits and costs derived from using certain suppliers for purchasing. The concept of perceived value is chosen, as it represents a customer's overall assessment of the utility based on perceptions of what is received and what is given (cf. Zeithaml 1988).

Perceived value is expected to significantly influence purchase intentions, and by measuring its predictors, it can provide insights in how value is. There are many ways to describe value. Woo (1992) identified four general meanings of value for people;

16. First, value is "what is of true worth to people in the broad context of the well-being and

survival of individuals, and by extension, of the species as a whole". Here value is reflected by the values consumers strive for in life, similar to the ‘human values' of Rokeach (1973).

17. Second, it means "what a society collectively sees as important...regardless of whether or not such highly valued objects of consumption really contribute to his or her well-being". This is a more collective/objective interpretation of value.

18. Third, value refers to "what the individual holds to be worthwhile to possess, to strive or exchange for". In comparison with the second definition, this is more individual and subjective.

19. Fourth, value refers to "the amount of utility that consumers see as residing in a particular object and they aim to maximize out of a particular act of buying or consuming. This last definition refers to the value that is derived from the purchase, consumption and disposition of products and services.

This study focuses on the fourth definition. The next section provides a background on four different types of value.

2.1 .5 .1 Four types o f va lue

Woodall (2003) reviewed the extensive literature on perceived value, or as he calls it ‘value for the customer.' He used a historical perspective to describe how value has been treated in the fields of economics and philosophy. He distinguished four types of value;

Intrinsic value,Exchange value,Use value,Utilitarian value.Based on whether the value assessment is subject-based or object-based (i.e. individual vs. collective), and on whether value should be seen in light of market characteristics and/or consumer sacrifices.

Intrinsic value Intrinsic value refers to the objective-based value that resides within the product, independent from market circumstances. This objective value assessment is made when people analyze the intrinsic product characteristics before, or during use. In this respect, Frondizi (1971) argued that all objects have ‘qualities' but if a quality is not valued, then it remains a quality. If it is valued, then it becomes an intrinsic value.

Exchange valueExchange value is also object-based, but influenced by market circumstances. For example, people attribute value to oil through an economic constant, which largely depends on the market circumstances (e.g. scarcity).

Use valueUse value is subjective-based and is perceived as individuals evaluate the product during, or just after use. It is associated with the rewards persons individually derive from using the product, and is thus highly subjective.

Utilitarian valueFinally, utilitarian value is also subject-based, but now refers to the point when intrinsic value and/or use value are compared with the sacrifice the person made in order to experience those forms of value. According to Woodall (2003), the utilitarian approach is to balance ‘all the good and the bad.' Here value is seen as the outcome of a personal comparison of sacrifices and benefits, an outcome that is essentially utilitarian in nature. The utilitarian approach assumes that the value derived by one individual is likely to be different from the value derived by another, because of the personal attribution of value. Value is here solely determined by the individual consumer (Woodruff 1997; Holbrook 1999), and only exists on the consumers' terms (Piercy 1997).

Figure 7 shows Woodall's (2003) conceptual model, which represents the different types of values and the impact of human values on these types of value. It is assumed that human values (e.g. quality of life, belongingness) guide consumers in their daily decision making by affecting the criteria by which value judgments are made. As such, human values are seen

as influencers of value (Woodall 2003). The four types of value illustrate the diversity in meanings of value, and the difficulty of conceptualizing the concept of value (cf. Zeithaml 1988). Woodall complicates the issue of what constitutes value by arguing that "value is neither use, nor exchange; it is neither object-based, nor subject-based; it is neither my view, nor your view, it is all of these things." He proposes that the types of value may play a more (less) substantial role in the formation of value, according to the situation itself and the individual consumer's value system.

Figure 7 Intrinsic, exchange, use and utilitarian value

2.1 .5 .2 Def in i t ions o f perce ived va lue

Researchers used different terms to define the construct of perceived value, although most of them meant the same concept (Woodruff 1997). Based on ninety marketing-related articles, Woodall (2003) found eighteen different names for the value consumers derive from buying and using the product. The most commonly used marketing terms of value:

perceived value (e.g. Chang and Wildt 1994; Dodds et al. 1991; Monroe 1990),

customer value (e.g. Anderson and Narus 1998; Dodds 1999; Holbrook 1994; 1996; Oh 2000; Woodruff 1997),

value (Berry and Yadav 1996; De Ruyter et al. 1997; Ostrom and Iacobucci 1995)

value for money (Sirohi et al. 1998; Sweeney et al. 1999).

Less frequently used value terms are:

20. value for the customer (e.g. Reichheld 1996),

21. value for customers (e.g. Treacy and Wiersema 1993),

22. customer perceived value (e.g. Grönroos 1997),

23. perceived customer value (Chen and Dubinsky 2003; Lai 1995),

24. consumer value (e.g. Holbrook 1999),

25. consumption value (Sheth, Newman and Gross 1991),

26. buyer value (e.g. Slater and Narver 1994),

27. service value (e.g. Bolton and Drew 1991),

28. acquisition and transaction value (Grewal et al. 1998; Parasuraman and Grewal 2000),

29. net customer value (e.g. Butz and Goodstein 1996),

30. perceived service value (LeBlanc and

Nguyen 2001),

31. consumer surplus (e.g. Brynjolfsson et al. 2003)

32. expected value (Huber et al. 1997).

There are a number of perceived value definitions that have been used in the literature;

6. Chen and Dubinsky (2003, p. 326)

a consumer's perception of the net benefits gained in exchange for the costs incurred in obtaining the desired benefits

7. Holbrook (1994, p. 27)

an interactive relativistic consumption preference experience

8. Monroe (1990, p. 46)

a tradeoff between the quality or benefits they perceive in the product relative to the sacrifice they perceive by paying the price

9. Spreng, Dixon and Olshavsky (1993, p. 51)

a consumer's anticipation about the outcome of purchasing a product or service based on future benefits and sacrifices

10. Schechter (1984), cited in Zeithaml (1988)

all factors, both qualitative and quantitative, subjective and objective, that make up the complete shopping experience

11. Sirohi, McLaughlin and Wittink (1998, p. 228)

what you [consumer] get for what you pay

12. Woodall (2003, p. 21)

any demand-side, personal perception of advantage arising out of a customer's association with an organization's offering, and can occur as reduction in sacrifice; presence of benefit (perceived as either

attributes or outcomes); the resultant of any weighted combination of sacrifice and benefit (determined and expressed either rationally or intuitively); or an aggregation, over time, of any or all of these.

13. Woodruff (1997, p. 142)

a customer's perceived preference for and evaluation of those product attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer's goal and purposes in use situations

14. Woodruff and Gardial (1996: p. 20)

a customer's perceived perception of what they want to happen in a specific use situation, with the help of a product and service ordering, in order to accomplish a desired purpose or goal

15. Zeithaml (1988, p. 14)

a consumer's overall assessment of the utility of a product based on perceptions of what is received and what is given.

Despite the varying terms and definitions, the following commonalities among these definitions stand out:

1. Perceived value is inherent in or linked through the use to some product, service or object,

2. Perceived value is something perceived by consumers rather than objectively determined,

3. Perceptions of value typically involve a tradeoff between what the consumer receives and what he or she gives up to acquire and use a product or service (Woodruff 1997).

2.1 .5 .3 Context -dependent nature o f perce ived va lue.

Previous research has unanimously confirmed the context-dependent nature of perceived value (Bolton and Drew 1991; Francis and White 2004; Holbrook 1994; Mathwick et al. 2002; Parasuraman 1997;

Woodall 2003; Zeithaml 1988). That is, the construction of perceived value differs between objects (product types), individuals, and circumstances (time, location, and environment). Not only do consumers differ in their evaluation of value between products and services (Zeithaml 1997), but also regarding the evaluations of the same product (Overby, Gardial and Woodruff 2004; Zeithaml 1988). Even for the same product, individual consumers value different qualities, or the same qualities to different degrees (Heskett et al. 1997; Holbrook 1999; Parasuraman 1997; Spreng et al. 1993; Zeithaml 1988). Even when the same individual evaluates value, he or she value may the product differently in time.

Woodall (2003) explained that consumers can construct value before purchasing (ex ante value), at the point of purchase and/or direct experience (transaction value), after the purchase (ex post value), and after use/experience (disposition value). Other authors also classified types of value based on the timing of evaluation. Grewal et al. (1998a) distinguished between;

Acquisition value,Acquisition value refers the consumer's

net gain (or tradeoff) from acquiring the product or service. It is associated with the benefits consumers think they are going to receive by acquiring the product/service relative to the monetary costs given up to acquire the product. The predicted value is based on the expected benefits and costs related to product purchase, use and disposition

Transaction value,Transaction value can be derived at the

point of purchase when consumers experience the pleasure of getting a good financial deal (Thaler 1985). Consumers may experience additional pleasure if they feel they get a bargain (e.g. was €200, now €150).

In-use value,In-use value involves the utility derived

from using the product/service by evaluating the actual benefits and costs related to its use.

Redemption value.Redemption value relates to the residual

benefit at the time of disposing the product or terminating the service (Grewal et al. 1998a).

The nature and determinants of perceived value may change over the various consumer cycle stages (Parasuraman 1997); that is, the relative emphasis on each component may change over time. While acquisition and transaction value dominate the first stages, in-use and redemption value may become salient during later stages of product/service usage. Thus, the antecedents or components of perceived value will differently impact consumers' evaluations of value at different points within the consumption process (De Ruyter et al. 1997; Woodall 2003; Zeithaml, 1988).

In line with this reasoning, Woodruff (1997) explained that consumers may consider different attributes and consequences and value them differently in time, such as when purchasing versus when using a product. Purchasing involves choosing, and that requires consumers to distinguish between product alternatives and evaluate which alternative is preferred. In contrast, during or after use, consumers are more concerned with the performance of the chosen product in specific use situations. Gardial et al. (1994) showed that consumers at the time of purchase rely more on the product attributes than they do during or after use. During and after use, the consequences become more salient. Consumers then learn about value in the form of preferred attributes, attribute performances, and consequences from using a product ; they form evaluative opinions about the actual value of using a product, i.e. use value. Thus, during the choice task consumers predict value by relying heavily on the product attributes, whereas during use they evaluate value predominantly on the consequences of use.

In this respect, Parasuraman (1997) put forward that the attributes that motivate a consumer's initial

purchase of a product may differ from the criteria that define value during use right after purchase, which in turn may differ from the determinants of value during long-term use. Consumers update evaluations and the importance of criteria through sequential purchases (Bolton 1998). In a similar vein, the attributes that motivate a consumer's initial use of a channel may be different from the criteria after using it. Thus, it can be expected that differences exist in the construction of value between experienced and less experienced consumers.

This research uses pre-purchase value perceptions because, as such, consumers that have not used a particular purchase channel are still capable of expressing their expectations of the use of that channel. Although they may have no experience with the exact consequences, they will probably have expectations about its use based on the channel attributes and opinions of others. These perceptions are likely to drive intentions and behavior.

2.1 .5 .4 Mul t i -d imens iona l nature o f perce ived va lue

Apart from the context-dependent nature of perceived value, the literature also confirmed its multi-dimensional nature, referring to multiple axiological dimensions or components of value. Researchers tried to classify the underlying dimensions with regard to purchasing and consumption. A broad approach is offered by Sheth et al. (1991); they distinguished between five dimensions of value:

Functional value (attributed-related, utilitarian benefits)

Functional value is concerned with the utility derived from the product quality and product performance.

Social value (social or symbolic benefits)Social value is the utility derived from

the product's ability to enhance social self-concepts, such as status.

Emotional value (experiential or emotional benefits)Emotional value refers to the utility

derived from the feelings, or affective states that a product generates.

Epistemic value (curiosity-driven benefits)Epistemic value refers to the surprise or

novelty aspect of a product; a product's capacity to arouse curiosity, offer novelty or satisfy a desire for knowledge.

Conditional value (situation-specific benefits).Conditional value refers to the situation

in which the value judgment is made. For example, specific situations such as Valentines Day and weddings can strongly enhance the perceptions of value.

Products often deliver a mixture of these types of values. For example, wine can act as an occasion (conditional value) and/or celebration enhancement (emotional value), while also complementing meals and enhancing the taste of food (functional value). Moreover, consumers sometimes seek to heighten their status by being knowledgeable about wines and to create a favorable impression within a social atmosphere (social value). The classification of Sheth et al. (1991) is characterized as benefit-driven because it onlydiscusses the benefits without explicitly linking it with the costs consumers bear (Duman 2002).

Based on the classification of Sheth et al. (1991), Sweeney and Soutar (2001) developed a multiple item scale (i.e. PERVAL) to measure perceived value. They omitted conditional value and epistemic value, as they were seen as less critical for a general measure of perceived value. Conditional value was omitted because it arises from situational (temporary) factors, whereas epistemic value was left out because the novelty or surprise aspect might only be apparent for hedonic products rather than for a wider product range. Based on the work of Zeithaml (1988), they split up functional value into quality and price arguing that some consumers perceive value as low price, whereas others perceive value when there is a balance between quality and price. The two components (quality and price) have different effects on perceived value for different consumers. Consequently, the perceived value scale comprised four dimensions:

quality/performance, price/value for money, emotional value and social value. The scale was tested based on the consumers' perceptions of a consumer durable and found to be reliable and valid in a prepurchase and postpurchase situation.

Other classifications have also been used to represent the axiological value dimensions. De Ruyter and his colleagues (De Ruyter et al. 1997; Lemmink, De Ruyter and Wetzels 1998) used the following value dimensions for services: emotional, practical and logical value. The emotional value dimension represents the emotional or affective side of the consumption experience, whereas the practical dimension refers to the functional consumption-related benefits. The logical dimension concentrates on the evaluation of the benefits against its costs (i.e. service quality vs. price). While the classification of Sheth et al. (1991) only discusses benefits, this classification takes into account the costs.

These classifications clearly broadened the concept of value by going beyond the functional value of purchasing and/or consuming products. It made clear that consumers also derive social, emotional and epistemic value from their shopping activities. These abstract value dimensions that were originally designed to elicit the product or service value dimensions can also be translated to a channel context. In doing so, functional value refers to the instrumental product-related and shopping-related benefits and costs consumers obtain from using the channel, whereas the social value refers to the utility derived from the channel's capability to enhance social concepts, such as self-confidence and status. When consumers use channels for purchasing, they may also derive emotional value through experiencing affective feelings and/or epistemic value through surprises and curiosities. The value of using channels under specific situations can obviously attenuate or increase value (conditional value).

2.1 .5 .5 Consumers ' format ion o f expected va lue

Although the axiological value dimensions are very beneficial in classifying the possible costs and benefits, they are rather abstract and do not show how consumers form judgments of expected value. Past research also tried to explain how consumers form value expectations of buying and using their products (cf. Woodruff 1997; Zeithaml 1988). Consumers are expected to purchase their products in order to help attaining their end goals or human values, such as quality in life, world at peace, and social recognition (cf. Rokeach 1973). Consumers form expectations of value based on lower-level abstractions in a means-end way: concrete attributes are the means to achieve the more abstract consequences, which are used to achieve the human values or end goals (cf. Howard 1977; Gutman 1982; Woodruff 1997; Zeithaml 1988)

Figure 8 Customer value hierarchy model (woodruff 1997)

Figure 8 shows that goals are organized hierarchically with the consumer's end goals or human values at the highest level, the consequences in the middle, and product attributes at the lowest level (Parasuraman 1997; Woodruff 1997). Attributes are the concrete descriptions that show what the product entails/possesses. Consequences refer to the outcomes from these product attributes. These outcomes refer to what the product or object can do for the consumer; they can be both negative and positive (Woodruff and Gardial 1996). Values refer to the most abstract end goals or human values, and are linked with the consequences. Consumers have their own personalized set of human values, which guide them in their daily shopping behavior (Rokeach 1973; Woodall 2003). For instance, a consumer that scores high on being kind to the environment may refrain from buying a particular brand that is harmful to the environment.

The studies of Woodruff (1997) and Zeithaml (1988) concentrate on the formation of value for products. In accordance with this means-end approach that explains how consumers evaluate products in terms of value, consumers also link lower-level store attributes

(e.g. opening hours, navigation perceptions, information availability) to more abstract consequences such as service quality, merchandise quality, and perceptions of value (cf. Baker et al. 2002; Kerin, Jain and Howard 1992). These consequences refer to the perceived costs and benefits of shopping online or offline, and may help consumers attain their personalized set of human values. The next section tries to classify the main costs and benefits consumers consider when purchasing.

2.1 .5 .6 C lass i f i cat ion o f purchase- re lated costs and benef i ts .

Most authors agree that perceived value refers to a tradeoff between all salient costs and benefits (e.g. Monroe 1990; Zeithaml 1988). To understand what constitutes value researchers have tried to classify these perceived benefits and costs. Early research focused on explaining perceived value of products, and defined perceived value as the tradeoff between product quality and price (Monroe 1990), or as a value-for-money assessment (Dodds and Monroe 1985). Sirohi et al. (1998) call this value-for-money assessment, "what you get for what you pay." Some authors addressed that viewing value as a tradeoff between only quality and price is too simplistic (e.g. Bolton and Drew 1991), particularly when products are not the focal point of interest. When consumers, for instance, evaluate the value of services, other criteria are needed to explain the apparent benefits and costs.

The service literature (e.g. Grönroos 1982; Parasuraman et al. 1985; 1988) indicated that apart from what is delivered (i.e. outcome value), the way the service is delivered (i.e. process value) is pivotal to the evaluation of service quality. Even though this distinction helped researchers to better predict the consequences of service quality (cf. Zeithaml, Berry and Parasuraman 1996), this approach is still limited as it ignores the sacrifices made (Cronin et al. 2000). Next, when evaluating retailers, consumers evaluate service quality, as well as merchandise quality (Mazursky and Jacoby 1986). In this context, Dodds (1999) argued that retailers provide most value when

the product is of the highest quality, supported by the best service quality, and offered at the lowest price. Additionally, Kerin et al. (1992) argued the importance of the shopping experience in explaining the value perceptions of a retailer. Consumers evaluate more than just the quality of the product and the additional services delivered in relation to price; they optimize the full process of decision making (procedural rationality), not just the outcomes (substantive rationality) (Simon 1976). In doing so, they generally make a tradeoff between the cognitive efforts and decision accuracy (Payne, Bettman and Johnson 1993).

This research uses Zeithaml's (1988) classification and insights from shopping literature to classify the purchase-related costs and benefits. Value judgments are predominantly influenced by evaluations of perceived quality (product and service-related benefits), monetary and nonmonetary costs, and hedonic shopping benefits. Perceived quality refers to the consumer's judgments about a product's or service's overall excellence or superiority. It acts as a global assessment, resulting from product and service-related benefits. Next, consumers endure monetary and nonmonetary costs when buying products.

Monetary costs refer to the price consumers have to pay. Studies investigate perceived price rather than the objective price, as consumers often do not evaluate the exact price, but rather encode it as ‘cheap', ‘reasonable' or ‘expensive' based on their internal reference price (Zeithaml 1988). Zeithaml (1988) views perceived price as costs, but other authors claim that price has a dual effect (Agarwal and Teas 2001; Dodds et al. 1991; Monroe 1990: Teas and Agarwal 2000). Price is a financial sacrifice, but it also positively influences perceptions of value through increased product quality perceptions. However, as the net effect of price on perceptions of value seems to be negative (Dodds et al. 1991), it is often placed among the costs.

Apart from monetary costs, consumers make other types of sacrifices to obtain or use the product or service (Becker 1965). These nonmonetary costs particularly refer to the time and effort -both mentally

and physically- and the psychological costs (e.g. uncertainty, frustration, anger, fear) made by the consumer. Although time/effort expenditures and psychological costs are conceptually related constructs (e.g. crowding can result in more time usage and psychological discomfort), researchers have treated them as distinct (cf. Baker et al. 2002; Zeithaml 1988). The psychological costs refer to the consumer's mental stress or emotional labor during the shopping experience, whereas time and effort costs refer to the non-emotional investments made by the consumers (Baker et al. 2002). In her classification, Zeithaml (1988) mainly focused on the shopping costs, but shopping literature (e.g. Babin et al. 1994; Babin and Darden 1995; Hirschman and Holbrook 1982) indicated that consumers also derive positive feelings from purchasing; they experience hedonic shopping benefits. This stream of research addresses that consumers evaluate shopping experiences along utilitarian and hedonic dimensions; they experience utilitarian and hedonic value.

The utilitarian dimension reflects whether consumers achieve their shopping goals with minimum investments in time and effort. To improve utilitarian shopping value, consumers must save time and/or reduce effort by engaging in goal-directed behavior that is instrumental, purposive, and task-specific (Hoffman et al. 2002). The hedonic dimension represents the experiential value consumers derive from the shopping process; it refers to emotional and epistemic value (cf. De Ruyter et al. 1997; Sheth et al. 1991). In this respect, consumers are more concerned with entertainment and enjoyment value; they engage in experiential behavior that is likely to be hedonic, ritualized and reflects nonlinear search (Hoffman and Novak 1996). Some authors leave out enjoyment because nonmonetary costs are assumed to have a much stronger impact on consumer behavior (e.g. Baker et al. 2002). This research, however, takes into account the emotional value dimension by suggesting that enjoyment has a distinctive positive effect on purchase intentions. Particularly for hedonic, experiential products, the affective side of shopping experience plays a pivotal part. Yet, this study does not classify the shopping benefits related to social

value (value derived from social approval and enhancement of self-image), epistemic value (value derived from curiosity and novelty) and conditional value (value derived from a particular situation). It focuses on the utilitarian and hedonic shopping value derived from the transaction itself. Consequently, it includes the functional and emotional value aspects of shopping. Analogous to the work of Sweeney and Soutar (2001), the influence of conditional value is seen as less important because the survey asks customers to give their general prepurchase evaluations without referring to a special occasion. Next, social value and epistemic value are expected to be partly captured by shopping enjoyment.

Table shows the classification of the purchase-related costs and benefits that constitute shopping value, i.e. value derived from shopping activities.

Table 1 Classification of purchase-related perceived costs and benefits

Cost Benefits

Monetary Nonmonetary Functional / Utilitarian

Nonfunctional /

Perceived price

Time and effort expenditures

Product quality Enjoyment, pleasure,

Psychological cost,(risk, anxiety, stress,frustration)

Service quality

2.1 .5 .7 Antecedents o f perce ived va lue and purchase intent ions

Although perceived value is highly personal and

idiosyncratic (Zeithaml 1988), scholars have tried to find common predictors of perceived value to understand what constitutes value and purchase intentions. Over the years, a considerable body of literature has empirically investigated the antecedents that determine product value and product choice (e.g. Bolton and Drew 1991; Zeithaml 1988), and store value and store choice (e.g. Baker et al. 2002; Donovan et al. 1994; Sirohi et al. 1998; Zeithaml et al. 1996). Most authors in this field used Zeithaml's classification of perceived costs and benefits to predict perceived value and purchase intentions (e.g. Baker et al. 2002; Sirohi et al. 1998; Sweeney et al. 1999). As such, they often treated the benefits and costs both as antecedents and as components of value (see Dabholkar et al. 2000). Before addressing the criteria consumers use for their purchasing, this observation is explained.

Research on value dimensions (e.g. functional value, emotional value) focuses on the components or constituents of value. It focuses on construct definition, denoting what perceived value includes or comprises (Rossiter 2002). In this respect, perceived value is seen as the (weighted) summation of its components. When these components are not related to an overall measure of perceived value, it is not possible to capture the effect or importance of each dimension (Dabholkar et al. 2000; Sweeny and Soutar 2001). Contrastingly, research has also addressed how the concept of perceived value behaves in retail settings, referring to the determinants and consequences of (the components of) value. This type of research focuses on understanding the relationships between constructs. Here, the benefits and costs sometimes act as components of value, and as antecedents of value. For instance, time and effort costs are seen as antecedents of perceived value (Zeithaml 1988), but can also simultaneously act as a component of value (cf. Baker et al. 2002).

Studies focusing on the interrelationships often take a more practical view, and use the identified costs and benefits without explicitly addressing whether they are used as components or predictors of value (e.g. Baker et al. 2002; Cronin et al 2000). However, the complex

nature of the perceived value concept sometimes necessitates researchers to model benefits/costs simultaneously as antecedents and components of value. The second stream of research provides us additional insights into how customers evaluate value. For example, research on the value dimensions cannot explain the dual effect of price (cf. Agarwal and Teas 2001; Dodds et al. 1991).

2.1 .5 .8 Product va lue and product cho ice .

A number of studies investigated how value perceptions are formed and how these perceptions influence product choice. For example, a study by Sweeney et al. (1999) showed the role perceived risk has in the quality-value relationship for durable goods. They concluded that consumers do not only consider the immediate benefits and sacrifices, but also contemplate about the longer-term implications of the product's ownership, including performance and financial risk. Perceived risk is considered a sacrifice, as it involves psychological costs. The results showed that product quality, relative price (i.e. relative to products with similar features), risk and functional and technical service quality defined perceived value. Perceived risk played an important role in the quality-value relationship; it was found to be a significant mediator of this relationship. Product and service quality reduced perceptions of risk, which, in turn, affected perceived product value. Additionally, the mediating role of perceived value was questioned; thus, whether it was necessary to include perceived value as a mediator, or whether it was possible to directly link service quality, merchandise quality, risk and relative price with willingness-to-buy. The results indicated that perceived value was found to be significant mediator and should be included.

Teas and Agarwal (2000) also researched the antecedents of perceived product value. Their model included perceived quality and perceived sacrifice that indirectly influenced perceived value through perceptions of performance and financial risk. Perceived quality was negatively related to

performance risk, whereas price was positively associated with financial sacrifice, as well as perceived quality (dual effect of price). The results demonstrate that perceived quality and perceive sacrifice have an indirect effect on perceived product value through performance risk and financial risk.

Table 2 Study & research of value perception

Study Service quality

Merchandisequality

Monetaryprice

Time/effort cost

Psygologicalcost

Agarwal andTeas (2001)

Productquality

Price Performance riskfinancial

risk

Baker et al.(2002)

Interpersonalservice quality

Merchandisequality

Monetaryprice

Time/effort costs

Psychiccosts

Bolton andDrew (1991)

Service quality

Sacrifice

Chang andWildt (1994)

Quality Price

Chen andDubinsky (2003)

Customerservice

Productquality

Productprice

Valence ofexperienc

e

Perceivedrisk

Cronin et al.(2000)

Servicequality

Sacrifice

Dodds, Monroeand Grewal(1991)

Product quality

Sacrifice

Kerin, Jainand Howard

Merchandisequality

Price Shopping experience

(1992)

Sirohi,McLaughlinand Wittink(1998)

Servicequality

Merchandisequality

Relative price and promotion

s

Sweeney,Soutar andJohnson(1999)

Technical and

functionalservicequality

Productquality

Relativeprice

Performance / financial risk

Teas andAgarwal(2000)

Perceivedquality

Sacrifice

2.1 .5 .9 Conc lus ion perce ived va lue

Reviewed perceived value identified the dimensions and/or and antecedents of value, which are likely to affect purchase intentions and customer satisfaction.

The marketing literature confirms that perceived value is linked through the use to some product, service or object; is something perceived subjectively; and, involves a tradeoff between the salient perceived benefits and costs. Prior research reported the context dependent and multi-dimensional nature of perceived value. Although perceived value is highly personal and idiosyncratic (Zeithaml 1988), researchers have tried to classify common purchase-related costs and benefits. A stream of research focuses on the axiological dimensions or components of perceived value; this stream of research sees perceived value as the (weighted) summation of the identified components.

Another stream of research is more interested in understanding the interrelationships and sometimes allows the benefits and costs to act as components and antecedents of value. This study follows the last

stream of research, as it provides additional insights into the relative effects of the antecedents of perceived value and purchase intentions. Next, it fits better with how consumers actually make evaluations of shopping online and offline (cf. Dabholkar et al. 2000).

A review of the product and store value literature showed the following classification of purchase-related costs and benefits:

Service quality,Merchandise quality,Monetary price,Time/effort costs,Psychological costs,Enjoyment.In addition to this, the construct of perceived value (i.e. value for money) has been found to frequently act as a mediator between the components and purchase intentions (e.g. Sweeney et al. 1999). Consumers are expected to consider these seven criteria when evaluating online and offline stores.

Figure 9 displays the antecedents of perceived value and purchase intentions. The conceptual model itself is well founded in the literature; it, however, introduces enjoyment as an additional predictor of purchase intentions. Note that this treats the shopping experience costs and benefits, depicted in the square box, as components of value, rather than as predictors of the value construct

Figure 9 Base model of channel purchase intentions

This study argues that this model holds for both the online and offline context: consumers consider the same benefits and costs, but may vary in their performance scores and weights they attach to them (see Verhoef et al. 2005).

2.1.6 Corporate brand image

It is imperative to understand the most important brand functions in B2B environments. McKinsey and MCM have performed an empirical survey of more then 750 deciders in 18 representative German business markets. Despite of the German impact the approach and general implications can be applied on international level. Apparently risk reduction is the most important brand function (45%), closely followed by information efficiency (41%). Image benefit will close the group with a minor 14% (Kotler & Pfoertsch, 2006:46-47). See figure 10.

Figure 10 Importance of brand functions in B2B versus B2C

Brands reduce risk involved in the buying process and increase information efficiency for the purchase of (very) complex and capital intensive products. Image benefits become important as soon as the purchase involves publicly visible products and services. Initiating on the company level, image has been defined as "perceptions of an organization reflected in the associations held in consumer memory" (Keller

1993). The history of corporate image definition reveals convergence on a gestalt meaning, but one that omits corporate attributes and focuses exclusively on perceiver images (Ster et al., 2001) starts to appear - the transactional process. In this meaning, the process is developed between the brand stimulus and the consumer perceiver. Thus, It is hoped that any consumer starts its purchase process by evaluating the image of something or by remembering the old ones (mainly the positive ones). Therefore, corporate image, in the service marketing literature, was early identified as an important factor in the overall evaluation of the service and the company (Andreassen and Lindestad 1997; Grönroos 1984). Moreover, it is also one of the most important tools for diverging among competitors.

Customer satisfaction has a positive influence on corporate image. Based on the transaction driven nature of satisfaction experience, several writers claim that corporate image is a function of the cumulative effect of customer (dis)satisfaction (Fornell 1992, Johnson and Fornell 1991). It suggested that when more the customer is satisfied, more this affective aspect will create a positive corporate image in the customer cognitive system. In fact, corporate image is established and developed in the consumers' mind through communication and experience (Andreassen and Lindestad, 1997). As a practical terms, it could mean that a determinate degree satisfaction (e.g. with a fast attendance) could generate a positive corporate image.

The cross-sectional nature of national customer satisfaction data means that pre-purchase expectations are collected post purchase, or at the same time that satisfaction is measured. (Johnson et all., 2001). What is really being collected is a customer's perception of the company's or brand's corporate image. Moreover, this corporate image will have been affected by the customer's more recent consumption experiences, or customer satisfaction. The effect of satisfaction on corporate image reflects both the degree to which customers' purchase and consumption experiences enhance a product's or service provider's corporate image and the consistency of customers' experiences over time.

2.2 Literature research reflection

High customer loyalty is one of the most important indicators of good performing companies. Since customer satisfaction is directly linked to customer loyalty it is evident that measuring customer satisfaction without taking customer loyalty into account and vice versa would be misleading.

What is needed is a way of measuring customer satisfaction in an inter-relational environment where relevant factors for determining satisfaction and also loyalty are measured simultaneously. This is best done using a causal model approach where the drivers of satisfaction as well as its resulting effects on loyalty are explicitly introduced. The approach outlined below offers such a framework.

Customer satisfaction is a multidimensional concept. It is a highly personal matter for the customer, which is influenced by a number of factors. Measurement of customer satisfaction thus needs to take a number of interrelated factors into account. In this approach the analysis is based on applying a micro economic model for determining satisfaction.

2.2.1 Which are the criteria for appraisal of customer satisfaction and how to classify these into antecedents?

Satisfaction is an overall customer attitude towards a service provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfillment of some need, goal or desire. Satisfaction represents a veritable key of modeling the acquisition behavior of the customer, being supported by three groups of variables:

Cognitive variables, based on the qualitative

superiority of the products given by the performance.

Affective variables, based on the emotions produced to the customers.

Conative variables, based on the interaction between the provider and the customer in the buying act.

The findings and answer to the first central question is segregated over the following four sub questions.

2.2 .1 .1 Which genera l character is t ics o f customer sat is fact ion can be def ined?

General characteristics involve features or qualities related to customer satisfaction serving to identify this phenomenon among other customer relationship management propositions.




A totally satisfied customer contributes 2.6 times as much revenue to a company as a somewhat satisfied customer.

A totally satisfied customer contributes 17 times as much revenue as a somewhat satisfied customer.

A totally dissatisfied customer decreases revenue at a rate equal to 1.8 times what a totally satisfied customer contributes to a business.

36. Customer satisfaction characterizes itself by a high degree of word-of-mouth where satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people. Equally well,

dissatisfied customers are more likely to tell another ten people of their unfortunate experience.

2.2 .1 .2 Which cr i ter ia can be drawn f rom the theory o f customer sat is fact ion?

A criterion for this purpose is seen as dimensions for the customers' satisfaction assessment. I have drawn the following 23 criteria from the theory as studied:

16. Product quality17. Product functionality18. Product availability / range19. Product knowledge20. Accessibility / location21. Access time / opening hours22. System of access23. Service provision24. Brand / company reputation25. Brand / company status26. Brand / company assurance27. Competitive price level28. Negotiation /discount policy29. Terms of payment30. Perceived value31. Accuracy of service32. Dependability of service33. Promptness of service34. Competence and treatment35. Employee behavior36. Operational performance37. Expected value38. Service degree2.2 .1 .3 How to c lass i fy the cr i ter ia o f customer sat is fact ion into antecedents?

The criteria can be classified in multiple groups which could fulfill a significant antecedent function in causal models towards customer satisfaction. See figure 11.

Figure 11Clasification of customer satisfaction criteria

3 Empir ica l research structureIn chapter two I have captured a literature study of scientific theories and concepts of customer satisfaction to create a common understanding of customer relation management and all facets of customer satisfaction in particular. The literature study has formed the basis of my empirical research structure. This chapter describes the empirical research structure by its type, strategy and method, objectivity and reliability, data collection, data processing, and research assessment.

3.1 Research strategy and method

Research strategy and research method need to comply with the research questions, if not, they will not enable the researcher to find the right answers.

Accordingly I have chosen for a cross-sectional non-experimental research strategy, using examination and document research techniques. See figure 12.

Cross-sectional research refers to data collection across multiple sources, individuals, and so on, without time discrimination. A momentary snapshot of a given situation. It differs from longitudinal research which monitors sources over a course of time (Wikipedia). Non experimental stands for a systematic empirical and research independent approach. Kerlinger and Lee define this as follows:

"Nonexperimental research is systematic empirical inquiry in which the scientist does not have direct control of independent variables because their manifestations have already occurred or because they are inherently not manipulable. Inferences about relations among variables are made, without direct intervention, from concomitant variation of independent and dependent variables." (Kerlinger and Lee, 2000;558)

Figure 12. Research strategy and method.

3.2 Research objectivity and reliability.

I have examined the research with an open attitude instead using my own standards and perspective, to find methodical answer on the research question. Using the latest theoretical valid knowledge will legitimate my research objectivity. My research is controllable and traceable driven by the above mentioned research strategy and methodology. As a consequence, both empirical and literature study are research worker independent and independently reproducible over time. Therefore, I classify the obtained data as reliable.

3.3 Research data collection.

I have gathered my research data from different angles, using desk research methods. I have researched customer satisfaction models to determine how existing cause and effect models comply against my set of model criteria within the (six) model categories.

3.3.1 Empirical desk research

From a best practice point of view relevant research findings are copied and reused in this research study. I have not copied texts or taken ideas from someone else's work in order to use that as if they were my own, notwithstanding the fact that it could have been my reflection of that specific topic.

4 Data gather ingIn chapter three I have captured the empirical research structure by its type, strategy and method, objectivity and reliability, data collection, data processing, and research assessment. In this chapter I will describe how the relevant data is collected, which data is gathered, and justify among who the data is acquired with a direct relation to internal document, customer satisfaction.

4.1 Document analyses

I have studied and examined over 30 academic papers, thesis and dissertations regarding relevant customer satisfaction and customer satisfaction modeling. All papers, thesis and dissertations where public available and free to download on the internet. Most important studied and examined documents:

A comparative Study on Several National Customer Satisfaction

An analysis of the New Norwegian Customer

Satisfaction Barometer (New NCSB) in a Supermarket Context

Customer satisfaction and customer value

Customer Satisfaction and Stock prices

Customer satisfaction surveys

Guidance Collecting Customer Satisfaction

Measuring customer satisfaction and loyalty

Measuring Online and Offline Shopping value perception

National Customer Satisfaction Measurement- Past and Future

Relation management and customer satisfaction in B2B

The evolution and future of national customer satisfaction index models

The Importance of Customer Satisfaction in Relation to Customer Loyalty and Retention

The one number you need

The six laws of customer experience

Why satisfied customers defect

5 AnalysesIn chapter four I have described how the relevant data is collected and which data is gathered. In it I justify how the data is acquired and the direct relation to customer satisfaction and possible customer satisfaction models. In this chapter I will analyze four national customer satisfaction models against the gathered data in my literature study and answer the central thesis questions as formulated in chapter 1.2.4 section 2;

2. Which are the interdependencies of customer satisfaction models? 2.3. To what extent do causal customer satisfaction models meet the assessed criteria and antecedents?2.4. How can the customer satisfaction be measured

5.1 Customer satisfaction index (CSI) models

Since 1970s, researchers of consumer behavior and marketing in developed countries have begun to make comprehensive studies on customer satisfaction (e.g. Oliver (1977), Churchill and Suprenant (1982), Olshavsky (1993)). In 1989, Fornell and his colleagues in Michigan University helped Sweden build the first nation-level measurement system of customer satisfaction - Swedish Customer Satisfaction Barometer (SCSB) (Fornell, 1992). The SCSB became a uniform, cross company, cross-industry national measurement instrument of customer satisfaction and evaluations of quality of products and services. The basic model for estimating these indices is a structural equation model which links customer satisfaction to its determinants namely perceived quality, customer expectations and perceived value, and, in turn, to its consequences, namely customer loyalty and customer complaints.

Later in 1994, American Customer Satisfaction Index (ACSI) was launched (Fornell, 1996). In ACSI model customer expectation, perception of quality, perceived value were introduced as the antecedents of customer satisfaction and customer loyalty and customer complaint as consequences.

In the middle of 1990s, CSI was gradually recognized by governments and companies worldwide as a good instrument to gauge a nation's or company's output quality. Till now, nation-level CSIs have Swedish Customer Satisfaction Barometer (SCSB), American Customer Satisfaction Index (ACSI), European Customer Satisfaction Index (ECSI), Norwegian Customer Satisfaction Barometer (NCSB), German Barometer, Swiss Index of Customer satisfaction (SWICS), Korean Customer Satisfaction Index (KCSI), Malaysian Customer Satisfaction Index (MCSI). In addition, Brazil, Argentina, Mexico, Canada, Australia, Hong Kong and some regions like Taiwan, are striving to build their own CSI systems.

Although these CSIs are fundamentally similar in measurement model (i.e. causal model), they have some obvious distinctions in model's structure and variable's selection so that their results cannot be compared with each other. On the other hand, for nations who are attempting to construct their own CSIs, only to take full advantages of other nations' CSI experiences can they establish the CSIs which are suited for their nation's characters. Therefore, a comparison and analysis of the differences among these existed CSIs seems to be indispensable and valuable.

Four influential national customer satisfaction index models are evaluated from three perspectives;

The latent and manifest variables in CSI modelsA manifest variable (or indicator) is an

observable variable - i.e. a variable that can be measured directly. A manifest variable can be continuous or categorical.

A latent variable describes an unobservable construct and cannot be observed or measured directly. Latent variables are essential elements of latent variable models. A latent variable can be categorical or continuous.

The exogenous and endogenous variables in CSI models

Exogenous variables in causal modeling are the variables with no causal links (arrows) leading to them from other variables in the model. In other words, exogenous variables have no explicit causes within the model. The concept of exogenous variable is fundamental in path analysis and structural equation modeling. The relationships among latent variables.

Endogenous variables in causal modeling are the variables with causal links (arrows) leading to them from other variables in the model. In other words, endogenous variables have explicit causes within the model.

The relationships among variables.The selected national CSI models are known as the most sophisticated and influential CSI models;

37. Swedish Customer Loyalty Barometer (SCSB) 198938. American Customer Loyalty Index (ASCI) 199439. Norwegian Customer Loyalty Barometer (NCSB)

1996European Customer Loyalty Index (ECSI) 2000

5.1.1 The Swedish Customer Satisfaction Barometer (SCSB)

The original SCSB model (Fornell, 1992), shown in Fig. 13, contains two primary antecedents of satisfaction: perceptions of a customer's recent performance experience with a product or service, and customer expectations regarding that performance. More specifically, perceived performance is equated with perceived value, or the perceived level of quality received relative to the price or prices paid. Quality per dollar, or value, is a common denominator that consumers use to compare brands and categories alike (Emery, 1969). The basic prediction is that as perceived value increases, satisfaction increases.

Figure 13 The original Swedish Customer Satisfaction Barometer model

The other antecedent of satisfaction is how well the customer expected the product or service to perform. Customer expectations are defined as that which a customer predicts ("will" expectations) rather than a normative standard or benchmark ("should" expectations; Boulding et al., 1993). These expectations are argued to positively affect customer satisfaction because they serve as cognitive anchors in the evaluation process (Oliver, 1980). While perceived performance captures more recent experience, customer expectations capture a customer's prior consumption experience with a firm's products or services as well as advertising and word-of-mouth

information. Because expectations forecast a firm's ability to provide future performance, it is argued to have a positive effect on satisfaction in the SCSB model (Fornell, 1992). Finally, expectations should be positively related to perceived performance (value). This captures customers' abilities to learn from their experience and predict the level of performance they will receive.

The consequences of satisfaction in the original SCSB model are derived from Hirschman's (1970) exit-voice theory. The theory describes situations in which a client or customer becomes dissatisfied with the products or services that an organization provides. The organization discovers its failure to provide satisfaction via two feedback mechanisms, exit and voice. The customer either exits, or stops buying from the firm, or voices its complaint of dissatisfaction to the firm in an effort to receive restitution. Accordingly, the immediate consequences of increased satisfaction are decreased customer complaints and increased customer loyalty. An increase in satisfaction should decrease the incidence of complaints. Increased satisfaction should also increase customer loyalty (Bloemer and Kasper, 1995), which is a customer's psychological predisposition to repurchase from a particular product or service provider. Loyalty is the ultimate dependent variable in the model because of its value as a proxy for actual customer retention and subsequent profitability.

Finally, the original SCSB includes a relationship from complaint behavior to customer loyalty. Although no prediction is made regarding this relationship, the direction and size of this relationship provides some diagnostic information as to the efficacy of a firm's customer service and complaint handling systems (Fornell, 1992). When the relationship is positive, a firm may be successfully turning complaining customers into loyal customers. When negative, complaining customers are predisposed to exit.

Table 4 Latent and manifest variables SCSB

Latent variables Manifest variables

Perceived performance

40. Price paid for quality received

41. Quality received for paid price

39. Customer expectations

4. Expectations of performance (as it will be)

Customer satisfaction

Overall satisfaction

Fulfillment of expectations

Customer complaints

Quantity of registered complaints

Complaint handling

Customer loyalty Repurchase behavior

Table 5 Exogenous and endogenous variables SCSB

Exogenous variables Endogenous variables

Customer expectation

Perceived quality


Complaint

Customer loyalty

5.1.2 The American Customer Satisfaction Index (ACSI)

The ACSI model, developed in 1994 and illustrated in Fig. 14, builds upon the original SCSB model specification, see figure 13. (For details of the ACSI survey and model see Fornell et al.,1996). The model is estimated for each of the approximate 200 firms in the survey based on a random sample of approximately 250 of the firm's customers. A total of 15 survey questions are used to operationalize the 6 constructs in the model. The survey questions are all rated on 1 to 10-point scales with the exception of price tolerance (described below) and complaint behavior (a dichotomous variable indicating whether the customer has complained or not). In every case, the measurement variables are specified as reflective

indicators of the latent constructs in the model.

Figure 14 The American Customer Satisfaction Index model

The main differences between the original SCSB model and the ACSI model are the addition of a perceived quality component, as distinct from perceived value, and the addition of measures for customer expectations. (By deleting the perceived quality construct and its relationships from figure 13, the reader can readily see the original SCSB model specification in figure 13.)

Quality experts (Deming, 1981; Juran and Gryna, 1988) delineate two primary components of the quality experience, the degree to which a product or service provides key customer requirements (customization) and how reliably these requirements are delivered (reliability). Asking customers to rate customization quality, reliability quality, and overall quality allows the ACSI model to delineate a distinct quality construct that is separate from perceived value. In 1996 the ACSI survey and model were expanded to delineate two general types of perceived quality, product (physical good) quality and service quality. This change was made only for manufacturing durables as they contain both a large product and a large service component. The survey questions used in other sectors to measure perceived quality (customization, reliability, and overall quality) are asked separately for both the product and service aspects of the offering.

The perceived value construct is operationalized using the same two survey questions as in the original Swedish model, a rating of the price or prices paid for the quality received and a rating of the quality received for the price or prices paid. The ACSI model predicts that as both perceived value and perceived quality increase, customer satisfaction should increase. Expected customization and expected reliability were also added to the survey to measure customer expectations using three survey measures (overall expectations, expected customization, and

expected reliability).

Fornell et al. (1996) argue that the inclusion of both perceived quality and perceived value into the ACSI model provides important diagnostic information. As the impact of value increases relative to quality, price is a more important determinant of satisfaction. As quality is a component of value, the model also links quality directly to value. There are two measures of customer loyalty in the ACSI model. The first is a rating of repurchase likelihood. The second measure is constructed from two survey ratings: the degree to which a firm could raise its price(s) as a percentage before the customer would definitely not choose to buy from that firm again the next time (given the customer has indicated that he or she is likely to repurchase), and the degree to which a firm would have to lower its price(s) as a percentage before the customer would definitely choose again from that firm the next time (given the customer has indicated that he or she is unlikely to repurchase).

Table 6 Latent and manifest variables ACSI


Perceived overall quality

42. Overall perception of quality

43. Perception of reliability

44. Perception of features


5. Overall expectations

6. Expectations for reliability

7. Expectations for feature

Perceived value Price paid for quality received

Quality received for paid price




Comparison with ideal

Customer complaints Quantity of registered complaints

Complaint handling


Tolerance of price

Table 7 Exogenous and endogenous variables ACSI



Perceived quality

Perceived value


Complaint

Customer loyalty

5.1.3 The Norwegian Customer Satisfaction Barometer (NCSB)

The first NCSB model was identical to the original American model with the exception that it included corporate image and its relationships to customer satisfaction and customer loyalty.

The new model: (1) replaces the value construct with a "pure" price construct; (2) replaces customer expectations with corporate image as a consequence of satisfaction; (3) includes two aspects of relationship commitment as well as corporate image as drivers of loyalty; (4) incorporates the potential for direct effects of price on loyalty, and (5) includes complaint handling as a driver of both satisfaction and loyalty. These changes are part of the proposed model that is illustrated in figure 15.

Figure 15 The Norwegian Customer Satisfaction

barometer model

Key to perceptions of corporate image is the organization-related associations held in a customer's memory. These associations are similar to schemas in cognitive psychology (Brandsford and Franks, 1971; Brandsford and Johnson, 1972). According to Fishbein and Ajzen (1975), attitudes are functionally related to behavioral intentions, which predict behavior. As a type of attitude, corporate image should be updated as schemas, including customer satisfaction, are changed. Corporate image should, in turn, affect behavioral intentions such as loyalty. Selnes (1993) hypothesized and documented these effects for brand reputation (a large part of overall corporate image) in a study of four companies from different industries. Finally, in two studies related to the impact of corporate image on customer intent, Andreassen and Lindestad (1998a, 1998b) found a positive correlation between the constructs.

In keeping with the evolution in marketing from a transactional to a relational orientation among service providers, the NCSB model was expanded over time to include a relationship commitment construct. The construct has evolved to focus on both the affective and calculative components of commitment. While the affective component is "hotter" or more emotional, the calculative component is based on "colder" aspects of the relationship such as switching costs. The commitment constructs are modeled as mediating the effects of satisfaction on loyalty (behavioral intentions).

Table 8 Latent and manifest variables NCSB


Affective commitment

45. Trust

46. Reliability

47. Responsive

48. Assurance

41. Calculative commitment

8. Switching cost

Perceived price / index

Product price

Expected price

Corporate image Overall image

Image of branches

Image in friends eyes



Expectation of disconfirmation

Complaint handling How complaints are handled

How complaints are resolved


Intentions to recommend

Table 9 Exogenous and endogenous variables NCSB

Exogenous variables

Endogenous variables

Price index

Complaint handling

Quality drivers

Tangible

Reliability

Responsive

Assurance

Empathy


Corporate image

Calculative commitment

Affective commitment

Customer loyalty

5.1.4 The European Customer Satisfaction Index (ECSI)

The ECSI represents another variation on the ACSI

model (Eklöf, 2000). The customer expectations, perceived quality, perceived value, customer satisfaction, and customer loyalty constructs are modeled the same as in the ACSI. See figure 16. The survey questions are also all rated on 1 to 10-point scales.

Figure 16 The European Customer Satisfaction Index model

The distinction between service quality and product quality in a subset of ACSI industries is standard in the ECSI. The measures of customer loyalty are also somewhat different. For the ECSI the loyalty measures include likelihood of retention, likelihood of recommending the company or brand, and whether the amount customers are likely to purchase will increase.

There are two more fundamental differences between the ACSI and ECSI models. First, the ECSI model does not include the incidence of complaint behavior as a consequence of satisfaction. As described subsequently, there is good reason for this change. Second, in keeping with the original NCSB, the ECSI model incorporates corporate image as a latent variable in the model. Corporate image is specified to have direct effects on customer expectations, satisfaction and loyalty. ESCI has been renamed EPSI which stands for European Performance Satisfaction Index. This has been done in order to open in for other performance measures like employee satisfaction and society trust. The EPSI Rating is run under the umbrella of a European not-for-profit organization, associated throughout its history and by its approach with the following leading European quality organizations EFQM (European Foundation for Quality Management, EOQ (European Organization for Quality) and IFCF(International Foundation for Customer Focus).

Table 10 Latent and manifest variables ECSI


Corporate image 49. Overall image

50. Image of branches

51. Ethics


9. Overall expectations

10. Interactive expectations

Perceived value Value for money

Comparison with competitors

Perceived service quality

Overall quality perception

Meet requirements

Service quality

Reliability and accuracy provided

Perceived product quality

Overall quality perception

Meet requirements

Technical product quality

Reliability

Customer satisfaction Overall satisfaction


Comparison with ideal


Intention to buy addition

Intentions to recommend

Table 11 Exogenous and endogenous variables ECSI


Corporate image

Perceived product quality

Perceived service quality


Perceived value


Complaint

Customer loyalty

5.2 Comparison of customer satisfaction models.

The four CSI models are fundamentally similar in measurement model (i.e. causal model), they have some obvious distinctions in model's structure and variable's selection so that their results cannot be compared with each other.

All models have an academic/scientific, causal construct. The purpose of each CSI construct is to be a structural equation model for standard measurement for evaluation of customer satisfaction based on a set of latent variables determined by a set of manifest constructs. Each latent variable is measured, the level of each latent variable estimated, the relevant connections between the latent variable established and the magnitude of the connections estimated. The objective of all CSI models is to provide results that are relevant, reliable, valid and have predictive financial capability.

The national CSI models are evaluated from four perspectives;

The Latent variables comparison (table 12)The Endogenous and exogenous variables compariso

(table 13)CSI comparison - generic qualities (table 14)National CSI model platforms versus Energyst locations

(table 15)

5.2.1 Most important similarit ies and differences among the models.

Table 12 Latent variables comparison table

SCSB

ACSI

NCSB

ECSI

Customer expectations Yes Yes Yes

Perceived overall quality Yes

Perceived performance Yes

Perceived service quality Yes

Perceived product quality Yes

Quality drivers Yes

Affective commitment Yes

Calculative commitment Yes

Corporate image Yes Yes

Perceived value Yes Yes

Price index Yes

Complaint handling Yes

Customer complaints Yes Yes

Customer satisfaction Yes Yes Yes Yes

Customer loyalty Yes Yes Yes Yes

Table 13 Endogenous and exogenous variables comparison table

SCS ACS NCS ECS

B I B I

Customer expectations Exo Exo Endo

Perceived overall quality Endo

Perceived performance Endo

Perceived service quality Endo

Perceived product quality Endo

Quality drivers Exo

Affective commitment Endo

Calculative commitment Endo

Corporate image Endo Exo

Perceived value Endo

Endo

Price index Endo

Complaint handling Endo

Customer complaints Endo Endo

Customer satisfaction Endo Endo

Endo Endo

Customer loyalty Endo Endo

Endo Endo

Table 14 CSI comparison - generic qualities

SCSB

ACSI

NCSB

ECSI

Linked to quality organizations Yes Yes

Causal equation model Yes Yes Yes Yes

Publish national results Yes Yes

Publish sector results Yes Yes

Computer aid telephone survey/interview Yes Yes Yes YesTable 15 National CSI model platforms versus Energyst locations

SCSB

ACSI

NCSB

ECSI

Norway Yes Yes

Sweden Yes Yes

Denmark Yes

Finland Yes

Russia Yes

Baltics Yes

Iceland Yes

Czech Republic Yes

Greece Yes

UK Yes

Ireland

Germany Yes

Netherlands

Belgium

France Yes

USA Yes

6 Conclus ionMy literature research has revealed that customer satisfaction can be defined as an overall customer

attitude towards a service provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfillment of some need, goal or desire. Satisfaction represents a veritable key of modeling the acquisition behavior of the customer, being supported by three groups of variables:

Cognitive variables, based on the qualitative superiority of the products given by the performance.

Affective variables, based on the emotions produced to the customers.

Conative variables, based on the interaction between the provider and the customer in the buying act.

The above groups built up the interface where latent variables, such as corporate image & brand image, customer expectations, perceived product value, perceived service value, perceived value, commitment, customer satisfaction, and customer loyalty are developed or even damaged.

Customer satisfaction is addressed as a strategic business development tool. Customer satisfaction does have a positive effect on an organization's profitability, satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty, and positive word of mouth. Satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people. Equally well, dissatisfied customers are more likely to tell another ten people of their unfortunate experience. Research has demonstrated that even a difference between a totally satisfied customer and a somewhat satisfied customer could lead to an increased revenue contribution of a factor 2.6.

My literature study has delivered an extensive source of customer satisfaction knowledge. I have chosen for a qualitative empirical research study taken from a singular desk research angle which incorporates a study of academic papers, thesis and dissertations in customer satisfaction and customer satisfaction models. My literature research exposed four general characteristics of customer satisfaction involving

features or qualities related to customer satisfaction serving to identify this phenomenon among other customer relationship management propositions;




55. Customer satisfaction characterizes itself by a high degree of word-of-mouth where satisfied customers are most likely to share their experiences with other people to the order of perhaps five or six people. Equally well, dissatisfied customers are more likely to tell another ten people of their unfortunate experience.

Desk research into the four most known causal customer satisfaction models (SCSB, ACSI, NCSB, ECSI) have shown fundamentally similarities. All models have an academic/scientific, causal construct. The purpose of each customer satisfaction construct is to be a structural equation model for standard measurement for evaluation of customer satisfaction based on a set of latent variables determined by a set of manifest constructs. Each latent variable is measured, the level of each latent variable estimated, the relevant connections between the latent variable established and the magnitude of the connections estimated. The objective of all customer satisfaction models is to provide results that are relevant, reliable, and valid and have predictive financial capability. Nevertheless they have some obvious distinctions in model's structure and variable's selection so that their results cannot be compared with each other. Therefore, adoption of a model needs to be guided by a set of objective selection criteria, so called user requirement specifications.

It is important to realize that many customers will not complain. In other words, we often are not aware of the extent of satisfaction / dissatisfaction as long as we do not ask.Customer satisfaction research should be done with greatest care. Measuring customer satisfaction must be a continuously, consistent, timely, accurate and reliable process. Being conscious of the aggressive and competitive B2B playing field B2B organisations should undertake direct action to avoid serious hindrance of their business development over the coming five years. Most B2B organisations will not succeed by simply doing more of what they are doing now, what it all comes down to is that they need to do some things differently. This is where a corporate customer satisfaction approach becomes a powerful strategic business development tool for B2B organisations.

7 Advice and recommendat ionsMy literature study and empirical research took off with the assignment of developing a customer satisfaction model for B2B organisations. Any organization (B2B and B2C) has to listen to its external customers and stakeholders. A number of studies have shown that the long-term success of a corporation is closely related to its ability to create and maintain loyal and satisfied customers, adapt to customer needs and changing preferences. Customer Satisfaction is a crucial goal for most organizations. In order to monitor customer satisfaction, and to take action for improving it, a number of different methods have been developed and tested. However, for the purpose of developing tangible applications for results a number of criteria have to be fulfilled in any such measurement system, not least if the ambition is to compare and benchmark. This is the spirit in which the research initiative of customer satisfaction was initiated.

For that reason I would like to finalize my research with advice and recommendations that could lead to

improvement of customer satisfaction and an increase of the effectiveness and strength of B2B customer portfolio.

Theory and best practices have proven that sustainable customer satisfaction models needs to be built on well-defined transparent processes and on a consistent approach. The means by which customer satisfaction is build may differ from time to time and from customer group/segmentation, whether this is based on geographic zone, business unit, country, product, or demographic culture is not relevant as long as accountable managers and marketers understand the relevance of each model latent and manifest variable in relation to the target group.

As a consequence of the above, B2B organizations would benefit from a well-defined customer satisfaction model. I shall emphasis my advice and recommendation on a structured causal customer satisfaction model. For that reason I recommend B2B organizations to carry out the following strategic proposition;

Implement a causal customer satisfaction model (see section 7.1).

Standardize (multilingual) survey questionnaire (see section 7.2).

Secure process ownership and process managers (see section 7.3).

Customer satisfaction survey on a monthly base (see section 7.4).

Standardize process flow and reporting structures (see section 7.5).

7.1 Implement a causal customer satisfaction model

Selecting or redesigning a customer satisfaction model, requires a set of objective selection criteria. Accordingly I have set twelve design criteria at which a customer satisfaction model should comply, so called model user requirement specifications (model-URS);

56. Problem solving model.The model should lead to improvement

of customer satisfaction challenges and an increase of the effectiveness and strength of business development.

57. Proven model.The model should be accepted and/or

known in literature and industry.

58. Comprehensive model.The model should be a causal construct

with a high correlation between the latent and manifest variables.

59. Generic B2B model.The model should fit in a B2B

environment regardless the type of industry.

A lot of B2B business models are built on consultative selling, "Keeping customers first". For that reason the model should have an out-side-in paradigm.

60. Transparent and specific model.The model should be easy to understand

and free of ambiguous criteria and processes.

61. Feasible model.The model should be applicable within

the bounds of B2B strategy and business objectives

62. Implementable model.The model should fit within a QHSE and

Marketing communication strategy.

Tracking performance over time

The model should serve for each individual organizational entity and/or country/region and for a group as a organizational total.

63. Bench markingThe model should support internal

benchmarking across countries, regions and business models.

The model should support external bench marking across nations, industries and sectors.

64. Diagnosing the effects of various quality initiatives

The model should be applicable for diagnosing of product quality, service quality and overall quality initiatives.

65. Result orientated modelThe model should have a logical and

result driven process flow.

66. Measurable model.The model must deliver objective and

measurable criteria for customer satisfaction management

On the basis of the above criteria I recommend to implement the European Customer Satisfaction Index model (ECSI) as processed and renamed by EPSI, see figure 17. The model is described in my literature study and it comply with the above ten criteria. See chapter 5.1.4. The European Customer Satisfaction Index (ECSI). The model has a strong European focus, see figure 17. The model includes the latent corporate image variable which fulfils a significant role in risk reduction and information efficiency. Perceived product quality and perceived service quality two other important latent variable which fulfil an important function in most B2B consultative selling organisations.

Figure 17 Recommended SCI model - ECSI / EPSI model

The ultimate objective of the Pan European program is to generate, analyze and present results from all these dimensions and relate them to key performance indicators. The EPSI approach is based on a casual model. The general strict anticipation within EPSI is that the econometric model should be able to explain around two thirds of what drives customer satisfaction. In general, the EPSI model is able to explain the major part of the variation in customer satisfaction based on the five specified drivers in the model.

EPSI is characterized by independence and a scientific background. These are combined with regularity in surveys, proven quality of methods and results, rich international benchmark database and new areas of research offered by the market and society. The network of EPSI national platforms and clients is active in around 20 European countries.

EPSI Research entity with office in London, England and the main operational office in Stockholm, Sweden, coordinates Pan European EPSI program. The participating countries conduct national studies based on comparable models and methods. In each of the countries one or more industries are included. The entire operation is coordinated and harmonized, to

achieve maximal benchmarking opportunities for multi-national users, by the R&D office in Stockholm.

7.2 Standardize multi l ingual survey questionnaire.

With the ECSI / EPSI model in mind the survey questionnaire should be applicable for all multiple countries in their own native language to ensure a full understanding of the questions and answers. The questionnaire should answer:

What are customers' perceptions of:corporate image,

perceived value,

perceived quality of products and services?

How satisfied are customers?How loyal are customers?Is customer satisfaction and perceived quality

improving or declining?How is the organisation performing relative to

competitors in the industry? And relative to companies in other industries, sectors and countries?

What are the manifest variables of customer satisfaction and customer loyalty?

What is the impact of the different drivers?What is the optimal allocation of resources across the

manifest variables?What will the consequence to improve customer

satisfaction?The survey questionnaire should cover all latent variables with two or more manifest variables (composite index) to increase reliable and become less volatile using a singular question. The survey questionnaire is composed in Appendix chapter 9.4 Survey questions.

7.3 Secure process ownership and process managers.

Efficient customer satisfaction management requires a long term vision and strategy, and a dedicated central Customer Satisfaction Manager who nurtures and protects the customer satisfaction process. For consistency and transparent survey processes it must be clear for the organization which manager is responsible for the customer satisfaction process. Because of that I recommend to assign a Marketing Manager to the central customer satisfaction manager role and BU Directors/Managers to the BU customer satisfaction manager role.

To coordinate continuous improvement efforts all activities should be processed according a plan, do, check, act Deming cycle. It both emphasizes and demonstrates that the customer satisfaction program should start with careful planning, should result in effective action, should measured and checked to move on again to careful planning in a continuous and consistent cycle:

67. 1. Plan (Central Customer Satisfaction Manager)Establish the survey objectives and

processes necessary to deliver results in accordance with the expected output.

Plan survey invitations, reminders and closure

68. Do (Central Customer Satisfaction Manager)Implement and execute the survey

processes

69. Check (Central Customer Satisfaction Manager)Measure the processes and compare the

results against the expected results to ascertain any differences. \

Analyze survey response data

Compile customer satisfaction reports

70. Act (Local Customer Satisfaction Manager)Analyze customer satisfaction reports,

select focal areas and determine their cause.

Each will be part of either one or more of the P-D-C-A steps.

Determine where to apply changes that will include improvement.

When a pass through these four steps does not result in the need to improve, refine the scope to which PDCA is applied until there is a plan that involves improvement.

7.4 Customer satisfaction survey on a monthly base.

Customer satisfaction research should be done with greatest care. Measuring customer satisfaction must be a continuously, consistent, timely, accurate and reliable process. Customers can construct value before purchasing (ex ante value), at the point of purchase and/or direct experience (transaction value), after the purchase (ex post value), and after use/experience (disposition value). The means by which customer satisfaction is build may differ from time to time, from purchase experience to point of use experience. Therefore I recommend executing the survey on a monthly base after month closure for closed purchase cycles/projects.

7.5 Standardize process flow and reporting structures

Reporting customer satisfaction must be a continuously, consistent, timely, accurate and reliable process. Therefore I advise to standardize the reporting structure and process flow. Next to that organizations should eliminate "communication stops". Each employee is accountable for satisfied and loyal customers; therefore each employee should have access to the reports - CRM, intranet, internal servers, etc.

"As far as customers are concerned you are the company. This is not a burden, but the core of your job. You hold in your hands the power to keep customers coming back, perhaps even to make or break the company."

7.6 Critical success factors and pitfalls

Whether all recommendations will lead to instant success depends on many factors. Nonetheless I am fully confident that all above mentioned recommendations will contribute significantly to better customer satisfaction performance and to a more structured and transparent marketing and communication organization. Last but not least I would like to emphasize both size of the coin by highlighting the critical success factor and pitfalls.

Critical success factors can be addressed as;Effectiveness of implementation.

Understanding of urgency and reason for change.

MT Management support and trust.

Regional management support and trust.

Willingness of employees.

Pitfalls can be addressed as;Doing nothing and continuing today

what we have done yesterday.

Implementing without full understanding and support of MT and BU managers.

Implementing without proper preparation, milestones and Deming-cycles

Implementing without ownership, accountability and responsibility.

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8.1 Internet sources

http://www.theacsi.org http://www.epsi-rating.com http://www.vovici.com http://www.zbc.nu http://www.zbc.nu http://experiencematters.wordpress.com http://hbr.harvardbusiness.org http://www.foreseeresults.com

9 AppendixCustomer satisfaction model & survey appendix:

9.1 Customer Satisfaction Process9.2 Survey equation model9.2.1 Survey Model Questions9.2.1.1 Image of Rovaha Engineering9.2.1.2 Customer Expectations of Rovaha Engineering9.2.1.3 Customer Perceived Product Quality of Rovaha Engineering9.2.1.4 Customer perceived service quality of Rovaha Engineering9.2.1.5 Customer perceived value of Rovaha Engineering9.2.1.6 Customer Satisfaction9.2.1.7 Customer Loyalty9.4 The Net Promotor Score9.5 How to calculate?9.5.1 The Mean9.5.2 The Median9.5.3 The Mode9.5.4 The range9.5.5 The score per latent variable9.5.6 The Net Promotor Score9.5.7 The standard deviation9.5.8 The variance

9.1 Customer Satisfaction Process

Figure 17 shows a standard customer satisfaction survey process. The main process is driven by the Plan-Do-Check-Act cycle, devided over four sub-processes;

Selection process of survey invitationsAfter you have delivered the goods and/or service you should invite your customer to participate in your survey. Incase you do not process the invitation you need to administrate the main reason to legitimate your decision.

Invitation process, in this case email invitations.Each initation should be personalized with a reference to his/her latest purchase experience. Maximum three reminders will be send untill the survey has been completed and submitted.

Survey questionair processOnce activated the survey can be started, saved, and restarted, and so on.

Reporting processThe system should be able to produce the right reports for each level of decision making. A very important report is the email alert. This alert will be automatically generated as soon as an exceptional bad or good survey is submitted. Exceptional good feedback will higly motivate your (sales)team and bad feedback enables you to undertake direct action towards your customer, demonstrating a clear sense of accountability and commitment towards your customer. (convert the negative perception into a positive experience)

How your specific architecture will look like is highly dependend of the type of applications and software solutions you utilize. For example; Vovici Enterprise Feedback Management (EFM) online survey software will integrate all processes, it will even integrate feedback data to/from CRM, HRIS and other systems with standard integration options.

9.2 Survey equation model

For measuring Customer Satisfaction in a wider context a structural equation model has been developed based on the components;

ImageCustomer ExpectationsCustomer Perceived Product QualityCustomer Perceived Service QualityCustomer Perceived ValueCustomer SatisfactionCustomer Loyalty

The components are viewed as latent variables

determined by a set of manifest constructs for each component. Each component is measured, the level of each component estimated, the relevant connections between the components established and the magnitude of the connections estimated. The objective is to provide results that are relevant, reliable, valid and have predictive financial capability.

The model demonstrates also the interdependencies between sales (the promise/proposition) and operations (delivery of goods/service).

9.2.1 Survey Model Questions;

Each questionair need to be tailored and validated to its specific business. Having said that let's review a draft set of 25 basic customer satisfaction survey questions that could have been designed for (a dummy) company:

Rovaha Engineering ,

a technical B2B engineering organization

trading "A-class" waste recovery installations.

Survey audience (survey invitations) qualified on the basis of delivered projects to customers of Rovaha engineering. See also the ECSI questionaire as used in 2007 for the Master Questionnaire B2C for Telecommunications; Mobile Phones.

9.2 .1 .1 Image of Rovaha Engineer ing

Think about the general image of Rovaha Engineering in your business. How do you find it generally rated (and perceived) among people in terms of .....

71. Being a reliable engineering company?72. Providing excellent customer service?73. Offering good value for money?74. Being a professional, state-of the- engineering

company?Use the scale where 1 means "very low" and 10 "very high".

9.2 .1 .2 Customer Expectat ions o f Rovaha Engineer ing

Think about your own expectations of Rovaha Engineering (based on your previous experience, during the last year)...

43. Your expectations on Rovaha Engineering products and services offered?

44. Your expectations on customer service?45. Providing a reliable and accurate service?46. Your overall expectations considering all aspects

that you find important to be fulfilled by an A-Class engineering company?

Use the scale where 1 means "very low" and 10 means "very high".


11. To what degree do you consider that Rovaha Engineering presently fulfils all your expectations?

Use the scale where 1 means "much less than expected", and 10 "much more than expected".

9.2 .1 .3 Customer Perce ived Product Qual i ty o f Rovaha Engineer ing

How would you rate your own experience concerning the product quality during the last rental project, delivered by Rovaha Engineering?

The reliability of our waste recovery machines?The technical features of our machines?The representability of Rovaha Engineering

installations on your plant?Technical documentation offered by Rovaha

Engineering?Use the scale where 1 means "very low", and 10 "very high".

9.2 .1 .4 Customer perce ived serv ice qua l i ty o f Rovaha Engineer ing

How would you rate your own experience concerning

the service quality during the last waste recovery project, delivered by Rovaha Engineering?

The quality of the service and advice offered by employees of Rovaha Engineering?

The quality of the services delivered by Rovaha Engineering?

The overall quality of the services delivered by Rovaha Engineering?

Use the scale where 1 means "very low", and 10 "very high".

9.2 .1 .5 Customer perce ived va lue o f Rovaha Engineer ing

Consider the products (functions) and service you have access to from Rovaha Engineering. How do you rate this in relation to the costs?

The Rovaha Engineering products are good value for money?

The Rovaha Engineering service charges are good value for money?

The Rovaha Engineering overall project value is good value for money?

Use the scale 1 meaning "very low value for money", and 10 "very high value for money".

9.2 .1 .6 Customer Sat is fact ion

Considering all your experience of Rovaha Engineering. How satisfied are you?

Use the 10-point scale where 1 means "not at all satisfied" and 10 "very satisfied".

Consider all your expectations;

To what degree do you consider that Rovaha Engineering presently fulfils all your expectations?

Use the 10-point scale where 1 means "falls short of expectations" and 10 "exceeds expectations".

Think of an ideal engineering company;

How close to this ideal would you rate Rovaha

Engineering?Use the 10-point scale where 1 means "not close to ideal" and 10 "very close to ideal".

9.2 .1 .7 Customer Loya l ty

If you were to buy waste recovery installations;

How likely is it that you would buy from Rovaha Engineering again?

How likely is it that you recommend Rovaha Engineering to a friend or colleague?*

Use the scale 1 meaning "very unlikely", and 10 "very likely".

Why do you feel that way about recommending Rovaha Engineering?

Open comment box.

*Net Promoter Score question by asking customers a single (loyalty) question.

.3 How to calculate

This section will inform you about the way you can calculate the different results. For all survey question counts that you need to ask your customer to rate your organisation on a linear scale for 1-10. In case the question does not apply he/she is able to select the n.a. option (not applicable).

The mean

The median

The mode

The range

The score per latent variable (image, expectations, etc)

The net promotor score

Standard deviation

Variance

9.3.1 The Mean

Example:

75. Four tests results: 15, 18, 22, 20

The sum is: 75

Divide 75 by 4: 18.75

76. The 'Mean' (Average) is 18.75

9.3.2 The Median

The Median is the 'middle value' in your list. When the totals of the list are odd, the median is the middle entry in the list after sorting the list into increasing order. When the totals of the list are even, the median is equal to the sum of the two middle (after sorting the list into increasing order) numbers divided by two. Thus, remember to line up your values, the middle number is the median! Be sure to remember the odd and even rule.

Example (1)

47. Find the Median of: 9, 3, 44, 17, 15 (Odd amount of numbers)

Line up your numbers: 3, 9, 15, 17, 44 (smallest to largest)

48. The Median is: 15 (The number in the middle)

Example (2)

12. Find the Median of: 8, 3, 44, 17, 12, 6 (Even amount of numbers)

Line up your numbers: 3, 6, 8, 12, 17, 44

Add the 2 middles numbers and divide by 2: 8 12 = 20 ÷ 2 = 10

13. The Median is 10.

14.

9.3.3 The Mode

The mode in a list of numbers refers to the list of numbers that occur most frequently. A trick to

remember this one is to remember that mode starts with the same first two letters that most does. Most frequently - Mode. You'll never forget that one!

Example:

Find the mode of: 9, 3, 3, 44, 17 , 17, 44, 15, 15, 15, 27, 40, 8,

Put the numbers is order for ease:

3, 3, 8, 9, 15, 15, 15, 17, 17, 27, 40, 44, 44,

The Mode is 15 (15 occurs the most at 3 times)

*It is important to note that there can be more than one mode and if no number occurs more than once in the set, then there is no mode for that set of numbers.

9.3.4 The range

Ocasionally in Statistics you'll be asked for the 'range' in a set of numbers. The range is simply the the smallest number subtracted from the largest number in your set.

Example:

if your set is 9, 3, 44, 15, 6 -

The range would be 44-3=41.

The range is 41.

9.3.5 The score per latent variable

The score of each latent variable is a weighted index score computed from the customer responses to a small set of required questions per variable with an answering scale 1 to 10 value. The weighting factors are equally distributed. Meaning each question weights the same as we have set the importance and relevance of each question at the same level. The total score of a variable represent the weighted sum of the set of

questions which are transformed into 0 to 100 scale value.

Computing the score is done in three steps:

Compute the mean of each question Compute the 0 to 100 scale value for each question Compute the latent variable scoreExample: perceived product quality

The survey has four question and you have determined that each question is equaly important

Each question weight (100% : 4 =) 25%.

let us assume:

Mean question 1 = 8.31




These mean values from the data set must first be transformed to the value on a 0 to 100 scale. This is done by subtracting 1 from the mean values (sample approach N-1), dividing the result by the scale minus 1 and multiplying the whole by 100.Compute 0 to 100 value score for each question:

Score question 1 = ((8.31-1) : (10-1)) * 100 = 81.25

Score question 2 = ((8.23-1) : (10-1)) * 100 = 80.32

Score question 3 = ((7.88-1) : (10-1)) * 100 = 76.46

Score question 4 = ((6.98-1) : (10-1)) * 100 = 66.50

Compute the weighted variable score:

Score value question 1 = 81.25 * 25% = 20.31




The score of the perceived product quality is the sum of the above = 76.14

9.3.6 The Net Promotor Score

You obtain a Net Promoter Score by asking customers a single (loyalty) question on a 0 to 10 rating scale: "How likely is it that you would recommend <our organization> to a friend or colleague?" Based on their responses, customers can be categorized into one of three groups: Promoters (9-10 rating), Passives (7-8 rating), and Detractors (0-6 rating). The percentage of Detractors is then subtracted from the percentage of Promoters to obtain a Net Promoter score. Tracking net promoters-the percentage of customers who are promoters of a brand or company minus the percentage who are detractors-offers organizations a powerful way to measure and manage customer loyalty. Firms with the highest net-promoter scores consistently garner the lion's share of industry growth.

Example (1):

Company ABX

Detractors : 20%

Passives : 30%

Promotors : 50%

The net promotor score : 50-20 = 30

Example (2):

Company XYZ

Detractors : 30%

Passives : 50%

Promotors : 20%

The net promotor score: 20-30 = -10 (minus 10)

The score does not follow a 0-100 scale but a -100% to +100% scale

9.3.7 The standard deviation

The standard deviation is the sum of squared deviations (or errors) of a data set with respect to the mean divided by the number of data. By far the most common formula for computing variance in a sample is:

Where:

s² = standard deviation

X = value

M = mean

N = sample size

Since samples are usually used to estimate parameters, s² is the most commonly used measure of variance. Calculating the variance is an important part of many statistical applications and analyses. It is the first step in calculating the standard deviation.

Example:

if your set is 1, 2, 3, 4, 6, 8 we can compute the standard deviation as follow:

X Freq.

M X-M

(X-M)²

1 1 4 3 9

2 1 4 2 4

3 1 4 1 1

4 1 4 0 0

6 1 4 2 4

8 1 4 4 16

24

6 34

Sample size N = 6 (frequency)

The mean : 24/6 = 4

The sum of (X-M)² : 34

The standard deviation is 34/6 = 5.67

9.3.8 The variance

The standard deviation formula is very simple: it is the square root of the variance. It is the most commonly used measure of spread. An important attribute of the standard deviation as a measure of spread is that if the mean and standard deviation of a normal distribution are known, it is possible to compute the percentile rank associated with any given score. In a normal distribution, about 68% of the scores are within one standard deviation of the mean and about 95% of the scores are within two standard deviations of the mean. The standard deviation has proven to be an extremely useful measure of spread in part because it is mathematically tractable. Many formulas in inferential statistics use the standard deviation.

Example:

If your standard deviation is 34/6 = 5.67

The variance is 2.38

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