Customer Satisfaction and Engagement

Executive Summary:

In order to comprehend the customer retention and loyalty in the retail sector, it is important to evaluate the difference between both the customer satisfaction and customer engagement as a tool. Customer engagement tool encompasses on various elements required for the retail sector to focus and also provide the ability to forecast the future set of events. 

Also from the data set provided, it has been found that, today’s the customers are greatly influenced by the two factors, and they are the price and social media. Since these two factors are considered to be the stronger contributors towards customer loyalty and retention in the current business perspective.

Introduction:

When it comes any business enterprises, one of the main elements of success and growth is the customer or the consumer engagement and satisfaction. Both the elements are pivotal in bringing the understanding about the customer segment of an organization and later aid in the development of strategies. 

Hollebeek (2011) defines customer engagement as an emotional linkage that a customer has with a brand. Hollebeek (2011) also asserts that both customer engagement and purchasing rate are directly proportional, because if the customer engagement goes higher, the purchasing rate also increases with it. When the customer engagement rises, it is not only the purchasing rate that goes higher says Bijmolt et al (2010) in their research journal, but also loyalty and the promotion (mainly word to mouth) of the brand through the customers as well. For this reason, it becomes significant for every business organization to offer the higher quality customer experience, since it is one of the most significant tools in the strategy of customer engagement. 

On the other side customer satisfaction, is a term used in the marketing sector for the measurement of customer expectation with a specific product or service. Bergman and Klefsjö (2010) defines it as a tool that a company measure in order to determine whether their product or service have surpassed the customer or the consumer expectation. They also assert it as a pivotal metric that can be utilized for improving business operations and growth through suitable development of strategies that would enhance the customer satisfaction rate. 

The report aims to understand the idea of customer satisfaction and customer engagement. The study also intent to learn and determine the factors or the variables that influence the customer satisfaction rate, through a thorough assessment of data sheet of a ‘consumer shopping survey’ provided.

Customer Satisfaction vs. Customer Engagement:

“Measuring customer satisfaction and their engagement with the brand and the product is always significant for the business, especially for the future strategic development and sustainability,” says Deng et al (2010, p. 291). The importance of measurement is always a significant part in science as well as in the business field, as Deng et al (2010) evidently established the pivotal role of it; since it is not only a growth strategy but also a survival tactic as well for the business organizations. 

One of the main dilemmas within the business and scholarly community was on the most effective and efficient measurement tool. Van Doorn et al (2010) stated this notion in their work ‘Customer engagement behavior’, and according to them adapting to a measurement tool is indeed tricky, since an effective tool should be able to analyze, forecast and even improve the customer loyalty. Customer satisfaction was in the sector since 1980, and has been popularized by both the business and the scholarly communities as one of the best measurement tool for the improvement of customer retention. Although customer satisfaction persisted as one of the most utilized tool in the business sector, there has been a dire concern over it by many various scholarly and business communities. As Anderson and Swaminathan (2011) posited, many experts from the business and the intellectual fields have questioned the significance of the customer satisfaction, and the main concern they raised was the weak impact over the loyalty factor. 

Currently many business enterprises are indulging in recording customer engagement instead of retention. Anderson and Swaminathan (2011) says this came as a result from the realization that customer engagement metric system have a greater stability and accuracy in determining and improving the retention as well as the customer loyalty. Therefore they term it as the “best measurement tool” in business today (Anderson and Swaminathan, 2011). One of the main issue with the customer satisfaction tool was its unpredictable nature says Anderson and Swaminathan (2011), since the metric mostly uses the past customer behavior to predict the future. The same argument was asserted by Tripathy (2014) in his work, and supporting the notion of Anderson and Swaminathan (2011), and according to him the entire approach of customer satisfaction sometimes fails to forecast the customer behavior. 

Tripathy (2014) also says that the customer satisfaction tool has been a popular tool among the business communities for a prolonged time. He also affirms that the customer satisfaction could successfully assess and determine the gap between the customer perception and customer expectation, especially in determining whether or not the customer expectations are met. It is an evident factor that customers who are satisfied from a product or a service are the one who met or even exceeded their expectations. 

According to So et al (2016), it was during the late 1990s that the business communities had a realization, especially on the goals they set on customer retention. The studies posited that customers, who are considered as satisfied, are just on the borderline of satisfaction (So et al, 2016). This is the fundamental case that many of the scholars and business communities started terming the customer satisfaction tool as ‘defective, says So et al (2016). 

According to Verhoef et al (2010) the emergence of customer engagement occurred when the element of emotion was added as a significant component that drives customer experience. As a basic functional measuring tool, customer satisfaction was assessing the review on tangible and above all rational results such as pricing. In this case when a less costly or priced service or product comes into the market, the probability of customers switching towards became extremely high. With many following researches and studies regarding this, the scholars as well as the business communities started verifying the significant difference between the customer satisfaction and the customer engagement, and as a result the realization came that more the customer engagement higher will be the loyalty (Verhoef et al, 2010). Therefore comparing customer engagement with the customer satisfaction tool, it become affirmed that customer engagement tool is far more effective and efficient, for the improving the retention rate. 

Assessing the Consumer Data:

In order to assess and interpret the data, a descriptive method has been adapted and utilized. From the entire data set ‘mode’ was synthesized in order to determine the most chosen option from the consumers. Sullivan (2015) states by calculating the mode, the researcher would be able to synthesize the most frequent numbers or the options chosen during the survey. 

According to the data, consumers spent once per week in comparing the product they wanted to buy. This indicates one of the most fundamental ‘consumers purchasing behavior processes i.e. the evaluation of the alternatives. Ellis (2015) asserts understanding this aspect is important in development of consumer strategy. The high tendency in this also projects that an average customers are not primarily inclined towards any brand or having a loyalty them. 

It has also been highlighted in the data set that the majority of the consumers are indulging in online purchasing, and according to the data they purchase products online at least once per week. This affirms the growth of online purchases and growth of the ecommerce sector. As the Ecommerce Europe’ (2014) recent report asserts more and more companies are now developing their ecommerce business sites as a part of customer retention strategy. The survey also shows that an average online purchase of a customer has increased to $500-$1000, which is more than the average indicated in the Ecommerce Europe’s report. 

In order to understand the most preferred factor while purchasing, the consumers where given the choice of Price, Reputable Brand, Reputable Retailer, and Informative Product Reviews; where majority of the consumers preferred price as their choice. This indicates the strength of price when it comes to consumer attraction as well as the retention factor. As Keiningham et al (2014) asserted, there is a high correlation between the price and the customer satisfaction factor. Even as a first and the second choice, the consumers chose price as the most determining factor while purchasing. 

Another important finding is of the growing influence of social media over the customer purchasing behavior and developing loyalty towards a specific brand. As Agnihotri et al (2016, p. 177) posited, “Today, social networking sites carries a significant role in the business; various businesses are engaging with their customers successfully through this medium, and as a result they aid these enterprises in achieving a certain percentage of retention rate as well.” From the given data itself it become evident that majority of the customers are getting influenced through social media sites to purchase a particular product or a service.

Recommendations:

Through evaluating various factors acquired through the secondary resources, it has been affirmed that various factors or variables influence and contribute customer satisfaction, retention and loyalty factors. Although the customer perception on the brand loyalty is changing due to various factors and as per the data evaluated, it can be acquired to a certain degree by maintain and implementing certain strategic business decisions. 

• It has been found that price as a major factor that the customers value while purchasing a product, especially in the retail sector. Therefore it is important for the organizations to develop various pricing strategy plan and implement them, this includes discounting and loyalty cards. 
• Another important factor that the business organization has to take into consideration is of the social media. Since the data affirms that social media plays a significant role in the influencing the customer purchasing behavior as well as in customer retention, it is important for the business organization to effectively utilize social media for customer engagement.

Conclusion:

With the emergence of customer engagement tool over the customer satisfaction, scholars as well as the business communities are able to link customer loyalty towards the business strategy and in turn able to improve the business activities and customer retention. In the current times, there are many factors that influence and contribute to customer satisfaction and retention, and among them price and the customer engagement through social media has been established as prominent and the most effective.

References: 

Agnihotri, R., Dingus, R., Hu, M. Y., & Krush, M. T. (2016). Social media: Influencing customer satisfaction in B2B sales. Industrial Marketing Management, 53, 172-180.

Anderson, R. E., & Swaminathan, S. (2011). Customer satisfaction and loyalty in e-markets: A PLS path modeling approach. Journal of Marketing Theory and Practice, 19(2), 221-234.

Bergman, B., & Klefsjö, B. (2010). Quality from customer needs to customer satisfaction. Studentlitteratur AB.

Bijmolt, T. H., Leeflang, P. S., Block, F., Eisenbeiss, M., Hardie, B. G., Lemmens, A., & Saffert, P. (2010). Analytics for customer engagement. Journal of Service Research, 13(3), 341-356.

Deng, Z., Lu, Y., Wei, K. K., & Zhang, J. (2010). Understanding customer satisfaction and loyalty: An empirical study of mobile instant messages in China. International journal of information management, 30(4), 289-300.

Ecommerce Europe . (2014). European B2C E-Commerce Report 2014. retrieved June 22nd.

Ellis, D. (2015). Consumer knowledge and its implications for aspects of consumer purchasing behavior in the case of information-intensive products(Doctoral dissertation, Doctoral thesis. KTH Royal Institute of Technology Division of Industrial Marketing, INDEK Stockholm, Sweden).

Hollebeek, L. (2011). Exploring customer brand engagement: definition and themes. Journal of strategic Marketing, 19(7), 555-573.

Keiningham, T., Gupta, S., Aksoy, L., & Buoye, A. (2014). The high price of customer satisfaction. MIT Sloan Management Review, 55(3), 37.

So, K. K. F., King, C., Sparks, B. A., & Wang, Y. (2016). The role of customer engagement in building consumer loyalty to tourism brands. Journal of Travel Research, 55(1), 64-78.

Sullivan III, M. (2015). Fundamentals of statistics. Pearson.

Tripathi, M. N. (2014). Customer Satisfaction and Engagement-Customer Retention strategies for brand manager. Vilakshan: The XIMB Journal of Management, 11(1).

Van Doorn, J., Lemon, K. N., Mittal, V., Nass, S., Pick, D., Pirner, P., & Verhoef, P. C. (2010). Customer engagement behavior: Theoretical foundations and research directions. Journal of service research, 13(3), 253-266.

Verhoef, P. C., Reinartz, W. J., & Krafft, M. (2010). Customer engagement as a new perspective in customer management. Journal of Service Research, 13(3), 247-252.