Effectiveness Of Customer Satisfaction In The Service Industry

In the service industry, the level of customer attraction depends on the quality of service rendered to the external customer. Quality here is closely related to employees’ performance which is an important feature of any successful company.

Customers mostly purchase services with which they are satisfied and also telling others about those pleasing services.

With the rapid growth of quality services and customers, it has brought about the need for researching into the provision of good services to customers, the best satisfaction customers can derived in the service sector.


According to Kotler and Armstrong (1999), customer satisfaction depends on a product perceived performance in delivering value relative to buyer expectations.

Also Perreault and McCarthy (1997), customer satisfaction is the extend to which a firm fulfils a customer’s needs, desire and expectations.

Furthermore, Arnold (1991) satisfaction is a judgement of pleasurable level of consumption related fulfilment, including level of under fulfilment or over fulfilment.

It can also be seen that firms that satisfy it customers are those who do their homework well. They also know that customer satisfaction commitment must be backed up by a complete understanding of the customer, the competition and the market place and an ability to identify and respond to areas where change is needed.

Finally, although satisfaction is an internal state, it is also social. Marketers need to aware of how individual judgement express a broader system of cultural values, meanings, beliefs, emotions, groups’ relations and conflicts.


Cravens (1992) said a customer is the person who pays for or buys the product or service. The word historically derived from “custom”, meaning ‘habit”. A customer thus, is someone who frequented a particular shop, who made it a habit to purchase goods from a particular shop rather than elsewhere and with whom the shopkeeper had to maintain a relationship to keep his or her “custom”, meaning expected purchase in the future.

A customer is a person that is an individual or an organisation which buys a product or service from a marketing organisation. Actually a customer is anybody or organisation which is directly or indirectly connected to the success of the business (Oliver).

With reference to the above presentation, one may find out that customer satisfaction needs to be seen from the customer’s perspective. Also customer can be anybody that is internal or external person that has got dealings with the marketing organisation. Satisfaction is the degree to which there is a match between customer expectation of goods or services and the actual performance of that goods or services including customer services.

Consumer research in a service industry suggests that if a bold service is followed by effective recovery, customers may be more satisfied. Satisfaction may also imply goals or standards that form the basis for comparison. When performance exceeds expectation, positive disconfirmation occurs and the likelihood of consumer satisfaction increase. When expectation is not met, negative disconfirmation occurs and the likelihood of customer dissatisfaction increase. Dissatisfaction is an unpleasant level of consumption related fulfilment.


There is the need for customer satisfaction, the organisation must know what customers expect which influenced by what marketers have promised in their advertisement and how well those expectations are being satisfied. And also, because of changing demographics, slow economic growth and more sophisticated competition. This means that there are fewer customers to go around.

According to Etel (1997), only few customers volunteer information to a firm. For example it is frequently said that only about 10% of dissatisfied customers formally complain to the company concerned. However, working to satisfy customers really makes sense. It is important that, the current customers are given satisfaction to encourage them stay.

The sensitive role that customer satisfaction plays are as follows;

  • It can assist in establishing and maintaining differentiated position in the market. This is the extend to which a product perceived performance matches a buyer expectation. The focus will be on consumer use and perception of types of products or service and more especially brands. The marketers work backward from the position the product occupies in the market place in relation to the satisfaction in other to satisfy it customers. Highly satisfied customers produce several benefits for their organisation and it products or services.
  • It builds a long term relationship between an organisation and its customers. This is due to the facts that, the role for business success are changing fundamentally. Relationship marketing is closely aligned with both customers care principles and the tenants with consumerism. From the above customer perspective the most important factor in relation building is creation of a dialogue between the organisation and the customer. Customer relation is important in
  1. Establishing relationship.
  2. Handling complaints.
  3. Gathering feedback

Forces such as globalisation, technology change and the using power of the customer are stimulating marketers to find new ways to retain satisfy and work with customer so that their needs can be anticipated.


Since satisfaction is a big factor for many customers in remaining loyal. Keeping customer can be difficult in competitive global market place because so many companies have joined in the race for customers.

The values chain can be an essential strategy for customer satisfaction. This idea was brought up by Michael E Porter (1985). This strategy of customer satisfaction was done through quality service and satisfaction, Michael Porter proposed the value chain as a tool for identifying ways to create customer value. Below is an illustration.

According to him, the goal of these activities is to offer the customer a level value that exceeds the cost of the activities, thereby resulting in a profit margin. The margin is necessary because a mark-up cover the cost of performing the firm value creating activities is part of the price borne by buyers.

The primary value chain activities are

  • Inbound logistics. These are activities relating to receiving, storing and distributing internally the input to the product and service.
  • Operation: Activities relating to the transformation of input in to finish product and services.
  • Outbound logistics: The warehousing and distribution of finished products.
  • Marketing and Sales: The identification of customer needs and the generation of sales.
  • Services: It relates to the provision of any necessary service with the product. Thus, the support of customers often the product or service on sold to them

The primary activities are supported by:

  • Infrastructure of the firm: Activities cost and asset relating to organisation, planning, financial controls and quality management design to support the whole of the value. It involves the organisational structure, control system, company culture etc.
  • Human resource management. Activities associated with the recruitment, hiring, training personal labour relations activities and development of care competences.
  • Technology development. Technologies to support value creating activities.
  • Procurement: This refers to the function or process of purchasing any input use to value chain, purchases such as materials, supplies and equipment.

Each of the supporting activities can be very important in creating and sustaining competitive advantage.

Therefore, if an organisation should focus much attention on the value chain, it will satisfy its customers in the long run.

Another strategy to consider as a strategy for customer satisfaction is the Mckinsey Sevens (7s). Below is a diagram illustrating the 7s

  • Structure: This refers to the things organisation has put in place for its effective running.
  • Strategy: This model emphasises that company must develop effective strategies which to should be implemented. These strategies must be based on what the customer wants.
  • Skills: This refers to activities organisation do best and for which they are known.
  • Staff: This model stresses the need for the organisation seeing its employees as valuable resources that should be carefully nurture or groomed, develop and allocated to enable the marketing orientation to be achieved, which will lead to satisfying the customer needs.
  • Style: This refers to the pattern of substantive and symbolic action under which top management work for the success of the marketing organisation. The style must communicate priorities and also influence performance.
  • System: This consists of both formal and informal procedure that allows the market orientation to function. Example can be the communication system.
  • Superodinate Goals. It refers to concept, values and aspirations that unite the organisation. They provide a sense of purpose for the organisation and what the organisation exist to achieve.

The 7’s mentioned above makes it clear for a company to satisfy its customers. Once the company becomes market oriented, it sees the 7’s as a tool which will help the company to emphasis on its effective use. This 7’s help to know what the company exist for and by so doing quality products and services would be brought up and will result in customer satisfaction.


Customer satisfaction is enormous in the range that, without marketing there will be nothing like putting the customer first to give the resulting value as satisfaction. Marketing looks at the customer and ensures that customers or consumers of a particular product or service are satisfied. Without it, the marketing concept will not be justified.

Based on the above, some importance of customer satisfaction are as follows.

  • It can be use as an additional explicit method of differentiation. For example a company which has stated it goals to keep customers forever and therefore the company has to create a new position called “customer satisfaction executive” to help ensure that it achieves this goal.
  • Customer satisfaction can help win new customers but perhaps it of more significance such that it can help to retain existing customers.
  • Keeping existing customers satisfied would help the company to derive another benefit. It makes existing customers recommend to company to offers (word of mouth) which will result in an increment in customers leading to increase in the purchase volume.

Others are;

  • Enhancement of company reputation.
  • Competitive advantage
  • Increase profit
  • Cost efficiency: producers would only produce what the customer needs.


Company which practice customer satisfaction must also put various mechanisms in place to check whether they are actually satisfying the customers and if yes, know the customers view about the product and services offered to them.

The methods are as follows


A firm might choose to include post sales survey for its customer care programmes as a means of identifying the level of satisfaction experienced by the customers who have recently purchased the commodity.

A typical post sale survey must cover the following areas;

  • How sales staff deals with customers as he/she tries to make purchase.
  • Staff telephone number
  • The quality and clarity of the explanation given by staff
  • How well the staff understood the customer.

Delivery details may include

  • Delivery of good or service on time.
  • Being offered the right goods or service.
  • Will the delivery time accepted by the customer.

The retail outlet used.

  • The location of the outlet
  • The appearance of the staff of the outlet.
  • The customer overall level of satisfaction.
  • Recommendations: Whether the customer would be prepared to recommend the product or service to cooperate bodies or friends.
  • The suggestion box – it help customers who can not complain directly to the staff to use this means to voice out or to tell the organisation about his/her level of satisfaction.


Customer complaints are normally seen as a evitable plan associated with doing business and handling of complaints also slows down business processes. If complaints are handled correctly it can provide valuable source of information for the firm.

Staff must be encouraged to inform management of all complaints brought up by customers and not to hide them. Customers must be encouraged to complain if they feel they have good course.


Joel R. Evan etal (2000) suggested that before any firm can measure it own satisfaction, it has to go through some laid down procedures.

  • Institute a process to top management, employees outside consultants and industry source for inputs on the dimension critical to customer satisfaction.
  • Uses of feedback to develop an ongoing programme of customer focus group and personal interview to identify satisfaction dimension.
  • Work with a professional staff to develop telephone and mail survey instruments to reliably and validly incorporate dimension.
  • Regularly do surveys and re-evaluate their reliability validity.
  • Use dimensional information to develop an action plan for improving each dimension and communicating these improvements to customers.


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