The relationship between service quality customer satisfaction and loyalty

Figure 6.16 highlights the importance of online service quality. If customer expectations are not met, customer satisfaction will be poor and repeat site visits will not occur, which makes it difficult to build online relationships. Note, however, that online service quality is also dependent on other aspects of the service experience including the offline component of the service such as fulfilment and the core and extended product offer including pricing. If the customer experience is satisfactory, it can be suggested that customer loyalty will develop.

Reichheld and Schefter (2000) suggest that it is key for organisations to understand, not only what determines service quality and customer satisfaction, but loyalty or repeat purchases. From their research, they suggest five 'primary determinants of loyalty' online:

1 quality customer support;

2 on-time delivery;

3 compelling product presentations;

4 convenient and reasonably priced shipping and handling;

5 clear trustworthy privacy policies.

Figure 7.13 shows a more recent compilation of consumers' opinions of the importance of these loyalty drivers in the online context. It can be seen that it is the after-sales support and service which are considered to be most important - the ease of use and navigation are relatively unimportant.

Price Selection Navigation Product info Ease of ordering Privacy policies Product content Fulfilment Support

% who care about attribute

Figure 7.13 Customer ratings of importance of attributes of online experience

Source: J.P. Morgan report on e-tailing 2000

Of course, the precise nature of the loyalty drivers will differ between companies. Reichheld and Schefter (2000) reported that Dell Computer has created a customer experience council that has researched key loyalty drivers, identified measures to track these and put in place an action plan to improve loyalty. The loyalty drivers and their summary metrics were:

1 Driver: order fulfilment. Metrics: ship to target - percentage that ship on time exactly as the customer specified.

2 Driver: product performance. Metrics: initial field incident rate - the frequency of problems experienced by customers.

3 Driver: post-sale service and support. Metrics: on-time, first-time fix - the percentage of problems fixed on the first visit by a service representative who arrives at the time promised.

Rigby et al. (2000) assessed repeat-purchase drivers in grocery, clothing and consumer electronics e-tail. It was found that key loyalty drivers were similar to those of Dell, including correct delivery of order, but other factors such as price, ease of use and customer support were more important.

To summarise this section and in order to more fully understand the online expectations of service quality, complete Activity 7.3.

Activity 7.3

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Advertising With Circulars

Co-op Mailing means that two or more businesses share in the cost and distribution of a direct mail campaign. It's kind of like having you and another non-competing business split the cost of printing, assembling and mailing an advertising flyer to a shared same market base.

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