CHAPTER TWO LITERATURE REVIEW 2
This chapter comprises the theories and empirical studies on the effects of customer service on customer satisfaction and customer loyalty. The chapter will also look at customer perception of service provision, barriers to quality services and how customer loyalty affects organizational performance.
A customer is a group of individual, organization or persons who receive and benefits from products or services offered by an organization. Providing good and quality services is essential to keeping your customer base running and increasing the profitability of the organization.
Customers could best be described as those who use the output of work, the end users of products or services. They may be internal to the organization such as the employees and directors or external like members of the public, other businesses, or government (DeiTumi, 2005)
2.2 CUSTOMER SERVICE
Customer service is one of the authoritative procedures which organizations perform considering the developing rivalry and for drawing in innovative open doors for expanding gainfulness and better access to the market increasing the customer satisfaction and loyalty level (Calif, 1987). According to Goofin and Price (1996), customer service has importance
because it ends in increasing product quality, gaining competitive advantage, gaining profitable opportunities, and as a result increasing sales and income. Newby & McManus (2000) states that excellent quality of customer services is based upon not just the knowledge and skills of employees but also upon the way, the organization as a whole, from top management downwards, pulls in the same direction and presents a clear, positive message to customers. Service quality is that segment in the structure of the corporate culture, which, from one viewpoint is a sign of values prevailing in the organization, and then again, characterizes the particular parameters of conduct. (Ronzina 2010.)
Considering the behavior of the parameters in organizations, they can be standardized in order to create excellent customer service (Ronzina 2010); language used by employees, appearance, the manner in which information is communicated to customers and the State of the environment.
2.3 Customer Satisfaction
Customer satisfaction has been defined in various ways, but the conceptualization, which appears to have achieved the widest acceptance, is that satisfaction is a post-choice evaluative judgment of a specific transaction (Bastos and Gallego, 2008). Customer satisfaction is the result of a customer’s perception of the value received in a transaction or relationship – where value equals perceived service quality relative to price and customer acquisition costs (Hallowell, 1996; Heskett et al., 1990; Blanchard and Galloway, 1994). (Grigoroudis ; Siskos 2010) mentioned, satisfaction is a standard of how the offered “total” product or service fulfils customer expectations. (Grigoroudis ; Siskos 2010) defines an organization that is customer driven as one that is committed to providing excellent quality and
competitive products and services to satisfy the needs and wants of a customer in a well-defined market segment. Such an enterprise analyze its market capabilities and provides products and services to satisfy market needs. It considers its customers as the final judges who determine product and service satisfaction level, delivery, price, and performance.
Looy et al (2003), points out although service quality and customer satisfaction are said to be inter-linked, there is a clear distinction between the two. The level of customer satisfaction is the result of the customer’s comparison of the service quality expected in a given service encounter, with the perceived service quality. The distinction is that in measuring customer satisfaction, the actual experience of the customer is the basis of assessments while in service quality measurement the customer experience is not required .i.e. when you go to a bank for inquiries, most service providers may not request immediate feedback from clients rather customer satisfaction can be determined when he or she is asked to assess the quality of the service was provided. According to Zeithaml et al, (2006), satisfaction or dissatisfaction is a measure or evaluation of a product or service’s ability to meet a customer’s need or expectations. Herrmann, Huber, and Braunstein (2000), who argue that whether or not a customer considers their purchase to live up to their expectations, i.e. whether the customer is satisfied or not, is dependent on the perceived quality.