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A critical analysis of the role of ICTS for the strategic development and an assessment of the electronic presence
A critical analysis of the role of ICTS for the strategic development and an assessment of the electronic presence of organization name.
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Modern Trends in HRM and strategic development
A critical analysis of the modern practices of managing human capital employed by various companies reveals significant changes (Marchand et al., 2001). Today many organizations have realized that in order to succeed they need to do more than merely hiring persons with colorful resumes – they need to put in place modern information technology tools to supplement what their employees can offer (Bartlett, & Ghoshal, 1997). Perhaps this new trend has been advised by the conventional wisdom that organizational success is largely determined by how a company organizes its social, human, and information resources rather than how it invests in material resources (Wang & Noe, 2010). In this regard, organizations need to integrate their human and information technology capital in a way that will ensure the maximum sharing of information between employees, as well as the timely reaction and management of such information (Marchand et al., 2001).
Laudon and Laudon (2003) opine that, contemporary HRM systems must meet the objectives of the highly dynamic organizational tasks as well as marketplace challenges. In this regard HRM systems need to be highly flexible, adaptable, enduring, as well as focused so as to address these changes (Huselid et al, 1997). In extension, the HRM experts need to grasp modern professional skills capable of effectively making sound organizational decisions in mitigation of potential organizational challenges (Baloh & Trkman, 2003). All these prerequisites bear a direct impact to an organization’s overall competitive edge and hence they need to be addressed with utmost concern.
Due to these changing organizational trends particularly regarding the HRM realm, human resource experts need systems capable of handling these new changes as well as other conventional tasks (Bartlett, & Ghoshal, 1997). In this regard, the realm of Human Resource Information Systems (HRIS) has been developed to provide a highly interactive interface that enjoins IT and HRM processes in an organization (Ngai & Wat, 2006). Precisely, HRIS occupies a central position in the overall positioning of an organization at the market ladder. This postulation is based on the espoused notion that, linking key departments in organization helps to reduce duplication of services, redundancy, and above all it eliminates unnecessary bureaucracies (Kovach et al., 2002). As a matter of fact, a well coordinated HRIS is capable of transforming a HR department from a mere administrative unit to a vibrant division forming a paramount part of an organization’s strategic plans (Ngai & Wat, 2006).
As Kovach et al. (2002) argue applying HRIS practices streamlines the HRM department hence making it more effective in the contribution of services towards the achievement of on an organization’s goals. This is possible through the growing technological innovations where new software capable of handling complex HRM tasks such as hiring and training have been successfully entrenched into the mainstream HRM practices. For instance, a streamlined HRM system makes it easy for tasks planning, task equipping, as well as overall workplace coordination among employees. Ngai and Wat (2006) assert that HRIS imparts a greater control of HRM practices by making it possible for experts to easily follow through critical organizational processes. Consequently, through streamlined HRM systems, experts are capable of diagnosing organizational anomalies and hence embarking on the necessary measures to mitigate such.
IT and Employee Training
Part of the core tasks of HRM entails the orientation and training of newly engaged employees (Alavi & Leidner, 2001). Organizations adopt various strategies in achieving this objective, for instance the findings of a study carried out by Laudon and Laudon (2003) on the impact of Executive Information System (EIS) in an organization’s strategic planning indicated that organizations derive a substantial part of their competitive edge from how best they manage information. In essence, the creation of information, storage, protection, as well as putting such information into active use is a critical facet of EIS (Daniels, 2007). Apparently, these processes of managing information can only be made a reality through a highly unified and interactive IT system capable of tackling the day-to-day performance of an organization and presenting such data in meaningful forms to line managers as well as the HRM experts in an organization to enable for strategic planning and normal decision-making purposes (Choo, 1991).
Such integrative endeavours can be enhanced through the application of the tenets of HRM as well as sound knowledge management (KM) practices that are espoused by IT practices (Turk, & Jaklic, 1998). Since it has been advanced that employees’ morale is boosted by the use of modern IT tools (Skyrme, 1998), organizations can endeavour to create positive and productive environments that will positively stimulate their employees and reinforce positive advancement of worthwhile skills and knowledge towards the achievement of the set objectives. Literally, how information and knowledge flows from one employee to another in an organization determines the overall productivity of an organization (Alavi & Leidner, 2001). No doubt a purposive integration of the best HRM and IT practices can elicit potentially rewarding results at the organizational level.
A fair number of existing studies support the importance of managing information at the organizational level (Chen & Huang, 2007; Daniels, 2007; Tokar et al. 2007; Wang & Noe, 2010). This is an indicator that the concept of managing knowledge and/or information is not new at the organizational level. Indeed the practices of compiling information, and storing it in a manner that it can be easily retrieved and transmitted has a far reaching history, nonetheless, it is fair to assert that the knowledge-based management of information is precisely a contemporary practice. As a matter of fact, (Alavi & Leidner, 2001) assert that practices such as transfer of worthwhile organizational practices, knowledge audits, benchmarking, as well as personnel development and appraisal drills are all new practices allied to knowledge management. Both Rotter (1945) and Bandura (1977) in their respective advancements in social learning theory opine that, for learning to take place there must be an impulse behind it. In an organizational context these impulses comes in the form of sound knowledge management practices that enhances positive stimulation, reinforcements as well as the desire to want to excel as some else (colleague) did (Owen, 2001).
On his part, Skyrme (1998) opines that knowledge management plays a core role in keeping the acquired knowledge relevant to organizational challenges. This is very crucial to HRM given that organizational challenges are dynamic and diversified – rigid HRM departments are incapable of meeting contemporary organizational challenges. Modern IT equipments and services ensure that employees are imparted with new and versatile knowledge strands that can be applied in a variety of situations.
Perhaps to understand the application of information creation and management practices in a HRM context it is better to look at it deeply from a social learning theory. In his book Social Learning Theory, Bandura (1977) offers that for the process of learning to take-off successfully there must be sufficient and purposive attention to what is being observed. Such attention and leads to the actualization, retaining, remembrance, and ultimately the comprehension of what has been learned. Apparently, this can only be achieved if the acquired knowledge is put into active use and most importantly if real-time efforts are made to ensure that there are clear motives for engaging in a learning activity. For example, employees should have good reasons for engaging in collaborative activities at the workplace for them to learn the spirit of teamwork – maybe because such collaborative activities make work easier or even induce meaning to specific tasks. In this regard, employees should be made to yearn to fit into their organizational environments by learning the basic skills and knowledge inherent in the performance of the specific tasks entrusted to them. When utilized well, IT tools and services can certainly impart these skills and knowledge among the employees, through the employment of a barrage of work-specific bonding sessions, training workshops, constant evaluation of employee performance to identify their strong and weak areas.
IT and Employee DevelopmentPrecisely, IT tools and services can successfully enhance employees’ capabilities to withstand the social and psychological conditions that characterize their immediate at the workplace environment particularly if such environments are against universal individual tastes and preferences (Akers & Jensen, 2010). Given that organizational knowledge and behaviors are mostly learned through observations, imitation and reinforcements such as reward and punishments organizations should plan their HRM departments so that they allow for the smooth transfer of knowledge from one point to another (Alavi & Leidner, 2001). One way of achieving such is through the use of internal information systems established for purposes of storing, organizing, processing, maintenance, as well as sharing of critical organizational information (Turk & Jacklic, 1998).Most software and hardware tools offer information management solutions that makes it possible for critical organizational information to be easily accessed by the employees but also helps to keep such information within the “walls” of an organization (Drucker, 20010). At the long run, organization gains a competitive edge by inducing efficiency on its HRM practices as well as by enhancing the security of information (Marchand et al, 2001).
In enhancement of the roles played by the management of knowledge and information in the overall management of organizational resources Marchand et al (2001) opined that the overall performance of organizations is not only determined by the nature of the IT tools they employ but also how they use such tools in the management of both formal and informal knowledge generated thereof. Chen and Huang (2007) justify this claim by holding that knowledge is the tool that pushes an organization into achieving its objectives. As a matter of fact, Skyrme (1998) holds that organizations that are not ready to embrace modern methods of information management are likely to face stiff competition at the market place from their rivals who have already put in place knowledge management structures. Precisely, Skyrme asserts how organizations manage information and exploit it at the market place greatly determines their overall market positioning. On the other hand, Tokar et al (2007) solidifies this assertion by holding that knowledge (formal or informal) is of no value if it is not shared amongst the employees or even when it is not subjected to the appropriate processing procedures to make it compatible with organizations unique needs .
Such postulations lead to the differentiation of knowledge into three basic facets of data, information, and knowledge. Whereas data is the bare (raw) answers, figures, and numerals, information is the compiled data, while knowledge is the information that has been reacted to and effective put into productive ends (Tokar et al, 2007). Apparently, this conversion of data to information and knowledge is subject to a number of forces – it requires strong IT stimulus to successfully develop and manifest into “resource” that can be managed for production gains (Davenport, Long & Beers 1998). In essence, the process of converting information requires the collaboration of human mind and both software and hardware tools offered by IT (Huselid et al, 1997). On the other hand, so as to effectively put into effective use of the developed knowledge there must be proper capabilities to channel it from one person to the other (Marchand et al, 2001). Essentially, this is done through three main forms, that is, through spoken, written, and practical activities (Skyrme, 1998).
From an organizational context particularly organizations with large numbers of employees, IT can play a core role in ensuring that critical information and knowledge is quickly and constructively passed through video conferencing, online chatting, electronic messaging, or even through virtual training interfaces (Turk, & Jaklic, 1998). On the other hand, basing on the notion that knowledge only exists within the minds of individuals and its transfer is determined by how best the individual can use it in conversing with others or even carrying out tasks. In this regard, for employees to achieve certain organizational goals they must be able to exhibit a certain level of knowledge (Skyrme, 1998). To achieve this, organizations need to identify worthwhile knowledge codes and establish the most appropriate IT tools for achieving those ends. This may entail identifying a few employees, training them how to handle the IT tools and then using them as imitation and reinforcement models to pass on the skills learnt thereof to the other employees (Davenport, Long & Beers 1998).
While recognizing that the engine of any organization is usually the employees, Wipro develops a wide range of technological service solutions that helps to tap the maximum service from such employees. Through these programs the company successfully links key HRM processes with IT practices and hence helping to reduce duplication of services and hence significant reduction of operation costs. The linking of the HRM and IT processes also plays to create good rapport between experts of the two departments. At the long run this helps to reduce organizational conflicts between workers a thing that negatively impacts on the overall production as it reduces the morale and commitments to the organization’s goals. The company also enjoys uninterrupted employee succession planning as it is very easy to identify which employees have left through whichever reasons and duly replace them within an appropriate time frame that allows for continuity of services to its customers (Employee Relationship Management, 2010).
The EPM program Wipro can easily identify new organizational as well as marketplace labour demands and duly arrange for refresher courses to train its employees on how best to achieve such. Again, Wipro also keeps a close tab of the status of the implementation of key HRM policies through the multi-tier response system that accords the employees an opportunity to pass their concerns regarding the effects of new changes and how best such changes would have been implemented. Precisely, such multi-tier response system accords the HRM experts an opportunity to correctly analyze the employee concerns from a wide range of indicators as it would not have been possible if only a few areas were sampled. In a nutshell, working for Wipro has got one important indication, that is, to gradually learn and grow up the organizational and career ladder through the utilization of modern IT tools (Employee Relationship Management, 2010).
IT and Employee Rewarding
In order to gain a competitive edge over their rivals many companies are investing heavily in IT (Baloh, Trkman, 2003). This is in concurrence with (Skyrme, 1998) argument that, a well equipped and staffed IT department can give an organization an upper hand in studying what their rivals are doing to mitigate conventional operational challenges such as increased costs of acquiring raw materials or even increased costs of carrying out market research. These sentiments are shared by (Marchand et al., 2001) when they assert that proper information management practices that are powered by modern IT innovations allow organizations to identify their markets, their product potentials as well as well as their suppliers’ potentials. Moreover, through access to HRM practices databases organizations can easily develop the best methods of identifying and utilizing “informal internal knowledge” that can be used to identify hardworking employees for rewarding as well as those who need to be reinforced (Turk & Jaklic, 1998). These facets of KM as employed by organizations can be very useful in helping a company make short and long term plans and hence make appropriate market decisions capable of improving the overall market share enjoyed by an organization and in extension better terms for the employees (Davenport, Long & Beers, 1998).
Employee satisfaction is one of the critical facets of the complex HRM processes (Nelson, 2005). Organizations seeking to increase their overall productivity, to satisfy their customers, and to shrug off their competition from their rivals acknowledge that they should kick-start such dreams by providing competitive working conditions for their employees (Nelson, 2005). In this regard, strategies provide competitive hiring, training, development, and motivation services to their workers enhances probability of such workers to develop positive attitudes toward serving customers professionally and efficiently (Maxwell & Lyle, 2002). When delineated in simple terms such strategies succeeds in creating a soothing yet realistic environment to the employees and clients alike by offering compensatory services that replaces some of their life values lost during normal tasking daily activities (Nelson, 2005). Apparently this is seemingly a tall order that cannot be achieved by ill-motivated and qualified employees (Maxwell and Lyle, 2002). In reaction to this many focused organizations endeavour to put in place, modern IT tools that makes tasks easy and more cheaper to accomplish, that create competitive terms for employees especially those at the low-end of the organizational ladder, as well as those that link the low-end employees with their high-end counterparts (Maxwell & Lyle, 2002).
Electronic presence of organization name.
Wipro pursues a complex and result-driven employee rewarding strategy. It achieves this through a number of appraisal programs that seek to constantly evaluate, reward, reinforce, and recommend on the best course of action regarding the overall employee preparedness to successfully carryout their mandate as expected of them. One such programme is the Employee Performance Management (EPM) which is implemented through two methods – either through the use of a software known as Software as Service (SaaS) or even the use of the Business Process Outsourcing (BPO). Under this program, the company easily, cheaply, and efficiently evaluates its employee’s overall performance vis-à-vis the company expectations. Ideally, this program is very accurate and reliable in terms of highlighting the critical areas that employees must work on, so as to perfect their general weaknesses in any area identified thereof (Wipro, 2010).
Basically, the company derives many benefits from this program. The company enjoys refined focus on its overall goals as one of the major objectives of the EPM project is to assist the company to stay focused to achieving its set goals through the purposeful engagement of its most valuable resource – human capital. Again, the company also enjoys decreased operation costs as the problem of time wastage and redundancies are completely eliminated. Under the EPM, workers who are not committed to their work can be easily identified and taken through the necessary morale building procedures as well as re-orientation of the company mission and vision. No doubt this serves to boost productivity while at the same time cutting down redundancy which of course is one of the greatest factors that lead to the accumulation of unnecessary operation costs (Wipro, 2010).
The hallmark of Wipro’s HRM and IT strategy is that an organization can provide more value for the products it sells to its customers if it incorporates IT-powered strategies in its overall production processes. In extension, the integration of organizational processes, as well as the management of potential risks through IT-powered mitigation plans is phenomenal to the achieving competitive advantage. Part of the company’s main goals is to offer a wide range of technological business solutions to other companies all year round. In essence, the company can be described as “transformation catalyst” due to its ability to provide to other companies transforming service solutions on how to tackle critical operational challenges such as outsourcing, system overhaul, as well as the integration of various system departments (Wipro, 2010).
References
7.0. REFERENCESAder, HJ, Mellenbergh, GJ, & Hand, DJ 2008, Advising on research methods: A consultant’s companion,. Johannes van Kessel Publishing, Huizen, The etherlands.
Alavi, M & Leidner, DE 2001, ‘Review: Knowledge management and knowledge management systems: Conceptual foundations and research issues’, MIS Quarterly. 25(1); 107-136.
Baloh, P & Trkman, P 2003, ‘Influence of Internet and Information Technology on Work and Human Resource Management’, Faculty of Economics, University of Ljubljana, Slovenia
Bernik, M, Florjancic, J, Crnigoj, D & Bernik, I 2007, ‘Using Information Technology for Human Resource Management Decisions’, Proceedings of the 8th WSEAS Int. Conference on Mathematics and Computers in Business and Economics, Vancouver, Canada, June 19-21, 2007.
Blyton, P & TurnBull, P., eds., 1992, ‘Reassessing human resource management’, Sage.
Cheatle, K., 2001, ‘Mastering human resource management’, Palgrave Macmillan.
Chen, C & Huang, J 2007, ‘How organizational climate and structure affect knowledge management – the social interaction perspective’, International journal of information management, 27; 104-104.
Creswell, JW 2003, Research design: Qualitative, quantitative, and mixed methods approach 2nd ed., Sage, Thousand Oaks, CA.
Daniels, SPA. 2007, ‘Knowledge management in organizations’, University Maastricht: Faculty of Economics and Business Administration. Master Thesis, 1179345.
Dash, J 1999, ‘Telecommuting Continues to Rise’,. Computerworld, Marion.
Hall, T.D. & Taylor, S., 2002, ‘Human resource management’, 5th ed., Prentice Hall.
Huselid, MA, Jackson, SE & Schuler, RS 1997, ‘Technical and strategic human resource management effectiveness as determinants of firm performance’, Academy of Management Journal, Vol. 40, pp. 171-88.
Johnston, P & Nolan J 2000, ‘eWork 2000, Status Report on New Ways to Work in the Information Society. Retrieved August 26, 2010 from; http://www.eto.org.uk/twork/tw00/pdf/tw2000.pdf/
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Maxwell, G, & Lyle, G, 2002, ‘Strategic HRM and business performance in the Hilton Group’, International Journal of Contemporary Hospitality Management, vol., 14, no., 5; 251-252.
A critical analysis of the relationship between customer satisfaction and customer retention
28092406985
A critical analysis of the relationship between customer satisfaction and customer retention
Author: Peng Chen
Date:
Project Supervisor: Mehedi HasanCourse: BA Business Management
Module: BUS602 Business Project
Certification:
I certify that the whole of this work is the result of my individual effort and that all quotations from books, periodicals etc. have been acknowledged.
Signature _________________________ Date _________________________
Contents
TOC o “1-3” h z u Abstract PAGEREF _Toc354130349 h 4Acknowledgements PAGEREF _Toc354130350 h 51. Introduction PAGEREF _Toc354130351 h 6Terms of Reference PAGEREF _Toc354130352 h 102. Literature review PAGEREF _Toc354130353 h 112.1 Customer retention PAGEREF _Toc354130354 h 112.2 Customer retention PAGEREF _Toc354130355 h 142.3 Customer satisfaction and customer retention PAGEREF _Toc354130356 h 162.4 SWOT PAGEREF _Toc354130357 h 193. Methodology PAGEREF _Toc354130358 h 213.1 Research methods PAGEREF _Toc354130359 h 213.2 Hypothesis PAGEREF _Toc354130360 h 223.3 Data gathering methods PAGEREF _Toc354130361 h 233.4 Population PAGEREF _Toc354130362 h 243.5 Sampling PAGEREF _Toc354130363 h 253.6 Questionnaire design PAGEREF _Toc354130364 h 253.6.1 Likert scale PAGEREF _Toc354130365 h 263.7 Data collect and analysis PAGEREF _Toc354130366 h 264. Findings, Analysis and Discussion PAGEREF _Toc354130367 h 274.1 Multiple Correlation PAGEREF _Toc354130368 h 274.2 Hypotheses PAGEREF _Toc354130369 h 294.3 Data analysis PAGEREF _Toc354130370 h 294.4 Demographic Information of Survey PAGEREF _Toc354130371 h 294.5 Correlation Analysis PAGEREF _Toc354130372 h 324.6 Summary PAGEREF _Toc354130373 h 364.7 Summary of Hypotheses Testing PAGEREF _Toc354130374 h 375. Conclusion PAGEREF _Toc354130375 h 37Evaluation PAGEREF _Toc354130376 h 40Reference PAGEREF _Toc354130377 h 41Appendices PAGEREF _Toc354130378 h 51Appendix 1: Questionnaire PAGEREF _Toc354130379 h 51Appendix 2: Project Proposal PAGEREF _Toc354130380 h 54Appendix 3: Multiple Correlations with five hypotheses PAGEREF _Toc354130381 h 63Appendix 4: Database PAGEREF _Toc354130382 h 64
List of Figure
TOC h z c “Figure” Figure 1: Retailer’s market share in the UK in 2012 PAGEREF _Toc354129759 h 9Figure 2: The Kano Model of Customer satisfaction PAGEREF _Toc354129760 h 12Figure 3: The conceptual framework for Multiple Correlation PAGEREF _Toc354129761 h 27Figure 4: Gender distribution PAGEREF _Toc354129762 h 30Figure 5: Participants within each of occupation PAGEREF _Toc354129763 h 31Figure 6: Participants within each of age ranger PAGEREF _Toc354129764 h 32
List of Table
TOC h z c “Table” Table 1: Overview of the Key defined Variables PAGEREF _Toc354129765 h 28Table 2: Participants within each of Gender PAGEREF _Toc354129766 h 30Table 3: Participants within each of age ranger PAGEREF _Toc354129767 h 31Table 4: The relationship between shop frequency and staff service PAGEREF _Toc354129768 h 33Table 5: The relationship between shop frequency and waiting time PAGEREF _Toc354129769 h 33Table 6: The relationship between shop frequency and price PAGEREF _Toc354129770 h 34Table 7: The relationship between shop frequency and promotion PAGEREF _Toc354129771 h 35Table 8: The relationship between shop frequency and loyalty program PAGEREF _Toc354129772 h 35Abstract
As the completion increasing, more and more company would like to set out unique policies to keep their customers and customer satisfaction and customer retention are becoming more and more important. Those two factors have been widely used in the business. The research is attempted to find out the relationship between customer satisfaction and customer retention. The methodology used quantitative research. Questionnaire was collected from 50 participants in the Wrexham through random sampling and Multiple Correlation analysis was used to analyse collecting data. The sample consisted of respondents from a wide variety of occupations and age groups. The findings show that customer satisfaction is correlated with customer retention. Further findings from the quantitative data proved that staff service, price and loyalty program are the influencing factors to affect customer retention. Meanwhile, the research used shop frequency as customer retention which can be applied in the further study. It is recommended to further study on the extent of the influencing factors affect customer retention and Multiple Regression might be a suitable method to apply on it.
Acknowledgements
I would like to express my gratitude to all those who helped me during the writing of project.
My deepest gratitude goes first and foremost to Mr. Mehedi Hasan, my supervisor, who gave a precious advice, feedback and experience to help me to improve the project and finish the project. Meanwhile, I would like to Mrs. Sandra King, my course leader, who give me the guidance on the project to complete the project. Additionally, I would like to thank IT services to help me to analyse the data to gain the result of the finding chapter. Without out their consistent and illuminating instruction, I cannot finish my project on time.
I would also like to thank the participants who were willing to accept my request to help me finishing the questionnaire with the valuable experience, which is very important for my project.
I would also like to thank my friends, who took a lot of time to discuss with me and gave me some useful ideas. It is so lucky to have such friends.
Last but not the best; I would like to take opportunity to thank my family. Their patience support and motivate me to keep on studying. No words are enough to utter their contribution in my life. Thank them in every moment of my life.
Peng Chen
May, 2013
1. Introduction
In the current economic environment, a company cannot afford to lose their customers. The rule can be applied to all of the companies. No matter which country they live or how long they have been in business. A customer who is dissatisfied with your product may never come back to your company again because many options may be available to him. Nowadays, buyers have power to select their sellers but sellers have to use various methods for trying to attract their customers to buy their products. It is easy to bring a customer to your door, but it is difficult to retain them. Therefore, this is the reason why customer satisfaction appears.
Customer satisfaction has a positive influence on a corporation’s profitability which has shown by many researchers (Carù and Cugini, 1999). Customer satisfaction can increase loyalty and current customers continue to purchase from the same supplier (Anderson et.al, 1994). Customer satisfaction can improve customer loyalty to firms, which can establish a good relationship between each other. When customers are loyal to a firm, they are likely to continue to purchase products or services from the same supplier. No matter the impact of the price changes, they are still sticking to the same company. The more loyal customers become, the more money would be spent on the company. Meanwhile, satisfied customers who will refer their friends and family members to businesses where they have a good customer service. Survey has shown that 4 in 10 customers are committed to recommend the provider to their friends (Casey and Warlin, 2001). Therefore, sellers should consider the consequences of customer satisfaction and dissatisfaction.
There are various factors that influence the company’s profit. Customer satisfaction is one of the major factors, so as customer retention. Customer retention can be defined as sales organization in order to reduce the loss of users using means to retain them. Successful customer retention always starts with the first good impression of an organization and continues the relationship throughout the entire lifetime. In some cases customer satisfaction and customer retention have a certain similarity. Kotler states:“The key to customer retention is customer satisfaction” (Kotler, 1997, pp. 20). Kotler has declared that customer satisfaction has a link to associate with customer retention. Therefore, customer satisfaction and customer retention are two key factors for the success of an organisation.
Customer retention is a strategic process to keep the existing customers and prevent them to defect to other organizations for business. Customers are company’s potential asset and competitiveness (Ahmad and Buttle, 2001). They are the base for the company. Without them, it is very difficult to be successful in the long term. Nobody wants to lose an existing customer. The goal of customer retention is trying to maintain and establish a positive relationship between the customer and the company.
Customer retention is a current topic to all of the companies, so the majority of them take an active part in setting their own policies to retain customers. Even though sample strategies, such as cash back, sending automatic emails on birthdays and solving problem, they both can hold customers. It is much cheaper to spend money on customer retention than on acquiring new customers. Loyal clients, who have a positive relationship between customer and company, will often buy additional products from the company. Additionally, they can share their experience with their friends and recommend them to join in the company.
A few businesses fail not because they do not have enough customers but they fail to retain and win new customers. Okun indicates the leaky bucket effect (1975 cited by Browning, 2008) is related to efficiency. The bucket with limiting capacity is leaky. Although you put things in it while others would leak out from the hole. Similarly, company tries to win some of new customers while old customers leave from the company at the same time. The scale of the company stays the same. It is impossible to expand your company and make a profit. The best strategy is keeping existing customers and winning new customers at the same time.
Customers can only be retained if they are satisfied with your business and are loyal enough to resist a competitor’s offer. However, satisfied customers can also walk away upon finding more attractive offers. Therefore, retention strategy must be formulated based on customers’s satisfaction.
The research will use a questionnaire to analyze customer service relates to Sainsbury’s supermarket to find out the relationship between customer satisfaction and customer retention, and investigate the key influencing factors of customer satisfaction. Sainsbury’s, built in 1869, which runs more than 1,000 stores, including 440 convenience stores and hires around 150,000 colleagues. Sainsbury’s supermarket was the largest supermarket chains in the UK. However, Sainsbury’s has been lost its market leader position. Recently, Sainsbury’s has fallen to number three in the market behind Tesco and ASDA. Sainsbury’s strategy is to put customers in the first position and tries to provide the best shopping experience to them and aims to help their customers Live Well For Less. In order to make all customers’ lives easier, sainsbury’s promises to offer great quality and service at fair prices. The sale (including VAT) got a 6.8% increase to £24,511m in 2012 (£21,102m on 2011). During 2012, Sainsbury’s market share got a slightly increase from 16.5 per cent to 16.6 per cent (The size of the UK grocery market £138.2 Billion).
(J Sainsbury plc, 2013)
Figure SEQ Figure * ARABIC 1: Retailer’s market share in the UK in 2012
The structure of UK supermarket is oligopoly market structure which has four big supermarkets dominate the whole market, Tesco, Sainsbury, Asda and Morrison’s, with almost 75% of the whole market share in the UK (Research and Markets, 2007).
Therefore, there are full of competition in the UK supermarket. In the field to the supermarket, product homogenization is so significant that a customer is easy to lure by their competitors. In order to keep the customer to continuous shop on their supermarkets, price war is the most commonly mean used by both supermarkets to be exhibited in front of people (Harvey, 2000). In coder to increase shopping experience and convenience for customers, currently Sainsbury’s attempt to trail a new creative technology called Mobile Scan & Go, which allow customers to scan items by mobile phone and pay the bill without unloading their trolley or bags. Meanwhile, this technology can allow customers to track how much they are spending and view savings instantly (Caines, 2012).
Terms of Reference1. This study purpose to assess the relationship between customer satisfaction and customer retention, why customer satisfaction influences customer retention and how it influences customer retention. It will also investigate the key influencing factors of customer satisfaction.
2. The research relates to the relationship between customer satisfaction and customer retention. By using Correlation Hypothesis, the hypothesis would be set that whether customer satisfaction is relating to customer retention. In order to prove the hypothesis, primary data could be collected via questionnaire. And the data would be collected from Sainsbury’s customer in Wrexham.3. The data will prove the result of the customer satisfaction influences the customer retention, draw conclusions and recommendations.
The rest of the report will be as follows:The next chapter is Literature Review. The chapter will critically analyse the existing research which divides into three parts, customer satisfaction, customer retention, customer satisfaction and customer retention. The following chapter is Methodology. It is aimed to talk about how to decide the questionnaire and how to analyse the data. And then is Finding. This will discuss the result of the questionnaire. Finally, it will give the recommendation and evaluates the project.
2. Literature review
The literature review will criticise relevant theory about customer satisfaction and customer retention, and critical discusses recent articles on the topic.
2.1 Customer retentionCustomer satisfaction has become an important strategy for companies. Fornell et al. say that customer satisfaction is high return and low risk strategy (2006). Higher satisfaction means the higher performance. If you can keep your customer, it means that more sales would occur at the same time. In other words, it’s the profit to the company. Research supports that customer satisfaction is linking with a company’s performance (Morgan et al., 2005). In the opinion of Homburg et al. (2005), satisfied customers who receive higher quality service or experience are willing to pay more. Therefore, the majority of companies have implemented the strategy of customer satisfaction for improvement. They spend a massive amount of time and money on the satisfaction survey to sum up customer behavior to deeper study what customers really want. Setting up relevant policies and training employees, they can improve service quality and customer satisfaction. Grönroos states that value can be delivered with satisfaction from the products and services (2009). Customer considers it as an additional value and benefit for them and they can accept it easily. The higher quality they provide, the better performance is. New technologies have helped Sainsbury’s to improve its performance and there are three technologies such as faster supply chains to speed up the time for products to deliver it to the shelves; self-checkout system to reduce queuing time; and coupon-at-till technology that help customer buy what they want economically (Caines, 2012).
Meanwhile, research has shown that customer satisfaction is the key to driving profits and competitiveness. Customer satisfaction is represented company’s competitiveness. If customer satisfaction is high, your company has good competitiveness. On the contrary, if customer satisfaction is low, your company lacks of competitiveness. During the implementation, plenty of information can be analysed to identify company’s own strengths and weaknesses and prospect the strategies for future progress. What is more, it can improve work practices. (Liswood, 1990)
Customer satisfaction has been described by Oliver (1997) as ‘the customer’s fulfilment response to a consumption experience, or some part of it’ (cited by Buttle, 2004. pp. 21). Customer satisfaction depends on customer’s expectations. Expectations-confirmation theory is the foundation of customer satisfaction (Oliver, 1980). The theory hypothesises that the customer is dissatisfied if the product’s performance is lower than expectations. The customer is satisfied if product’s performance matches expectations. And the customer is highly satisfied if product’s exceeds expectations. Kotler and Armstrong (1999) agree with the theory and suggest that expectation is related to past buying experience. Marketer should formulate the right level of expectation for customer. If the expectation is too high, buyers are hard to satisfy. Conversely, if the expectation is too low, it may fail to attract buyers.
Figure SEQ Figure * ARABIC 2: The Kano Model of Customer satisfactionThere is another theory relevant to expectation. Kano points out Kano model that further explain the expectation with three elements of the customer need which are Must-be element, One-dimension quality element and Attractive quality element
(2001, cited by Nilsson-Witell). Must-be quality element is regarded as the basic element which should be fulfilled. If not fulfilled, it would cause dissatisfaction. One-dimension quality element is the additional feature. Customers are satisfied if the element is provided. If elements do not provide, it would not cause dissatisfaction. Attractive quality element is the feature which is unexpected and matches their need. It would not cause dissatisfaction if elements do not provide and customers are highly satisfied with the element. With deeper research of customer behavior, company can get better understanding about customer’s need and expectation, which can increase sales and acquire new customer (García-Murillo and Annabi, 2002). Customers expect to gain good services, and the essential factor is the service exceeds their expectation. If you can offer exceeding expectation service, customers will satisfy and remember it. Memorable service every time can keep your customers stay with you. Interestingly, survey has found that a high level of satisfaction is not equal to the high level of loyalty (Bennett and Rundle-Thiele, 2004). Generally, customers look forward to good service which can bring convenience and match their need. However, if the price is too high which they cannot afford it, they would never buy it or only try once and never do it again.
However, some of the researchers are against about customer satisfaction. According to survey, they found that many CEO, the manager or the investors are no longer care about customer satisfaction though they have never mentioned it (Williams and Visser, 2002). Customer satisfaction no longer holds any relevance for the customer. Most of them care about their tenure and career. They would try their best to make a better performance in the short time. From then on, they have to give up the long-term strategy of customer satisfaction and focus on the short time investment, such as merger and acquisition. Also they still pay attention on customer satisfaction, such as customer compliant. Customer compliant is the fast way to reflect the shortage of company. What’s more, even customer satisfaction is also relatively unimportant for customers. Customers can get more reward for being dissatisfied. Another research agrees with Williams and Visser. In the eyes of a manager, customers are merely potential assents that need to keep it (Strategic Direction, 2003). Those contributions are better than nothing and the kinds of relationship do not mean tangible yield.
2.2 Customer retention
Customer retention is defined as repurchase intentions and is obtained by good service and good relationships (Hansemark and Albinsson, 2004). When the customer is satisfied with the product or services, he might buy it again initiatively. Even sometimes they do not realise what they have done. Long-term consumer behaviour would be repeated as routine. This is the process how customer retention appears. Based on Sainsbury’s gift vouchers and cards, the more customers spend on the supermarket, the more reward they would gain. And loyalty scheme assist Sainsbury’s to remain customer loyalty to the brand and get repeat business (J Sainsbury plc, 2013). Satisfied customers prefer to continue their relationship with the firm, and there is a less costly approach than find a new customer. Customer retention is the solid evidence that customers continue to keep a business relationship with the company. Keiningham et al. support the idea from several examples. Customers prefer to continue to use the same provider with Internet service providers, sustain an account relationship with the same bank and repeat shopping with the retailer (2007). When company understands exactly what the customer needs and the customer understands what the company attempts to deliver exactly what he needs. It is an efficient way to save time and money both. Since they have already known what is different between you and your competitors, satisfied customer would have more chances to choose your company. Tesco’ Clubcard, one of the most successful retail loyalty schemes in the world precisely, which provides cost effective goods to the customer (Stone et al., 2004). Many retailers are trying to imitate the loyalty scheme, so as Sainsbury’s. Nectar card, the largest and most popular loyalty scheme in the UK, has 11.5 million active card users. With data from Nectar, Sainsbury’s can reward customers with points, and sent relevant rewards and promotions to customers (Caines, 2012). Sainsbury’s sets up ‘NECTAR’ card scheme to allow customers to collect points in several non-competing store groups, such as Debenhams, BP, McDonalds, Argos, Amazon, Easyjet and many other places (Nectar, 2013). The approach attempts to seek other larger retailers in a different segment to form a relationship.
Payne claims that company can gain competitive advantage and survive in the increasing competitive environment because customer retention is one of the most powerful weapons (1995). Customer retention keeps customer repurchasing product and service. It cost up to five times more to get a new customer as to keep an existing one. It’s easier and more profitable to spend time and energy holding on to the customers you have (Canning,1999). To find a new customer, you have to take a lot of gifts or benefit to attract them once, and you have to keep arousing their interests. Sometimes they can be lured to your competitors and it gains nothing and costs quite a lot of money. Compare with it, keeping current customer is very easy, you just need to keep in touch with them and support something benefit to them. You possibly get lifetime value in reward. Meanwhile, long-term customers have less sensitiveness on price increases (Dawes, 2009). The loyal customer who can accept price fluctuation, maybe regards your company as a part of their life and what they do is a kind of habit nature. Customers enjoy doing business with a company because they found that the company concerns themselves.
There are many customers who the company cannot serve or are unprofitable, are less important for the company. Haenlein et al. states that company should abandon unprofitable customers because it would cost a lot of money and not profitable (2006). In the past customers are used to being treat as king. However, some of the companies maybe abandon unprofitable customer relationships. Obviously, company is an organization for the purpose of making profits. Its goal is to earn money as much as it can. If you cannot provide profits to them, they would not survive in the full of competitive society. Abandoning unprofitable customers is one of method to cut down cost. Thought it might bring risks, it is worthwhile to use it occasionally. Niraj et al. further researches that topic and declared that a small part of customers contribute to a significant proportion of total profits and a large percentage of customers are unprofitable (2001). The result accords with the Pareto principle (The 80/20 rule) which has become a popular creed of business people in the customer-oriented business strategy era. It points out that, for most companies, 80% of the profit income come from only 20% of customers (Juran, 2001 cited by Craft and Leake, 2002).
20% of these clients are always called Key account who can or have great potential to bring high value to company, which the company has to pay high attention on them. Key account management has evolved as a means to enable suppliers to prosper when confronted by when confronted by these kinds of difficult customers, conditions and fierce competition. Key account management approach adopted by most successful companies is not merely a sales and marketing activity, rather is involved to build up sustain long-term relationship with the common objective with their customers.
2.3 Customer satisfaction and customer retentionThere are few papers mention about the relationship between customer satisfaction and retention. Customer satisfaction and customer retention are two important factors in marketing. Firstly, as a driver of customer retention, customer satisfaction has a positive impact on the on retention, which can increase customer retention (Ranaweera and Prabhu, 2003 and Gustafsson et al, 2005). Customer satisfaction follows the lifecycle of customer retention. Before customer retention appears, as an important factor, customer satisfaction leads customers to start to establish the relationship with the company. When customer retention is operating, customer satisfaction leads a foundation to keep customers. When customer retention disappears, because of the bad customer satisfaction, customer starts to lose. Secondly, customer satisfaction is one of the organization’s abilities to attract and keep customers, increase customer relationships over time Ahmad, 2010). Customer satisfaction is not disposable evaluation, which is the sum up of overall performance. Customers who have long term experience have higher cumulative satisfaction (Bolton, 1998). Customer satisfaction can be increased in every purchasing. Obviously, the long term experience would get the higher satisfaction. With the collection data which can analyse customer behavior, organization uses the mean to increase customer satisfaction and keep customers. Finally, one of the advantages of customer satisfaction and retention is that Competitor’s product would not be recognized by the buyer because customer maintaining is so strong (Rese, 2003). Nowadays, many customers have many products to choose, it is not the only one option for them, therefore, these kinds of customers have a relationship with different companies in the congeneric product. It is extraordinary hard keep loyal to one company. Every company wants to establish relationships with customers and maintain them. In the meantime, they attempt to break their competitor relationship with the customer, which can increase customer loyalty with them. As a result, the competitor realised that they have lost this customer. Sainsbury’s set out Brand Match with reward over 14,000 branded goods against with Tesco and Asda. If the same brand Sainsbury’s set up Brand Match plan to fight against with other supermarkets. If the same brand you have been bought from Sainsbury’s is higher than at ASDA or Tesco on the same day you will get a coupon for the difference, the plan includes offers and promotions. Since Brand Match launched over a year ago, Sainsbury’s has given nearly 250 million coupons (Caines, 2012 and J Sainsbury plc, 2013). Similarly, Tesco and ASAD also implement the same kinds of planning.
Andreassen (1999) points out that satisfied customers are more likely to keep the relationship with the same organization than those are dissatisfied customers who would choose another one easily. The results suggested that customer dissatisfaction which caused by the initial service failure, has a negative impact on customer satisfaction and retention. When a new customer feels dissatisfaction with your company for the first time, it will take you more time get a better understand of your company. However, customer dissatisfaction does make a contribution to customer satisfaction and retention. When customer dissatisfies with products or services, they would start to complain it. If you ignore or do nothing, it would be easy to lose customers. If you take action to solve it, people think you pay attention to him and will improve customer satisfaction and retention significantly. Therefore, many companies keep eyes on customer complaint.
Customer satisfaction and customer retention are not appearing absolutely linear correlation, though they both can drive profits and increase customer’s consumption.
In some cases, you may find that some customers are satisfied, but are still not retained. Similarly, some customers are not satisfied, but are still retained. There are some reasons to explain why satisfied customers abandon your product. First of all, satisfied customers may get bored with your product and get the better price from the competitor, so they change the brand. Secondly, you provide a good product but do not match their needs; therefore, they have to give up your company. Besides, dissatisfied customers are not good at administrating expectation and they choose it optionally. What is more, because the exit cost is so high that they don’t want to take risk (Executionmih, 2012).
2.4 SWOTIn order to perform Sainsbury’s situation, a SWOT analysis has been presented below. SWOT Analysis is a useful tool to focus on aspects of the company and business sector, and evaluate the current situation of the business (Pahl and Richter, 2009).
Strength
1. Sainsbury’s as a brand: Sainsbury has been built over 140 years which has represented its brand which can get several benefits like customer loyalty and brand familiarisation. Compare with other new competitors, it has a competitive advantage.
2. Comprehensive service: Sainsbury’s not only is the food retailer, it also consists of Sainsbury’s online, Sainsbury’s property, Sainsbury’s Bank, Sainsbury’s Energy, and Sainsbury’s Entertainment, which can increase the range of services (J Sainsbury plc, 2013).
3. Reliability and trust: Because Sainsbury’s has built more than a hundred years, it has a sense of reliability and trust among customers. Customers confirm that Sainsbury’s would support the high quality product. They also trust Sainsbury’s would provide relatively competitive prices for the products if not the cheapest.4. IT infrastructure: Sainsbury’s set up many new technologies to improve customer shopping experience, such as Brand Match, self-checkout system, and Mobile Scan & Go.Weaknesses
1. Lack of international expansion: Sainsbury’s market is in England. It lacks of expansion in the international market. Compared with Sainsbury’s, its main competitor Tesco is more successful in this aspect.
2. As one of the oldest supermarkets, Sainsbury’s did not seize the great opportunity t
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Letter of Admission, Georgia Tech’s Corporate
I am a hardworking and determined individual who seeks to gain admission in industrial engineering. My interest in industrial engineering began in my early childhood years and I intend to pursue this course all through to the Masters level. Specifically, I am interested in admission at Georgia tech, as I believe the college provides a comprehensive curriculum in industrial engineering. At the outset, Georgia Tech’s Corporate program allows students to take on practical applications of what they learnt in their classrooms, thus allowing proper professional performance in the field. In addition to this, the lecturer and instructors in the institute of industrial engineers have proved able to organize their classroom-thought-lessons to allow students gain proper comprehension of the coursework. This has, in turn, prompted the success of students graduating from the college, as they are transformed into well-performing professionals in the industry.
I also intend to pursue my life-long dream as a successful entrepreneur in the field through the acquisition of a minor in leadership studies. Coupled with membership in LeaderShape and the Young Entrepreneurs Society, I believe that I will rise up to become a good leader. Georgia Tech’s Shanghai initiative will also play a great role in the achievement of my life goals and dreams as it will widen my entrepreneurial and international outlook in the field. Networking with other students and affinity groups will also assist in the fulfillment of my future endeavors. I also intend to join other educative clubs such as the debate club, the national MUN club, as well as, the Georgia Tech community service council. In addition to gaining membership in clubs, I also intend to take up various games such as, basketball, volleyball, cycling, and paintball. Coming from country with a strong cultural and ethical background, I believe that I will add to the miscellany of the student college community, thus making the college a rich cultural society. Being an international applicant from a country with strong cultural and ethical believes, I wish to add to the diversity of the college community.