Behavioral and Financial Consequences of Service Quality
The research suggests that most employees have a true customer orientation, understand
customer needs, and possess empathy and respect for their customers (Bitner, Booms & Mohr,
1994). Quality service sustains customer faith and is essential for maintaining competitive
advantage (Berry, Parasuraman & Zeithaml, 1994). Superior service quality leads to favorable
behavioral intentions, which leads to retention, which leads to ongoing revenue, increased
spending, payment of price premiums, and generation of referred customers (Zeithaml et al.,
1996). Excellent service is a profit strategy because the results include new customers, increased
business with existing customers, fewer lost customers, more cushioning from price competition
and fewer mistakes requiring the services to be repeated (Berry et al., 1994). Listening to the
customer is a part of providing excellent service. Listening and responding to the customer’s
needs in a quality way has a direct effect on the quality of service provided (Berry &
Parasuraman, 1997). To maximize long term customer and shareholder value, organizations
must develop customer retention strategies (Weinstein et al., 1999c).
Inferior quality leads to unfavorable behavioral intentions which leads to customer defection
from the organization which leads to decreased spending, lost customers, and increasing costs
associated with attracting new customers (Zeithaml et al., 1996). Customer switching behavior
can damage market share and profitability. Switching can cost an organization the customer’s
future revenue stream (Keaveney, 1995). Evidence that customer loyalty makes an organization
more profitable makes it imperative that complaints and other unfavorable behavioral intentions
are handled effectively to ensure the stability of these relationships (Tax, Brown &
Chandrashekar, 1998b). It is important for organizations to also realize that customers may also
switch because of the attraction of competitors that are providing better service, more personable
service or higher quality. In this case, the customer is not switching because of unsatisfactory
service. Managers of service firms should know that some customers would switch services
even when they are satisfied with a former provider (Keaveney, 1995).
Favorable and Unfavorable Customer Intentions
Customers display favorable intentions such as praising the firm, expressing preference,
increasing purchasing volume, paying premiums willingly, saying positive things about the firm
to others, making recommendations to others, and continuing purchasing when they are satisfied
(Zeithaml et al., 1996). Satisfied customers stay loyal longer with an organization, pay less
attention to the competition, are less price sensitive, offer service ideas to the organization and
require less costs for the organization to service them (Weinstein et al., 1999d).
When disatisfied, customers display unfavorable intentions such as eagerness to leave the
organization, decreasing spending patterns, complaining to the seller, complaining to others
outside of the firm, taking legal action such as reporting to the Better Business Bureau, and
decreasing the amount of business they do with the organization (Zeithaml et al., 1996). When
customers do leave an organization, sometimes they do it silently with the intent to get even with
the firm by later making negative comments to others (Tax & Brown, 1998a).
Analyzing defection problems is vital. Properly identifying disloyal customers and
understanding why they left can be valuable tools for implementation of a customer retention
program. Strategies must be implemented to overcome non-loyal purchasing behavior
(Weinstein et al., 1999e). As soon as an organization acquires a new customer, retention efforts
should be set in place. The organization should try to learn what the customer’s needs are, make
sure to provide fast response, make sure that the customer feels cared for, and resolve any
complaints quickly (Weinstein et al., 1999f). There are many ways to build loyalty to increase
favorable behavioral intentions. Organizations could send sales people to work at the offices of
their best customers, participate in their customer’s events, interview the customer’s customers,
have a retreat with major customers to share best practices, invite customers to participate in
training seminars, develop a preferred customer pricing strategy, reward customers for referring
new business, develop a three to five year business plan with customers, and even partner with
key accounts on industry research projects (Weinstein et al., 1999g).
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