Relationship Between Customer Satisfaction And Loyalty Business Essay

Customer loyalty is an emotional rather than a rational thing. It is typically based on customer interest in maintaining a relationship with one organization. Often, customer interest is created and maintained through one or more positive experiences which lead to a relationship.

Relationship is built on trust the most important thing to remember about trust is that without it, one have no relationship. This applies to all human situations, not just the customer service environment, for customers to continue long business with one and ones organization, trust has to be earned, and it does not happen overnight. Only through continued positive efforts on the part of everyone in organization can anyone demonstrate to customers that one can be worthy of their trust and thereby positively affect customer retention. Through actions and deeds, one must deliver quality products, services, and information that satisfy the needs of one’s customers. Even when one wins trust, it is very fragile. And inappropriate one, a missed appointment, failure to follow through on a promise, a lie, of misleading statements to a customer are just some of the ways one can destroy trust quickly. (Robert W. Lucas, 2005, p.318)

Customer satisfaction

In general, satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing product’s perceived performance (or outcome) in relation to his or her expectations. If the performance falls short of expectations, the customer is dissatisfied, if the performance matches the expectations, the customer is satisfied, if the performance exceeds expectations, and the customer is highly satisfied or delighted.

Relationship between customer satisfaction and loyalty

The link between customer satisfaction and customer loyalty is not proportional suppose customer satisfaction is rated on a scale from one to five, at a very low level of customer satisfaction (level one), customers are likely to abandon the company and even bad mouth it. At levels two to four, customers are fairly satisfied but still find it easy to switch when a better offer comes along, at level five, the customer is very likely to repurchase and even spread good work of mouth about the company. High satisfaction or delight creates an emotional bond with the brand of company, not just a rational preference. For example, Xerox’s senor management found out that its completely satisfied customers are six times more likely to repurchase Xerox products over the following 18 months than its very satisfied customers. (Philip Kotler, Keven Lane Keller, 2003 p.60)

Up to Level four there is a chance of customer to leave the brand but from level five customer satisfactions is proportional to the customer loyalty

The disloyalty at current rates would stunt the corporate performance by 25 to 50 percent, and sometimes even more, by contrast, the business enterprises that concentrate on finding and retaining good customers, productive employees and supportive investors still continue to generate superior results the loyalty factor remains one of the day elements in the success of a business enterprise. In fact, the principles of loyalty and business strategy.

Loyalty Effect

In simple terms, loyalty is best defined as a state of mind, a set of attitude, beliefs, and desires. Most of the companies benefit from the customer’s loyal behavior, which is an end-result of the positive state of mind shown by the business enterprises in serving their customers. To make customer loyal to the product company should focus on some significant things. Consumers can be divided into steps of a ladder. More marketing effort should be given for the people on the top step of the ladder. These kinds of peoples are who are more likely to spend huge money for the product. (Shahjahan, 2004, p.125)

Profitability of the Loyal Customer

Several reasons could be pointed out to show why the loyal customers repurchase a high proportion of their needs from the same source are much more profitable.

Lower costs of service

The loyal customers are easier and cheaper to service. Since they are familiar with the products and services, because they would not have as many questions are less likely to make mistakes, and would have adjusted their behaviour to simplify their relations with the supplier.

Increased purchases:

The loyal customer tend to buy more as the time progresses, either because they learn about part of the product line of they give a higher proportion of their spending to the favoured source.

Less price Sensitivity:

They tend to become fewer prices sensitive and may pay a premium. Al the relationship strengthens over time, they are less susceptible to the competitors appeal, and since they are satisfied by what they are receiving from the enterprise, they are prepared to pay more.

Favorable word of mouth:

Finally, the loyal buyers are more likely to pass on favourable recommendations to others who also tend to be higher quality prospects. This helps in reducing the high costs of new customer acquisition.

Sustainable Advantages:

Another reason for the rising interest in the market relationship is the durability factor involved in a committed relationship. In fact the proper chemistry of positive relationship is hard to understand copy or displace, this is a persuasive argument, in cases where the product-based advantages are short-lived and new competitors are posing challenges on all sides. Furthermore, with network technologies that could enable the addressability, interactivity and demand chain coordination, business firms are currently better equipped with both the motive and means for moving closer to their customers. (Shahjahan, 2004, p.126)

Degree of Loyalty

The degree of customer loyalty varies among three levels

(Shahjahan, 2004)

Overview of Nestlé company

Nestlé is the world’s largest food and beverage company, founded and headed puartered in vevey, Switzerland. It employs in excess of 250,000 has almost 500 factories situated in around 90 countries and its products are on sale everywhere. It has contract with many co-manufactures, some of whom wouk exclusively for Nestlé. In recent years, Nestlé has focused on becoming a nutrition, health and wellness company through its existing brands and knew acquisitions. The Nestlé brand portfolio covers practically all food and beverage categories, milk and dairy products, nutrition (infant, healthcare, perfomadnce and weigaht management), ice cream, breakfast cereals, coffee and beverage, culinary products (prepare dishes, cooking aids, sauces, etc.) chocolate, confectionery, pet care, and bottled water. Many brands have category leadership, both globally and in local markets. The best known global brands include Nescafe, Nesta Maggi,Buitoni Purina, and, of course Nestlé itself. In 2007, Nestlé’s revenues exceeded 107 billion Swiss France (about 100 billion USD at prevailing exchange rates)

Nestlé is run as a decentralized group of companies which foster and rely on organizational learning within the Group. Headquarters provides leadership, guidance, and consultancy to the regional and local organizations. Central competence units identify opportunities within market and Business and assist local management in improving business performance.

Supply chain management Organization

Corporate operation- Supply Chain is one of the corporate functional units hosted at Headquarters and is responsible for

Global Supply Chain Strategy

Governance

Best Practices

Compliance

Market Assistance and Guidance, and

Reporting Standards and Guidance, and

Reporting Standards and Guidance

(http://books.google.co.uk/books?id=L8nLFFt5G1MC&pg=PA180&lpg=PA181&ots=8_SlcjIvPD&dq=Nestlé+companies+chain+management+system#v=onepage&q&f=false)

Contribution to the society as a part of corporate Social Responsibility

As the part of corporate social responsibility Nestlé took parts in the sixth Women’s Forum Global Meeting on October 21, 2010 and deliver their opinion to the discussion and exchanged ideas on important social and economic issue.

Participation in many Seminar

On world Development Issue

Nestlé took part both the sponsorship and various debates, brainstorm meeting and session highlighting on this year’s theme change; make it happen.

On combat against malnutrition

On Thursday, October 15. Paul Bulcke, Nestlé CEO, deliver a keynote speech about how to combat malnutrition during changing in Global health.

On how to become successful in green revolution to ensure food security

Nestlé also took place another brainstorming session highlighting on how can Africa succeed in its green revolution against the challenges of food security on the continent. What are the potential obstacles, political, social, environmental and ethical, and how can these be overcome?

On how to decrease gender discrimination

Nestlé also participated in the forum and highlighted about gender balance in order to promote the environment, culture and leadership to facilitate a balanced gender mix.

of activities Nestlé tried to transfer that their objective of doing business is not only create value for the shareholder but also for society at large.

Presenting new pump:

Nestlé presented a new water pump to the community of Deputekro in Côte d’Ivoire to ensure safe drinking water to the community. On September 18 in the Deputekro village 40 kilometers from the country’s capital Yamoussoukro Nestlé donate this.

Previously the villagers had to collect clean water from two hours journey distance but now around 400 members can collect this from around their area.

Providing huge amount of coca seeds

During the crop season of coca in this year Nestlé has given premium of 300 tonnes of good quality coca.

Nestlé keep on donating to the organizations work for people nutrition and safe drinking water. As the part of this activity they donate 1.5 million to the International Federation of Red Cross (IFRC) over the next three years in order to improve access to clean water in plantations and basic sanitation in rural schools. (http://www.Nestlé.com/MediaCenter/NewsandFeatures/AllNewsFeatures/New-water-pump-in-Cote-dIvoire-to-sustain-The-Cocoa-Plan.htmheath)

Good Food, Good Life is main strategy of Nestlé

Nestlé strategy directs its Nutrition, Heath, and wellness. Their motive is to make aware people about their healthy choices of food and beverage.(http://www.Nestlé.com/NutritionHealthAndWellness/Introduction/NutritionHealthAndWellness.htm)

Nestlé’s goal is not only make consumer life more pleasurable by providing tasty food but also make their life healthy by providing nutritious food.

Reference

Book

Philip Kotler and Keven Lane keller (2003) Marketing Management, 11th Edition, Pearson education publication, India, p60-p88

Robert, W.Lucas (2005) customer service, 3rd Edition, Mc Graw Hill Irwin, India, p318-p322

Shahjahan (2004) Relationship Marketing, Tata McGraw Hill 2nd Edition, p125-p135

Building customer satisfaction, value and retention

Internet

http://www.nestle.com/ (20 October 2010)

Women Welfare (17 October 2010)

http://www.nestle.com/MediaCenter/NewsandFeatures/AllNewsFeatures/Nestle-presence-at-the-2010-Womens-Forum-Deauville.htm

Giving water plan as a corporate social responsibility(12 October 2010)

http://www.nestle.com/MediaCenter/NewsandFeatures/AllNewsFeatures/New-water-pump-in-Cote-dIvoire-to-sustain-The-Cocoa-Plan.htm

Heath (20 April 2010)

http://www.nestle.com/InvestorRelations/Events/AllEvents/NHS.htm

Nestle nutrition and health (22 October 2010)

http://www.nestle.com/NutritionHealthAndWellness/Introduction/NutritionHealthAndWellness.htm

Research and development (20 October 2010)

http://www.nestle.com/NestleResearch/NestleResearchHome.htm

Supply chain management (17 April 2010 )

http://books.google.co.uk/books?id=L8nLFFt5G1MC&pg=PA180&lpg=PA181&ots=8_SlcjIvPD&dq=Nestle+companies+chain+management+system#v=onepage&q&f=false