Research Paper on the Factors That Influence Customer Loyalty

Abstract

This study seeks to identify and understand the factors that influence customer loyalty in any organization or company. In finding that out, the research in suggesting customer satisfaction, brand image, and customer loyalty, will try to understand their relationship. SingTel Company will be the focus, in examining the factors above and also seeking to know some of the ways that the company uses to measure its status of customer loyalty. Further, the research also seeks to unravel if SingTels brand image has a positive effect and relationship with customer loyalty, as well as the identification of customer satisfaction impact on the level of customer retention.

CHAPTER ONE: INTRODUCTION

1.1 Background of the Study

Good customer service brings positive customer experience which leads to satisfaction and possibly loyalty as well. That is common knowledge in the business field. Customer satisfaction is the key indicator of how likely a customer is to come back to make another purchase. Brand image is the customers perception of the brand. The positive brand image can lead to customer satisfaction and further contributed by other factors, such as brand image and trustworthiness can create customer loyalty.

Moreover, according to research by marketing professionals, it can be said that a satisfied customer is more likely to grow their trust in the brand, which will lead to loyalty. The satisfied customer has more chances of showing loyalty behavior, such as being an advocate for the brand. (Bennett & Rundle-Thiele, 2004)

Good customer service guarantees to increase customer satisfaction level and possibly the loyalty intention of the customers. Recent extensive researches on brand images show that there is a substantial relationship between brand image and loyalty intention as well. For example, when a customer receives high social benefit from a salesperson or positive customer experience, it is very likely that the customers become a loyal customer or even feel close with the brand, leaving a positive brand image in their mind(Reynolds and Beatty 1999). These aspects have been studied theoretically in previous studies. This research will look into how customer service, customer satisfaction, and brand image have an impact on customer loyalty in the context of SingTel.

1.1.1 Presentation on SingTel

The SingTel Group is a telecom corporation based in Singapore. It is one of Asias leading telecom groups. SingTel provides a wide range of service, including mobile, data, internet fiber, TV satellite, and other information communication technologies (ICT) and various other digital solutions for individual, family, and corporates. SingTels advanced telecom technology can connect to the international network, providing direct connections and data roaming, from Singapore to more than 100 countries across the world. SingTel invested in submarine cable and satellite systems as well to extend its global reach. SingTel holds the second largest satellite operations in Asia Pacific region.

Over the years, SingTel has not only been the vital part of communication hub for development of Singapore but also grown to become a global corporation with strong regional legacy. SingTel provides a supreme reach of telecoms in Asia and beyond with its most extensive advanced telecommunications infrastructure. Its subsidiary, Optus in Australia, serves more than six million customers. For the corporation as big as SingTel, it is important to learn whether their standardized customer service has effectiveness in creating high customer satisfaction and impacts on the positive brand image.

1.3 Objective of the Research

The study aimed to find the answers to three major research questions:

What are the major influencing factors on customer loyalty?

What are the cause and effect relationship between brand image, customer satisfaction, and loyalty intention?

How can SingTel measure its current loyalty status?

By addressing this first question, other independent variables were driven out by the means of the qualitative method, which later helped to address the third question of the research. The objectives of the research were:

To identify if brand image has a positive effect and relationship with customer loyalty

To identify the impact of customer satisfaction level on customer loyalty

To examine the customer service influence on loyalty intention

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

The objective of this research was to establish the impact of customer service, customer satisfaction level and brand image on customer loyalty of Singtel. This chapter will, therefore, review the theoretical literature on customer loyalty, customer service, and brand image as well as customer satisfaction. Further, the chapter will look at the factors that influence customer loyalty.

2.2 Customer Loyalty

Loyalty according to Oliver (1999) is a deeply rooted commitment to re-patronize and rebuild a desired service or product in the long run despite any marketing efforts and situational influences that have the potential to switch customer behaviors. Customer loyalty is also viewed as a strong relationship that exists between a persons re-patronage and relative attitude. Although many consider customer satisfaction as a central part of any business, satisfaction on its own cannot take a business to the next top level. In regular purchases, this is when customer satisfaction is likely to produce any positive financial outcome. The market today is quite unforgiving because maintaining as well as creating customer loyalty is becoming more complex compared to the previous years. This is because the market is experiencing a technological widespread and breakthrough of the internet users. This according to Griffin (2002) means that building loyalty requires a business to focus on the value of its services and products so as to show that it is committed to fulfilling the desire as well as building the relationship it has with its customers.

Loyalty according to Thomas and Tobe (2013) is more profitable, that is gaining a new customer is more expensive than retaining an existing one. When customers are loyal to the brand, they tend to encourage others to buy from that company and they will also think twice before buying products and services from the rival company. Customer loyalty is not easy to gain because it is constructed from design and sourcing decisions. When a company is designing customer loyalty, it is required to use approaches that are customer centered on recognizing the interest and want of the service or product receiver. Customer service, therefore, is built over time on multiple transactions. The relationship a company has with its customers is important in building customer loyalty as it also requires that company to work on a context that is beyond itself. This is because according to McDonald and Keen (2000) no company is world class in achieving and doing everything. Customer loyalty is divided into three categories namely emotional loyalty, behavior loyalty and intentional loyalty (Gremler and Brown, 1999). Intentional loyalty is the possibility of a customers intention to buy a product or service, while behavior loyalty is when a customer repeats a purchase. Emotional loyalty, on the other hand, is when a customer feels that a service or product corresponds with their ideas, values, and passion.

Figure 2.1: Model used to describe customer loyalty

Figure 2.1shows that customer loyalty is a model. According to the loyalty model, the factors that form customer loyalty are the understanding of the customers wants as well as their needs. For any company to achieve customer loyalty it ought to pay close attention to promotion, price, products, and the services. In addition, the company should also create a comfortable for the customers. Investments in creating customer loyalty for a company are vital because of advantages such as growing profit and effectiveness of the business.

2.3Customer Satisfaction

Customer satisfaction is considered an important tool for the success of a company or business. According to Anderson et al. (1994), customer satisfaction is an overall evaluation that is based on the consumption and purchase experience with services and goods over time. When a product or service matches the expectations of the customer, then it enhances satisfaction which leads to profitability in the long run. However, that kind of satisfaction is not always achieved through total quality management, because it is associated with other components. Moreover, according to Churchill Jr. (1982) products and services will remain low customer expectation especially when it is easy to evaluate them. A higher satisfaction for a brand can as well prove harmful because of maintaining those levels as well as due to the impact it will have on the intention of customer repurchasing from the same brand. Further, the disconfirmation will come out each time there are expectations and perceptions about the product or service and its performance (Churchill Jr. et al., 1982).

Customer satisfaction is a vital component of a companys strategy as well as product repurchase and customer retention. It is also a barometer that is used by management to predict customer behavior in the future (Hill, Roche, and Allen, 2007). However, it is important to note that in order to meet customer satisfaction a company should look into the products or services and its features, reliability, functions, customer support and sales activity. When customers are satisfied with a brand they tend to rebound as well as buy more. Moreover, the satisfied customers also tend to network with other customers by sharing their experiences with the brand (Hague and Hague, 2016). The value a company gets in keeping an existing customer is usually one-tenth of attracting a new one. Therefore, when a company wins a customer, it ought to work extra hard to build the relationship with the consumer. According to Hague and Hague (2016) provision of quality services and goods to customers in the growing markets is not only for the purposes of consumer satisfaction but, also to ensure a safe position in the competitive market. While improving on customer satisfaction, companies ought to notice...