APPLICATION OF CUSTOMER SATISFACTION IN THE HOSPITALITY AND

TOURISM INDUSTRY.

The hospitality and tourism industry is one of the fastest

growing industries that provide the necessary and desirable goods

and services to people worldwide. Sriyam (2010) points out that

guest satisfaction in the hospitality and tourism industry is the

highest priority for owners and managers competing with hundreds

of others, because personal services are at the top of the guests

list of the most important things when considering a destination

to visit. Tailoring of customer service has seen more and more

customers switching from one service provider to another. This is

seen especially in the hospitality and tourism sectors where

guests prefer a high level of service, and individual

requirements are therefore much differentiated. For example, in

Banyan Tree Hotels customers were offered tailored reservation to

their taste; such as enjoying dinner on the such as enjoying

dinner on the ocean sandbank with a poem written in the sandbank

plus some music played by the boat crew. Satisfaction is derived

from the Latin word “satis” (enough) and “facere” (to do or

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make). Thus, the satisfaction of products and services has the

capacity to provide what is being sought to the point of being

"enough." Two related words are satiation, which loosely means

enough, up to the point of excess, and satiety, which can mean a

surfeit or too much of enough, as if to say that too much is

necessarily undesirable.

PRINCIPLE OF THE CONCEPT (E.G. DEFINITION, HOW IT WORKS):

There are several theories which explain satisfaction including:

expectancy disconfirmation, assimilation or cognitive dissonance,

contrast, assimilation contrast, equity, attribution, comparison-

level, generalized negativity and value precept; (Pizam & Ellis,

1999).

2Expectation Disconfirmation

Figure 1.2 Expectation Disconfirmation Theory (Source: Tse, D.K.

and Wilton, P.C. (1988),

According to Tse, D.K. and Wilton, P.C. (1988), determination of

satisfaction elements is also another important area of concern.

This is because customer satisfaction is a complex construct and

still a critical area for research and debate. The dominant model

in the literature is the disconfirmation of expectations or

comparison standards paradigm as depicted in the above diagram.

“Customer satisfaction is a psychological concept that involves

the feeling of well-being and pleasure that results from

obtaining what one hopes for and expects from an appealing

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Satisfaction

Perceived performa

product and or service” (Pizam & Ellis, 1999 cites WTO, 1985). In

majority of books and academic articles; approach of Richard

Oliver 2005 to explanation of satisfaction and dissatisfaction is

represented as the customer buys services and products under the

effect of expectations about anticipated performance actually

when the product or service is purchased, the consumers compare

the actual performance with expectation. If the outcome matches

the expectations, confirmation occurs and disconfirmation occurs

when there are differences between expectations and outcomes as

the product and service performance is less than what is

expected. The most common way of quantifying satisfaction is to

compare the customer’s perception of an experience, or some part

of it, with their expectations. This is known as the expectations

disconfirmation model of customer satisfaction. Studies indicate

that, the concept of Customer satisfaction is a state of mind

that a customer has about a company when their expectations have

been met or exceeded over the lifetime of the product or service.

The definition, Customer Satisfaction has been the subject of

considerable research, and has been defined and applied in many

different perspectives. Customer satisfaction, a term frequently

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used in various fields such as marketing, human resource

management and a host of others is a measure of how products and

services supplied by a company meet or surpass customer

expectation. Customer satisfaction is a state of mind that a

customer has about a company when their expectations have been

met or exceeded over the lifetime of the product or service. The

achievement of customer satisfaction leads to company loyalty and

product repurchase. However, customers who are merely satisfied

are only at the first stage and they can easily switch to other

companies. At Most Customers range from being moderately

satisfied to moderately dissatisfied, which means that most

customer are essentially ambivalent in their loyalty to a

particular business. These customers would likely defect in the

presence of even a modest motivator; such as getting a better

price or

finding a more convenient store location.( Olorunniwo, F., Hsu,

M.K., & Udo, G. F. (2006)

Customer satisfaction is defined as “the number of customers, or

percentage of total customers, whose reported experience with a

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firm, its products, or sits services (ratings) exceed specify

satisfaction goals. It depends on a product’s perceived

performance in delivering value relative to a buyer’s

expectations. If the products performance falls short of the

customer’s expectations, the buyer is dissatisfied. If

performance matches expectations the buyer is satisfied. If

performance exceeds expectations, the buyer is delighted (Kotler,

Bowen & Makens, 2006).

From this assertion by Kotler, it can be inferred that an

organization that seeks to survive in today’s rigorous

competition, must delight customers by promising only what they

can deliver, and then delivering more than they promise.

HOW CUSTOMER SATISFACTION WORKS OR OPERATES.

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Customer Satisfaction

Understanding customer requirement

Meets customer expectations

Deliver customervalue

Figure 1.0: Customer satisfaction, (Buttle

2004)

SOURCE: (Customer Relationship Management Concepts and

Technologies, Buttle).

From the diagram above, any company wanting to satisfy their

customers must first ascertain the customers` needs. Failure to

do this, they will end up providing wrong products and services

which in the long run will lead to decline in sales, lower

profits and above all run out of business.

For example, a company’s marketing and sales team may ask one of

the following questions in their quest to better understand their

customers’ needs;

1. Who are our potential customers and existing customers?

2. What are their needs?

3. Where are they coming from?

4. What are their socio-demographic characteristics, i.e. sex,

age, income, ethnicity, etc.?

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Nevertheless, it is not enough for companies to just identify the

needs of their customers without putting down strategies and

measures to meet or exceed the expectations of their customers.

It is therefore prudent that, companies at this point integrate

programmes which involve all departments of their organizations.

Companies can meet or exceed the expectations of their customers

through:

1. Encouraging employee training programmes.

2. Controlling quality.

Satisfied customers are customers who have the intention to

repurchase or revisit a company`s service or products. Also, when

service performance of a company is equal or greater than that of

customers’ expectation, then it is justifiable to say that

customer satisfaction is attained. In addition to this, customer

value comes to reality when customers experience quality service

delivery.

Lastly, the customer value is when a product or service offer

delivers value and satisfaction to the target buyer. The buyer

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chooses between different offerings on the basis of which is

perceived to deliver the most value. We define value as a ratio

between what the customer gets and what he gives. The customer

gets benefits and assumes costs, as shown in this equation:

Value= Benefits = Functional benefits + emotional

benefits

Cost (sacrifice) Monetary costs + time costs+

energy costs + psychic costs

Based on the above equation, organizations can increase the value

of customers offering by:

Raising benefits

Reducing costs or sacrifices

Raising benefits by more than the raise in costs or lowering

benefits by less than the reduction in costs. For instance,

A customer choosing between two value offerings, V1 and V2

will examine the ratio V1/V2. She will favor V1 if the ratio

is larger than one; she will favor V2if the ratio is smaller

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than one; and she will be indifferent if the ratio equals

one.

Similarly, Kotler (2009) pointed out that it is important to

measure customer's satisfaction

regularly through survey to determine customer's level of

satisfaction. He said this is

because firms may think that they are getting a sense of customer

satisfaction through

customer's complaints. However, in reality, 95 percent of

dissatisfied customer's do not

make any complaints, they just leave. As a result it is important

for firms to make it easy

for the customers to complain. Dissatisfied customers who usually

complaints, about 54

to 70 percent will continue to do business again with the

organization if their complaints

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are taken care of and resolved and may even be 95 percent if the

complaints receive

quick response and action. (Kotler, 2009).

THE EFFECTIVENESS OF CUSTOMER SATISFACTION IN ENSURING A

SUCCESSFUL CRM

For companies to ensure a successful Customer Relationship

Management (CRM) in their operations there is the need for

companies to analyze the operational effectiveness of the

concept, customer satisfaction (CS).

According to Jamal and Naser (2003), if customers were satisfied

with the services of the firm;

• They will be more likely to give more credit to this firm

compared to those firms they were not satisfied with and hence

less likely to engage in repeat purchases.

• Similarly, if the customers are satisfied with the services

of the firm, then they will be more willing to engage in repeat

purchases and develop their relationship with that firm.

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However, satisfying customers is not enough to retain them

because even satisfied customers defect at a high rate in many

industries. Customers’ behavior is mainly shaped by their needs

and expectations. The desired outcome of expectations is getting

what one anticipates from a service encounter as a consumer.

Needs focus on obtaining what one seeks from life as a person,

therefore the firm should: Understand that people strive to

satisfy core needs in life at a level more fundamental and

compelling than meeting their expectations as consumers.

(Schneider 1999). Moreso, Kotler (2009) pointed out that, it is

important to measure customers’ satisfaction

regularly through survey’s to determine customers’ level of

satisfaction. He said this

because, firms may think that they are getting a sense of

customer satisfaction through

customers’ complaints.

However, in reality, 95 percent of dissatisfied customers do not

make any complaints, they just leave. As a result it is important

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for firms to make it easy for the customers to complain.

Dissatisfied customers who usually complain, about 54 to 70

percent of them will continue to do business again with the

organization if their complaints are taken care of and resolved,

and may even be 95 percent if the complaints receive quick

response and action. (Kotler, 2009).

SIGNIFICANCE OF CUSTOMER SATISFACTION (CS) IN ENSURING SUCCESSFUL

CRM IMPLEMENTATION.

Customer satisfaction is considered to be the corner stone of any

means of customer acquisition, company loyalty, and retention

strategies as far as CRM is concern. Within many organizations,

customer satisfaction can have powerful effects.

1. They focus employees on the importance of fulfilling

customers’ expectations.

2. Customer satisfaction warns of problems that can affect

sales and profitability.

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3. It ensures customer loyalty which gains positive word of

mouth that is free and highly effective. This therefore

reduces company advertising cost.

4. It provides a leading indicator of consumer purchase

intention.

5. Customer satisfaction provide referrals and more use of the

product and higher levels of customer retention and loyalty.

LIMITATIONS OF THE CONCEPT

One of the major concern with the concept of CS is how companies

measuring performance on a scale. When performance is measured on

a scale, it makes it very difficult to make the translation

between the scale and what that change means in the real world.

(For example, what exactly does it mean to improve from a 5.6 to

6.2 on a 1 to 7 scale?).Solution: measure the performance in

terms of real world experience. Let us hold time on the telephone

as an example. Customers express how they think the institution

is performing on hold times in terms of their actual experience

in seconds.

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Another limitation of the concept is inferring importance from

performance. Most service quality or customer satisfaction

approaches do not actually measure importance at all. They either

correlate or regress performance scores of a key driver against

some measure of overall satisfaction. These approaches then call

that correlation or regression weights an “important score”. From

the stand point of experimental method, this is simply invalid.

Correlation and regression coefficients are measures of

association, not important. Obtain importance from early

attributes by using techniques expressly to measure importance

(conjoint analysis, discrete choice analysis).

Moreover, many companies find it difficult to link customer

satisfaction to real world outcomes. Customer satisfaction

measurement typically calculates an overall index (CSI).When this

index is tracked over time, we can see whether the organization

is improving or not. The more advanced traditional customer

satisfaction protocols even build simulation models that allow a

strategist to change the performance of an attribute.

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Added to the above, there is a challenge which lies in the use of

the satisfaction construct itself, which is often defined in

terms of the psychological processes that customers use in

satisfaction judgments. This is because the definition of CS

presents or possesses two problems, when applied in a business-to

business context. First, many client employees will not have

direct consumption experience with the product or service on

which to base their satisfaction judgments. Second, in addition

to the psychological or personal dimension reflected in this

definition, business customers incorporate concrete, rational

objectives directly related to the execution of a particular

business function in their satisfaction judgment process.

Finally, many businesses have few industrial clients, which

raises questions about the

validity of using statistical techniques requiring significant

sample sizes.

SUGGESTIONS AND JUSTIFIED RECOMMENDATIONS.

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Customer data base should be shared among the business

units in all departments in order to avoid the former (that

is the implementation of CRM in only the front office

department ) failure of adopting CRM concept in the

company.

The company should process the compilation of a database to

allow the implementation of CRM containing the elements of

customer life time value (LTV). In the future, LTV may be

calculated and compiled for customers. Valuable customers

will be identified and profiled and more effort should be

directed at these customers. High-value customers can give

insight and feedback, allowing the company to improve its

customer service.

Vitality of having updated database on the customers and the

importance of using these data efficiently and correctly in

order to reach the CRM objectives. Adding to that, the

studies revealed that the most important factors for

successful CRM implementation are, high management support

and the selection of the most appropriate CRM system to

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adopt to ensure higher level of quality assurance and

enforce the commitment of the

Employees with higher standard in responding and dealing

with customers.

Also, companies that want to achieve successful CRM must

learn how to handle customer complaints in more proactive

and prompt manner. Thereby if business in their attempt to

solving them at the earliest time creates good impression to

the customer about the type of establishment they are in. An

unresolved issue encourages negative talks and a bad

impression of management inability to manage the

organization. It is not in order to disappoint a golden

customer because it is them that they bring in more

customers.

To realize effective customer satisfaction, the hotel

industry must constantly gather more

information on how to improve their services by providing

communication channels for the customers to convey their

complaints easily. Critics argue that customer satisfaction is

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not enough anymore, and that customer loyalty is the key yet

without the right attitude of service, the customer will not

feel valued nor welcomed. Therefore hotel employees need to

keep their passion for the customer alive.

CONCLUSION

Therefore customer satisfaction is a key element that must be

practice in tourism and hospitality industry because every CRM

Project undertaken by any tourism and hospitality company is

likely to fail if still the expectation of guest is not met.

customer satisfaction is a core marketing tactic in

differentiating itself from its competitors and therefore a

heightened understanding of a guest preference and total worth

will enhance a guest experience and maximize hotel revenue that

in order to achieve customer satisfaction, it is important to

recognize and to anticipate customers' needs and to be able to

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satisfy them. Hence, Customer satisfaction measurement (CSM) is

the principal tool by which marketers’ uses to assess the health

of their relationships with their customers.

REFERENCES

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Barnes, J.G. (2000). Secrets of customer relationship management . New

York:McGraw-Hill.

Buttle, F. (2004). Customer relationship management concepts and tools.

Oxford: Butterworth –Heinemann Publications.

Christopher, M. , Payne , A. and Ballantyne , D. ( 1991 )

Relationship

Marketing. Oxford: Butterworth-Heinemann .

Patnaik.K. (2008).What customer wants? New Delhi: Lotus Press.

Pizam A. & Ellis T. (1999). Customer satisfaction and its

measurement in hospitality enterprises. International journal of

contemporary hospitality management, 11(7), 326-339.

Olorunniwo, F., Hsu, M.K., & Udo, G. F. (2006) .Service quality,

customer

satisfaction and behavioral intentions in the service factory.

Journal of Service

Marketing, 20(1), 59-72.

Tse, D.K. and Wilton, P.C. (1988), ``Models of consumer

satisfaction formation: an

extension’’, Journal of Marketing Research, Vol. 25, May, pp.

204-12.

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