MAXIMIZING/MINIMIZING CUSTOMER SATISFACTION/ DISSATISFACTION AS MAJOR COMPONENTS OF ECRM

By | February 9, 2018

Various researchers have proposed a framework for eCRM studies. A previous review on eCRM in information system research by Romano and Fjermestad (2003) suggested the frameworks for CRM research, including eCRM within markets, eCRM business models, eCRM knowledge management, e-CRM technology issues, and e-CRM human issues. From about the early 1990s until now, studies on eCRM have addressed issues regarding (i) factors affecting customer satisfaction and loyalty; (ii) factors affecting customer dissatisfaction and complaints; (iii) effectiveness of the Web site; (iv) the impact of online communities on eCRM; (v) supply chain management; and (vi) knowledge man- agement, and so on. Cho, Im, Hiltz, and Fjermestad (2002) note that the major eCRM components to be discussed include: (i) maximizing customer satisfaction/minimizing customer dissatisfaction;

  • increasing customer loyalty; (iii) increasing product/service quality; and (iv) resolving customer complaints. This chapter will review issues of customer satisfaction/dissatisfaction, including theo- ries and models that have been frequently applied to It will also review issues of customer loyalty and complaints that are consequences of customer satisfaction/dissatisfaction.

Satisfaction is defined as a judgment that a product or service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfillment, including levels of under- or over-fulfillment (Oliver 1981). According to Surprenant (1977), satis- faction leads to desirable consequences, such as repeat purchase, acceptance of other products in the line, brand loyalty, store patronage, and, ultimately, higher profits and increased profit share. According to Tse and Wilton (1988), satisfaction is the consumer’s response to the evaluation of the perceived discrepancy between prior expectations and the actual performance of the product as perceived after its consumption.

Maximizing customer satisfaction and maintaining customer loyalty have become objectives for eCRM. In an effort to provide a positive contrast for the new against the old, this chapter first discusses the issue of customer satisfaction and customer loyalty as being at the center of success- ful brick-and-mortar physical business exchanges. The authors focus more on customer satisfac- tion, because it provides clues as to what managerial changes might have induced different and more desirable behaviors, raising the issue of customer loyalty myopia. This myopia stems from believing that consumer behavior can be created and sustained in and by itself without careful regard to its underlying basis on the customer satisfaction side, reviving the long-standing mar- keting dilemma of attitude and behavioral measures, and the degree to which attitudes influence or predict behavior.

The level of detail goes beyond the customer satisfaction concept and much more deeply into the underlying theories and models that attempt to explain why people may or may not be satis- fied. Given the recent dismal performance of most e-commerce stars—e.g., amazon.com lost 70 percent of its market value in 2000—the authors are forced to admit that customers’ purchasing behaviors are rather sticky and that most e-commerce innovations will be absorbed gradually when customers prove their worth beyond the initial trial phase. This question’s importance tran- scends the domain of the enterprise and goes into society at large, because shopping exchanges are a key element of the social order and economic growth.

Although customer satisfaction has been identified as a key component of eCRM (Cho, Im, Hiltz, and Fjermestad 2002), the question of how to minimize online customer dissatisfaction has not received much attention. As with any transaction, online customer satisfaction/dissatisfaction is largely determined by how much the customer’s expectations differ from the product’s or service’s actual performance—what traditional marketers refer to as the degree of disparity re- sulting from a customer’s disconfirmation of expectations (Anderson 1973; Tse and Wilton 1988). According to the model of online customer complaining behavior proposed by Cho, Im, Fjermestad, and Hiltz (2001a and b), online customer dissatisfaction results from unmet expectations about a product, technology issues, and/or Web assessment factors (Schubert and Selz 1999), which in- clude information content, customized product information, convenient after-sales support, pri- vacy issues, fast and accurate delivery, and the like. Similarly, according to customer metrics by Julta and Bodorik (2001), online customer satisfaction primarily depends on lead time, delivery speed, product or service introduction, and convenience.

Researchers in the customer satisfaction/dissatisfaction (CS/D) area posited that the fulfill- ment of expectations is a determinant of consumer satisfaction. Most of the definitions of satis- faction or dissatisfaction that have been proposed contain some mention of “expectation” or a synonym (Gilly 1979). Bearden and Teel (1980) posit that the intensity of complaint behavior was often hypothesized to be directly proportional to the customer’s degree of dissatisfaction.

 

THEORIES APPLIED TO ECRM STUDIES

 

Researchers on eCRM have applied various theories of customer satisfaction developed by mar- keting researchers. In this chapter, the authors cover in depth the most commonly accepted theo- ries relating human factors to the satisfaction level and effective use of computer-mediated communications (CMC). The viewpoint is that current CMC techniques applied to e-commerce have grown out of different application domains, where the needs and benefits sought may have been different from what is required for successful business applications.

Various satisfaction/dissatisfaction theories have applied consumers’ judgment on satisfac- tion with product/service. Most of the early studies focused on the approach to products only,

comparing consumers’ expectations with their experience of product performance. Expecta-  tion and disconfirmation have been used as proxies to predict satisfaction and significant vari- ables in a satisfaction function. If the performance is above the (predicted) expectations (i.e., if positive disconfirmation occurs), increases in satisfaction are expected, while if the perfor- mance is below expectations (if negative disconfirmation occurs), increases in dissatisfaction are expected.

Satisfaction/dissatisfaction theories frequently cited include cognitive dissonance theory (Festinger 1957), contrast theory (Engel and Blackwell 1982; Howard and Sheth 1969; Cardozo 1965), assimilation-contrast theory (Oliver 1997), expectation-disconfirmation theory (Oliver and Desarbo 1988), generalized negativity theory (Yi 1990), level-of-aspiration (LOA) theory (Yi 1990), and adaptation-level theory (Helson 1948, 1959, and 1964). Other theories, such as equity theory and value-percept disparity theory, have been applied to explain the expectation- disconfirmation paradigm.

According to cognitive dissonance theory, disconfirmed expectations create a state of disso- nance or psychological discomfort (Festinger 1957). The theory (Festinger 1957) states that dissonant or inconsistent states may exist and are a source of psychological tension to the person perceiving them. This tension will lead to efforts to reduce dissonance and restore con- sistency. Mechanisms to reduce dissonance include changes in behavior or attitudes or selec- tive distortion of perceptions (Festinger 1957). The contrast theory presumes that when product expectations are not matched by actual performance, the contrast between expectation and outcome, or the surprise effect, will cause the consumer to exaggerate the disparity (Engel and Blackwell 1982; Howard and Sheth 1969; and Cardozo 1965). Similarly, assimilation-contrast theory (Oliver 1997) found that expectation and disconfirmation were independently related to the  postexposure ratings.

Another support for eCRM is the adaptation-level theory (Helson 1964), which posits that one perceives stimuli only in relation to an adapted standard (Yi 1990). Adaptation-level theory says that if the original expectations were to change, the customer would still be free to compare unfavorably the product received with better ones (Helson 1964). The generalized negativity theory states that any disconfirmation of expectations is perceived as less pleasant than a confir- mation of expectations (Yi 1990). Yi (1990) restated that disconfirmation of expectations results in a hedonically negative state, which is generalized to objects in the environment. If consumers expect a particular performance from a product, and a discrepant performance occurs, they will judge the product less favorably than if they had not had prior expectations. The elements and the process may be viewed as analogous to the level-of-aspiration (LOA) theory’s description of the evaluation of differences between expected and actual performance and the perception of “suc- cess” or “failure” (Yi 1990). Combining this idea from LOA theory, from Thibaut and Kelly, and from Sherif, one may suggest a model that calls attention particularly to some factors critical to the measurement of satisfaction.

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