Factors Affecting Customer Satisfaction

an organization. The theory includes two small processes that have independent impacts on customer satisfaction: service expectations before purchase and service perceptions after experience. According to this theory, customer satisfaction can be understood as the following process:

(1) First of all, customers form expectations in their minds about the elements that constitute the service quality that the supplier can bring to them before customers decide to buy.

(2) Then the purchase and use of the service contribute to the customer's belief in the actual performance of the service they are using.

(3) Customer satisfaction is the result of comparing the effectiveness of the service between what they expected before purchasing the service and what they received after using it. There are 3 centers of agreement:

Maybe you are interested!

 Satisfaction is confirmed if the performance of the service completely matches the customer's expectations;

 Will be disappointed if service performance does not match customer expectations;

 Will be satisfied if what they feel and experience after using the service exceeds what they expected and expected before purchasing the service.

In the tourism business, customer satisfaction and loyalty are derived from the services provided and experiences during their trip.

Tourist satisfaction plays an important role in the success of destination marketing because it affects the choice of destination, the use of products and services and the decision to return (Kozak, 2001). Satisfaction can be defined as the overall personal evaluation of a consumer about a given product or service (Oliver, 1997).

Like any other customer, tourists have initial expectations about the type and quality of services provided at any destination. These expectations are largely formed through information received from tourism advertisements, brochures, media and informal information such as from friends and relatives (Masoomeh, 2006). Tourists will be satisfied if they

receive a service that is (at least) equivalent to what they assumed. They consider satisfaction when considering the overall perception compared to their expectations (Choi and Chu, 2001).

Pizam, Neumann and Reichel (1978) defined tourist satisfaction as the result of a comparison between “the tourist's perceptions and expectations of the destination”. Cadotte, Wooddruff and Jenkins (1982) suggested that satisfaction refers to a comparison of expectations with actual perceptions.

According to Donald Davidoff (1982):

Satisfaction = Perception – Expectation S = P – E

(Satisfation = Perception – Expectation) There are 3 possible cases:

- Case 1: If P > E: The value that customers receive from the service provided is higher than the customer's expected value, the service quality is considered good.

- Case 2: If P < E: The value that the customer receives from the actual service provided is lower than the customer's expectation, the service quality is considered poor.

- Case 3: if P = E: The value that the customer receives from the actual service provided matches the customer's expectations, the service quality is assessed as satisfactory.

According to the researchers, customer satisfaction is very important in the sustainable development of business organizations. For customer-oriented businesses, especially tourism businesses, customer satisfaction is both the goal and the key factor in the success of the business.

1.11 Factors affecting customer satisfaction

1.11.1 Service quality

Customer satisfaction index consists of factors (variables), each factor is made up of many specific elements characteristic of a product or service. Customer satisfaction is defined as a comprehensive evaluation of the use of a service or

after-sales activities of the enterprise and this is the core point of the CSI model (customer satisfaction index model). Around this variable is a system of causal relationships originating from initial variables such as customer expectations, corporate and product image, perceived quality and perceived value of the product or service to the outcome variables of satisfaction such as customer loyalty or customer complaints.

Expectations

Representing the level of quality that customers expect to receive, the parameters measuring expectations are related to the parameters of the image and perceived quality of products and services. This is the result of previous consumer experience or information through communication channels for the product or service. In fact, the higher the expectation, the more likely it is to lead to a purchase decision, but the higher the expectation, the more difficult it is for the business to satisfy that customer.

Perceived quality

Perceived quality can be understood as the customer's assessment when using the service provided by the business, either during or after use. It is easy to see that the higher the expectation, the higher the customer's perceived quality standard for the business's service and vice versa. Therefore, this factor is also affected by the expectation factor.

Perceived value

Theoretical studies show that customer satisfaction depends on the perceived value of goods and services. Value is the level of evaluation/perception of product quality compared to the price paid or the “value for money” aspect that customers consume the product. Customer value is the difference between the total value that customers receive and the total cost that customers have to pay for a product or service.

Loyalty and Complaints

Loyalty and complaints are the last two variables in the model and are decisive for the future survival of the business. Loyalty is

measured by repurchase intention, trust and recommendation to others about the products and services they are using. The opposite of loyalty is complaint, when customers are not satisfied with the products and services compared to their expectations. Customer loyalty is considered an asset of the business, so businesses need to create satisfaction for customers, increase their loyalty to the company.

In short, in the American satisfaction index model (ACSI), perceived value is affected by perceived quality and customer expectations. At that time, customer expectations have a direct impact on perceived quality. In fact, the higher the expectation, the higher the customer's perceived quality standard for the product or vice versa. Therefore, the requirements for product and service quality provided to customers need to be guaranteed and satisfied on the basis of their satisfaction. Customer satisfaction is created on the basis of perceived quality, expectations and perceived value. If the quality and perceived value are higher than expectations, it will create customer loyalty. On the contrary, it is a complaint or grievance about the products they consume.

1.11.2 Service prices

The impact of price on customer satisfaction

Price is the monetary expression of the value of goods and services determined based on the value of use and the customer's perception of the products and services they use.

Customers do not necessarily buy the highest quality products and services, but they will buy the products and services that give them the most satisfaction. Therefore, factors such as customer perceptions of price and cost (cost of use) do not affect service quality but will affect customer satisfaction (Cronin and Taylor, 1992).

In many previous studies on customer satisfaction, the impact of price factor has received less attention compared to other criteria (Voss et at., 1998). However, with the increasingly strong competition of the central market and changes in customers' perceptions of products and services, researchers have determined that

Price and customer satisfaction are deeply related to each other (Patterson et al., 1997). Therefore, if this factor is not considered, the research on customer satisfaction will lack accuracy.

The relationship between quantity, value and perceived price

When purchasing a product or service, customers must pay a certain cost in exchange for the value of use they need. Thus, that cost is called the price exchanged to obtain the desired value from the product or service. If the price is quantified in relation to the value obtained, customers will have a feeling about whether the price is competitive or not. Only when customers feel that the service quality (perceived service quality) is greater than the cost of use (perceived price), the price is considered competitive and customers will be satisfied. On the contrary, customers will be dissatisfied because they feel they have to pay more than what they receive and the price in this case will have a negative impact on customer satisfaction.

This is the relationship between price, value and perceived price. However, it is the perceived price that affects customer satisfaction. The price may be more than the value received, but if customers perceive it as reasonable, they will still be satisfied and vice versa. In their study of the relationship between perceived price and customer satisfaction, Varki and Colgate (2001) also demonstrated that these two factors interact with each other depending on the customer's sensitivity to price as well as the relationship between the service user and the service provider. In addition, to assess the impact of price on customer satisfaction, we need to consider the following three aspects more fully: (Maythew and Winer, 1982).

1. Price vs. Quality

2. Price compared to competitors

3. Price vs. Customer Expectations

Therefore, when considering the impact of price on customer satisfaction, we need to be more fully aware of the price here, including the cost and opportunity cost of obtaining the product or service as well as the correlation of price to the aspects mentioned above. In the scope of this article, the price factor considered is competitiveness.

perceived price competitiveness. The more competitive a customer perceives the price to be, the more satisfied he or she will be, and vice versa.

1.12 Model of factors affecting satisfaction

1.12.1 American customer satisfaction index models (CSI model)‌

The American Customer Satisfaction Index (ACSI) is an economic indicator based on modeling customer assessments of the quality of goods and services purchased in the United States and produced by both domestic and foreign companies with a sizable market share in the United States. The American Customer Satisfaction Index was developed by the National Quality Research Center (NQRC) at the Stephen M. Ross School of Business at the University of Michigan, led by Professor Claes Fornell.

The American Customer Satisfaction Index uses customer interviews as input data for a multi-equation econometric model. The ACSI model is a model with indicators influencing satisfaction on the left side (expectations, perceived quality, and perceived value) and on the right side (complaints, loyalty including customer retention, and acceptance of price premiums).

The indicators in the model are multivariate components measured by multiple questions that are weighted in importance in the model. The questions represent customers' evaluations of the determinants of each indicator. The indicators are reported on a scale from 0 to 100. The survey and modeling methods quantify the strength of the influence of the indicator on the left on the indicator pointed to by the arrow on the right. These arrows represent “influence”. The ACSI model itself rates importance to maximize the explanation of customer satisfaction for customer loyalty. Looking at the indicators and their influence, the model user can identify the factors that influence satisfaction, which if improved would have a positive impact on customer loyalty.

Figure 1.3: American Customer Satisfation Index (ACSI) model

Expectation

(Expectations)

Complaint

(Complaint)

Perceived value

(Percentage value)

Customer satisfaction

(SI)

Perceived quality

quality)

Loyalty

(Loyalty)

(Source: Anderson and EW and Fornell, C, 2000)

1.12.2 Functional and relational customer satisfaction model (Parasuraman, 1994)‌

According to the model, customer satisfaction depends on product/service characteristics and relationships. Customer satisfaction is made up of two components:

- Functional satisfaction : satisfaction achieved by purchasing a quality service at a reasonable price.

- Relationship : relationship gained from business transactions accumulated over time such as trust in service providers, professional skills of employees, customer service attitude.

Functional and relationship satisfaction are influenced by the following factors:

- Price : is the value of a product or service converted into money. Price depends on many factors such as quality, brand, accompanying services, etc.

- Product quality : is an important factor affecting the decision to purchase a service. If the quality is not good, it will affect the performance of the service provider.

- Service quality : customer satisfaction is strongly influenced by service quality factors.

- Contact service and relationship quality : factors related to professional level, staff attitude,... fulfilling commitments, reputation with customers,... will affect customer satisfaction.

Figure 1.4: Customer satisfaction model by function and relationship

Price

Quality of service

Satisfaction

function

Product quality

Satisfaction

total

Contact Services

Relationship

Quality of relationship

(Source: Parasuraman, 1994)

1.13 The relationship between service quality and tourist satisfaction

Service businesses often assume that service quality is the level of customer satisfaction. However, many researchers have shown that service quality and customer satisfaction are two distinct concepts (Zeithaml and Bitner 2000). Customer satisfaction is a general concept, expressing satisfaction with a service.

Comment