Customer service and customer retention in fast food industry in karachi
This study investigates the relationship between dining attributes, customer satisfaction and customer's retention in the fast food industry. In short this research paper is to describe & analyze why customers come back to the same restaurant when there are several options available to them. What influence their decisions? This research has brought out how to gain customer retention to the services and the factors that influence the customer retention. For this research qualitative approach is used. Data collection method is questionnaire and interviews to clarify what is their real mean of filling the options; sample size of 100 consumers from different fast food restaurant has been taken randomly on the basis of convenience sampling. Results obtained from the statistical analysis corroborate using the optimal regression as a statistical tool which shows that research can be used by marketers especially by the managers of the restaurants for better understanding, and assessing what influences customer how they behave and why they come back to the restaurant. Managers can also use our findings to increase the retention rates by adjusting relevant service elements of the restaurants.
Eating is observably a daily action and necessity for all human beings. Depending on individual's reason for eating at restaurants, individual intentionally or instinctively assess a multifarious set of attributes ahead of choosing a restaurant. The significance involved to these restaurant attributes is ultimately evaluated in the customer's mind, leading to a decision of purchasing. Some factors, like age, company and even social division come into take part in to amplify these attributes as the customer makes a decision of dining (Johnson and Champaner, 2004).
The restaurant industry has undoubtedly not been free from either augmented competition or from increasing customer expectations regarding quality. In the greatly competitive food industry, large operators chain have a propensity to gain competitive gain in the course of cost leadership, likely only due to standardization and economies of scale beginning from large market shares, while smaller, independent restaurants on the other hand endeavor to gain benefit through differentiation (Lowenstein, 1995).
Branding keeps on gaining importance in the marketing of restaurants services and marketers have spent lot of money to create and give support to brand images. This have seen in the marketing of strong and well defined brands like Mc Donald's and Kfc fast food restaurants which attracts the customer through their marketing , service and by making brand loyal customers of their products. This increases the retention rate due to satisfied and loyal customer. Particularly, there is lot more to discern about customers perceive restaurant brands and the comparative weight these links get during purchase decision as there is lot more to discern about customers perceive restaurant brands and the comparative weight these links get during purchase decision. According to the Kaplan and Norton (2001) the importance of the perceived quality in order to get the retention effect in restaurant industry is always considered as a main element to retain in the customers and the business. The main reason behind that in this industry entry barrier are usually low and any one can easily enter due to investment required that is not on the higher side. So the point is that when ever consumer is satisfy from the arrangement by the management, the quality of the food provided by the staff members with the positive attitude than this result in increasing the loyalty towards the particular restaurant and increases the retention intensions of the customers.
1.2 Purpose of the study
The purpose of study fold in two parts: one suggests that how important is dining attributes in term of Re-patronage intentions and second part suggest the customer satisfaction which leads Re-patronage intentions in restaurants. The role of dining attributes and customer satisfaction is very important for knowing the customer intentions, would they will visit to that restaurants again or not. There has been a strong support for the espousal of consumer retention in restaurants as one of the key performance indicators. It has found that there is a high association between customer retention and the profit earn by the industries. The fragmentation of media choices and the active nature of the marketplace, tied with an enlarged number of additional demanding and prosperous consumers, brought bigger challenges to marketing practitioners in keeping hold of their regular customers.
Customer satisfaction is regularly used as a sign of whether customers will come back to a restaurant that shows the customer retention. Whereas there is no agreement of a satisfied customer's repeat visit, it is nearly certain that a not satisfied customer will not return. The majority of the preceding customer satisfaction researches are mentioned in the literature that has pay attention on recognizing the resource of customer contentment such as characteristic and attributes and on determining useful ways to establish consumer's desires, wants and needs. On the other hand, significant dissimilarity comes out in the level of specify of the characteristic investigated.
1.3 Research Objectives
To identify the process to gain customer retention to the services and what are the factors that influence the customer retention.
The primary problem is to identify the customer retention in the detail that includes factors of dining attributes and customer satisfaction in context to food restaurant industry. Thus these factors leads to consumer behavior and customer revisit the restaurant.
1.4 Research Methodology
This study find out the relationship between dining attributes, customer satisfaction and customer's Re patronage intentions and this execute particularly in restaurant industry, how customers decide to revisit the restaurant and what are those factors which influences the customer for returning back to restaurants again and again.
To find these reasons we used quantitative approach for this research. The constructed instrument was pre-tested, where 5 to 6 sample questionnaire to be filled, to know if there are any problem with the instrument and therefore it was simple to understand and figure out the questions or not. Through pre-testing it was found that all respondents felt at ease in responding and instrument was interested to them.
Instrument:All the information is collected through a questionnaire containing closed ended, structured and unstructured questions. This method was chosen primarily due to ease in handling and recording information.
Procedure:The research study is conducted to examine the outcomes and responses of our sample targeted (Local Industry) in order to conclude the impact of customer service on customer retention.
Sample size: 100
2. LITERATURE REVIEW
2.1 Literature review
Whether human live to eat or eat to live, food always plays a fundamental role in the lives of human being. The significance of foodstuff cannot be overstated from the physiological viewpoint; food gives us sustenance; while on the other hand from a psychological point of view food is classified as a basic need. Food can also characterize a product used to describe self-actualization. Therefore, individual can quarrel that above and beyond provided that nourishment food plays a variety of roles together at individual and group level.
Edifice brands have become a key focus of restaurant managers. Furthermore, restaurant managers are relating brand management theories and practices which have done so far, and lots of restaurants are redesigning their business missions to imitate branding orientation rather than they go for product orientation. There is also an influence of brand recall on consumers intensions in choosing a restaurant for dining due to the different discount offers through different mediums of advertising that mostly include the below the line activities that makes restaurants brands that diminish the perceived risk of pay for the food and also indicate the quality of the product that creates their willingness to make wider positive word of mouth, recommendations, and complaint intention (Lowenstein, 1995)
In our research we find that since the last few years the trend of dinning out and fast food restaurants has been increasing with the increasing rate. Now you will find (at least one) fast food restaurant in every society, whether it is high profile or low profile people society. The culture has always significant impact on the society's emerging trends. It is also observed though people don't consider fast food a healthy meal, yet they go for it over again. Due to availability of too many options to the customers, their behavior is more towards variety seeking instead of going for one meal second time. Especially the Pakistani youth seems that they are fond of entertainment and they find only fast food restaurants the best to be visited whenever they go for entertainment (Syed Kamran, 2010)
The food industry is highly aggressive and customers have also become more demanding due to sufficient knowledge and information they have about the different trends in restaurant industry which causes increase the significance of effective marketing strategies to get the competitive advantage in order to understand the wants and needs of the customers (Bateson and Hoffman, 1999) Numerous Fast Food restaurants are paying attention in studying, assessing and implementing the marketing strategies with the aim of gaining maximum market share of customers and improving customer retention in analysis of the advantageous effects on the monetary performance for the organization. Customer satisfaction, contentment, quality of the service, excellence and retention are global matter that influences all organizations.
This increases in the restaurant business revenue as well and this increases the word of mouth publicity (Almanza and Jaffe, 1994). Evaluating quality awareness and price elasticity related to quality, suggested that buyers are generally steady in their evaluations of quality. The results of their study showed that there was a strong association between a product's attributes and the quality perceptions of the customers.
It was found that tangible quality has a bigger circumlocutory effect than the straight effect indicates from a theoretical point of view; affect was a fractional mediator, facilitating the association among tangible quality and behavior. The consequences of well-situated parking must not be the lost upon restaurant management. Often the cost of attaining parking near to a restaurant is sighted as a non-revenue generating expenditure. This specifies the value of given that well-located parking along with the direct consequence it has on consumer intentions to patronize a restaurant (Lasser and Winsor, 2000).
In customer's mind when there is no defect in the overall dining service, then they consider the quality of the food is good enough for them (Bitner, 1992). Quality is all about eliminating internal failures that means all shortcomings before the product leaves from the factory and the external failures are the defects after usage of the product (Eileen and Berry, 2007). In Early research and study efforts in measuring and defining quality were mainly centered in the tangible goods, whereas the apparently more complicated services products was ignored. Products quality was conventionally correlated to the technical stipulation of products, with the most description of quality coming up from the manufacturing goods sector where excellence and quality control has inward drawn out awareness and research. Quantifying service quality is a difficult task because the idea of service quality is intrinsically insubstantial in nature and complicated to define (Kincaid, 2009)
Branding and its orientation have been wicker strongly into the contemporary act of consumption in restaurants. Undeniably, the previous century will be considered as the century of brands in marketing (Johnson and Champaner, 2004)
Researchers have acknowledged customer satisfaction, service quality and the loyalty to be similarly important for marketers, because they are responsible for determining dining satisfaction, and they must know the important of dining that must position restaurant functions competitively in the current and future marketplace (Kaplan and Norton, 2001). Customer satisfaction and the quality of food have long been acknowledged as a essential function for success and endurance in competitive marketplace that have been connected to consumer behavioral intentions as purchase and loyalty intention, their willingness to widen positive word of mouth, recommendation, and complaint intention (Olsen, 2002).
Purchase behavior of the consumer in restaurants can be pretentious by the surroundings in different ways. Researcher consider atmosphere, which is an attention-building medium that can make restaurant inkling. The centre of attention is based on the collective possessions of those clues on customers idiosyncratic through design, sound, motion, and color. Customers are delimited by true rock and roll memorabilia (Supphellen 2000).
The indication of Service in selecting by means of restaurant services, customers frequently act like detectives as they investigate for information and standardize their opinions into a set of mind-set regarding the resultant service. For example, the whole thing about the dining attributes of a restaurant or café starts from the dining table potential communicate to the customers, with the table top used, if practical sign concern the technical excellence of the service, mainly concerning to whether the service is carry out proficiently.
The research also highlighted that customers who pay for high quality foodstuffs also had a low acceptance for deviations from predictable quality. In the Fast food restaurant perspective, this entails that customers who want superior dining quality are more sensitive to quality fluctuations and possibly will be less price sensitive but, for example in relation to the relative higher pricing of the menu items and marketing strategies that put together the quality image of the restaurant, ambience and service.
The concept of service quality comprises the tangible and intangible fundamentals most essential to consumers. Service quality has been related to customer satisfaction, contentment and loyalty as well as the business performance, success and profitability (Raajpoot, 2002)
Fundamentals such as surface and texture, smell, color, sound, and texture inducing intuitive reactions in restaurant atmosphere that persuades purchase likelihood known as the mechanical clues (Eileen and Berry, 2007)
Food and drink quality is an imperative dining attributes to diners representing restaurant management should certify an aggressive quality control agenda is in place to make sure food and drink quality must maintained The convenience of location includes the parking space, seating availability in the restaurant; the nearness to roof-tops like people's residence, hotels, and motels is significant for the accomplishment of restaurants all through the dinner mealtime duration.
The significance of the physical excellence raise of foodstuff and service and convenience to restaurant administration is to facilitate these constructs that have an affirmative association with influence which is completely linked with customer intentions to retention a restaurant. The objective of most restaurants is to obtain and maintain customers; restaurant administration organized with the information get that will be better prepared to accomplish their aim.
There is a intense deficient in understanding about dining satisfaction and pleasure and post-dining behavioral intentions in the customer literature reviewed studied so far away, and up till now, according to the literature allude to, aspects concerning to customer satisfaction and return customer are elementary when put together business and marketing strategies of the organization.
Professed service quality may perhaps be improved if customers are support with the mauve list and bill of fare and if a worker responds suitably to a customer's asked for quick service. Customer always feel admire and important if they get the best service and respect from the overall management of the restaurant specially from the behavior of the front line staff that increases the comfort level of customers and at the same time makes them brand loyal to that particular restaurant.
The impacts of customer satisfaction on customer retention are bringing into being to be momentous and positive. Specially, the customer satisfaction will influence the re customer retention intentions (Reece, 1999)
Customer satisfaction is vital to the restaurant management for the reason that it is normally assumed to be a noteworthy determinant of replicate sales, customer loyalty and affirmative word of mouth. The more pleased the customers, the larger are their retention.
Another attention-grabbing finding was that a product's higher volume rate like for instance, fast food restaurants resulted in a lower sensitivity side to quality. This shows that management of restaurants must segment the market based on the food usage rate includes the repeat purchase of the particular item and quality preferred (Jochen and Rachel, 2000).
The previous research shows the effect of physical quality construct on behavioral intentions for restaurant consumer and finds that influence is a strong moderator between tangible quality constructs and behavioral intentions when cognition affect actions archetype is applied to the restaurant location.
One more factor for the customer retention which really brings customers back is that the customer likes to have a positive attitude of employee throughout the dining as a support for the disputation that employee approach is strongly linked with customer satisfaction. Ease and the location of the restaurant is also considerable and also the other factor influence customers to select that particular restaurant which satisfy their needs and wants regarding quality of the food and the restaurant environment. This leads in the increase of the retention rate and the loyalty of the customers towards that restaurant diners have an effect on restaurant (Bateson and Hoffman, 1999)
It is suggested that commonly and normally used indicators of customer satisfaction comprise repeat customer behavior, brand loyalty and reliability and at last word of mouth recommendation (Lowenstein, 1995)
In case of large restaurants franchised group, this kind of relative study and positioning might be important. Besides, while the performance of anyone of the outlet can impinge on the reputation of a whole network, identifying and recuperating those outlets that have a delicate association in the series can be vital. Valuable curriculum in marketing, human resource and man oeuvre be capable also be learnt as of those outlets where service exceeds or meets expectations of the customers (Kuo and Kao, 1999).
The one of the fact is that business like restaurants is considered as a low credibility service and that is one of the reason that quality of the services are complicated to prove until consumers revisit the restaurant. Furthermore, the service quality that customers come across may be dissimilar apiece time they visit that particular restaurant, thus persuading the level of contentment and ultimately upsetting their retention intentions.
There may possibly be a countervailing competitive consequence to enhance in product differentiation. Revelation of restaurant sanitation grades may serve up to decrease search costs for customers. Positive completion always ends in setting new ideas and innovation in the mind of the management of the management that makes them superior and differentiated in the industry in between the existing market players (Kaplan and Norton, 2001)
Both service value and customer retention is extensively acknowledged as practices of repurchase intentions. Though, it is understood that restaurant possessor would like to identify the strongest influence on retention intentions. A recent study divulges that customer satisfaction is the better predictor of intention comparing to service quality to repurchase. Increasing trend in retention is always due to service quality which is provided by the management to the customers and at the same time customer should be satisfied. Any of the factor missing may cause the decrease in loyalty of the customer towards that particular restaurant and customers are unwilling to re-visit for dining to the same restaurant.
In researches, results found that managing for most select customer satisfaction necessitates so as to satisfaction statistics be used in previous researches advise implement the positioning strategies with the intention of helping a business whittle a niche. Each restaurant has its own strategies to get the competitive edge in the market. Such information is able to facilitate to modify the restaurant service so that it congregates the desires of the target market segment. Supporting a firm's competitive benefit and enduring productivity and profitability possibly will better rely on the incorporation of customer satisfaction into the service organization's strategies and operations that helps the restaurant management to look their positions in the long run completion in the industry (Olsen, 2002)
In some countries like Germany, there is a system of Grade cards according to the quality differentiation in restaurants what decrease the expenditure of learning whether an individual restaurant has high-quality hygiene, and possibly will give confidence to customers to go to restaurants they want or else would not have. This may perhaps encourage competition among restaurants, by making customers not as much of incarcerated to any particular restaurants providing inducement for lesser prices, improved food quality, or better hygiene quality food provided and if this result is there, still amongst restaurants with the identical sanitation quality ranking, compulsory revelation may cause lesser prices or enhanced food quality (Johnson and Champaner, 2004).
In Chinese and French restaurants, customer view of service quality by the side of all proportions drop short of customers' expectations, even though an evaluation of the unprejudiced quality scores shows that the French restaurant is nearer to summiting the prospect of its consumers along all extent of service quality than in the Chinese business. It is evident that compassion and consistency are the two extents which plunge the largest part of below customer prospect inside the French restaurant
As a meaning- generating medium, the environment gives discriminative motivation to buyers that facilitate them to identify a restaurant's divergences as a source for select that restaurant. For instance, snowy white linen tablecloths, the soft lighting, and crystal chandeliers of a chic restaurant communicate the level of service and a kind of food to customers that create a fine-dining experience (Palmer and Neill, 2003).
3. FAST FOOD INDUSTRY
Fast foodis one of the world's largest growing food types which are growing with an increasing rate. The term Fast Food refers to many items that can be prepared and served quickly usually outside the home. While any meal with low preparation time can be considered to be fast food, typically the term refers to food sold in a restaurant or store which is rapidly prepared and served to the customer in a packaged form to dine out, take out or take away.
A typical fast food meal in the United States generally consists of fries, a burger and a soft drink.
3.2 Customer Preferences
People pick fast foods because it's easy. They could just go to McDonalds, Mr. Burger or KFC and order a burger or sandwich with fries and soft drink, rather than spending hours in the kitchen for cooking food.
Another reason would be if they work for long hours, while they come back to home, they could just stop at the drive through and order something to eat. Through this they can save their time to get rest.
When an individual is rushing for next appointment after lunch or work, it is more convenient to pack fast food.
3.3 Significance of Service Elements
We believe that customer service elements have huge impact on customer retention. Many researchers have closely analyzed all the service elements of several service providers. But in our research we have tried to cover and analyze all the service elements of Karachi's famous multinational and local restaurants.
7 ps of service marketing elements
Restaurant service elements associated with 7 ps of service marketing model
Odd pricing offers
Deals & discounts offers
Friendly & helpful staff
Atmosphere (interior, music)
Easy table reservation process
Easy & fast order taking process
Researchers urge all service providers to pay attention towards all of the above service elements in order to improve and enhance the level of service & quality.Poor service quality leads to switching intentions of the customer. To satisfy customer the restaurants' service elements should be more competent or should have an edge over competitors.
3.4 Brand Perception
When customers think or hear about any product or restaurant they start building perception about the brand. Sometimes it is based on observation or may be on the pat experience whether it is negative or positive. Most common methods of forming perception about brand are
- Past experience
- Interaction with sales staff or employees
- Word of mouth (colleagues or friends)
- Reviews by reputable sources
Some researchers call brand image and brand perception are the two sides of a coin; brand image is how company want you to see them where as brand perception means how you see to the company.
In our research we believe that in Karachi people are very brand consciouses the impact of brand over people is very huge and their replies to our questions were little biased.
3.5 Strategies for Retention
In this chapter some theories are presented in the context of customer retention which was not discussed in the previous part, because these cannot be analyzed within our practical research. These studies are important part of the customers' retention problem and can be used for advance researches.
n this chapter some theories are presented in the context of customer retention which was not discussed in the previous part, because these cannot be analyzed within our practical research. These studies are important part of the customers' retention problem and can be used for advance researches.
The research of Fruchter and Zhang (2004) examine strategic use of targeted promotion for gaining and retention of customers. Authors stress that selection of strategy: defensive targeted promotions for retention and repulsive promotions for acquisition depend on market share of a company. Fruchter and Zhang 2004 highlighted that for companies with larger marketplace share offense promotions targeted on learning generate little knock on gross sales than defensive promotions. Therefore, researchers state that if market share of firm increases it should spend more on customer retention; if market share of firm decreases it should spend more on customer acquisition. This research highlights when marketers should put emphasize on retention or acquisition but it does not provide keeping increase strategies and reasons for keeping. (Fruchter and Zhang, 2004)
Hogan, Lemon and Libai (2003) discuss changes of the customer's value during the product life cycle. Authors stress the value of retained customer and impact of the lost customer on company's ability (Hogan, Lemon and Libai, 2003).
Kumar (1999) highlights that relationship oriented service firms have higher level of trust and more repeated service encounters with their clients, therefore, such firms get higher level of ability and lower expenses over time.
Desai and Mahajan (1998)argue that feeling based attitudes appeal to fillings wishes emotions etc. can takings component in a strategic part in small indefinite amount brands to obtain develop and retain customers.
4. CUSTOMER SERVICE AND CUSTOMER RETENTION
For more than last couple of decades customer satisfaction is extensively discussed subject in different research areas like consumer behavior and marketing research. Since the mid-1970s many annual conferences on customer satisfaction were held, with proceedings being published since 1981 in the “Journal of Customer Satisfaction, Dissatisfaction, and Complaining Behavior.” During the past couple of decades more than 1300 articles have been published to discuss and understand customer satisfaction.
In recent era, customer satisfaction has gained new attention. Now it has been shifted from transactional marketing to relationship marketing , which refers “to all marketing activities directed towards establishing, developing, and maintaining successful relational exchange” (Morgan & Hunt, 1994, p 22). The key to retention is satisfaction of the customer and it has been treated as the necessary premise in many publications and research articles.
The link between satisfaction and the long-term retention of customers is developed by scholars and marketing practitioners in a rather categorical way, and is therefore treated as the starting point, rather than the core question of the analysis. “The assumption that satisfaction/dissatisfaction meaningfully affect on repurchase behavior underlies most of the study in this area of inquiry”. Consequently, only a few researchers have investigated the nature and to which degree the relationship between satisfaction and retention exist.
The number of studies in this area can be classified into three groups. Most of the researchers use monetary data as dependent variables, such as revenues or profit. In this procedure the investigation of the satisfaction-retention relation considerably limited for two reasons. First, the aggregation of data renders any analysis on the individual customer level impossible. Second, revenues and proﬁt are determined by a large amount of variables, which in addition are highly correlated. Therefore, a suitable assessment of the relationship investigated here seems barely accomplishable with this research design. A second group of studies on an individual level utilizes repurchase intentions of customers to investigate the link between satisfaction and retention (Bitner, 1990; Oliver, 1980; Oliver & Bearden, 1985; Oliver & Swan, 1989). This approach is also accompanied by two main limitations. Because satisfaction values and intention measures are usually obtained through the same questionnaire, the data are inherently correlated. This may lead to an overestimation of the strength of the relationship. Furthermore, previous research in the area of customer loyalty shows that the predictive validity of intention measures “varies depending on the product, the measurement scale, the time frame, and the nature of the respondents” (Bolton, 1995, p. 2; see also Morwitz & Schmittlein, 1992) and, altogether, must be seen as rather low (LaBarbera & Mazursky, 1983; Oliva, Oliver, & MacMillan, 1992). Closely related to the problem of intention measures is the usage of other inadequate operationalizations.
4.2 Importance of Service Quality
A restaurant service engages a route or a performance in which customers are involved in the overall service production process. This happens due to the interaction of the consumers with the service surroundings and personnel throughout the utilization experience, understanding consumers' sentimental response become vital in replicating satisfaction in a service locale. Study indicated that the affective processes throughout the consumption phase might play a straight, unmediated role in determining customer retention.
A study of the basics or attributes of customer satisfaction be supposed to give indication concerning what action a restaurant service manager must take to raise the probability that customers will appear back. It appears that study is not often concluded that the remarkable rate of malfunction in the restaurant service industry advices that the management can find the targets of converting customer satisfaction into financial achievement a vague one. Research accept as true that restaurant failures are partially a consequence of management's lack of strategic direction in determining and focusing on customer contentment, satisfaction and at last most importantly retention.
4.3 Customer Loyalty
Brink and Berndt (2004:32) state that customer trueness the aim of CRM is more than having customers brand repeat purchases and beingness content with their experiences and products or employment they bought. Client loyalty entails that customers are attached to buying products and services from a particular business and will resist the activities of competition companies attempting to attract their backing (Paswan et al.,2007). With customer loyalty, a bond is formed between the business and customer and the bond is based on more than a positive feeling about the business. By ensuring high levels of customer loyalty something Fishy, Nando's attains greatly reduced customer defection rates which in turn push to favorable rates of customer retention (Terblan-che, 2007).
4.4 Customer Problem in Retention
There are a variety of researches which investigate the retention of the customer's problem. Many authors look at the retention of the customers from the switching barriers perspective (Colgate et al., 2007; Ahmad and Buttle, 2001; Roos, 1999; Anton et al., 2007; Jones et al., 2007; White, Lemon and Hogan, 2007 etc.).
Colgate etal. (2007) in their work, researched customers who decided to stay with their current service provider after serious consideration of shifting to another service provider. Colgate et al. (2007) conducted a big empirical research which covered big variety of service industries (banks, insurance companies, doctors, electricity companies, dentists, mobile phone companies, fitness centers, hairdressers, Internet service providers, telephone companies, airlines, credit card companies, auto mechanics, video stores, and opticians) but not the restaurant service industry.
The final reasons to stay according to the Colgate et al. (2007) are categorized into the switching barriers and affirmatory barriers.
Research of Colgate et al. (2007) gives the understanding of wide categories which influence the customers' retention (e.g. satisfaction), but don't specifies these categories (i.e. the satisfaction with which determinants of the service enhances retention? Indeed, if the customer replies that he or she is satisfied with the present service provider. It will not be helpful to understand the satisfaction in depth and what factors makes customers come back.
Han, Back, and Barrett (2009) research relationships among consumption emotions, customer satisfaction, switching barriers and customer retention. They identified next switching barriers for the restaurant customers: switching costs, relational investment, lack of alternatives, preference. Authors also stated that these switching barriers are extensively related to repurchase intentions, and they explain why customers come back even when they experience low level of satisfaction or fault-finding emotions at the restaurant. Han, Back, and Barrett (2009) highlighted that there is a positive relationship between customer satisfaction and customer retention, also customer satisfaction highly influenced by emotional factors such as comfort and displeasure. (Han, Back, Barrett, 2009)
Another researcher is Roos who looks at the customer's retention from the scope of switching barriers. Roos (1999) defines switching determinants as pushing determinants (what makes customers to switch to another provider) and pulling determinants (what makes customers come back). The pushing determinants according to the Roos (1999) are price, range of goods, product mix, location, failure of system, design, policy (terms of payment), variation (a natural need of people for variation). While pulling determinants are variation, location, and range of goods, habit, pleasure and policy (Roos, 1999).
Let's compare the restaurants' service elements with the switching determinants presented by Roos (1999). “Product P” can be associated with the range of goods, product mix, variation; “Place P” can be associated with the location; “Physical environment P” can be associated with design; “Process P” (payment part) with policy. Interesting determinants presented by Roos (1999) are pleasure, habit and failure of the system. It is challenging to compare mentioned determinants with the restaurants' service elements, but we think that satisfaction with, for example, “Physical environment” and “People” Ps can create pleasure. Malfunction with delivering of some or all of the restaurants' service elements can create a service failure. We assume that stable satisfaction with the restaurants' service elements desired by the customer can create a habitual (routine) process of buying. Also we can look at the restaurants' service elements from the creating of switching barriers scope. We think that the restaurants' service elements could be used to create different kind of economical, social and emotional switching barriers.
Jones et al. (2007) propose three switching costs dimensions: social, lost benefits and procedural. The behavioral outcome of creating these types of costs according to the Jones et al. (2007) could be repurchasing intentions and Negative Word of Mouth (if customers are locked in the relations they don't want to be involved in by the switching costs they can start generating Negative WOM). Social switching costs Jones et al. (2007) relate to the potential loss of friendship with the service provider. This type of switching costs we associate with the “People P” of the 7 Ps Model. Lost benefits switching costs Jones et al. (2007) relate to the economical loses of the customer such as special offerings and price. We assume that lost benefits switching costs can be associated with the “Price” restaurants' service element and “Special offers, discounts etc.” restaurants' service element. Procedural switching costs Jones et al. (2007) relate to the time and efforts needed to find and adapt to a new service provider.
At the same time they positively influence the customer dissatisfaction which directly influence the customer switching intentions (Anton et al., 2007). The service quality according to the Anton et al. (2007) is founded on such dimensions as the service outcome, interaction between service and customer, and physical environment qualities. We assume that the service outcome can be associated with the “Food” and “Additional services” restaurants' service elements, interaction - with the “Friendly and helpful staff” restaurants' service element, and “Physical environment” qualities respectively - with the “Atmosphere” restaurants' service element. Commitments according to Anton et al. (2007) are willingness to invest, shared information, loyalty and commitment to the customer, or perceived desire to continue. The unfair pricing and anger incidents according to Anton et al. (2007) strongly affects switching intentions of the customers both directly and indirectly through satisfaction. We think that unfair pricing can be also analyzed through the “Price” restaurants' service element. The anger incidents according to Anton et al. (2007) are related to the customers' experience when they become upset and lose confidence in the firm. There could be lots of factors generating lose in the firm's confidence. At this stage we assume that dissatisfaction with some or all of the restaurants' service elements can be one of such factors which makes customers upset.
Lemon, White and Winer (2002) state that when customers decide whether or not to come back they consider not only current and past evaluations of company's performance (service quality, satisfaction) they also evaluate future expectations (future benefits and future regret). Authors state that firms should put more emphasize on customer expectations of future benefits in order to achieve retention and suggest to marketers to take into consideration how marketing mix elements (for instance, pricing strategy) influence customers' current usage levels and expectations of future use when developing marketing strategy (Lemon, White, Winer, 2002).
Keaveney (1995) defined reasons of switching behavior of the customers within the service industries: price, inconvenience, core service failures, failed employee responses to service failure, ethical problems, involuntary factors, competitive issues and service encounter failures. In his model are present such elements of 7 Ps Model like “Product”, “Price”, “People”, “Physical environment” etc. Also Keaveney (1995) stated that six of the eight causes of switching behavior can be controlled by the service provider.
Ahmad and Buttle (2001) emphasize that the Marketing Mix model is the tool of traditional marketing approach which is directed to acquisition of the new customers, at the same time it can be used to achieve higher rates of customer's retention. Ahmad and Buttle (2001) propose three types of potential retention increase strategies for three types of consumers: consumers of fast moving consumer goods (FMCG), consumers of services, businesses as users of physical goods and services. In all strategies they propose adjustment of particular elements which can be associated with Marketing Mix Model.
Berne et al. (2001) see retention of the customers as a function of the customer satisfaction while customer satisfaction is a function of the service quality (SQ-CS-CR model). Also he adds to this model variety seeking determinant which influences the customer retention directly (Berne et al, 2001).
The variety seeking determinant we can try to associate with the “Food” restaurants' service element as the big variety of products can satisfy the natural need of customer for variety seeking process. Furthermore, to the determinants of customer satisfaction Berne et al. (2001) relate: personnel and cleanliness, food, atmosphere, fast service. Personnel and cleanliness we can associate with “Friendly and helpful staff” restaurants' service element, Food - with “Food” restaurants' service element, atmosphere - “Atmosphere” restaurants' service element, Fast service - “Easy and fast order taking process” and “Service delivery speed” restaurants' service elements.
Based on the overviewed theoretical background in our empirical research we want to find out which role each restaurant's service element plays in retention of the restaurant customers.
Another important view on the customer retention was highlighted by the Yi and La (2004). Their study research the impact of the loyalty factor on customer satisfaction and repurchase intention (Yi, La, 2004). Authors concluded that for loyal customers satisfaction has a direct impact on repurchase intentions, when for non-loyal customers adjusted expectations (expectations formed after consumption) play leading role in forming repurchase intention (Yi, La, 2004). Therefore, researchers highlight that when failure happens; repurchase intentions of loyal customers are less affected than repurchase intentions of non-loyal customers (Yi, La, 2004).
Looking for the loyalty measurement tool we have directed our attention at the research of Reichheld (2003). He has presented the set of questions directed to the loyalty measurement and identified one question which was the most effective tool of loyalty measurement among other questions (Reichheld, 2003). Reichheld (2003) justified the correctness of his question by the notion that those customers, who recommend the service, are highly likely to be the loyal customers. This gives us the opportunity to touch the relation between retention and loyalty of the customer.
4.5 Customer Service Satisfaction
The core aim of any business is to make sure that the customer that buys its product or service is satisfied. Customer satisfaction can be described as the degree to which a business's product or service performance matches up to the expectations of the customer. If the performance matches or exceeds the expectations, then the customer is satisfied, if performance is less than par then the customer is dissatisfied (Brink and Berndt, 2004:46). However, to make sure that the business satisfies the needs and wants of its identified target market, the business must focus on customer value. All customers want to buy a product or service of value. Customer satisfaction is defined as the consumer's fulfillment response. It is a judgment that the service or product features, its attributes provided a delightful level of consumption associated achievement including levels of under fulfillment or over fulfillment (Eileen and Berry, 2007).
4.6 Product Specific Satisfaction
In today's fast rapidity and progressively more competitive market, the base line of a firm's promotion and marketing strategies, tactics and procedure is to make s and add to the growth of the company. Customer satisfaction, contentment, quality of the service, excellence and retention are global matter that influences all organizations. This include all type of organizations, it can be large or small, global or local or non-, services provider.
The significance of elevated quality service given to business success, there are various prospective benefits for the management of restaurants from performing a customer-based assessment of the service quality veteran at their organization. In restaurant industry, the intangible nature of services means that particular specifications for the homogeneous quality of service are complicated if at all probable to set. This sometimes put together it difficult for restaurant managers, workforce and customers to calculate, measure, assessment or confirm service productivity and service quality
4.7 Timeliness of Delivery
Customer service departments can meet customers in person or be reached over the phone. Customer service delivery relates to certain elements that are necessary when serving customers, including treating them properly and answering the customer's question to his satisfaction.
Special Attention: One customer service deliverable includes providing the customer with special attention, which includes eye contact, according to "Inc. This attention ensures that the customer gets to ask her question without getting rushed. Customers usually appreciate it when companies take time to listen to them.
Professionalism: Professionalism is another element that companies must deliver to customers. A customer service rep must maintain certain decorum and not get angry with the customer, though the customer may be upset.
Timeliness: People are busy today, so customer service delivery also entails handling transactions or refunds in a timely manner. No one wants to stand in line for 10 or 15 minutes. When customer service reps see a line queue, they should allocate more reps to serve the customers. Fax or phone orders to the restaurant. Pick up and deliver the food to customers, then collect payment.
4.8 Customer Relationship Management
Customer Relationship Management (CRM) has developed from a synthesis of relationship marketing, internal marketing, and customer care to form a fully integrated system (Lancaster and Reynolds, 2005:259). CRM has developed From a technology-centered view to a business-value activity Because companies now view customers as important Assets rather than just exploitable income sources that have to be looked after and developed (Iriana and Buttle, 2006: 24-26).
CRM is a strategy which is used to learn more about customer's needs and behaviors in order to develop stronger relationships with them (Leverin and Liljander, 2006:233-235).
4.9 Servperf Model
According to Audrey (2003), the development of the SERVPERF model is aimed at providing an alternative method of measuring perceived service quality and significance of the relationships between service quality, customer satisfaction, and purchase intentions. This model consisted of five dimensions which are:
Tangibility:The concern here is more specifically with the condition of physical environment of the restaurants, the equipments used to provide services and the products consumed by the customers (Yuksel, 2001). Besides, it also referred to the presentation of the interior (i.e. clean environment with a nice decoration of the place) and the convenience offered to the customer (Subhash, Ashok, & Soon, 2000).
Reliability:It is the restaurants' regularity and consistency in performing services and the degree to which it inspires confidence and trust in customers. In operational terms, this means keeping promises, trust worthiness in transactions and the efficiency of the recovery process if anything goes wrong (Yuksel, 2001).
Responsiveness: According to Parasuraman et al. (1985), Zeithaml, Parasuraman, and Berry (1990) and Fetus, Maxwell, and Godwin (2006) responsiveness is defined as willingness and readiness to help customers and provide prompt service.
Assurance: Assurance means the knowledge and courtesy of restaurant staff and their ability to convey trust and confidence to its customers. It also includes three main elements which are (i) Courtesy: politeness, respect, consideration, and friendliness of contact personnel; (ii) Credibility: trustworthiness, believability, and honesty of the service provider as well as (iii) Security: freedom from risk, or doubt (Parasuraman et al., 1985; Zeithaml et al., 1990; Fetus et al., 2006).
Empathy: This term means caring, giving individual attention from the restaurant staff to its customers. There are several components in this dimension which are (i) Access: approachability and ease of contact; (ii) Communication: keeping customers informed in languages they can understand and also listening to them; and (iii) Understanding Customers: making the effort to know customers and their needs and wants. What exactly they demand (Parasuraman et al., 1985; Zeithaml et al., 1990; Hyung, 2006).
5. RESEARCH FINDINGS
1. Specify your age range, please:
15-25 26-35 36-45 46-55 56+
4.1 - Distribution of the respondents through the age range categories.
Age range category
Number of respondents
Analysis: The total numbers of questionnaires that we distributed were 100, out of which 15% respondents were in the age group of 15 to 25 years, 15% were in the age group of 26 to 35years and 21% were in the age group of 36 to 45 years. 20% were in the age group of 46 to 55 years. And the rest 29% were in the age group of 56+. Hence the majority of people surveyed had age group from 56 +year.
2. How often do you visit this restaurant?
1-10 11-50 51-100 101-200 201+
Table 4.2 - Distribution of the respondents through restaurants visiting frequency categories.
Analysis:The frequency of visiting the restaurant of the respondents were, 31% of the respondents have visited the same restaurant 1 to 10 times, 39% of the respondents said that they have visited the same restaurant 11 to 50 times, 17% visited 51 to 100 times, 7% said 101 to 150 times & 4% of them visited more than 150 times.
3. What makes you come back to the restaurant? Mark 3 options
Amount of Respondents
Friendly and helpful staff
Easy and fast order taking process
Service delivery speed
Special offers, discounts etc.
Who other clients are
Analysis:we find many reasons of revisiting to the same restaurant from the respondent in which top 3 are Food, Atmosphere, Special offers & discounts are major reasons for retention.
4. How long are you being a regular client of the restaurant?
Table 4.3 - Distribution of the respondents through duration of being
restaurant regular customer, years.
Analysis:Some of the respondents were not sure whether they have been returning back to the restaurant for 2 or 3 yrs so we interpreted this value as 2.5 years.
It has been observed during the research that customers that fall in the first 4 categories of duration have declining interest because they have got better options offered by other restaurants where as the customer of last 3 duration categories are loyal to the same restaurant because of primarily food, service, and location.
5. To what extent from 1 to 10 (10 means the most important) does the following attributes influence your decision to continue to go to the restaurant?
Restaurants' service element
Friendly and helpful staff
Service delivery speed
Location of the restaurant
Easy and fast order taking process
Easy table reservation process
Recognition by the staff
Special offers, discounts etc.
Who other clients are
Table 4.5 - Rating of restaurants' service element from closed questions
Analysis:There is no doubt about that food is the core service element of the restaurant and customers who dine out are more conscious about taste & quality of food. That is why the food is rated highly and nobody has weighted “Food” as 1-3. But the fact, which influences them more, is the staff of the restaurant. The highest amount of respondents rated this element as an important. The lowest rated element was additional services like (newspapers, parking etc).
6. How likely is it that you would recommend restaurant x to a friend or colleague? Where is 1„not at all likely, 5 is „neutral and 10 is „extremely likely (Reich held, 2003)
Customer distribution through Reichheld's customer categories
Table 4.4 - Respondents distribution through Reichheld's (2003) customer categories
Analysis:we find that the 14% of the respondents done a critical analysis of the restaurant's service elements where as 35% customer are least bothered about other service elements or they have compromised on other services elements that is why they look satisfied to some extent.
While 51% of the respondents were fully satisfied and they were trying to defend the restaurant's service elements and were eager to recommend the restaurant service, are highly likely to be the loyal customers.
6. CONCLUSION & RECOMMENDATIONS
Testing customer demands indicated that management of the restaurant must make an effort to deliver not only quality food stuffs and services, but at the same time a high level of dining satisfaction that will lead to increased customer return results in re-patronage of customer and greater market share. The consequence of customer satisfaction and contentment in relation to possession rates, return rates and equally management researchers and experts in the generosity field have long urged ability. The behavior of the restaurant staff (the way they treat, talk, their face expressions, willingness and positive response) to the customers is another most important factor that helps in increasing the customer retention.
The management of the restaurant should focus on the way their staff welcome and acknowledged their customers on the board. In the fast food industry, patronage and recommendations are dependent on the personalized service through empathy and assurance, the better the way they deal with their customers the higher will be the retention rate. As an outcome, the restaurant's whole environment of service, the atmospherics of feelings of the surroundings is always very imperative in seminal both customers and front line staff attitude about the procedures and service delivery outcome. This entails that, it was very important that the awareness of the tangible pressure on service quality, such as the substantial and physical facilities, and the appearance of personnel
The challenge for the management here is to train their staff to ensure better quality service, like appearance and cleanliness of the restaurant staff which are significant factors and play an important role in increasing the retention rate of the customers. In servicing industry the appearance and behavior of the employees is most important therefore, manager should focus these aspects with high priority. Tangible quality on its own may have a weaker influence and effect on behavior, but it helps in developing feelings and sense of attachment towards the restaurant, which results in a stronger influence on behavior. Restaurants supposed to strive for enlightening positive feelings to their brand name by maneuvering tangible attributes.
Another most important issue for the fast food restaurants of Karachi is that though people do not accept that they are price conscious yet we find them, but price factor can be made less important for the customers if they are valued properly though all service elements.
Customer satisfaction is a key element for the planning of the marketing in view of the fact that satisfaction does sway customer's intention to re-patronage the restaurant in fast food industry. Therefore, marketers are supposed to look into the issues that would have an effect on customer satisfaction intensity. Besides, as customer prospect are altering over time and it is advised to determine the customer satisfaction and expectation on regular basis and grip complaints timely and effectively.
In order to provide the value addition to know the needs to the consumer and to satisfy them then managers and restaurants administration should understand what customer's value and must understand how consumers perceives their restaurant's products and services. So to have a study that divulges consumer perception of all brands is necessary. A study of this type should generate an accepting of how customers appraise main brands in order to get better both managerial and the academic understanding in the customers' assessment process.
Restaurants should invest in the training and development of their employees as they are the one who in actual are dealing with the customers, their presence and approach will create an image in the customers mind. Customer retention is important in the current competitive environment; restaurant manager should need to take care of the factors that have a direct impact on the customer retention rate.