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The object of this study is to propose and empirically analyze a conceptual framework that considers perceived value/ equity, customer satisfaction, Company/consumer identification and switching costs as the determinants of customer loyalty

Extracts from this document...

Introduction

Executive Summary. Since your company's relationship with its customers changes over time, it's helpful to take advantage of customer loyalty research, to investigate how consumer trends threaten to take away your customers, or can provide new opportunities to hold onto them. Since your profits are most likely closely tied to how well you retain your current customers, this is probably a more than worthwhile investment. Problem Statement. Loyalty can be defined as the non-random repurchase behavior of a brand, or group of brands, following a process of evaluation. A high degree of customer loyalty in a business can result in increased revenue, reduced customer acquisition costs, lower costs of serving repeat purchasers, and eventually improved profitability. So, the question should be asked, how does a business achieve customer loyalty? Based on the cognition-affect-behavior model, this proposal hypothesizes that customer equity mediates the relationship between customer satisfaction and customer loyalty and that customer satisfaction and loyalty have significant reciprocal effects on each other. The proposal will construct a conceptual framework, based upon empirical evidence that will be specifically tailored towards the business. Customer loyalty research discovers and measures attitudes and experiences that lead to desirable behaviors. It is a market research practice that is extremely actionable-it identifies areas for improvement, prioritizes them, identifies remedies, and then provides feedback on their effectiveness. Research objectives. The object of this study is to propose and empirically analyze a conceptual framework that considers perceived value/ equity, customer satisfaction, Company/consumer identification and switching costs as the determinants of customer loyalty towards the business. Through quantitative research we will develop a conceptual model explaining the causal relationship linking these variables and explore their relationships. In this model we suggest that customer satisfaction mediates the impact of customer equity on customer loyalty in a positive relational nature. Concepts such as company/consumer identification and switching costs will also be factored into the model and the research will be specifically tailored towards the firm. ...read more.

Middle

This aspect of the study will answer important questions such as: Why there is a high churn rate? What drives customer loyalty for this particular business? How well do customers identify with the firm? The study will, as a secondary objective, develop a picture of the overall satisfaction and degree of customer loyalty for the business. This aspect of the project, using mainly quantitative research, will deliver key statistics such as: What percent of customers are loyal? What percent are at risk? How do satisfied vs. dissatisfied customers' experiences differ? comprehensive customer loyalty research process Firstly, we will have to identify how data will be used, get an idea of the research scope and methodology. After which a hypothesis will be identified, with regards to what factors correlate to customer loyalty, to do this there will be a number of interviews and/or group sessions with the staff. By doing this it also ensures buy-in, whereby any changes brought about from the change encounter less organizational resistance. The quantitative phase will determine whether the hypothesis is correct in relating various variables. We will ask select customers to participate in a forum. Typically through focus groups (online or traditional), these customers discuss their experiences and their own perceptions of what leads to loyalty. After which, a presentation of the hypothesis is made to all departments that may be affected by the process. This is to help ensure buy-in. Customer loyalty research is often met with resistance. Presenting all potentially affected constituencies with hypotheses before going into data collection shows them the analysis will be comprehensive, that no one department will be "picked on." There will be a degree of quantitative research preparation required to ensure successful data collection, whereby the customer list is gathered and cleaned before the survey design begins. We have to know whom to contact and how to contact them. Even the biggest companies have customer list problems. ...read more.

Conclusion

A possible strategy to combat this would be to Enhance Equity/perceived value or improve customer satisfaction. Results from the research should determine the area on which to focus on. A Presentation of the results will be made to all departments that may be affected. This is to help ensure buy-in. Customer loyalty research is often met with resistance. Presenting all potentially affected constituencies with a comprehensive explanation of the results, and how we arrived at the conclusions, will help to unify the organization towards a common set of goals. After the data has been fully analysed, visual displays of data will be made to facilitate communication of the results, typical displays include perceptual maps, bar charts, line graphs, and tree diagrams. Follow-up at a later date would also be made available to ensure the data is used to encourage appropriate decisions and to take decisive, corrective action. Schedule 1) Hypothesis identification - 1 day 2) The quantitative phase- focus groups- to establish basic hypothesis - 2 days 3) Presentation of the hypothesis to all departments that may be affected by the process. - 2 days 4) Research preparation, customer list is gathered and cleaned before the survey design begins. - 10 days 5) Client input to ensure survey instrument is comprehensive but concise. - 1 day 6) Questionnaire pilot testing - 2 days 8) Questionnaire revision - 2 days 9) Conducting field work - 30 days 10) Data analysis, conclusions - 5 days 11) Presentation of findings - 3 days 12) Follow up An estimate of 58 days is required for completion of this study. Each day consists of 6 hours of work at a rate of $150 per hour. 6hours x $150 x 58days = $52,200 Facilities and special resources Software required CATI (Computer assisted telephone interviewing)- enhanced analysis of telephone data. Computer Assisted Personal Interviewing (CAPI) - enhanced the performance of this technique. Personnel capabilities required: A skilled moderator for Group discussions (focus groups) Mystery shopper Facilities required: Rooms required for focus groups. ...read more.

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