Customer needs

Reference: (The effects of customer satisfaction, relationship

Commitment dimensions, and triggers on customer retention

- Anders Gustafsson, Michael D. Johnson, & Inger Roos)

In hospitality industry where relationship management drives the business, research findings
indicate that two dimensions of relationship commitment motivate customers for be loyal towards a
brand. They are affective commitment and calculative commitment. We need to emphatically
submit the relative effects of customer satisfaction, affective commitment and calculative
commitment on customer retention. Hence our primary concern is to recognize these drivers and
suggest the impact that they might have on retention.
Affective commitment is built on emotional grounds and is a hotter factor that develops
through constant interaction with the customer, involvement and reciprocation. This shall make the
customer more sensitive to our organization and facilitates greater trust and brand loyalty. On the
other side, calculative commitment is the colder, or more frugal and tangible, economic-based
dependence on product or service benefits over the other competitors because of lack of options. A
stark difference between customer satisfaction and dimensions of commitment is that satisfaction is
retrospective in nature, whereas the commitment dimensions are more futuristic. Satisfaction is a
function of performance to date, whereas affective and calculative commitment capture the
strength of the relationship and the resultant commitment to proceed forward. It is evident from the
previous literature that these factors have a positive effect on the customer retention and can
drastically reduce the churn rate.
Customer satisfaction is deeply impacted by the reactional triggers. This generally happens
when a customer faces a bitter experience with the service quality. For example, when there is a
delay in room service or improper staff attitude etc. Reactional triggers are those crucial incidents
that deteriorate the perceived performance. They may be seem to be insignificant in the short run
but over a period of time may have radical implications on a business. As cited in the literature
pertaining to customer satisfaction, a positive customer spreads the word to 3 people where a
dissatisfied customers resonates the word to 11 other people. Hence the negative opinion spreads
more rapidly than positive. So it is necessary to minimize these triggers and provide customers best
quality service.
Understanding customer psyche

Last but not the least, since the survey form at Indian Hotels Company is exhaustive, it is to
be recognized that the high profile guests visiting these hotels generally face a time crunch and
might not be able to go through the form thoroughly. Hence, a pilot study can be conducted on 50
respondents about the clarity and crispness of questions. Based on the feedback, a few unclear
questions can be rephrased and unwanted questions can be removed.
Customer Retention
Reference: From accuracy to diversity in product recommendations:
Relationship between diversity and customer retention
- Sung-Hyuk Park and Sang Pil Han

In marketing literature, some models have indicated that customer retention rates can be
attributed to customers long-term profitability. According to these models, if the repeat business
generates a positive profit, then customer retention rates positively influence long-term profitability.
For example, IHC ltd which already promotes Privilege cards for its elite guests can remodel the
points scheme such that it they can be used by customers more often and entice them to stick to our
services. This generates profitability to the customers. This brings us to the concept of Customer
Lifetime Value (CLV) which is the net present value of a customers present and future profits. CLV
has been widely accepted by marketing practitioners and scholars.






The relationship management literature emphasizes two different dimensions of
relationship commitment that drive loyalty: affective commitment, as created through
personal interaction, reciprocity, and trust, and calculative commitment.
We need to examine the competing effects of customer satisfaction, affective commitment,
and calculative commitment on customer retention.
If customer satisfaction is the primary driver of retention, a firm should improve product or
service quality or offer better prices. If affective or calculative commitment is more
important, a firm should either build more direct relationships with customers or build
switching barriers in relation to competitors.
We focus on three prominent drivers of retention in the marketing literature: overall
customer satisfaction, affective commitment and calculative commitment.
In a service context, overall satisfaction is similar to overall evaluations of service quality.
Compared with more episode-based or transaction-specific measures of performance,
overall evaluations are more likely to influence the customer behaviours that help a firm,
such as positive word of mouth and repurchase.
Longitudinal data that combine survey measure with subsequent behaviour should be used
to establish a causal relationship between perceptions and behaviour.
Calculative commitment is the colder, or more rational, economic-based dependence on
product benefits due to a lack of choice or switching costs.
Affective commitment is a hotter, or more emotional, factor that develops through the
degree of reciprocity or personal involvement that a customer has with a company, which
results in a higher level of trust and commitment.
These various sources create a stickiness that keeps customers loyal to a brand or
company.
An important conceptual difference between customer satisfaction and the commitment
dimensions is that satisfaction is backward looking, whereas the commitment dimensions
are more forward looking.
Satisfaction is a function of performance to date, whereas affective and calculative
commitment capture the strength of the relationship and the resultant commitment to
proceed forward.
On the basis of the literature, we predict that affective commitment and calculative
commitment each has a negative effect on churn (i.e., positive effect on retention).
Reactional triggers are those critical incidents of deterioration in perceived performance
that are traditionally described in the literature.
Customers classified as having reactional triggers referred to some form of critical incident in
which, for example, the customer support was poor or the service was unreliable. Customers
classified as having situational triggers identified fundamental changes in their situation,
including a lower need to make calls, a greater need to make long-distance calls, or the need
to add an Internet supplier.
The relationship managers need not worry about trigger conditions in the short run. In the
long run, however, the situation may differ considerably.
When a pilot study is conducted on 50 respondents to test the questions, we should
encourage respondents to identify unclear questions. Some of the questions need to be
rephrased on the basis of feedback from the respondents.