Koh, See Yong
Customer Satisfaction & Loyalty in the Singapore Retail Fuel Market.
[Dissertation (University of Nottingham only)]
Where are all the customers? If your competitors have got them, then it’s a bad news. The good news is that you can win them back or attract new ones. This may sound simple and easy. However, the starkest challenge facing business today is customer scarcity where they are too many sellers for too few buyers.
According to an article from Harvard Business Review, Frederick Reichheld and Earl Sasser (2000) explained that there is a high cost of losing customers. This includes reduce profitability, loss of free advertising through word of mouth. It would also take a great deal of effort to win back these customers. To keep customers loyal, company needs to find out why defectors are leaving. Using this information would thus help improving the business.
Organizations that listen and respond to the way their customers feel will succeed and thrive despite changes or demands in the marketplace. Ultimately, it’s the element of customer satisfaction; the feelings that influence that are responsible for customer loyalty. Loyal customers demonstrate their loyalty through certain behaviors that benefit your organization. These behaviors include resisting offers from the competition, recommending you to others, and working with you when they experience a service breakdown. The payoff is of great significant to the company where both market share and profitable growth are possible. For most companies, customer loyalty is the single most important determinant of long term growth and profit margins (Doyle, 2000).
Retention is a key term in customer loyalty where the customers who continue to do business with your company would provide a solid base for success. The most loyal customers would cost the company the least to service because they are not as sensitive to competitive pressures.
Loyal customers would also encourage others to choose your organization or product over the competition. Such referrals would save your company the substantial cost of acquiring new customers. Where yesterday’s “word-of-mouth” could influence a dozen individuals, today’s “word-of-mouth,” via e-mail or blogs, can influence thousands.
Loyal customers speak well of your company, thus this positive reputation are enhanced. They increase public support and positive interest from investors, suppliers, future employees, the media, and even regulatory bodies.
Lastly, loyal customers give your company a larger share of their business, which increases the overall revenue and the recognition that comes with success. Cross-selling and up-selling to existing customers is the primary growth strategy for many organizations and is particularly lucrative with loyal customers.
In this research paper for the retail fuel industry in Singapore, it was found that there was indeed a high level of customer satisfaction as well as loyalty. However, the keys element to influences the loyalty index were found to be the reward program from the fuel company, fuel discount program from both the credit card and fuel company. As fuel is the main source of movers for vehicles and the substitute of bio-fuel is not that established and popular, coupled by the huge available market of vehicle owners, the authors of this research agreed that loyalty program should do more than keeping customer from defecting. Fuel company need to have a clear and distinct value proposition such as their brands, their product offering, wide network of service station, in order to achieve long term sustainable competitive advantage. This sustainable competitive advantage would thus translate into customer satisfaction and loyalty is embedded in the customer mindset.
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