How to Make Your Customers Satisfy. Chen-Hsien Lin, to make the study even more reliable, the sample size used was 500, with 406 …
How to Make Your Customers Satisfy
Chen-Hsien Lin,
Department of Business Administration, Diwan University,
No87-1, Nansh Li, Madou Jen, Tainan, Taiwan, ROC
Cheng-Te Lin
Department of Applied Economics, National Chung-Hsing, University
250, kuo Kuang Rd, Taichung 402, Taiwan, ROC
Corresponse Author: I-Hua Lin,
Department of Hospitality and Food management, Diwan University,
No87-1, Nansh Li, Madou Jen, Tainan, Taiwan, ROC
ABSTRACT
Numerous studies have shown a positive correlation between customer
satisfactions and repurchase intention However, service failure can put
companies out of business if attention is not paid to this problem This
study explained the components of service recovery strategies used when
service failure occurs in each situation in a hotel, and to link customer
response to service recovery strategies to behavioral intention, as applied
to the hotel industry in Orlando, Florida In this study, the sample of 500
was received; however, only a total
of 406 respondents filled out
questionnaires completely 812 This study used the SPSS for Windows
version 140 for data analysis The purposes of this study were to
investigate the explanatory relationships between hotel guests socio-
demographic characteristics and perceptions of a service failure; b
service recovery strategies in each service failure situation; and c
behavioral intentions; to investigate the impact of hotel guests socio-
demographic characteristics and their perceptions of service recovery
strategies used in each service failure situation compared with other
strategies, in explaining behavioral intentions of hotel guests in Orlando,
Florida One research questions and four hypotheses were developed for
this quantitative, non-experimental study Several statistical measures,
such as frequency distributions, reliability estimates, a correlation
analysis, and multiple regression analysis were used for data analysis
Future studies may try to strengthen internal validity of the study;
conduct a replication study in other service industries in other city as
Las Vegas
Keyword:
Service Recovery Strategies, Service Failure, Hotel Industry,
Behavioral Intentions, Customer Satisfaction
INTRODUCTION TO THE STUDY
In marketing, the most important strategy is to maintain current customers
and attract new ones McCole, 2004 As a result, most sellers attempt to
deliver first-class service to customers because high-quality service is
likely to enhance customer satisfaction Simons Kraus, 2005 Numerous
studies have shown a positive correlation between customer satisfaction and
repurchase intention, which can lead to future profitability Simons
Kraus, 2005 However, failures, errors, mistakes, and complaints can
frequently happen in the process of service delivery Babakus, Yavas,
Karatepe, Avci, 2003 As one of the service industries, the hotel
industry involves a high degree of personal interaction between hotel staff
and customers; miscommunication can lead to service failure Lewis
McCann, 2004
Businesses typically lose approximately 50 of their customer base every
five years Mack, Mueller, Crotts, Broderick, 2000 The cost of gaining
new customers is approximately five
times that of retaining present ones
Kerr, 2004 Service failure can put companies out of business if
attention is not paid to this problem Consequently, hotels cannot afford
to lose guests who have the potential to become public relation makers for
hotels through positive word-of-mouth by referring others to use the
companys products or services Magnini Ford, 2004
Service recovery involves those actions designed to resolve problems,
alter negative attitudes of dissatisfied customers and to ultimately retain
these customers Miller, Craighead Karwan, 2000, p 388 Therefore,
emphasis on service improvement, in particular service recovery strategies,
is important to companies in order to resolve this problem Service
recovery is a key strategy that can be utilized to help increase customer
satisfaction, regardless of industry settings, and the hotel industry is no
exception
JUSTIFICATION
Research has demonstrated that the appropriate and effective application of
service recovery strategies can help a firm retain customers, leading to
customer loyalty Hoffman, Kelly, Rotalsky, 1995 However, by
contrast,
some research has indicated that even though various service recovery
strategies have been implemented, more than half of respondents in
Zeithaml, Parasuraman, and Berrys study 1990 reported discontent with
service recovery efforts Therefore, it would be advantageous for a study
of the hospitality and tourism industry to examine the perceptions of
service failure and service recovery strategies used by service providers
in each failure situation, and resulting customer behavioral intentions, an
area which little research to date has explored
LITERATURE REVIEW, THEORETICAL FRAMEWORK
Service Failure Models and Theories
Service failure occurs when a service provider cannot deliver service that
meets the customers expectation Alexander, 2002 Service failure can be
identified through customers and service providers using the following four
causes: a an improper service provider response to a service delivery
system; b an ineffective response of the service provider to customer
requests; c unwanted service provider actions proposed by Bitner et al,
1990; and d inappropriate customer behavior proposed by
Bitner, Boom,
and Mohr, 1994 Among these four areas, the most significant finding was
that service provider feedback is important to customer assessment
Alexander, 2002 Even though customers experienced service failure, they
could leave the service encounter contented when the service provider
responded favorably to their requirements Contentment can also happen
after dissatisfaction with service when customers have a chance to express
their feelings and receive an apology and corrective action from the
service provider At this point, feelings of satisfaction can be enhanced
by a favorable outcome Alexander, 2002
Service Failure Measurement
Lewis and McCann 2004 focused on service recovery and service failure in
the hotel industry in the United Kingdom This was a mixed-methods
qualitative and quantitative, causal-comparative study of business and
leisure customers The main purposes of the 2004 study were to evaluate
the types and extent of failures perceived by hotel customers, assessing
strategies of service recovery used by hotels and their efficiency, and to
explore of whether or not there were distinguishing
characteristics in the
feelings and actions between commerce and leisure customers Data were
collected from a random sample of hotel business and leisure customers in a
four-star hotel with 120 beds in a northwestern town Lewis McCann,
2004 This hotel represents numerous national hotel chains
Lewis and Spyrakopoulos 2001 empirically investigated incidents of
service failure and service recovery attempts in the field of retail
banking The purposes of this study were to address and categorize service
failures as perceived by customers in Greek retail banks; and to describe
strategies used by the banks to solve the problems as shared from the
direct experience of the customers In addition, this studys objectives
also were to evaluate customers perceptions of the magnitude of service
failures and effectiveness of service recovery strategies, and to explore
whether or not there are indicators of customers perceptions about the
magnitude of different service failures and the effectiveness of different
recovery strategies
Service Recovery Strategies
Service recovery is defined as the feedback delivered by a service
provider
following a service failure Alexander, 2002 Service recovery refers to
steps that are intended to identify and correct service failures or quality
problems Simons, 2004, p 13 Service recovery can be recognized as a
crucial determinant of customer satisfaction and retention Mattila, 2001
Service recovery has two dimensions: technical and functional dimensions
Parasuraman, Zeithaml Berry, 1988 The technical dimension refers to
what customers actually obtain from the hotel as part of efforts to
recover, whereas the functional dimension refers to how this process is
accomplished Lewis Spyrakopoulos, 2001
Customer Satisfaction
In the last 42 years, Adams theory has been revised and adopted to study
customer satisfaction and service recovery by Goodwin and Ross 1992,
Oliver and Swan 1989, and Tax, Brown, and Chandrashekaran 1998 Equity
theory addresses essential issues about equity in the discipline of
management and marketing, and is useful in explaining and predicting the
relationship between equity perception and customer satisfactions This
theory strikes a fine balance between simplicity and
complexity,
contributing to its usefulness Thus, it is a good guide to measure
customer satisfaction
Customer Satisfaction Empirical
Kandampully and Suhartanto 2000 conducted a study of the relationship
among customer loyalty, the role of customer satisfaction, and hotel image
The researchers used a non-experimental, causal comparative, quantitative
design, regression analysis of 106 guests of five different chain hotels in
New Zealand Kandampully and Suhartantos literature review was thorough
and current in comparing and contrasting theories of customer satisfaction
and customer loyalty Empirical studies were examined reviewed, leading
to a major gap in the literature about understanding the relationship among
customer loyalty, customer satisfaction, and image
A non-probability, purposive sampling plan resulted in a data-producing
sample of 106, a response rate of 45 of the hotel guests Likert-type
scales were used to measure Customer Loyalty, Customer Satisfaction, and
Hotel Image Data collection procedures were clearly described, but this
study did not report IRB or other ethical approval
RESEARCH
METHODOLOGY
The study was designed to use a quantitative research method An
exploratory correlational research design was used to answer the research
question and to test the hypotheses The design sought to explain the
relationships among hotel guests sociodemographic variables, their
perceptions of service failure magnitude and service recovery strategies,
and their behavioral intentions toward the hotel industry of Orlando,
Florida A large sample was used, as systematic probability sampling
permits generalizing the results of the study to the desired target
population Gay, 1996
Based on the literature, numerous studies have reported on the field of
service failure, service recovery, and customer behavioral intentions
However, little research has discovered the relationship among service
failure, service recovery strategies, and customer behavioral intentions,
particularly in the hotel industry of Orlando, Florida In addition, most
studies on a similar topic used only descriptive statistical analysis, such
as central tendency and frequency distribution Thus, this study used
inferential
statistics and multiple regression methods, which were not
found in previous studies, to explain the relationships between perceptions
of service failure and service recovery strategies, and behavioral
intentions of consumers in the hotel industry of Orlando, Florida, USA
Sample Size
According to the International Drive resort areas media, the number of
annual visitors who used I-Ride Trolley service was over 20 million in 2005
internationaldriverorlandocom, 2006 Thus, the appropriate sample size
relied on this number According to Zikmund 1997, large samples are more
obvious than small samples, but if appropriate sampling is applied, a small
proportion of an entire population will provide a reliable measure of an
entire population This ensures that selected samples are representative
in order to generalize with confidence from the sample to the overall
population Ary, Jacobs, Razavieh, 2002 There are two popular methods
of determining a sample size to be used First, the use of a sample size
that is similar to that used in prior studies Ary et al, 2002 Second,
using calculation tables provided in the statistical books As
stated
earlier, the estimated visitors in Orlando per year, reported in the year
2005, was approximately 20 million In the calculation table, Gay 1996
noted that if the size of population is more than 100,000, the sample size
should be about 384 Therefore, to make the study even more reliable, the
sample size used was 500, with 406 responses that were usable, which
created a 81 response rate
Pilot Study of Survey Instrument
To address reliability and validity of the questionnaire, a pilot test was
needed, along with evaluation of experts and professors in the hospitality
field because the instruments used in this study were modified from the
original versions An appropriate pilot test study was conducted with 50
guests in hotels that were located in Orlando This number was appropriate
for conducting the pilot run However, as the participants were asked to
show their perception of service failure of hotels and service recovery
strategies provided by hotels in which they had recently stayed, they were
requested to select only one item that fit their recent experience Thus,
reliability and validity for these parts were not reported,
as numbers of
items were not adequate to run the Cronbachs alpha and factor analysis
RESULTS
As shown in Table 1, the total population was composed of 46 males and 54
females The age of respondents ranged from 18 to over 65 The age of the
majority group represented was 26-35 313 The second largest age group
was 18-25 241 The least represented group was over 65 42 About
52 of respondents were married, whereas only 17 was widowed The second
largest group of respondents was single 36 For nationality, the
majority group of USA respondents was from the South 14 The least
represented group was from New England 62 For non-USA, the largest
participating group was from Europe 16 The smallest participating
group was from Africa 17
Table 1
Sociodemographic Characteristics of Hotels Guests by Gender, Age, Marital
Status, and Nationality N406
|Sociodemographic |Frequency |Valid |Mode |
|Variables | |Percentage | |
|Gender | | |Female |
|Male |187 |461 | |
| Female
|219 |539 | |
|Total |406 |100 | |
| | | | |
|Age | | |26-35 |
| 18-25 |98 |241 | |
| 26-35 |127 |313 | |
| 36-45 |88 |217 | |
| 46-55 |45 |111 | |
| 56-65 |31 |76 | |
| Above 65 |17 |42 | |
|Total |406 |1000 | |
| | | | |
|Martial Status | | |Married |
| Single/Never |146 |360 | |
|Married | | | |
| Married |211 |520 | |
| Separated |12 |30 | |
| Divorced |30 |74 | |
| Widowed
|7 |17 | |
|Total |406 |1000 | |
| | | | |
|Nationality | | | |
|USA | | |South |
| Mid-Atlantic |48 |118 | |
| New England |25 |62 | |
| North Central |26 |64 | |
| Midwest |46 |113 | |
| South |57 |140 | |
| West |24 |59 | |
|Non-USA | | |Europe |
|Africa |7 |17 | |
| Asia |16 |39 | |
| Europe |65 |160 | |
| Oceania |17 |42 | |
| North-America |36 |89 | |
| South-America |39 |96 | |
|Total |406
|1000 | |
As shown in Table 2, the highest frequency of annual household income was
35,001-50,000 259 The lowest frequency of annual household income
was less than 20,000 123
Table 2
Sociodemographic Characteristics of Hotels Guests by Annual Household
Income, Educational Level, and Occupation N406
|Sociodemographic |Frequency |Valid Percentage|Mode |
|Variables | | | |
|Annual Household Income | | |35,001-50,00|
| | | |0 |
|Less than 20,000 |50 |123 | |
| 20,000-35,000 |93 |229 | |
| 35,001-50,000 |105 |259 | |
| 50,001-75,000 |75 |185 | |
| More than 75,000 |83 |204 | |
|Total |406 |1000 | |
| | | | |
As shown in Table 3, for educational level, the highest number of
respondents had obtained
undergraduate degrees 246, whereas only 20
of participants had an educational level below high school This means
that most participants in this study were well educated For occupation,
about 261 of respondents served as administrative personnel, while only
17 of the represented group worked as a manual laborer
Table 3
Sociodemographic Characteristics of Hotels Guests by Annual Household
Income, Educational Level, and Occupation N406
|Educational Level | | |Undergraduate|
| | | |Degree |
|Below High School |8 |20 | |
|High School Diploma |42 |103 | |
|Vocational Degree |53 |131 | |
|Some College |47 |116 | |
|Associate Degree |64 |158 | |
|Undergraduate Degree |100 |246 | |
|Graduate Degree |92 |227 | |
|Total |406 |1000 | |
| | | |
|
|Occupation | | |Administrativ|
| | | |e Personnel |
|Executive |15 |37 | |
|Business Manager |83 |204 | |
|Administrative Personnel|106 |261 | |
|Clerical and Sales |91 |224 | |
|Workers | | | |
|Skilled Manual Employee |34 |84 | |
|Machine Operator |25 |62 | |
|Manual Workers |7 |17 | |
|Other |45 |111 | |
|Total |406 |1000 | |
As shown in Table 4, the percentage of respondents who had experienced
service recovery strategies provided by hotels in terms of correction was
about 246 Based on respondents perception, the highest percentage of
correction fell into dissatisfied 126 The lowest rated was very
satisfied 02 In addition, the percentage of respondents who had
experienced service
recovery strategies provided by hotels in terms of
exceptional treatment was nearly 11 The highest percentage of
exceptional treatment was very satisfied 81 The lowest percentage
of exceptional treatment was satisfied 22 For explanation
strategy, the percentage of respondents who had experienced service
recovery strategies provided by hotels in terms of explanation was almost
22 The highest rated of this category was dissatisfied 99, whereas
the lowest percentage of this category was very satisfied 20
Table 4
Recovery Strategies Characteristics of Hotels Guests by Correction,
Exceptional Treatment, and Explanation Variables N406
|Recovery Strategies |Frequency |Valid |Mode |
|Variables | |Percentage | |
|1 Correction | | |Dissatisfied |
|None |307 |756 | |
|Very Dissatisfied |9 |22 | |
|Dissatisfied |51 |126 | |
|Neutral |7 |17 | |
|Satisfied |31 |76
| |
|Very Satisfied |1 |02 | |
|Total |406 |1000 | |
| | | | |
|2 Exceptional | | |Very Satisfied|
|Treatment | | | |
|None |364 |897 | |
|Very Dissatisfied |0 |00 | |
|Dissatisfied |0 |00 | |
|Neutral |0 |00 | |
|Satisfied |9 |22 | |
|Very Satisfied |33 |81 | |
|Total |406 |1000 | |
| | | | |
|3 Explanation | | |Dissatisfied |
|None |318 |783 | |
|Very Dissatisfied |24 |59 | |
|Dissatisfied |40 |99 | |
|Neutral |0 |00 |
|
|Satisfied |16 |39 | |
|Very Satisfied |8 |20 | |
|Total |406 |1000 | |
DISCUSSION
In this study, service failure was measured by perceptions of hotel guests
toward the service failure of hotels located in Orlando through three
dimensions of Service Failure facilities, procedure, and providers
behavior Service recovery strategies were measured by perceptions of
hotel guests toward service recovery strategies provided by hotels located
in Orlando through seven dimensions of Service Recovery Strategies
correction, exceptional treatment, explanation, apologies, redirection,
compensation, and did nothing Behavioral intentions were measured
through customers completing three dimensions of Behavioral Intentions
instrument referral, repeated purchase, and price insensitivity The
sample of 500 was approached, but only 406 hotel guests completed the
survey questionnaires correctly This means that only 406 of these
questionnaires were usable
for processing data Thus, 406 hotel guests who
stayed in a hotel in Orlando participated in the study Using systematic
sampling, respondents were approached to complete the survey questionnaire
at I-Ride Trolley Stops on International Drive in Orlando, Florida
Findings showed that service failure was a significant explanatory variable
of behavioral intentions Specifically, facilities and procedure were
significant explanatory variables of behavioral intentions Also, findings
indicated that all dimensions of service recovery strategies correction,
exceptional treatment, explanation, apologies, redirection, compensation,
and did nothing were a significant explanatory variable of behavioral
intentions In this study, Chapter 5 not only presents a discussion about
the interpretations, limitations, implications, and recommendations, but
also draws conclusions about the relationships between hotel guests
perception of service failure, service recovery strategies, and behavioral
intentions in Orlando, Florida
CONCLUSIONS
1 The sample size was sufficiently appropriate and systematic
probability sampling was used In addition, the final data-producing
sample closely represented the distribution of hotels in Orlando,
which helped strengthen external validity Consequently, findings of
this study may be generalized to all hotel guests in Orlando; however,
generalizing beyond this population must be done with caution
2 The research hypotheses 1, 2, 3, 4 in this study were partially
confirmed, as several variables of socio-demographic, service failure,
and service recovery strategies were found to be significant
explanatory variables of behavioral intentions
3 Procedure and service providers behavior dimensions of service
failure were not found to be important factors influencing repeated
purchase intention of hotel guests
4 Facilities, procedure, and service provider˜s behavior dimensions of
service failure found to be significant explanatory variables of
referral dimensions of behavioral intentions of hotel guests in
Orlando measured by Behavioral Intentions These dimensions should be
key areas of emphasis for hotel management
teams to improve behavioral
intentions of hotel guests in terms of referral
5 Modified Behavioral Intentions has been reliable and valid based on
high Cronbachs alpha score and high validity score However, using
this instrument in other studies needs to be done with caution
6 Hotels should pay more attention on the length of stay of hotel
guests, especially those who staying five days or longer at hotels in
Orlando, because these groups will have more time to experience the
service failure and service recovery strategies provided by the
hotels
RECOMMENDATIONS FOR FUTURE STUDY
1 Future studies should focus on investigating service failure from the
managers view point because this study considered service failure and
service recovery only from the hotel guests perceptions
2 Conduct a MANOVA with this studys data in a secondary analysis with
multiple independent and multiple dependent variables: dimensions of
service failure, service recovery strategies and sociodemographic
variables serve as the independent variables, and three reliable
dimensions of the Modified Behavioral Intentions serve as the
dependent variables
3 Conduct a combination of qualitative and quantitative study in
specific hotels in Orlando to strengthen internal validity of the
study
4 Conduct a quantitative study emphasizing the relationships between
service failure, service recovery strategies, and behavioral
intentions in specific hotels in Orlando to strengthen internal
validity, as hotel guests will have a quiet place to sit and complete
the survey questionnaire
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