THE INFLUENCE OF CUSTOMER SERVICE FEATURES ON CUSTOMER RETENTION: A CASE OF COFKANS HOTEL.
ABSTRACT:
Organizations in the hospitality industry are employing various strategies to retain customers to their facilities due to the increasing competition in the industry and the complexity of customers demand. One key strategy is to ensure efficient customer service to patrons of hotels. This study examines the influence of customer service features on customer retention in one of the prestigious indigenous hotels in the Obuasi municipal-Cofkans hotel. The study used a qualitative design to understand the effects of customer service features from two stakeholders, guest and employees of the Cofkans hotel. A sample of fifteen (15) respondents were obtained via purposive and convenience sampling. An interview guide was used as a research instrument to obtain guests and employees experience on the customer service features and its influence on their retention. The ethically obtained data was analysed using Thematic analysis and the results presented with quotations to support the themes. The findings indicated that customer service features such as professionalism, empathy, responsiveness, communication, friendliness, customer reward and product knowledge were reported to be important characteristics which when practiced and harnessed will ensure greater retention of customers. Also, it was found that there were challenges that limit employees from delivering at the zenith, effective customer service features including; resource constraints, poor recruitment and selection practices of employees and lack of adequate training.
TABLE OF CONTENTS
DECLARATION i
CERTIFICATION ii
DEDICATION iii
ACKNOWLEDGEMENT iv
LIST OF TABLES viii
ABSTRACT ix
CHAPTER ONE: INTRODUCTION 1
Background of Study 1
Problem Statement 2
Objectives 3
Significance of Study 4
The organisation of the study 4
CHAPTER TWO: LITERATURE REVIEW 5
Introduction 5
Definition of Concepts 5
Customer 5
Customer Service 5
Good Customer Service 6
Superior Customer Service 7
Customer Service Features 7
Friendliness 7
Responsiveness 8
Professionalism 8
Product Knowledge 8
Empathy 9
Rewarding Customers 9
Communication Skills 9
Customer Satisfaction 10
Impact of Customer Satisfaction. 11
Customer Retention 11
Influence of Customer Service on Customer Retention 15
Challenges to the Provision of Customer Service Features 16
Over/Under worked Staff 16
Having a Non-Caring Culture 17
Poor Accountability 17
Communication of Customer Value 17
Inadequate Understanding about Customer Needs 17
CHAPTER THREE: RESEARCH METHODOLOGY 19
Introduction 19
Research Design 19
Data Sources 19
Population 20
Sample Size 20
Sampling Technique 20
Research Instrument 21
Method of Data Analysis 21
Limitations of the Study 21
Ethical Consideration 22
Profile of Organisation 22
CHAPTER FOUR: DATA ANALYSIS 24
Introduction 24
Profile of Respondents 24
Customer service features influence on customer retention 24
Knowledge about the hotel’s services 25
Customer reward programs 26
Empathy influence on customer retention 27
Communication style influence on customers patronage of hotel’s services 27
Staff friendliness influence on patronage intentions 28
Professionalism influence on customer retention 29
Staff responsiveness influence on hotel patronage 30
Barriers to the customer service features at Cofkans hotel Ltd. 31
Resource Constraint 31
Poor Recruitment and Selection Practice 32
Lack of training 33
Critical customer service features for staff retention 33
Conclusion 35
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION 36
Introduction 36
Summary 36
Conclusion 37
Recommendations 38
Practical Implications. 38
Limitations of the Study 40
Recommendation for Future Study 40
REFERENCE 41
APPENDIX 45
CHAPTER ONE:
INTRODUCTION
Globalization has impacted all forms of human endeavour including businesses in the hospitality industry. The many interventions by the governments of Ghana to boost tourism cannot be over emphasized. Hotels are critical component of the hospitality industry. However, the main difficulty facing most businesses is the ability to provide excellent customer service to satisfy customers, retain them and remain both competitive and profitable. Most hotels find themselves uncertain about the influence customer service features has on their customer retention (Lu, Berchoux, Marek, & Chen, 2015). People travel from their places of habitation to other locations for various reasons which may require them to lodge in a hotel. Some of the reasons people travel include; to attend seminars, conferences, and summits to meet existing business partners or explore new business opportunities, to inspect, handover, commission projects, take up appointment in places other than where one lives or in foreign lands and for vacations or holidays (Aziz & Ariffin, 2009). Customer service is an organisations ability to supply their customers’ wants and needs. It is the provision of service to customers before, during and after a purchase which enhance a customer’s experience to recommend to others (Goodman, 2019). Ettore (2001) is of the opinion that focusing on a customer’s information can and ought to be obtained to better understand their view of the service provided by a firm.
Customer service can be expressed in personal and interpersonal skills such as communicational skills, professionalism, friendliness, responsiveness, product knowledge and assurance, empathy and rewarding customers. These constitutes the features of customer service. According to Jeng and Bailey (2012) customer retention refers to customer engaging in a contract, either formal or informal, over a period of time, which includes repeated transactions. In loyalty literature, retention means the number of customers who stay with the
provider in the course of an established period, for example a year (Dawes, 2009; Kaura, Durga Prasad, & Sharma, 2015). Customer retention is ‘customers’ intention to stay loyal with the service provider especially in the context of switching cost (Edward & Sahadev, 2011). The difference between companies that grow and those that don’t is customer retention. The more customers that can be kept and continual sales made to, the more likely business goals are to be achieved (Kulbyte, 2019).
According to KPMG (2017), customer retention is the biggest revenue driver. Existing customers who stay with an organization’s brand over time spend 67% more than new customers (Trust Barometer report, 2018). Studies have indicated that an increase in customer retention can increase a company’s profitability by a large margin (Alshurideh, 2016; Kumar & Reinartz, 2016). Cofkans hotel has customer service as one of its pillars on which the hotel operates and this research seeks to find out whether the service features being provided has an influence on its customer’s retention.
Problem Statement
The core issue to be addressed with the study is to bridge the gap of customer service features and customer retention at Cofkans Hotel. Customer service has been gaining increasing attention from the researchers and practitioners as a recognized field of scholarly study and is a fundamental tool used by hospitality industries for enhancing customer retention and ultimately organizational performance and profitability. The importance of customer service cannot be overlooked because happy customers are like free advertising for an organization as they are more like to recommend the organization’s service to others in their social network (Kierczak, 2019). A lot of studies have been done on the influence of customer satisfaction on customer retention, but little has been done on the influence customer service features has on customer retention. Recommendations from expert, scholars and consultants on current trend for businesses is to become highly customer-centric, that is to put the customer at the centre of business in terms of strategies, actions and processes. Despite this fact, most companies have
ignored the influence these customer service features have on customer retention, believing that customers will patronise their services regardless of the services provided. Such organizations are always shocked when customer base erodes and their existence is threatened resulting from poor sales and cashflow for the such firms that downplayed the significant influence of customer service quality (Allan, 2016). It is common to think that if you have a great product or service, then customer retention will naturally follow. And while this might be the case in some instances, the truth is that it’s a short-term strategy. Sooner or later, customers’ feel that you don’t care about them and eventually leave (Kulbyte, 2019).
The researcher is a staff of Cofkans Hotel and has constantly been witnessing customer base erosion. Customers are excited about the facilities available during during their first visits. They visit probably for a second time and do not patronise the hotel again. This greatly affects the revenue of the hotel. From the researcher’s experience as a marketing executive, the old truths still hold well, such that it is easier and more profitable to sell to existing customers than to find new ones (Baker & Hart, 2016). The researcher thus wants to find out if the customer service features being used by Cofkans Hotel has an influence on their customers’ retention.
Objectives
Generally, the study seeks to examine the relationship between customer service features and customer retention and to further analyse how this relationship influences customer retention at Cofkans Hotel. The specific objectives of the study are;
1. To evaluate how customer service features influence customer retention at Cofkans hotel.
2. To identify if there are some barriers to the customer service features provided at Cofkans Hotel
3. To examine other customer service features that customers’ need to enhance retention of customers at Cofkans Hotel.
Significance of Study
Cofkans Hotel has customer retention as one of the ways to increase revenue and be profitable, hence the need to find out if the customer service features being employed by the hotel has an influence on customer retention. This work will therefore provide information regarding customer service features and its influence on customer retention. This work will be available to management of Cofkans Hotel to enable them to know the perception of their customers on the customer service features being provided by the hotel and help improve customer retention.
The importance of the findings of the study is to bring to the fore the relationship between customer retention and the customer services that the hotel provides. This study, apart from contributing to knowledge on the concept of customer service features and customer retention, will also provide information for the stakeholders in the hotel industry on the influences the services rendered to their customers have in keeping them in or out of business. It will also guide the management of the hotel to identify training needed by the staff of the hotel. Policy makers and stakeholders may be guided by the outcomes of this study in formulating and making certain decisions that will enable them to keep their existing customers.
The organisation of the study
The study is organized into five (5) chapters. Chapter One concentrates on the background of the study, problem statement, research objectives. Also, it identifies the significance of the study as well. Chapter Two gives insights on review of related literature and the theoretical underpinning of the study. This is followed by Chapter Three which discuss the methodological approach of the study. Further, Chapter Four presents the data analysis of the study and Chapter Five discuss the summary, recommendations and suggestions for future studies.
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