Factors Affecting Customer Satisfaction

Factors Affecting Customer Satisfaction Purpose The purpose of this paper is to test the effect of different service quality factors as quality of food, music, ambience, waiter service on customer satisfaction in a restaurant and to study how the customer satisfaction ultimately relates to customer loyalty for the restaurant. Design/methodology/approach A questionnaire was given to MBA students of XLRI Jamshedpur in the age group of 21-30 asking questions to ascertain the different levels of service in the Sonnet restaurant. The results of these questionnaires were analyzed using factor analysis. Findings The factors that are crucial for obtaining customer loyalty are waiter politeness, waiter promptness, space, music and food quality. The waiter promptness, space, food quality are partially mediated by customer satisfaction. Of these factors, music negatively affects customer loyalty and positively affects customer satisfaction. Only waiter promptness, aesthetics, music and food quality affect the customer satisfaction. With customer satisfaction as the mediating factor to obtain customer loyalty, we find waiter politeness, waiter promptness, space, music and food quality are significant factors. Research limitations The study was limited only to the patrons of Sonnet, Jamshedpur. The respondents to the survey consisted of students of XLRI Jamshedpur who have visited Sonnet. Future research may be done on number of restaurants instead of a particular restaurant. Future research may also be conducted such that the respondents reflect a more heterogeneous group in terms of age, income level and location. The solitary effect of servicescape on the overall satisfaction level for the customer may also be explored in future research. Practical Implication Hoteliers and restaurant operators should try to ascertain which aspect of the service quality is perceived as more important by their patrons. They can then focus more to improve on these particular aspects as in future these would lead to more satisfaction for the customer. The customer satisfaction in turn will lead to customer loyalty and thus will increase the overall profit for the organization. Originality/value This paper provides insights into how music affects the satisfaction and loyalty for restaurant patrons. The effect of music on customer loyalty has not been conclusively proved in any research paper so far. The other factors of service quality that affect the satisfaction level and loyalty of a patron of the Sonnet restaurant in Jamshedpur have also been explored to provide a complete picture. Keywords Service Quality, Customer Satisfaction, Customer Loyalty Introduction In todays fast paced world meals are no longer a very well planned event, on most occasions it is an afterthought. The proportion of women in the workforce has increased, As a result women have less time to cook meals at home. Hence there has been an increase in the trend of eating out. This results in a flourishing restaurant industry. Like any lucrative industry which attracts a number of players, the restaurant industry is also highly competitive. It is very important to get a feel of this industry from the viewpoint of the customer. It is the customer who makes the final decision of how much to spend and what, when and most importantly where to eat. Thus in order to offer the right service to the customers, restaurant owners and managers need to have a clear understanding of the factors that influence customer satisfaction. Customer Satisfaction Customer satisfaction is the state of the fulfillment of the customers expectations from the establishment. When the difference facets of the service provided to the customers exceed the expected level, then the customer is positively satisfied. On the contrary if the perceived level is less than the expected level then the customer may develop negative perceptions towards the establishment. Customer Loyalty Customer loyalty basically indicates a repeat patronage of the particular facility whose services have already been experienced by the customer. Loyalty consists of both a behavioral dimension as well as an attitudinal dimension. Once a customer has a strong positive experience with an establishment, he is more likely to be loyal to it which may be exhibited through behavior as repeat patronage and recommendation (generally exhibited through positive word of mouth). Constituents of service quality The different factors of service quality which influence the customer satisfaction level include: Music: The music played at restaurant has a significant impact on the satisfaction level of the customer. Customers are generally more satisfied in an environment playing music they preferred than in an environment of no music. Music may also have an impact on the spending pattern of customers. Food Quality: Although restaurants have gained importance as a place for socializing, food is the primary reason why a customer visits a restaurant. Thus the quality of food and beverages as well as the variety influences the customer satisfaction level. Waiter Service: Waiters serve as the medium of interaction between the restaurant owners and the customers. Thus the service provided by the waiters often forms the image of a restaurant. Careful, pleasant and attentive behavior on the part of the waiter leads to high customer satisfaction. Ambience: Ambience ( dà ©cor and artifact, odor, noise level , temperature, spatial layout) forms the impression of the restaurant. Research background and hypothesis Music and Customer Satisfaction It has been often agreed upon by researchers that different aspects of service like ambience and layout affect the experience quality of a customer and thus influence his satisfaction. Music helps in creating the proper ambience in the restaurant and has important role to play in customer satisfaction. Studies in social psychology often indicate that there is a strong correlation between music and the social context in which the customer hears it. This relationship can also be extended to the setting of a restaurant. In 1996, North and Hargreaves studied the effect of music on atmosphere in a university cafeteria (North and Hargreaves, 1996). Results suggested that customers liking of the cafeteria increased with their liking for the music played within it. In their research conducted in 1996 North and Hargreaves also found that liking the music in a restaurant had a positive relationship with the customer returning to the establishment in future. According to Stephanie Wilson in her article, The effect of music on perceived atmosphere and purchase intention in a restaurant the music could be used by restaurants to create the proper atmosphere. This can also be used to distinguish itself from the competitors. The research states that the absence of music had the most negative impact on the atmosphere and thus on customer satisfaction. Wilson in her research actually found out that in an environment of no music the respondents were willing to pay the least maximum price. Wilson also found out that the type of music played may also have an important bearing on the customers overall experience as well as his spending habits. Ronald Milliman, in his article The Influence of Background Music on the Behavior of Restaurant Patrons, has proved that background music can significantly influence the behavior of patrons in a restaurant. This view is supplemented by Smith and Curnow (1966), who have proved that inappropriate, loud music creates an avoidance condition and thus can affect the customer perception about a restaurant negatively. In such cases music actually detracts from the service experience. J. Duncan Herrington and Louis M. Capella in their article Effects of music in service environments have stated that often music can be used by service providers in order to a distinctive image in the minds of the customers and thus get a competitive edge. Restaurants can take the aid of music to create an environment which complements their service offerings. Restaurants serving international food can play the music of the particular nation and restaurants serving a particular type of food can also similarly use music. Food and Customer Satisfaction: Variety and presentation of food and beverages and quality of the menu are one of the most important factors influencing the customers feelings towards the restaurant. According to Kincaid and Baloglou, in their article What Really brings them Back (2008), this has tremendous practical significance for restaurant operators. It should be made sure that an interesting variety of food and drinks are presented in unique ways. Food and drink quality is very important to the patrons of a restaurant and restaurant operators should ensure that a strict quality control is in place to make sure that only high quality food is being offered to the customers. Andaleeb and Conway in their article Customer satisfaction in the restaurant industry: an examination of the transaction-specific model(2006) has also opined that food quality is one of the major components which can be improved in order to enhance customer satisfaction. Hong Qin and Victor R. Prybutok in their research, Perceived service quality in fast-food restaurants: empirical evidence from China found that the quality of food was a critical factor in the customers overall level of satisfaction and often influenced the customers decision about selection of a restaurant. Ambience and Customer Satisfaction The ambience and layout of the establishment has an important role to play in the experience quality of the customer. Bitner (1992) coined a new term servicescape which denoted the physical constituents of a service environment. The different tangible constituents of servicescape such as optimum temperature, noise, furnishings and layout combine together to influence the customer satisfaction and repeat patronage level. In comparison to other service industries as banks servicescape plays a more important role in service industries as restaurants where the customer spends a greater period of time. Wakefield and Blodgett(1996) proposed a servicescape framework, the service environment comprised of five important factors: Proper layout and accessibility of the premises (i.e. how furniture, service area and equipments are organized within the establishment) Aesthetics of the establishment ( the interior decoration and architectural design) Seating comfort Electronic equipment ( arrangement of displays and lighting and electronic equipment) Cleanliness All these five factors together had a combined effect on customer satisfaction. As per Grayson and Mc Neill in Using Atmospheric conditions in service retailing, the proper servicescape leads to customer comfort. This comfort has two aspects: Physical comfort and emotional comfort and safety Both these factors together affect the satisfaction level of the customer. Han Ryu in their research The Roles of the Physical Environment, Price Perception, and Customer Satisfaction in Determining Customer Loyalty in the Restaurant Industry had studied the effect of physical environment on customer satisfaction. In the research they categorized the physical environment into dà ©cor and artifacts (which contributed to the attractiveness of the physical environment i.e. floor coverings, wall decorations, pictures, paintings etc), spatial layout (arrangement of objects as furniture and equipment) and ambient conditions (background characteristics as scent, temperature, lighting etc) . The research showed that of all the three dà ©cor and artifacts had the most significant and direct effect on customer satisfaction. The researchers have expressed their opinion that restaurateurs should give paramount importance to physical elements in the restaurant. These can be used as marketing and operational tools to improve the customer experience and resultantly imp rove the customer behavior. Waiter Service and Customer Satisfaction: How a patron is actually treated by the waiter in the course of service is also an important parameter which contributes to his satisfaction or dissatisfaction. Even if there is a service failure, a competent employee can take proper actions which can actually lead to service recovery (Bitner and Booms, 1990). Hence waiter and waitresses who serve as a liaison between the restaurant and the customer play the most important role in the success of the establishment. J.D. Pratten in his article The importance of Waiting Staff discusses that poor waiter service may consist of slow service, serving cold food, spoiling the presentation at the table, causing delay in the carriage of food (as a result of which different dishes at the same table may arrive at different times) failure to have all the accompaniments as sauces at the table, not having the proper cutlery etc. Any of the above occurrences may spoil the experience of a customer thus leading to customer dissatisfaction. A lot of competency and effort is required from the waiting staff to ensure that the experience of the customer is pleasant thus leading to satisfaction. Apart from the basic competencies mentioned above, the personal contact attributes of the waiters and waitresses with the customers including whether the employees were helpful, attentive, prompt, courteous, neat in appearance, and understood customer needs are also very important. Winsted in his study Service Behavior that leads to Satisfied Customers found that the three most important qualities which had a strong correlation with customer satisfaction in a restaurant are careful (.77), attentive (.76) and pleasant (.75). It has been also suggested that managers and owners of restaurants can actually have specialized training programs which will enable as well as encourage the employees to improve their service quality. This, coupled with regular tracking of performance can lead to increase in the customer satisfaction level. Pratten in his article Customer satisfaction and waiting staff (2003) emphasizes that the role of waiting staff in customer satisfaction is paramount and thus if this is not recognized and acted upon there will be a loss of business for firms. Customer satisfaction as a Mediating Variable Customer Satisfaction and Loyalty: It seems only logical that satisfied customers of any establishment will turn into loyal customers and will grant their patronage again. Researchers have also found that there exists a strong relationship between the two. As per Szymanski and Henard (2001), there are fifteen significant positive correlations between customer satisfaction and loyalty. Bearden and Teel (1986) have also proved that there is a relationship between satisfaction and loyalty. Thus a satisfied customer turns into a loyal one and brings more revenue to the restaurant. Fornell,Rust Dekimpe, in their research The Effect of Customer Satisfaction on Consumer Spending Growth has proved that an increase in customer satisfaction leads to growth in future customer spending. On the other hand, an unsatisfied customer can cause negative word of mouth publicity. He can actually cause other prospective patrons to turn away from a particular restaurant. Smith and Swindyard (1983) found that in case of a service which is consumed by the customer at the spot, the attitude and the satisfaction level of the customer is an excellent predictor of future purchases. Thus extending this if the consumers are satisfied by the service level at a restaurant then it is actually increases the probability of revisit by the customer. Namkung and Young (2007) in their research found out that food quality significantly affects customer satisfaction as well as behavioral intentions and the relationship between customer satisfaction and behavioral intentions is mediated by satisfaction. Kivela, Inbakaran and Reece in their research Consumer research in the restaurant environment, Part 1: A conceptual model of dining satisfaction and return patronage (2000) made certain observations related to dining satisfaction and return patronage. The study revealed that satisfaction had a strong positive influence on return patronage .The factors having significant influence on the customer included first and last impressions, service excellence, food excellence and ambience. Hypotheses From the above literature review, the following hypotheses are proposed: H1: Waiter service is positively related to Customer loyalty which is mediated by Customer Satisfaction H2: Ambience is positively related to Customer loyalty which is mediated by Customer Satisfaction H3: Music is positively related to Customer loyalty which is mediated by Customer Satisfaction H4: Food quality is positively related to Customer Loyalty which is mediated by Customer Satisfaction Methods Sample The young men and women of age between 21 to 29 years were identified as the target respondent group for the survey. One of the major reasons for choosing this specific respondent group was its availability and ease in communicating to them the questionnaire and getting the response. Since majority among this population has visited Hotel Sonnet during their stay in Jamshedpur, Sonnet was chosen as the hotel on which the questions would be based. The questionnaire was floated through a website and the respondents were asked to fill the questionnaire online. To encourage participation and increase the number of responses a disclaimer declaring the confidentiality of individual data was assured. A total of 164 respondents filled the questionnaire of which 156 responses were considered for the analysis and hypothesis testing. The reasons for not including the rest of the responses were incomplete data set and falling out of our target respondent group. Measures Based on the discussion in the above sections a theoretical model was developed and the following constructs were measured using different scales. Waiter Service Food Quality Ambience Music Customer Loyalty Customer Satisfaction Waiter Service, Ambience, Music, and Food Quality are considered as factors that determine Customer Satisfaction which in turn leads to Customer Loyalty. Waiter Service: Participants were asked to respond to Likert-type scales of 21 questions. The scale used was adapted from Kivela et al. (1999). The questions framed to assess consumer knowledge are consistent with prior literature. The scoring rule was to assign a numerical value to each of the response ranging from 1= Least Important to 5 = Very Important. Factor analysis has been done on the individual responses to determine the factors that constitute waiter service. The appendix reports the questionnaire items used. The content validity for the used scale has been established in the study and since we have used a very similar questionnaire and the scale, the scale can be considered as content valid. Ambience: The significance of ambience to an individual has been measured through 20 questions asked in the questionnaire. The scale used was adapted from Kivela et al. (1999). The questions framed to assess consumer knowledge are based on the questions used in the study and the literature review done during the research. The responses were recorded using 5-point Likert-type scales ranging from Least Important to Very Important. Questions asked to ascertain the importance of ambience are present in the questionnaire attached in the appendix. The individual responses were run through factor analysis to obtain the factors that determine the importance of ambience. The scale has been adopted from the aforementioned study and content validity has been established in the study. Music: Significance of music has been measured on a five-point Likert-type scale adapted from Kivela et al (1999). The individual responses have been subjected to factor analysis to obtain the factors that determine the significance of music. The content validity for the used scale has been established in the study and since we have used a very similar questionnaire and the scale, the scale can be considered as content valid. The appendix reports the questionnaire items used. Food Quality: 7 Likert-type scales have been used to determine the importance of food quality to an individual. Factor analysis has been done on these individual responses to get the factors that determine the food quality. The questions have been framed in accordance with the scale used by Kivela et al (1999). The questionnaire attached in the appendix. Customer Loyalty: 3 questions of Likert type scales have been used to obtain the responses from the respondents. Factor analysis has been run to obtain the factors comprising the customer satisfaction. Questionnaire used by Kivel et al (1999) has been used and the scale is content validated. The appendix reports the questionnaire items used. Customer Satisfaction: 4 questions have been asked regarding customer satisfaction and factor analysis has been run on this data to obtain the factors affecting customer satisfaction. The questionnaire used is same as one used by Kivela et al (1999). The questionnaire attached in the appendix. Analysis The factors for Ambience were found out by running exploratory factor analysis on the 20 items related to Ambience. It was found to contain 2 factors. Similarly the factor analysis was run on Waiter service (21 items), Music (9 items), Food quality (7 items), Customer satisfaction (4 items) and Customer loyalty (3 items) and they were found to contain 2,1,1,1 and 1 factors respectively. The three-step method developed by Erich B. Bergiel, Vinh Q. Nguyen et all for mediation analysis is used in this study. The first step uses Customer loyalty as the criterion variable in the regression equation and the 6 factors identified as predictors. The second step uses Customer satisfaction as the criterion variable in the regression equation and the 6 factors identified as predictors. The third step uses Customer loyalty as the criterion variable in the regression equation and the 6 factors identified as well as customer satisfaction as the predictors. Initially, multicollinearity was found initially between Customer satisfaction and Customer Loyalty (tolerance of 0.161 and VIF greater than 5 were observed). In order to solve this, a factor analysis with all the items corresponding to the 6 factors, customer satisfaction and customer loyalty were done. The items which were correlated to other factors were eliminated. Thus the items corresponding to the factors were brought down. After this, the three-step method of Erich B. Bergiel was used. Results The following were the factors that were identified and the component scores of items under each factor: Waiter service Waiter politeness Respects me .928 Uses very polite language .944 Is helpful and understanding .925 Makes me feel comfortable .932 Waiter promptness Responds to my comments .882 Is quick to attend and serve .804 Tables were cleaned quickly .780 Aesthetics Pleasant fragrance .816 Floor and carpet that are done with aesthetics .816 Ambience Space Spacious ceiling composition .837 Adequate parking facilities .890 Easily accessible location .854 Music Music I feel relaxed when my favorite music is being played in the restaurant .799 I like it when my friends like the music played in the restaurant .799 Food quality Food quality The food meets the expectations from the description in the menu .787 The food is a good value for money .787 The KMO of all the above factors were above 0.5 suggesting that the factors were sound. The Bartletts test of sphericity was significant for all the factors. The communality of all the items was above 0.4. The total variance explained was above 60% for all the factors. Varimax rotation was used to ensure homogeneity of items within factors and heterogeneity with other factors. The correlations between the factors are as follows: Customer loyalty factor Waiter Service Factor 1 Waiter Service Factor 2 Ambience Factor 1 Ambience Factor 2 Music Factor Food Factor Customer Satisfaction Factor Customer loyalty factor 1.000 Waiter Service Factor 1 .632 1.000 Waiter Service Factor 2 .561 .180 1.000 Ambience Factor 1 .712 .779 .440 1.000 Ambience Factor 2 .431 .287 .452 .410 1.000 Music Factor .349 .489 .455 .614 .414 1.000 Food Factor .670 .596 .551 .673 .456 .542 1.000 Customer Satisfaction Factor .665 .400 .683 .580 .494 .559 .658 1.000 All the above correlations were significant at 0.01 levels. Regression Analysis Regression analysis has been carried out with the following six identified factors on Customer Loyalty with Customer Satisfaction as the mediating variable. Waiter Politeness Waiter Promptness Physical Space Aesthetics Music Food Step 1: Regression of the factors on Customer Loyalty Model 1 Unstandardized Coefficients Standardized Coefficients Sig. Collinearity Statistics B Beta Tolerance (Constant) 3.731 .000 Waiter Politeness .358 .330 .000 .327 Waiter Promptness .390 .360 .000 .537 Physical Space .359 .331 .000 .269 Aesthetics .092 .084 .118 .708 Music -.341 -.314 .000 .557 Food .200 .184 .010 .411 R Square Adjusted R Square .696 .684 The above table shows the results of regression with the six mentioned factors as independent variables and Customer Loyalty as dependent variable. The value of R square is 0.696 shows positive correlation between the six factors together and Customer Loyalty. The inference from Value of Beta and Significance is as follows: Waiter Politeness on Customer Loyalty: Significance of 0.00 and Beta of 0.33 shows that Waiter Politeness affects Customer Loyalty positively. Waiter Promptness on Customer Loyalty: Significance of 0.00 and Beta of 0.36 shows that Waiter Promptness affects Customer Loyalty positively. Space on Customer Loyalty: Significance of 0.00 and Beta of 0.331 shows that Restaurant Space affects Customer Loyalty positively. Aesthetics on Customer Loyalty: Significance of 0.118 is higher than a threshold of 0.05, which indicates that this has insignificant effect on Customer Loyalty. Music on Customer Loyalty: Significance of 0 and Beta of -0.314 shows that Music affects Customer Loyalty negatively. Food on Customer Loyalty: Significance of 0.01 and Beta of 0.184 indicates that Food affects Customer Loyalty partially. Step 2: Regression of the factors on Customer Satisfaction Unstandardized Coefficients Standardized Coefficients Sig. Collinearity Statistics B Beta Tolerance (Constant) .000 1.000 Waiter Politeness -.014 -.014 .872 .327 Waiter Promptness .384 .384 .000 .537 Physical Space .132 .132 .175 .269 Aesthetics .103 .103 .089 .708 Music .134 .134 .050 .557 Food .246 .246 .002 .411 R Square Adjusted R Square .621 .606 The above table shows the results of regression with the six mentioned factors as independent variables and Customer Satisfaction as dependent variable. The value of R square is 0.788 shows positive correlation between the six factors together and Customer Satisfaction. The inference from Value of Beta and Significance is as follows: Waiter Politeness on Customer Satisfaction: Significance of 0.872 shows that Waiter politeness on Customer Satisfaction is not significant. This indicates that the impact of Waiter Politeness on Customer Satisfaction is insignificant. Waiter Promptness on Customer Satisfaction: Significance of 0 and Beta of 0.384 shows that Waiter Promptness affects Customer Satisfaction positively. Space on Customer Satisfaction: Significance of 0.175 is higher than a threshold of 0.05, which means that we cannot comment on the effect of Space on Customer Satisfaction Aesthetics on Customer Satisfaction: Significance of 0.89 and Beta of 0.103 shows that Aesthetics affects Customer Satisfaction positively. Music on Customer Satisfaction: Significance of 0.05 and Beta of -0.134 shows that Music affects Customer Satisfaction partially in a positive manner. Food on Customer Satisfaction: Significance of 0.002 and Beta of 0.246 indicates that Food affects Customer Satisfaction partially in a positive manner. Step 3: Regression of the 6 factors and the mediating variable (Customer Satisfaction) on Customer Loyalty Unstandardi