The Relationship between Customer Satisfaction and Loyalty: An Application of the American Customer Satisfaction Index in the South African Fast Food Industry

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ABSTRACT

Customer retention has become a major concern for many businesses. Measures such as satisfaction, loyalty and commitment have, over time, been operationalised with the purpose of enhancing customer retention. A model that has been used extensively to measure satisfaction and loyalty is the American Customer Satisfaction Index (ACSI). This study investigates the reliability of the ACSI for South Africa and reports on the empirical findings in respect of the relationships between various dimensions in the ACSI model for fast food retailers in South Africa. No research using the ACSI has been published in any South African academic journal as yet.

The respondents in this empirical study were 2000 consumers drawn randomly from the seven major metropolitan areas of South Africa. The respondents were required to respond to items from the ACSI scales in relation to the fast food industry. The fast-food industry as a whole and seven individual fast food retailers are the focal points of this study. The strengths of various relationships, such as the relationship between customer satisfaction and customer loyalty and the relationship between perceived value and customer satisfaction, were examined.

INTRODUCTION

The total quality movement (TQM) of the 1980's attempted to improve the consistency and quality of goods and services. However, TQM lost its prominence as a management approach towards the end of the 80's because of its failure to enhance either economic returns or competitiveness. Researchers then started to elaborate on the process, based on the assumption that delivering highquality goods and services influences profitability through customer satisfaction (Forza and Filippini, 1998; Choi and Eboch, 1998; Anderson, Fornell and Lehmann, 1994: 53-54). The attempts to influence profitability through quality improvements and enhanced customer satisfaction gave rise to the development of national customer satisfaction indices, which are customer-based measurement systems for evaluating the performance of firms, industries and economic sectors (Fornell, Johnson, Anderson, Cha and Bryant, 1996: 7). The ACSI came into being when the National Economic Research Associates (NERA) of America recommended that the Swedish Customer Satisfaction Barometer be adapted for use in the USA (ACSI, 2001: 1-2). The ACSI was pretested in 1993 and introduced in 1994, covering 7 sectors, 30 industries and over 180 companies (ACSI, 2001:2).

Since the 90's various national measures of customer satisfaction, based on the ACSI methodology, were developed, including Sweden, the SCSB (Fornell, 1992), Norway, the Norwegian Customer Satisfaction Barometer (Andreassen and Lervik, 1999; Andreassen and Lindestad, 1998a and 1998b), Denmark (Mortensen, Granholdt and Kristensen, 2000), Europe (Eklof, 2000 and ECSI Technical Committee, 1998) and Austria (Hackl, Scharitzer and Zaba, 1996).

Over time, some weaknesses were identified in the ACSI methodology that necessitated some adaptations such as the weak linkages between customer expectations and the other dimensions, and the items used to measure customer loyalty.

The customer satisfaction models used in the countries other than the USA (for instance the European model) also differ from the latest ACSI version (see Figure 2) in the sense that an image variable was added. In the European model, image is modelled as an antecedent of both perceived value and customer loyalty. The three items used to measure customer loyalty are the customer's intention to repurchase, intention of cross-buying, and intention to recommend the brand/company to other consumers (Juhl, Kristensen and Østergaard, 2002: 328). The intention to repurchase is also used in ACSI together with price tolerance, to measure customer loyalty. The intention to cross-buy and intention to recommend are unique to the non-American customer satisfaction models. The most recently developed customer satisfaction index is the European Performance Satisfaction Index (EPSI). …