Research Project Proposal

An investigation into customer satisfaction and a sales performance in the Australian Retail industry

1. Background

Australian retail industry has faced a decreasing in sales in 2019. In September, it presented the lowest result since 1990s recession. In addition, retail volume sales have been under pressure as households tackled budget pressures with a big amount of debts and a slight remuneration growth (Rumbens, 2019). In addition, according to KPMG (2019), consumer has had a good experience rather than a great one in the Australian market. KPMG’s study shows the Australian market was rated 7.14 average in customer experience excellence (CEE), with about 75% of companies grouped between 6.5 and 7.5 in 2019. This rate is only 0.04 higher than last year’s result, which suggests an enormous opportunity for customer experience improvement. “Overall, we find there is still little competition on customer experience in the Australian market, offering an opportunity for brands to disrupt the market and build a lasting competitive advantage” (KPMG, 2019). Up to this date, this research could not find any reliable academic journal or article that mentions statistics of customer satisfaction in the Australian retail industry beside KPMG’s article.

In terms of personal motivation, researching customer satisfaction and the Australian retail market matters to us for several reasons. First of all, from a young age, we have been in contact with many good and bad service retail companies and we could realize the real impact of a quality customer service on our own. We have become loyal of some companies which have developed a great customer service, and, on the other hand, we have done free-bad-publicity for those which “do not care” about their clients. Secondly, the retail industry is the heart of every country’s economy and its service must be improved and professionalised. We believe it is a win-win action where the retail sector wins and so does the client.

Keywords: Marketing strategies, Australian retail market, Customer service, Customer satisfaction, Customer experience, Sales performance

2. Research Objectives

The research’s objective is to investigate the influence of customer satisfaction on sales performance of the Australian retail industry. Also, it aims to contribute to the sector with a suggestion of the best practices to improve the quality of customer service and, consequently, increase companies’ performance and revenues.

3. Research questions

The research question that must be answered by the research is:

1. How does customer satisfaction affect sales performance of the Australian retail industry?
2. What would be the best practice for the Australian retail companies to develop to maintain a good customer experience?
3. Literature Review

The academic literature relating to some strategies to improve productivity through customer satisfaction in Australian Industry Retail is reviewed in this section. Firstly, we present an overview of the literature on (1) marketing and retail, (2) customer service, satisfaction and experience, (3) the current Australian retail market.

1. Marketing and retail concepts

According to Webster (2002), marketing was considered in the past, even before the existence of money and a market economy, as a commercial and societal activity of exchanging goods and services between consumers and sellers. In a more recent concept, Ferrell et al. (2014) state that marketing is the process of generating advantage and value for the client through exchanges, which aims to maximise returns to stakeholders. Therefore, the success of a marketing activity is related to the advantage given by the seller to the customer. Marketing’s current aim is to develop relationships between the two parties as a result of exchange. Overall, Ferrell et al. (2014) define “marketing as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large” (pg 6). Along the same line, (Drucker, 2007) declares that marketing is bigger than just selling and cannot be refereed as a specific activity. For him, marketing is “whole business seen from the point of view of its final result, that is, from the customer’s point of view” but it is not the whole firm, states him. However, organisations and marketing have the same purpose which is the creation of satisfied customers although this is not the only role of marketing within organisations. (Webster, 2002).

According to the authors, customer are the heart of marketing and companies, even in a transaction between two organisations which just occurs between their people (Ferrell et al., 2014). Therefore, companies set their marketing strategies considering people as the focal point as illustrated in Figure 1¹ and the modern organisations develop and manage their product to satisfy people’s need and make this “product available in the right place and at the right price acceptable to buyers” (Ferrell et al., 2014) (pg 7).

To link the product from manufacturer to the end customer, most of organizations use one or two marketing intermediaries such as wholesalers and retailers. While the former “buy and resell products to other wholesalers, to retailers and to industrial customers, retailers purchase products and resell them to the end consumers”. (Ferrell et al., 2014). As this research focus on investigating how customer satisfaction affects sales performance of the Australian retail industry and develop strategies to increase company’s productivity, it will not focus on wholesalers’ concept and strategies.

Coulter (2014), Ferrell et al. (2014) state that retail industry focus on sales in stores, service establishments, vending machines, door-to-door sales or electronic channels (Ferrell et al., 2014).

Marketing has played an important role in retail companies by helping them to increase their sales and keep competitiveness in their market (Ferrell et al., 2014). One of marketing’s strategies is by improving clients satisfaction (Jahanshahi et al., 2011) which has the power to increase companies’ revenue by up to 15 percent and to drop the attending customer expenses by up to 20 percent (Pulido et al., 2014).

1. Customer service

The customer service, according to Jahanshahi et al. (2011), Calif (1987), Goffin and Price (1996), is a process used by organisations to grow competitive advantage and business opportunities in order to increase sales, income, superior access to the market, customer satisfaction and loyalty level.

The topic customer service is outlined by the scholars as a strategic organisational process to achieve customer satisfaction. Therefore, this research truly believes customer satisfaction has a high impact on retails companies’ sales and consequently it will investigate its concept.

Jahanshahi et al. (2011) states that customer satisfaction is related to the value the client perceive in a specific transaction of tangible or non-tangible products by meeting client needs and surpassing their expectations (Javed and Cheema, 2017). According to the authors, the customer’s behaviour after a transaction also affects the customers’ satisfaction levels.

Essentially, according to (Javed and Cheema, 2017) the perception of the value and standard of a product or a service is purely the customer’s rather than the retailer’s because the client is the one who receives benefits from consumption.

When the concept of customer satisfaction is fully examined, three common elements can be clearly identified (Jahanshahi et al., 2011) and cannot be considered as a separate construct (Verhoef et al., 2009):

1. Consumer satisfaction is an emotional or cognitive reaction;
2. This reaction concerns to a specific focus (client expectations, product, consumption experience, etc.);
3. The reaction appears at certain time and are based on the client experience (after consumption or choices, etc.)

It means that customer experience is a personal reaction in different levels (rational, emotional, sensorial, physical and spiritual ) provoked by a set of interactions between a customer and a product, an organisation or its part (Verhoef et al., 2009).

Along same the same line, Grewal et al. (2009), Verhoef et al. (2009) reinforce the value of past customer experiences, retail atmosphere, service interfaces, and store brands on future customer experiences. Actually, Verhoef et al. (2009) describe customer experience as “holistic in nature and involve[ing] the customer’s cognitive, affective, emotional, social and physical responses to the retailer. This experience is created not only by those factors that the retailer can control (e.g., service interface, retail atmosphere, assortment, price), but also by factors outside of the retailer’s control (e.g., influence of others, purpose of shopping)”. Overall, it is five specific aspects of the conceptual model of antecedents to and moderators of customer experience which are social environment, service interface, retail brand, customer experience dynamics, and customer experience management strategies (Verhoef et al., 2009).

The client satisfaction has been extremely desired and pursued by companies that many worldwide retailers have embraced and included the concept of superior customer experience into their organizational mission. Starbucks, Toyota, IBM and Dell computers’ goals are to offer the best customer experience in order to sustain and increase profits (Verhoef et al., 2009).

1. Marketing strategies

Wang et al. (2004) states that delivering superior customer value is one of the most important ‘strategic weapon’ for companies to attract and retain customer, improve sales performance, to build and sustain competitive advantage and (Javed and Cheema, 2017) gain customer loyalty. To do so, (Wang et al., 2004) explain that companies should focus on directing their operations toward customer satisfaction by improving their customer relationship management (CRM).

After a study on customer experience with more than 27,000 American consumers across 14 different industries, (Pulido et al., 2014) has found that “measuring satisfaction on customer journeys is 30 percent more predictive of overall customer satisfaction than measuring happiness for each individual interaction”. They named of “the three Cs of customer satisfaction”, which are customer-journey ‘Consistency’, emotional ‘Consistency’ and communication ‘Consistency’. The scholars explain to achieve the three Cs is necessary the top-leadership attention.

The research will analyse some of the current strategies to improve customer satisfaction, in order to improve sales performance and ultimately propose some of the most effective ones.

References

CALIF, D. 1987. Waste audit study: Automotive repairs. Wesley M. Toy, PE Saratoga, Calif, for the California Department of Health Services, Toxic Substances Control Division, Alternative Technology Section, 131-142.

COULTER, K. 2014. Retail Detail: The Work and The Workers. Revolutionizing Retail: Workers, Political Action, and Social Change. New York: Palgrave Macmillan US.

DRUCKER, P. 2007. The Practice of Management, Saint Louis, UNITED STATES, Taylor & Francis Group.

FERRELL, O. C., NIININEN, O. & LUKAS, B. 2014. Marketing Principles, London, UNITED STATES, Cengage Learning Australia.

GOFFIN, K. & PRICE, D. 1996. Service documentation and the biomedical engineer: Results of a survey.

GREWAL, D., LEVY, M. & KUMAR, V. 2009. Customer experience management in retailing: An organizing framework. Journal of retailing, 85, 1-14.

JAHANSHAHI, A. A., GASHTI, M. A. H., MIRDAMADI, S. A., NAWASER, K. & KHAKSAR, S. M. S. 2011. Study the effects of customer service and product quality on customer satisfaction and loyalty. International Journal of Humanities and Social Science, 1, 253-260.

JAVED, F. & CHEEMA, S. 2017. Customer satisfaction and customer perceived value and its impact on customer loyalty: the mediational role of customer relationship management. The Journal of Internet Banking and Commerce, 1-14.

KPMG. 2019. Customer Experience Excellence Report 2019 [Online]. Available: https://assets.kpmg/content/dam/kpmg/au/pdf/2019/customer-experience-excellence-report-2019-au-summary.pdf [Accessed 27 April 2020 2020].

PULIDO, A., STONE, D. & STREVEL, J. 2014. The three Cs of customer satisfaction: Consistency, consistency, consistency. McKinsey Quarterly, 2.

RUMBENS, D. 2019. Retail Forecasts – November 2019 [Online]. Available: https://www2.deloitte.com/au/en/pages/media-releases/articles/retail-forecasts.html [Accessed 22 April 2020 2020].

VERHOEF, P. C., LEMON, K. N., PARASURAMAN, A., ROGGEVEEN, A., TSIROS, M. & SCHLESINGER, L. A. 2009. Customer experience creation: Determinants, dynamics and management strategies. Journal of retailing, 85, 31-41.

WANG, Y., LO, H. P., CHI, R. & YANG, Y. 2004. An integrated framework for customer value and customer-relationship-management performance: a customer-based perspective from China. Managing service quality, 14, 169-182.

WEBSTER, F. 2002. Handbook of Marketing. London: SAGE Publications Ltd.

1 Components of strategic marketing FERRELL, O. C., NIININEN, O. & LUKAS, B. 2014. Marketing Principles, London, UNITED STATES, Cengage Learning Australia.

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