Whether service providers truly understand customers' needs and means to retain customers.doc

1、1Whether service providers truly understand customers needs and means to retain customersAbstract. It is well known that customer satisfaction impacts customer loyalty and market share. Based on over-optimism perspective， this study further examines the differences between the service provider and t

2、aker in terms of perceived service quality. It also explores the differences factors of forming customer satisfaction， trust， and customer loyalty. The analysis on dyad questionnaire shows that the perceived service quality of the service provider is generally higher than that of the service taker.

3、As for forming factors of customer satisfaction， trust and customer loyalty， both the two parts believe that satisfaction originates from core service and staff service quality. But there exist differences in forming of trust and loyalty. For service quality dimensions affecting trust， the service p

4、rovider considers core service as the origin one， while the service taker consider staff service quality as the vital one. And of the forming path of customer loyalty， the service provider believes switching costs can raise customer loyalty， which is different from the service takers view on this ma

5、tter. The author provides some 2practical suggestions in view of these findings. Key words： service quality； over-optimism； customer satisfaction； trust； switching cost； customer loyalty 1. Introduction In Reichheld and Sassers study （1990） ， as long as the loyal customer defections is reduced by 5%

6、， it is possible to realize a rise of 25% in profit. In some enterprises， the difference can even be as large as 85%. Pervious studies conducted on service industries with excellent performance showed that the commitment to quality， satisfactory handling of customers needs， and strengthening custome

7、r satisfaction decide continued existence of enterprises （Buzzell & Wiersema， 1981）. From the perspective of organizational behavior， enterprises emphasizing customer satisfaction are likely to improve performance since they require high-quality service from employees. Therefore， enhancing customer

8、loyalty can generate more profit than developing new customers blindly. In service delivery， a complete service delivery chain is available with involvement of both the service provider and taker. However， in the field of service quality satisfaction， studies on perceived service quality mainly conc

9、entrate on 3customer satisfaction with less awareness of evaluation from the service provider （Dabholkar， 1996）. Parasuraman， Zeithaml， and Berry （1985） developed a service quality model contains five gaps of service quality existent in service providing process which expounds reasons for failing to

10、 meet customers needs in service delivery. However， the gaps are constructed to provide the components of service failure， without understanding about the customer and faults in the process of design， marketing， and delivery. Therefore this model fails to mention the most basic point in service deli

11、very， which should be the disparity mechanism of perceived service quality between the service provider and taker. The current study argued that， when overestimating their service， providers may still disappoint both customers and themselves even though they are capable of mastering and tackling wit

12、h the above mentioned gaps. As shown in past studies， service providers or organization managers usually underestimate hidden risks while overrating enterprises problem-solving ability due to excessive optimism and confidence （Kahneman & Riepe， 1998）. From studies on the service provider field， over

13、-optimistic about service may lead to management personnels overrating future performance of company （Lin， Hu， & Chen， 42005）. Hence the first purpose of the current study is to discuss whether the service provider would overrate their service due to over-optimism. From the other respect， it is rare

14、 to find study discussing differences of cognition loyalty forming paths between the service provider and taker. If differences really exist in the two sides， it is possible that providers still fail to enhance loyalty effectively. This may attribute to limited resources and cognitive difference of

15、the service provider with consequence of inappropriate resource distribution. The current study conducts deep analysis on whether there are differences between the service provider and taker in terms of forming paths of loyalty. To summary up， the service provider and taker of accounting firms are t

16、aken as research targets. Meanwhile， this study establishes its hypotheses on the basis of a series of literatures contains over-optimism theory， perceived service quality， satisfaction， trust， switching cost， and loyal in audit service. With the above-mentioned purposes， data collection is accompli

17、shed through dyad samples. With all these efforts， it is expected to solve the two important but have been less concerned issues in this field. 2. Literature Review 5（1） Over-optimism theory People often take over-optimistic attitude towards their decision out of over-confident about their ability （

18、e.g.， Iossa & Palumbo， 2010； Kahneman & Riepe， 1998）. In other words， individuals are inclined to overstate their own abilities and miscalculate the actual situation. According to Heaton （2002） ， the managers optimistic behavior is defined as management personnels systematically overestimate the pro

19、bability of good firm performance and underestimate the probability of bad firm performance. To a large extent， they will further believe all strategies would end up with positive results （Heaton， 2002； Malmendier & Tate， 2005）. In addition， management personnel would find it difficult to get rid of

20、 influence exerted by their innate optimistic and confident disposition （Gervais， Heaton， & Odean， 2007）. This is also true of service delivery process. If providers feel excessively confident about their service， they would mistakenly think their service is spoken highly of by takers. This is simil

21、ar to what Paramsuraman et al. （1985） proposed in his service quality model， which argues there are perceptual gaps between customer expectation and service operating. 6（2） Perceived service quality Service quality is considered as a key factor in influencing the customers choice for providers and i

22、n promoting customer satisfaction （Grace & OCass， 2005）. Service quality usually serves as an indicator to evaluate whether the provider is in accordance with original expectation. And since service is intangible， its quality can only be assessed in the course of or after its delivery （Bolton & Drew

23、， 1991）. Service quality evaluation model developed by Parasuraman et al. （1985） is the most exhaustive one and many researchers tried to access it （e.g.， Calabrese & Scoglio， 2012）. This model highlights interactive relation between the service provider and taker in delivery course. In order to mee

24、t the customers needs， utmost efforts should be taken to narrow the gaps. As Wakefield （2001） once put that service quality can impact the service takers attitude when it is being provided and it determines takers future behavior. Core service determines existence of the service provider. It is what

25、 the customer need most in a transaction （Aldlaigan & Buttle， 2002）. For accounting firms， the core service is to provide the service taker with accounting audit service， which is also the takers original need. Besides， personal 7interactions constitute a pivotal aspect in the marketing service （Blo

26、emer & Ruyter， 1999）. Jones， Mothersbaugh， and Beatty （2000） pointed out even though core service is taken as the most crucial part by the service taker， yet service quality of staff is also one of important factors that bind takers and providers. This conclusion shares a common ground with that of

27、Tracy and Rachel （1998 ） ， who conducted a research on service satisfaction with employing of Herzbergs （1975） Two Factor Theory. Here， core service quality can be seen as hygiene factors， while staff service quality as motivation factors. Therefore， consolidation efforts from the two aspects make i

28、t possible to enhance service takers satisfaction and reduce their intention to switch. （3） Customer satisfaction perceived switching cost Customer satisfaction has been noted as a special form of consumer attitude， which is reflecting how much the consumer feels about the service after experiencing

29、 it （Chatura & Prabhu， 2003）. Generally， customer satisfaction refers to the customers whole experience of service process with passage of time （Anderson， Fornell， & Lehmann， 1994）. Previous studies have shown that customer satisfaction from the view of the service provider can impact on customer lo

30、yalty （Buzzell & 8Wiersema， 1981； Reichheld & Sasser， 1990）. This is more conspicuous in intensely competitive environment， where customer satisfaction plays a critical role in effect on marketing and customer loyalty （Luo， Homburg， & Wieseke， 2010； Luo， Rindfleisch， & Tse 2007）. Some scholars hold

31、that customer satisfaction is the gap of perceived effectiveness before and after the customer uses products （e.g.， Miller， 1977）. Others thought that consumer satisfaction is settled on the customers pleasurable fulfillment obtaining from provided service （e.g.， Anderson et al.， 1994）. The so-calle

32、d pleasurable fulfillment here is mainly accumulated through past experience customer satisfaction is the rational and perceptual state. The customer satisfaction discussed in this study is major related to the second category mentioned above. Switching costs is defined as customer perception of the

33、 magnitude of the additional costs needed to stop using the current provider and ensure an alternative （Maria， Saura， Gloria， & Beatriz， 2010）. In Klemperers （1987） economic model， switching costs make each individual firms demand more inelastic， reduce rivalry， and segment the market into submarket

34、s. In general， switching costs include loss in time， money and 9psychological respects （Dick & Basu， 1994）. It is concluded that switching costs function as a key factor in sustainable relation between the service provider and taker （Jones et al， 2000）. （4） Trust and customer loyalty Trust is a psyc

35、hological state that allows consumers to risk personal vulnerability by fostering positive expectations for the intentions of others （Rousseau， Sitkin， Burt， & Camerer 1998）. Consumer trust is widely held to be an important area of study part because of the key role it plays in a number of desirable

36、 marketing outcomes （Wilson & Darke， 2012）. In the realm of marketing management， consumer trust is constructed on the basis of brand awareness and reliability. This awareness is built on response through using products and service （Flavin， Guinalu， & Gurrea， 2006； Hong & Cho， 2011）. It indicates th

37、at customers feel reliable and confident for provided service and then assume their responsibility with utmost effort in the process of exchange （Johnson， Sivadas， & Garbarino， 2008）. Trust closely links to the relationship between the two sides and acts as an important mediating variable in a 10suc

38、cessful trading relationship. The customers trust on an organization is established on the basis of their loyalty to the organization （Singh & Sirdeshmukh， 2000； Morgan & Hunt， 1994； Williams， 1998）. Customer loyalty has become increasingly popular and both academics and practitioners regard custome

39、r loyalty as being fundamental to a companys success （Set-Pamies， 2012）. Customer loyalty shows whether the customer will continue to support the service， to have the repurchase intention， the willing to recommend to others （Cho， Kim， & Hyun， 2010； Jones & Sasser， 1995； Oliver， 1999）. 3. Methodology

40、 （1）Research Framework This research is concepturalized based on six constructs， namely core service quality， personnel service quality， satisfaction， trust， switching costs and loyalty. The conceptual framework is shown in Figure1. （2）Hypotheses Deployment Based on relevant literatures on perceived service quality （Parasuraman et al.， 1994） and over-optimism （Heaton， 2002） ， this study argues that when feeling confident about their service， the service provider will believe they can