Investigating the Effectiveness of Customer Satisfaction on Customer Loyalty in E-commerce Business

This research aims to investigate the impact of customer satisfaction on customer loyalty in the e-commerce business. It will analyze the factors affecting customer satisfaction, challenges in achieving it, and the benefits of customer satisfaction. The research will also propose suitable recommendations for improving customer satisfaction in e-commerce.

Running head: PROPOSAL
Investigating the Effectiveness of Customer Satisfaction on Customer Loyalty in E-commerce
Business
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Chapter 1: Introduction....................................................................................................................2
Overview......................................................................................................................................2
Problem statement.......................................................................................................................2
Research aim................................................................................................................................3
Research objectives.....................................................................................................................3
Research questions.......................................................................................................................3
Research hypotheses....................................................................................................................4
Research rationale........................................................................................................................4
Structure of the dissertation.........................................................................................................4
Chapter 2: Literature review............................................................................................................5
Conceptual framework.................................................................................................................5
Concept of customer satisfaction.................................................................................................5
Factors affecting customer satisfaction.......................................................................................6
Challenges in achieving customer satisfaction............................................................................7
Benefits of customer satisfaction.................................................................................................7
Impact of customer satisfaction on customer loyalty..................................................................8
Chapter 3: Proposed research methodology....................................................................................9
Research philosophy....................................................................................................................9

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Research approach.......................................................................................................................9
Research design...........................................................................................................................9
Research strategy.......................................................................................................................10
Sampling technique and sample size.........................................................................................10
Data collection process..............................................................................................................10
Data analysis technique.............................................................................................................11
Ethical considerations................................................................................................................11
Timescale...................................................................................................................................11
References......................................................................................................................................13

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Chapter 1: Introduction
Overview
Customers are the key external stakeholders that determine the improved profit, revenue
generation and market share for the business organizations. According to Saeidi et al. (2015), it
is highly significant for the business organizations to develop a satisfied customer base so that
they can rely and count on the return on `the investments. Having a satisfied customer base
ensures that the customers remain loyal to the business organization and return to them in the
future irrespective of the market scenario. Therefore, it can be said that customer satisfaction
helps in developing loyalty among the customers and offers several advantages such as
competitive advantage, positive word-of-mouth, new market opportunities and retaining existing
customers (Agnihotri et al. 2016).
United Kingdom is one of leading countries in the western world and paying using credit
cards is one of the most preferred methods. The e-commerce business in the UK is on the rise
and the total sales has accounted up to 10.7% of the total retail sales. E-commerce business in the
UK is most preferred and is rising because of the convenience it offers to the customers while
living in the fast paced life. However, some evident issues of using e-commerce in the UK have
questioned with the level of customer satisfaction that in turn imposed a negative impact on the
loyalty of the customers (Ecommerce News 2019).
Problem statement
Customer satisfaction is often an issue for e-commerce business sectors because it
operates virtually. The customers do not have the scope of being physically present and judge the
quality, price and consistency of the product. As a result, the products bought by them from e-

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commerce business platforms fail to meet the expectation of the customers thereby, resulting in
customer dissatisfaction. One of the major issues that lead to customer dissatisfaction is the
quality of the product (Torres 2014). As the e-commerce business fail to ensure customer
satisfaction, the customer loyalty is compromised significantly. Additional problems related to
customer satisfaction that lead to disloyalty for e-commerce businesses are unclear website
policies, limited payment preferences, security issues while paying and missing payment
confirmation (Zhang and Cole 2016).
Research aim
The aim of the research is to investigate the effectiveness of customer satisfaction on
customer loyalty in e-commerce business.
Research objectives
The objectives of the research are listed below:
 To understand the concept of customer satisfaction and customer loyalty
 To critically analyze the factors affecting customers satisfaction that impose sound
impact on the level of customer loyalty
 To assess the relationship between customer satisfaction and customer loyalty and
investigate its impact on e-commerce business
 To provide suitable recommendations for improving customer satisfaction so that
effective customer loyalty in e-commerce can be achieved
Research questions
The questions of the research include:
 What do you mean by customer satisfaction and customer loyalty?

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 What are the factors affecting customer satisfaction that impose sound impact on the
level of customer loyalty?
 What is the relationship between customer satisfaction and customer loyalty and
investigate its impact on e-commerce business?
 What are the suitable recommendations for improving customer satisfaction so that
effective customer loyalty in e-commerce can be achieved?
Research hypotheses
The hypotheses formulated for the research are:
H0: Effectiveness of customer satisfaction is not noticed on customer loyalty for e-commerce
business
H1: Effectiveness of customer satisfaction is noticed on customer satisfaction for e-commerce
business
Research rationale
Undertaking the research is significant, as this will provide an opportunity to identify the
customer satisfaction issues that occur in e-commerce business. Identifying the customer
satisfaction issues will help in determining the impact on customer loyalty for e-commerce
business and develop suitable strategies for overcoming the issues so that customer loyalty for e-
commerce business can be ensured and achieved successfully (John and Roitimi 2014).
Structure of the dissertation
The entire dissertation will be developed in six different chapters. The chapters that will
form the overall layout of the dissertation are introduction, literature review, research
methodology, data analysis, findings and interpretations and conclusion and recommendations.

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Customer satisfaction Customer loyalty
Quality
Website design and usability
Privacy and security
Order fulfillment
Trust
Chapter 2: Literature review
Conceptual framework
Figure 1: Conceptual framework
(Source: Created by Author)
Concept of customer satisfaction
Customer satisfaction is said to be an optimistic outcome from the situation that deals
with products and services that are purchased by a customers that meets the expectations thereby,
making the customer contended. According to Orel and Kara (2014), customer satisfaction is
defined as the measurement that is used for measuring the degree to which a customer is happy
with a specific product and service. However, as argued by Hussain, Nasser and Hussain (2015),
the concept of customer satisfaction highlights the feeling of a customer about a brand

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interaction. It is necessary for the business organizations to ensure customer satisfaction, as this
provides several benefits that are crucial for surviving the highly competitive business sectors
globally.
Factors affecting customer satisfaction
There are different factors that affect the level of satisfaction for e-commerce customers.
According to Kaura, Durga Prasad and Sharma (2015), the type of information presented in the
e-commerce website and the way of presenting the information determines customer satisfaction
largely. The e-commerce websites have to ensure that the information presented in the website is
not misleading and fulfill the expectations of the customers. However, as argued by Izogo and
Ogba (2015), apart from information quality, the product quality also determines customer
satisfaction. As the customers spent adequate time, effort and money in selecting a product in e-
commerce business, they expect the product to be worth the effort they have put it. Failure in
doing so affects the level of customer satisfaction that is difficult to regain when it comes to e-
commerce business.
As mentioned by Ali (2016), the customers do not want to spend time figuring out how to
navigate and access the e-commerce websites. Therefore, the design and usage of the e-
commerce website facilitates customer satisfaction largely. It is necessary for the e-commerce
businesses to develop and design a website that is user-friendly and easy to understand while
purchasing products. Apart from website design, order fulfillment also determines customer
satisfaction and development of trust. It is necessary for the e-commerce businesses to fulfill the
requirement of the order placed by the customers at the first time itself. This helps in developing
trust among the customers that they are not cheated and will be delivered what they have paid

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for. As a result, the e-commerce businesses develop loyal customer base that is crucial for
surviving the highly competitive e-commerce market (Khan and Fasih 2014).
Challenges in achieving customer satisfaction
In spite of being highly evident, ensuring and achieving customer satisfaction imposes
some unavoidable challenges. According to Patil and Divekar (2014), understanding the
constantly changing expectations of the customers without communicating with them personally
is one of the biggest challenges of achieving customer satisfaction in e-commerce business.
Though the customers are targeted by dividing them according to demographics, expectations
vary within same demographics as well. However, as argued by Choshin and Ghaffari (2017),
reaching out to the potential customers while conducting research and gathering data on
customer expectation is often an unavoidable issue. In the case of e-commerce business, reaching
out to suitable customers is even more difficult because of the vastness of the platform.
Benefits of customer satisfaction
In spite of the unavoidable and constant challenges, customer satisfaction is highly
beneficial for the business organization regardless of the business sector. As mentioned by
Subramanian et al. (2014), customer satisfaction is the leading indicator that measures loyalty
among the customers by identifying unhappy customers and reducing the churn successfully.
However, as argued by Nisar and Prabhakar (2017), customer satisfaction is crucial because this
act as a key differentiation point that encourages attracting new customers thereby, gaining
competitive advantage. Therefore, having a satisfied customer base is significant in this
competitive market for e-commerce business for ensuring customer loyalty.

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Impact of customer satisfaction on customer loyalty
As mentioned by Hill and Alexander (2017), customer satisfaction encourages the
likelihood of recommending a brand as well as the purchasing decision of the customers.
Customer satisfaction fosters loyalty that is the precursor for ensuring a favorable attitude among
the customers towards the organizations. As the satisfied customers recommend the e-commerce
business organizations, both repurchasing and loyalty is ensured. Therefore, the key of
generating customer loyalty is to ensure customer satisfaction. However, as argued by Bowen
and Chen McCain (2015), considering the highly competitive e-commerce business sector, only
satisfied customer is not enough. It is necessary for the e-commerce business organizations to
ensure highly satisfied customer base for confirming customer loyalty.

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Chapter 3: Proposed research methodology
Research philosophy
For investigating the impact of customer satisfaction on customer loyalty, positivism
philosophy will be most appropriate. This is because using positivism philosophy will help in
using logic and facts for analyzing and making quantifiable observations about the effectiveness
customer satisfaction on customer loyalty. Therefore, the statistical approach will help in
ensuring data validity and reliability (Kumar 2019).
Research approach
For investigating the impact of customer satisfaction on customer loyalty, deductive
approach will be most appropriate. This is because previous literatures about customer
satisfaction and customer loyalty can be analyzed thereby, comparing and contrasting the views
and opinions of different authors. As a result, developing a study with in-depth knowledge and
understanding about the effectiveness of customer satisfaction on customer loyalty will be
possible. Based on the information collected from past literatures, suitable observations can be
derived by referring to relevant theories and models of the two variables (Mackey and Gass
2015).
Research design
For investigating the impact of customer satisfaction on customer loyalty, descriptive
design will be most appropriate. This is because descriptive design will provide an opportunity to
identify the potential customer satisfaction issues for e-commerce business and the reasons that
gives rise to the customer satisfaction issues. As a result, the impact of customer satisfaction

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issues on customer loyalty for e-commerce business can be determined successfully (Taylor,
Bogdan and DeVault 2015).
Research strategy
For investigating the impact of customer satisfaction on customer loyalty, survey research
strategy will be most appropriate. This is because survey will help in selecting a large customer
population, that is, the customers in this case. Considering the large population of customers will
help in gathering a bird’s eye view of the issues that customers face in terms of satisfaction while
using e-commerce websites thereby, determining whether the issues are having a negative impact
on the loyalty in e-commerce business (Flick 2015).
Sampling technique and sample size
For investigating the impact of customer satisfaction on customer loyalty, simple random
probability sampling technique will be most appropriate. As e-commerce business has large
customers, simple random probability sampling technique will be best suited because all the
customers will gave equal chances to take part in the survey. As a result, the researcher will
select 70 customers as the sample size randomly for undertaking the research (Alvesson and
Skoldberg 2017).
Data collection process
For investigating the impact of customer satisfaction on customer loyalty, primary data
collection process will be used. Using primary data collection process will be the best because
this will help in collecting recent and updated data about the customer satisfaction issues that
customers are facing recently and whether it is compromising with the customer loyalty in e-

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commerce business. However, collecting data for the first time will be requiring effort and time
(Ledford and Gast 2018).
Data analysis technique
For investigating the impact of customer satisfaction on customer loyalty, quantitative
data analysis technique will be used. Both co-relation and regression analysis will be used in
SPSS software for assessing the relationship between customer satisfaction and customer loyalty
for e-commerce business thereby, determining the effectiveness suitably (Bauer 2014).
Ethical considerations
The significant research ethics that needs to be followed for investigating the
effectiveness of customer satisfaction on customer loyalty for e-commerce business are data
confidentiality, willing participation by signing consent forms, ensuring that the surrounding
environment is unharmed while undertaking the research, collecting data from authentic
resources, using the information collected only for academic purposes and presenting data
without manipulating them (Choy 2014).
Timescale
Main activities1st week6th week12th week18th week20th week24th week
Topic selection
Reviewing
literature
Developing
Research
methodology

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Collection of
primary data
(online survey)
Analysis and
interpretation of
data
Findings
Conclusion and
Recommendation
Final submission

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