Impact of Word of Mouth and Complaints on Customer Satisfaction and Loyalty

CONSUMER SATISFACTION,
COMPLAINTS
CUSTOMER LOYALITY, WORD OF
MOUTH COMMUNICATION
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Table of Contents
1. Introduction..................................................................................................................................4
1.1 Problem Statement.....................................................................................................................5
1.2 Research Objectives/Questions.................................................................................................5
2. Justification of the Project...........................................................................................................6
2.1 Expected Research Outcome.....................................................................................................6
3.0 Conceptual Framework..............................................................................................................7
3.1 Importance of Word of Mouth in case of Customer Satisfaction and Loyalty......................8
3.2 Role of Consumer Complaint in case of Customer Satisfaction Level.................................8
3.3 Effect of Customer Satisfaction Level on Customer Loyalty................................................9
3.4 Relationship between Customer Satisfaction and Customer Loyalty..................................10
4. Research Hypotheses.................................................................................................................10
5. Research Methodology..............................................................................................................11
5.1 Research Philosophy............................................................................................................11
5.2 Research Design..................................................................................................................11
5.3 Research Approach..............................................................................................................12
5.4 Data Collection Method.......................................................................................................12
5.5 Data Analysis Technique.....................................................................................................12
5.6 Sampling Technique............................................................................................................12
6. Organization of the Research Study..........................................................................................13
7. Budget and its Justification........................................................................................................14
8. Gantt Chart.................................................................................................................................15
Reference List................................................................................................................................20
Bibliography..................................................................................................................................23
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1. Introduction
Customers are the most important part of all businesses, because of which all organizations
exists to satisfy customers and thereby earn profits (Izogo & Ogba, 2015). Dealing customers
carefully, monitoring their preferences and choices, their past records and new demands and
requirements is essential for tracking and understanding customers in order to serve them better.
An organization requires fulfilling the needs and requirements of customers to stay competitive
in business environment and earn high profits. Innovating their products and services as per the
needs of customers in order to provide smart and unique products will create high reputation and
brand name for the company.
Customer satisfaction depends upon the ability of providing superior quality products and
services at reasonable prices as compared to rivals in the same sector. When customers are happy
with the quality of products and services that they receive in exchange of money they tend to be
loyal with the company. Customers tend to choose the same organization to purchase products,
the next time, and may even refer to friends and family for purchasing the product from that
organization (Ennew, Binks & Chiplin, 2015). Word of mouth communication refers to sharing
of experience, in which a customer shares his or her experience with other people surrounding
him and tend to influence their decision-making and choices. This proposal explores word of
mouth communication and customer complaints affect the satisfaction level and the loyalty of
customers. Several methods and techniques that will be used for conducting the research is
briefly discussed and mentioned below.
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1.1 Problem Statement
Customer satisfaction is a well-known aspect and all organizations understand that if their
customers are satisfied with their products and services, only then they can exist in the market
and generate large profits. Customers always share their information about a particular product
and their experience, often with other customers, friends and family (Kim, Vogt & Knutson,
2015). This does has an impact on their decision making process and future choices. Word of
mouth communication is highly effective and believable to people, far more influencing than
several polished advertisements and marketing strategies. Several studies and research have
already been conducted in the past, briefly describing the impact of word of mouth
communication on customer satisfaction. However, all these previously conducted reports and
studies fail to highlight the impact of word of mouth communication and customer satisfaction
on customer loyalty. This is the primary focus of this research and the research also aims to
outline the ideas or facts about how changes can be made in order to foster customer loyalty.
1.2 Research Objectives/Questions
The aim of this particular research will be to explore the concept of customer satisfaction. In
addition to that, this particular research will explore “explore the impact of complaints and word
of mouth communication on customer loyalty and satisfaction”.
The objectives of the research are summarized below-
 To explore the effectiveness or the usefulness of the concept of “word of mouth
communication” in the resolution of the customer complaints and enhancing the
satisfaction level of the customers.
 To explore the impact of customer complaint as well as the “word of mouth
communication” in the process of customer satisfaction.
 To explore the relationship between customer satisfaction and also customer loyalty.
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The following are the research questions that have been investigated in order to arrive at the
expected outcome:
RQ 1: How word of mouth communication assists to deal with customer complaints and
improving customer satisfaction?
RQ 2: What impact does word of mouth communication and customer complaint have on
customer satisfaction?
RQ 3: What is the relationship between customer loyalty and customer satisfaction?
2. Justification of the Project
Study of customer satisfaction and customer loyalty is essential for improving the organization
performance and competitiveness in the market. Organizations can develop better strategies and
tactics to improve their brand name and brand value. The research project will guide companies
to realize the impact of word of mouth communication on customer satisfaction, pivotal for
understanding key concepts and aspects about customers. The project highlights the relationship
between two important areas that are customer loyalty and customer satisfaction (Bowen, &
Chen McCain, 2015). Happy customers are loyal customers of an organization, they also help to
share the word about the company or organization to other possible customers. Customer
complaints have an effect on the level of customer satisfaction, therefore require proper attention
so that it does not creates negative impact on the organizational performance.
This will enhance the capabilities of organization to serve their customers and attract new ones in
a better manner. Word of mouth communication has greater impact on the minds of a customer
than various advertising strategies, therefore this report will assist to focus on more important
matters. All organizations aim to improve their reach to customers so that they can serve them
better, hence this research will aid in this process (Kaura, Durga Prasad, & Sharma, 2015).
2.1 Expected Research Outcome
The expected outcome of this research project is mentioned below:
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