Chapter 1 Introduction
In this chapter, background information about the research problem was presented firstly. Then the purpose of this dissertation and research questions was introduced, after which the structure of this thesis was described.
Background of the Problem
The deepening of globalization has forced companies to develop and maintain their competitive advantages to remain their customers' loyalty. The increased competitiveness in the markets highlights the importance of building a long -term relationship with customers (Javalgi and Moberg, 1997). It is quite common in service market that employees of service companies communicate and interact with customs face to face, which provides the opportunity to companies to foster longer "customer tenure" (Ang and Buttle, 2006). In return, the purchased volumes of customer and the referrals of customers would benefit from the longer "customer tenure".
The service industry is highly competitive and hence the provision of differentiated service quality (Ndubisi, 2007). The importance of managing customer retention and loyalty has become more and more apparent (Zineldin, 2006).
Andersn and Fornell and Lehmann (1994) suggested that the need of customer retention results from the fact that it is more costly to attract a new customer than to maintain a current customer. Moreover, it is 5 times costly to attract a new customer than to retain an existing customer. Moreover, the existing customers have already knew the service process and need less help, compared with new customers.
Thus, with an effort to build a long- term relationship, it is very crucial for service companies to satisfy customers and take the lifetime value of customers into consideration. According to Zineldin 2006), the lifetime value of customers includes the purchase /repeated purchase in the future, the referrals and the avoiding of negative reviews from customers. However, the elimination of service failure is unrealistic target for service...