An Application of AHP in Optimizing Customer Satisfaction in a Services Marketing Scenario

Abstract

Achieving customer satisfaction in services sector firms has necessitated creation of numerous business strategies and policies through empirical, theoretical & conceptual research. Researchers believe that the extended Ps of services marketing may influence customer satisfaction. Recent empirical study has identified key factors of the extended 3Ps of services marketing i.e. People, Process & Physical Evidence, through which customer satisfaction can be determined and measured in case of banking and financial services firms. Research also indicates that customer satisfaction has a positive direct effect on brand equity but an indirect negative one on the shareholders’ wealth. This latter effect emerges when managers are mainly customer-oriented and implement policies, focused excessively on satisfying customers at the expense of shareholders’ wealth. As optimization means looking for the best while maximization means looking for the most, it is better to concentrate on optimizing rather than maximizing customer satisfaction. In a service delivery scenario some unique situations can arise when firms must make decisions which can minimize cost while at least maintaining same levels of customer satisfaction, i.e. resorting to optimization policy rather than maximization. So, development of quantitative models for optimizing customer satisfaction is the need of the hour which will make a perfect balance between the two conflicting goals of providing maximum customer satisfaction and maintaining minimum expenses at the creation, delivery and maintenance of services. In this paper, taking cue from the past research and using common operational logic, different decision situations have been developed within the working principles of the banking services firms and the identified key factors of 3Ps have been linked with these situations to form a conceptual platform at the first stage and then the techniques of analytic hierarchy process (AHP) have been applied for model development at the next stage. The quantitative approach developed in this paper can be used for theoretical research as well as the base for future empirical study. Next level of research should focus on the development of quantitative measurement framework for quantifying and measuring model variables to make these models practically implementable and extendable for application in other service sector firms. As the quantitative models are conceptual in nature and still at the preliminary stage, practical application of these models at this stage is not feasible but once a measurement framework to measure the variables involved in these models has been developed, it will be possible to implement these models in practice.

Keywords: Customer Satisfaction, Key Factors of People Process & Physical Evidence, Analytic Hierarchy Process (AHP), Satisfaction Optimization Models

JEL Classification: A00, A10, C00, M00, M31, Z00