The title of the proposal will be how third party logistics gain consumer loyalty. It is based on the fact customer loyalty is crucial when it comes to customer service. The quality of goods offered is a major determinant of whether the consumers are going to be loyal or not.
Third party logistics mostly deals with provision of services to either some or all the supply chain of a company. The services provided by third party logistics are based on customer needs which are in relevance to market conditions, demand, and delivery service requirements of the particular products and services (Chitica 2010). Customer loyalty is very important to third party logistics and they apply different strategies to ensure that customer loyalty is attained.
When customers are satisfied by the services offered to them, they are likely to be retained which may eventually lead to customer loyalty (Chitica 2010). Customer satisfaction is the major contributor to customer loyalty. If the goods and services offered by an organization are of good quality, they customers are likely to be satisfies, retained and eventually be loyal and have strong relationships with their service/product providers (Chitica 2010). There has been a wide range of knowledge about the importance of customer loyalty. This is because many companies believe that it is easier and cheaper to maintain the existing customers than attracting new ones.
My interest on this topic was based on the benefits which come with gaining customer loyalty. The problem which many organizations face is how to or which strategies to apply to gain the customer loyalty. This dissertation is aimed at putting forward some strategies which can be used to ensure that customer loyalty is gained. Many companies have tried to develop customer loyalty programs to assist them in gaining customer loyalty.
There have been a lot of researches done to find out how customer loyalty develops. In many of these researches, the quality of goods offered has received a lot of emphasis (Cahill 2007). Many of these researches have only highlighted very few determinants of customer loyalty gaining. They do not clearly identify the mechanisms which can be applied to effectively lead to customer loyalty development (Cahill 2007). Third party logistics have not been spared by the increasing competition in all fields of business. Therefore like in any other industry, they need to adopt those strategies which will improve their customer loyalty. Consumer loyalty should be achieved first, and then relationships maximize this to get profits.
This topic was chosen due to because many organizations have faced a challenge in gaining customer loyalty. This was specifically observed from my workplace. Our organization had a problem in retaining customers as well as gaining their loyalty. This was because customers used to come and go completely. It was very expensive because every time we were involved in looking for new customers who came once or twice and left. I also found out that those organizations who had totally gained customer loyalty were prospering in their business.
Aims and Objectives
The main aim of this research is to investigate the how customer loyalty is of benefit to third party logistics. After which it will go ahead to study the strategies which third party logistics can apply to ensure that they gain customer loyalty. Therefore for this study will be guided by several objectives which include;
o Importance of customer loyalty to an organization.
o Identify the strategies which can lead to gaining of customer loyalty.
o Identify the strengths which an organization should posses which can boost their ability to gain customer loyalty.
o Identify some of weakness and threats which third party logistics should do away with in order to ensure their customer loyalty is not at stake.
o Identify opportunities which third party logistics can maximize to improve their customer loyalty.
o Determine how third party logistic views the idea of customer loyalty and the efforts being taken.
Terms of Reference
This study will achieve it aims and objectives by getting information from the literature review and from findings of other researches. It will be based on ideas from customers’ level of satisfaction and how their satisfaction contributes to their loyalty. It will also be the services providers’ point of view. The study will also use primary research based on surveys done on customers. The conclusion of the study will be based on specific recommended which will be given organizations dealing with third party logistics.
The study will also put in to consideration all ethical issues. The consent of the customers will be sought before any information is enquired from them. This study will put in to consideration a high level confidentiality and privacy will be observed. No unethical questions will be asked or questions about ones private live. The results of the research will be disseminated to ensure that the necessary actions are taken.
Research Design and Methods
The research design will be based on qualitative and quantitative approach. This will help to collect both qualitative and quantitative data. Qualitative data will be obtained from interviews then it will be quantified using data collected from the questionnaires.
This study will be designed to collect both secondary and primary data. Primary data is data which has not been collected and recorded before. Secondary data is data which has already been collected and recorded. The research method which will be used to collect secondary data will be the use of business reviews, case studies, business reports and investigative journals. This will help the researcher understand the findings from other researches hence create a point of comparison.
Primary data will be collected using questionnaires and interviews. Questionnaires will be constructed for both customers and those who run the third party logistics. The questions will be structured in a way that they address the questions that lead to the achievement of the set objectives. Interviews will also be conducted on both the consumers and on the ones running the third party logistics.
Theoretical Framework/Initial Literature Review
Third party logistics involves the use of specialized logistics companies to do some logistics work which may entitle the whole logistics work or part of it (Paulo 2006). Activities mostly performed by third party logistics involve outbound, transportation, customer clearance, inbound transportation, freight forwarding, freight bill auditing, cross docking consolidation, and other distribution activities (Paulo 2006). There has been a very stiff competition lately; therefore, service quality is crucial as a competitive differentiator. Quality service is depended on how customers view them and their perception towards the services (Paulo 2006). Therefore, it is advisable that third party logistics providers should ensure that they understand how customers perceive their services (Paulo 2006).
Customer loyalty can be determined using different concepts. The first concept is behaviorist customer loyalty concept which is based on the observable behavior of a customer (Cahill 2007). For instance, a customer’s purchasing behavior. Customer loyalty is determined by the consistency of customer in a particular organization. Neo-behaviorist customer loyalty concept argues that customer loyalty is determined by both behavior and attitude (Cahill 2007).
Customer loyalty model was developed in 2004 by Wallenburg which began with hypothesis on the determinants of customer loyalty (Cahill 2007). First is service quality which determines the level of customer satisfaction and customer loyalty in the long run. Service/product quality determines if the customer will come back or not. High quality comes with high customer loyalty. It makes customers be satisfied about the price and develop trust in the organization. Second is price satisfaction which increases the probability of the customers coming back and developing customer loyalty eventually (Cahill 2007). Third is rational satisfaction which also increases repurchase and development of positive relationships and trust. This contributes to loyalty. Fourth is proactive improvement which is a contributor to customer satisfaction and loyalty (Cahill 2007). Other determinants are fairness, commitment, trust, and alternatives (Cahill 2007).
Customer loyalty is a very crucial thing to achieve as it determines the amount of sales one is likely to make. Customer satisfaction has been found to the key to gaining customer loyalty. Customer satisfaction can be in the form of price satisfaction or quality satisfaction or even needs satisfaction (Chitica 2010). When the products/services provided by a particular organization are of high quality, customers are likely to be satisfied. Quality also satisfies customer needs. This makes customers be satisfied about the price which enhances the relationship between the service/product providers and the customers (Chitica 2010). This relation eventually leads to customer loyalty. Customer loyalty contributes to promotional strategies.
Gaining customer loyalty is not an easy thing to do this therefore efforts should be put to ensure that customer loyalty and relationships are attained. These relationships should be maintained to enhance customer loyalty and then the organization should maximize this to ensure they attain maximum profit (Coffey et al 2006). Therefore customer satisfaction is the key to customer retention. When customers are satisfied, they will always come back and the level of customer loyalty is going to be high.
Customer loyalty can be achieved using different methods but customer satisfaction should be put in to more consideration (Coffey et al 2006). Issues which should be put into a lot emphasis are ensuring that services are of high quality. Building of health relationships is also another issue which should be put into consideration.
Third party logistics providers can gain customer loyalty if they look at company related issues which include the provider himself or the services/goods (Cahill 2007). Customer loyalty is influenced by company reputation and customer loyalty programs. They can also consider relations which brings trust and closeness (Cahill 2007). Customer related issues should also be considered which should be based on the customer characteristics.
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