QUALITY SERVICE DELIVERY ON CUSTOMER SATISFACTION
ABSTRACT
This research examined the Impact of quality service on customer satisfaction in case of Oromia Insurance S.C. service. Service quality has been defined as a difference between customers’ service perception and expectations. To achieve the objectives of this study, data was collected through questionnaire from a sample of 319 major customers of Oromia Insurance S.C. These respondents were selected using judgmental sampling method. The data collected from the questionnaire were analyzed using Descriptive Statistical tools such as counts, percentage, mean, and standard deviation. The results of this study indicate that except tangibility the four quality service dimensions (reliability, responsiveness, assurance, and empathy) have negative and significant difference with customers’ expectations. Furthermore, customers were most dissatisfied with the reliability dimensions of service quality. On the contrary, customers were more satisfied with tangibility and empathy dimensions of service quality. Based on the findings of the study, the researcher forwards some recommendations for Oromia Insurance S.C. managements such as the company must improve its service quality and consistency of performance as well as on improvement of customer handling and service process.
IMPACT OF QUALITY SERVICE DELIVERY ON CUSTOMER SATISFACTION
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Customer satisfaction and quality service remain critical issues in most service industries, and are even more important for financial service providers that offer generally undifferentiated products. For example, in the insurance industry, the major approach to differentiation and the principal means by which one insurer can distinguish itself from another is service before and after the sale of the policy (Stafford and Wells, 1996). Otherwise, companies are generally unable to differentiate based on market offerings because insurance providers offer state-mandated standardized products.
In an increasingly competitive environment, service quality as an essential strategy for success and survival has attracted increasing attention in the past 20 years (Ismail et al., 2006). Thus, companies need to pay keen attention to their customers and must understand their customers‟ needs and wants so as to meet or exceed their expectations. In this context, customers are considered as kings since customer satisfaction is what guarantees for their success and survival. To remain competitive, especially, service providers must render quality service to their customers. Moreover, understanding and meeting customers‟ expectations and subsequently being different by providing best quality service are important in order to survive in today‟s globalizing world.
Defining service quality is not as simple as defining product quality because of the nature of services. Parasuraman et al. (1985) have developed service quality measurement tool (SERVQUAL) and defined service quality as the gap between customer expectation and perception based on five dimensions. They further define consumer‟s perception of service quality as a function of the difference between expectations about the performance of a general class of service providers and assessment of the actual performance of a specific firm within that class. The five dimensions of service quality identified by the authors are: tangibles, reliability, responsiveness, assurance and empathy.
The concept of customer satisfaction occupies a central position in marketing thought and practice. Many companies today are aiming for Total Customer Satisfaction (TCS). Although a variety of alternative definitions exist, the most popular definition of customer satisfaction is given by K. Douglas & John E.G (2008) which is a comparison of customer expectations to perceptions regarding the actual service encounter. Oliver (1981) who defined customer satisfaction as a judgment of product or service providing a pleasurable level of consumption-related fulfillment, including levels of under-or-over-fulfillment, gives the other definition of customer satisfaction. According to Kotler (2002), customer satisfaction is the levels of one‟s feelings after comparing the performance (results) are perceived as compared with expectations. Thus, this is the reason behind why companies direct their business activities to produce goods and services that can provide best satisfaction to consumers. Pertaining to the above, the focus of this study is to examine the level of service quality provision by Conia Insurance Company.
Oromia Insurance S.C was established and licensed by the National Bank of Nigeria to carry on general business on 26 January 2009 and commenced operation on 9 February 2009. It was established by 540 founding shareholders (now 815) with paid up capital of Birr 26 million (now 84.6 million) and subscribed capital of Birr 85.084 million (http://oromiainsurancecompany.com.et).
Currently the Insurance Industry in Nigeria is relatively in a high competition among insurance companies. The intense competition among the firms is mainly based on premium rate, market proximity, promotion and advertisement etc. to attract new customers and to retain the existing ones. In order to win the customer, companies should begin to devise mechanisms to attract new customers and to retain existing ones by improving their service quality level.
Moreover, like any business, insurance business need to attract and establish a customer market and would need to retain it through satisfaction. That is the key to its business performance (Johnson et al., 2000). In order to attain this goal, a company should have a high satisfaction rate from its clients. The increasing competition, is forcing the business sectors to pay much and more attention to satisfying customers (Management library, 2008). Therefore, exploiting the opportunities, maintaining and improving the service excellence and measuring the current level of customers satisfaction level is necessary.
1.2 Statement of the Problem
Insurance by its nature does not produce tangible goods but provides quality services which must meet the requirements of its customers. Measuring services by its intangible nature is very difficult. It is also often difficult to standardize or to make insurance services uniform because the quality of service perceived by each individual may be different depending on the circumstances of the type of cover needed, the nature of the risk, type of loss in the case of claims and also the level of professionalism displayed by employee specially in the front line officers.
So the greatest challenges posed to insurance companies is setting standards and adopting appropriate parameter for measuring customer satisfaction performance over time. Each insurance company that wants to continually satisfy its customers‟ needs has to do customer satisfaction analysis. By doing so, a company can identify and understand the need