Satisfaction, Loyalty and Reputation as Indicators of Customer Orientation in the Public Sector

Abstract

With public services operating as monopolies, dissatisfied users cannot exit from the relation without changing patronage. Apart from exit from the region, voicing their dissatisfaction in order to influence the service offer becomes the only alternative. Industries and companies may be classified as customer oriented if they market differentiated products and services reflecting heterogeneous customer preferences. Customer satisfaction is influenced by expectations and perceived service quality. Degree of customer satisfaction and loyalty consequently becomes an indication of customer orientation. Reports on an empirical study of 100 business executives′ degree of satisfaction with local governments′ services in the capital of Norway. Loyalty, defined as willingness to maintain present location of business, is believed to be influenced by satisfaction. The results from the study confirm low satisfaction scores. However, support for positive correlation between satisfaction and loyalty was not found. Reputation correlated with loyalty and satisfaction. Improvements in customers′ perception of service quality, government′s reputation and professional handling of customer voice, will influence customer satisfaction and loyalty. Improving service quality as perceived by the users through the differentiating of the offer, and improving reputation, are the managerial implications of this study in order for government to improve its performance, i.e. increased user satisfaction and loyalty.