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Customer Satisfaction Measurement. Why CSM?. Why satisfied customers?. Buy more often Buy more (range) Pay more (9% less price sensitive) Recommend more Free advertising Referred customers are best Stay longer. Make companies more profitable. Satisfaction - Loyalty links.
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Customer Satisfaction Measurement
Why satisfied customers? • Buy more often • Buy more (range) • Pay more (9% less price sensitive) • Recommend more • Free advertising • Referred customers are best • Stay longer Make companies more profitable
Satisfaction - Loyalty links Apostle 100% Zone of affection 80% Zone of indifference 60% Loyalty 40% Zone of defection 20% Satisfaction Terrorist 1 5 10 Source: Professor J. Heskett, Harvard Business School
Customer satisfaction pays • Customer loyalty is a better predictor of profit than market share (Harvard) • Dow Chemicals: 1% increase in loyalty generates 1.2% increase in account share • IBM: 1% gain in customer satisfaction index results in $100 million extra sales over 5 years • Poor service is the main reason for customer defections • Service differentiates more than product or price in most markets
Why measure satisfaction? • Traditional measures not adequate • Customer complaints • Most dissatisfied customers don’t complain • Most complaints don’t reach senior management • Salesforce • Selective feedback of information • Subjective knowledge based on relationships • Only objective third party surveys provide a reliable customer satisfaction indicator • Requirement of ISO 9001:2000
Continual improvement of Quality Management System Management responsibility Measurement analysis improvement Resource management Product realisation Product Customer Customer Sat isfact ion Requirements Input Output Source of diagram: BSI
Whose perspective? Lens of the organisation people products processes results outcomes benefits Lens of the customer
Exploratory research It is essential that customers set the agenda • Depth interviews or focus groups • Range of customer types • customer value • market segments • full coverage of DMU(decision making unit) • Customer requirements • Forced trade off • Relative importance • Questionnaire based on what’s most important to customers Talk to customers to fully understand the lens of the customer
The main survey Personal interviews Telephoneinterviews Self-completion questionnaires
Choice of survey • Personal interviews • Too expensive • Postal survey • Lowest cost • Likely to be a low response rate (20%) • Makes the sample unrepresentative • May not be able to trust the result • Telephone survey • Good response rate – reliable result • Low satisfaction probed – understand reasons • On balance the most cost-effective
Telephone survey • Introductory letter to customers • Explain the purpose of the survey • We need your feedback • We want to make you as satisfied as possible • 15 minute telephone interview • At a time convenient to you • Only once a year • Sample of 200 customers • Representative • Based on customer value • Range of decision making roles covered
ABC Ltd. Satisfaction Index 80.4%
Satisfaction IndexTM targets 87.0% 86.0% 85.5% Very good 84.7% 85.0% 84.0% 83.4% 83.0% 82.0% Good 82.0% 81.0% 80.4% 80.0% Borderline 79.0% 2000 2001 2002 2003 2004
Improving customer satisfaction PFI PFI PFI
Mirror survey (optional) • Simultaneous survey of employees who affect customer satisfaction • Self-completion questionnaire • “How important or unimportant do you think these things are to our customers?” • “How satisfied or dissatisfied do you think customers are with our performance in these areas?” • Involves employees in the CSM process • Highlights causes of customer dissatisfaction by identifying ‘understanding gaps’
Overview of the process • Project planning • Exploratory research • Questionnaire design • Main survey • Analysis and reporting Measure based on what’s important to customers
DIY or use external specialist • Advantages of DIY approach • Less expenditure • Learn new skills • Advantages of specialist agency • Use their expertise – get it right • Customers have option of anonymity, making them more honest (many will be happy to be identified) • Will show we are taking the concept seriously • Agency will do the work much more quickly • Agency can help with next steps after the survey
Agency timescales • Exploratory research phase: 6 weeks • Briefing and project planning • Conduct 12 depth interviews • Design questionnaire • Interim review meeting • Main survey: 6 weeks • Sampling • Interviews • Analysis and reporting • Presentation of results • Feedback to customers
Estimated agency cost options • Exploratory research • Face to face depth interviews £6,000 • Telephone depth interviews £3,000 • Focus groups £8,000 • Main survey • Telephone survey (200 interviews) £10,000 • Postal survey £6,000 • Mirror survey (optional) £1,750
The Leadership Factor • Leading specialist provider of research in customer satisfaction measurement • 100 staff • HQ in Huddersfield, plus offices in France, Italy, USA and Australia • ISO 9001 registered • Over 200 satisfaction studies per annum – the most by any UK agency • Large Satisfaction Benchmark database • Can make comparisons across many blue chip companies