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Measuring Customer Satisfaction: Insights and Strategies for Success

Explore American Customer Satisfaction Index, factors influencing satisfaction ratings, and the importance of customer service in today's competitive landscape. Learn valuable tips and strategies to enhance customer satisfaction and drive business success.

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Measuring Customer Satisfaction: Insights and Strategies for Success

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  1. Chapter 12DEFINING AND MEASURING CUSTOMER SATISFACTION

  2. AMERICAN CUSTOMER SATISFACTION INDEX(ACSI) • Top Firms (all produce goods) • Dole Food • Mars • H.J. Heinz • Proctor & Gamble • PepsiCo • Honda • Mercedes-Benz • Maytag

  3. AMERICAN CUSTOMER SATISFACTION INDEX(ACSI) • Bottom Firms (all produce services) • Internal Revenue Service • Police • U.S. Postal Service • Continental Airlines • McDonald’s • BankAmerica Corp. • Unicom (electric utilities) • Ramada • Aetna Life & Casualty (insurance)

  4. RECIPE FOR CUSTOMER SERVICE DISASTERS • Labor shortages • motivated employees are difficult to find • who can blame them… • low pay • no career paths • no respect • little training in customer relations

  5. RECIPE FOR CUSTOMER SERVICE DISASTERS • Automation • effectiveness was sacrificed in the name of efficiency • general feeling that companies are continuing to distance themselves from their customers • examples are numerous … • mounting frustrations with automated phone and other service delivery systems • e-commerce strategies should take note!

  6. RECIPE FOR CUSTOMER SERVICE DISASTERS • Customers are tougher to please • increasingly educated • more informed • more discretionary income • not at the mercy of shop keepers anymore • expectations have increased

  7. RECIPE FOR CUSTOMER SERVICE DISASTERS • Skyrocketing inflation • efforts to reduce prices • services were slashed • price competition ensued (price wars) • firms once again cut costs • service was sacrificed again • interestingly, advertising was also cut during a time customers were attempting to make more informed decisions

  8. THE IMPORTANCE OF CUSTOMER SATISFACTION • The average business does not hear from 96% of its unhappy customers • For every complaint received, 26 customers actually have the same problem • The average person with a problem tells 9 or 10 people • 13% tell more than 20

  9. THE IMPORTANCE OF CUSTOMER SATISFACTION • Customers who have their complaints resolved tell an average of 5 people • Complainers are more likely to do business with you again than non-complainers • 54-70% if the complaint is resolved at all • 95% if the complaint is resolved quickly

  10. WHAT IS CUSTOMER SATISFACTION/DISSATISFACTION? • Expectancy Disconfirmation Model • Confirmation • perceptions = expectations • Negative Disconfirmation • perceptions < expectations • Positive Disconfirmation • perceptions > expectations

  11. THE BENEFITS OF CUSTOMER SATISFACTION • Positive word-of-mouth • Purchase more frequently • Less likely to be lost to competitors • Insulated from price competition • Positive work environments

  12. THE BENEFITS OF CUSTOMER SATISFACTION SURVEYS • Provides a formal means of customer feedback • Conveys a caring message to customers • Used to evaluate employee performance • Merit and compensation reviews • Employee training programs • Comparison against competition • Provide information for advertising

  13. MEASURING CUSTOMER SATISFACTION • Indirect Measures • sales records, profits, customer complaints • Direct Measures • The Scale of 100 Approach • Federal Express’ original approach (score = 83) • The “Very Dissatisfied/Very Satisfied” Approach • The Combined Approach

  14. MEASURING CUSTOMER SATISFACTION • FedEx’s “Hierarchy of Horrors” • wrong-day delivery • right day, late delivery • pick-up not made • lost package • customer misinformed by FedEx • billing and paperwork mistakes • employee performance failures • damaged packages

  15. Conceptual Distribution of Satisfaction Measurements High satisfaction High dissatisfaction Source: Robert A. Peterson and William R. Wilson, “Measuring Customer Satisfaction: Fact and Artifact,” Journal of the Academy of Marketing Science 20,1 (1992), p. 61. UNDERSTANDING CUSTOMER SATISFACTION RATING • Virtually all self-reports of customer satisfaction possess a distribution that is ………………???

  16. SAMPLING OF SATISFACTION RESULTS Source: Robert A. Peterson and William R. Wilson, “Measuring Customer Satisfaction: Fact and Artifact,” Journal of the Academy of Marketing Science 20,1 (1992), p. 61.

  17. FACTORS INFLUENCING CUSTOMER SATISFACTION RATINGS • Customers are genuinely satisfied • Response bias • Data collection method • personal vs. non-personal • Question form • satisfied vs. dissatisfied

  18. RESPONSE BY QUESTION FORM Source: Robert A. Peterson and William R. Wilson, “Measuring Customer Satisfaction: Fact and Artifact,” Journal of the Academy of Marketing Science 20,1 (1992), p. 65.

  19. FACTORS INFLUENCING CUSTOMER SATISFACTION RATINGS • Question context • General question prior to specific question • Timing of question • Recent vs. Past Purchase • Social desirability bias • Mood

  20. CUSTOMER SATISFACTION:HOW GOOD IS GOOD ENOUGH? • Should a firm invest $100,000 to attempt to improve ratings from 95% to 98%? • Depends Upon: • satisfaction ratings of other firms • dollar investment needed relative to the impact on the bottom line by increasing market share • number of time periods needed to recoup the investment • opportunity costs associated with other uses of the firm’s funds

  21. CUSTOMER SATISFACTION MODELS [Panels A, B, and C of Figure 12.3, p.309.] • Babich Satisfaction Models Illustrate: • the value of knowing competitive ratings • high customer satisfaction scores make the firm more resistant to competitive efforts to increase their market share

  22. CRITICISMS OF CUSTOMER SATISFACTION RESEARCH • Does not necessarily translate into customer retention • Focus is on current needs only • Focuses on registered complaints • Fails to involve employee viewpoints • Fails to involve customer viewpoints • surveys are generally designed internally by middle and upper managers

  23. CUSTOMER SATISFACTION: A CLOSER LOOK

  24. The Zone of Tolerance Expected service Desired service Zone of tolerance Adequate service Source: Valerie A. Zeithaml, Leonard L. Berry, and A. Parasuraman, “The Nature and Determinants of Customer Expectations of Service,” Journal of the Academy of Marketing Science 21,1 (1993), pp. 1-12.

  25. Factors Influencing Expected Service • Explicit service • promises • Advertising • Personal selling • Contracts • Other communications • Enduring service • intensifiers • Derived expectations • Personal service • philosophies • Implicit service promises • Tangibles • Price Personal needs Expected service • Transitory service • intensifiers • Emergencies • Service problems • Word-of-mouth • Personal • “Expert” (Consumer Reports, • publicity, consultants, • surrogates) Desired service Zone of tolerance Perceived service alternatives Past experience Self-perceived service role Predicted service Adequate service • Situational factors • Bad weather • Catastrophe • Random over-demand Perceived service Source: Adapted from Valerie A. Zeithaml, Leonard L. Berry, and A. Parasuraman, “The Nature and Determinants of Customer Expectations of Service,” Journal of the Academy of Marketing Science 21,1 (1993), pp. 1-12.

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