Customer Satisfaction Measurement & Management

Customer satisfaction has been one of the top tools for a successful business. Customer satisfaction is defined as an overall evaluation based on the total purchase and consumption experience with the good or service over time (Fornell, Johnson, Anderson, Cha & Bryant 1996).

With marketing, customer satisfaction also comes along with it which means it ascertains the expectation of the customer on how the goods and services are being facilitated by the companies. Actionable information on how to make customers further satisfied is therefore, a crucial outcome (Oliver 1999.)

At a glance, customer satisfaction is a crucial component of a business strategy as well as customer retention and product repurchase. To maximize the customer satisfaction companies should sell ideas and methods after the completion with all the necessary documents. As for example, customers will buy a car after taking a closer look at it such as how is the engine, what is its model, how many kilometers it has been traveling, and is there any cracks or not. Therefore, they do not feel disappointed after purchasing it. Otherwise, if the company uses only their sell and build method customers might expect that the car is exactly the same as what they see in the pictures or during the exhibition and later on the company might receive complaint if anything is wrong. Customer satisfaction is a barometer that predicts the future customer behavior (Hill, Roche & Allen 2007.)

However, the product and its features, functions, reliability, sales activity and customer support are the most important topics required to meet or exceed the satisfaction of the customers. Satisfied customers usually rebound and buy more. Besides buying more they also work as a network to reach other potential customers by sharing experiences (Hague & Hague 2016.)

The value of keeping a customer is only one- tenth of winning a new one. Therefore, when the organization wins a customer it should continue to build up a good 6 relationship with the client. Providing the quality of goods and services in the 20th century is not only to satisfy the customers but also to have a safe position. Indeed, this has benefited the customers significantly on consuming qualitative products (Rebekah & Sharyn 2004.)

Customers often look for a value in the total service which requires internal collaboration among the department that is responsible for different elements of the offering, such as the core product (goods or services) delivering the product, product documentation, etc. Moreover, from profitability and productivity perspectives only activities that produce value for customers should be carried out. Hence, firms have to get to know their customers much better than has normally been. However, the company should be able to build trust with the customer, so it is easy to get the feedback from the customer. This is how customer-oriented product or service could be developed (Hill, Brierley & MacDougall 2003.)

Customer satisfaction is dynamic and relative. Only the idea “customer-centric” can help companies improve satisfaction and keep customer truly, conversely, if competitors improve customer satisfaction, then it may loss corporate customers. While improving customer satisfaction, customer expectations should be noticed. Service quality, product quality and value for money have a direct positive impact on customer satisfaction. Employee satisfaction is equally important before achieving the customer satisfaction. If employees have a positive influence, then they can play a big role to increase customer satisfaction level. Satisfaction is a dynamic, moving target that may evolve overtime, influenced by a variety of factors. Particularly when product usage or the service experience takes place over time, satisfaction may be highly variable depending on which point in the usage or experience cycle one is focusing. (Lovelock, C & Wright, L.2007,86-87.)

Customer satisfaction is influenced by specific product or service features and perceptions of quality. Satisfaction is also influenced by customer’s emotional responses, their attributions natheir perception of equity (Zeithal & Bitner. 2003, 87-89.)

Increased customer satisfaction can provide company benefits like customer loyalty, extending the life cycle of a customer expanding the life of merchandise the customer purchase and increases customers positive word of mouth communication. When the customer is satisfied with the product or service of the company, it can make the customer to purchase frequently and to recommend products or services to potential customers. It is impossible for a business organization to grow up in case the company ignores or disregards the needs of customers

As shown in the graph above that’s a measure of customer satisfaction.

Consumer behavior refers to the selection, purchase, and consumption of goods and services for the fulfillment of their basic and the fundamental needs. There are different phases involved in consumer behavior. Initially, the consumer finds the needs and then goes for the selection and budgets the commodities and take the decision to consume. Product quality, price, service, consumer emotion, personal factors, situational factors, a perception of equity or fairness, product features are some of the factors that influence the customer satisfaction. On the other hand, several factors like mentioned in the figure influence the purchasing behavior of the consumer (I research Service 2017)

Cultural factors: Culture is crucial when it comes to understanding the needs and behavior of an individual. The values, perceptions, behaviors and preferences are the factors basically learned at the very early stage of childhood from the people and the common behaviors of the culture. Norms and values are carried forward by generation from one entity to the other. Cultural factors represent the learned values and perceptions that define consumer wants and behaviors. Consumers are first influenced by the groups they belong to but also by the groups (aspirational groups) they wish to belong to.

 

Social factors: Human beings live in an environment surrounded by several people who have different buying behavior. A person’s behavior is influenced by many small groups like family, friends, social networks, and surrounding who have different buying behaviors. These groups form an environment in which an individual evolves and shape the personality. Hence, the social factor influences the buying behavior of an individual to a great extent.

 

Personal factors: This consumer behavior includes personal factors such as age, occupation, economic situation, and lifestyle. Consumer changes the purchase of goods and services with the passage of time. Occupation and the economic situation also have a significant impact on buying behavior. On the other hand, a person with low income chooses to purchase inexpensive services. The lifestyle of customers is another crucial factor affecting the consumer buying behavior. Lifestyle refers to the way a person lives in a society and is expressed by the things in the surroundings.

 

Psychological factor: Many psychological factors like motivation, perception, learning, and attitudes and beliefs play a crucial role in purchasing a particular product and services. To increase sales and encourage the consumer to purchase the service organization should try to create a conscious need in the consumer’s mind which develops an interest in buying the service. Similarly, depending on the experiences of the costumer’s experiences, beliefs, and personal characteristics, an individual has a different perception of another. Attitudes allow the individual to develop a coherent behavior against the class of their personality. Through the experiences that the consumers acquire, the customer develops beliefs which will influence the buying behavior.

 

The factors that influence customer vary from people to people and by the culture of the people. Hence, for a successful consumer-oriented market service provider should work as a psychologist to procure consumers. By keeping in mind that affecting factors can be made favorable and goal of consumer satisfaction can be achieved. The study of consumer buying behavior is gateway to success in the market. Overall the result shows that brand image, and perceive value, price, health concern and quality influences customer satisfaction.

Measuring customer satisfaction is a key performance indicator within business and is often part of the balanced scorecard. The main aim of measuring customer satisfaction is to make a prompt decision for the continuous improvement of the business transactions.

Attracting a new customer as a source to build on existing relationship, customer satisfaction measurement is essential to be measured. Similarly, to retain the current customer base, measuring customer satisfaction is equally important. Actionable information on how to make customers more satisfied is, therefore, a crucial outcome. Unless the organization focus on their improvement efforts in the right area the organization cannot maintain the competition level of business in a market.

To recognize the needs of the customer is to satisfy the customer and to meet the need of the customer, a measurement of customer satisfaction is what matters the organization. (Hill, Roche & Allen 2007.)

 

Measuring a customer satisfaction may be different in the different organization since there are different approaches to measure customer satisfaction. As one of the measurements of the performance of the quality management system, the organization shall monitor information relating to customer perception as to whether the organization has met the customer requirements. The methods for obtaining and using this information shall be determined. (American National Standards Institute/International Organization for Standardization/American Society of Quality 9001-2000).

 

Every organization seeks customer satisfaction where these sorts of parameters helps an organization to measure the customer’s satisfaction and demands so that organizations can provide them with appropriate services as per their requirements. The possible dimension to measure customer satisfaction could be quality, price, trust relationship, complaints, problems and many others. The key point of measuring customer satisfaction is to conclude how to improve it and how to keep building a good relationship with customers and potential customers. International Organization for Standardization (ISO) 9000: 2000 states “As one of the measurements of the performance of the Quality Management System, the organizations shall monitor information relating to customer perception as to whether the organization has met customer requirements. The methods for obtaining and using this information shall be determined”.

 

The requirement has been there in the Quality Management System (QMS) 9000 standard clause 4.1.6 which says: “Trends in customer satisfaction and key indicators of customer dissatisfaction shall be documented and supported by objective information. These trends shall be compared to those of competitors, or appropriate benchmarks, and reviewed by senior management.” International Customer Satisfaction (ICS) is an international quality guideline that encourages to create and to implement a Quality Management System (QMS). ISO certification 9001 allows any organization to gear towards achieving the quality goal (ISO Update 2017.)

 

Many strategies exist regarding the customer satisfaction measurement but overlooking the fundamentals of how to measure customer satisfaction can be detrimental to a business. Measurement of customer satisfaction refers to the collection of data and providing information about how customers are satisfied or dissatisfied with the products and the service. Data collection helps the organization to understand what the main reason behind the level of the satisfaction is. This will motivate the customers to focus on the business organization. In addition, it adds to the improvement of the service delivery. During 1960-1980 customer satisfaction was initially considered as a problem of consumer behavioral analysis and the most important effort from this was the following. (Grigoroudis & Siskos 2010.)

 

Nowadays organization has started to track the satisfaction level so that they can improve the services. In addition, it has a great impact on understanding the issues that cause the satisfaction or dissatisfaction with the service experience. In this way, if the organization is able to understand why and how the customers are satisfied then, they can focus on its resources. (Hill, Roche & Allen 2007.)

 

Negotiation with the customers will enable to understand more deeply results infeasible requirements. Having mutual co-operation as well as the trust between customers and suppliers, suggestions from the customer’s contentment. Additionally, when it comes to the customer satisfaction all the factors should be considered such as the price of the product, the quality of the product, what varieties of the products are available in the store. Some of the few dimensions of customer satisfaction measurement are the quality of service, the speed of service, pricing, complaints or problems, trust in employees, the closeness of the 18 relationship with contacts in a firm, types of other services needed, recognizing the position in the client’s mind. (National Business Research Institute 2017.)

Customer satisfaction is extremely important because it is the way of getting feedback from the customers in a way that they can use it to manage and improve their business. Customer satisfaction is the best indicator of how the business looks like in the future. Customer satisfaction helps in doing SWOT analysis that could help them to develop their business in an advance and in a systematic way. Besides this, it will also help in making the right decision to use the appropriate resources while manufacturing the products. Similarly, it maintains the relationship with the existing customers and also creates the possibility to acquire others. (SSRS research 2016.)

 

When products are bought customers expect perfection instead of quantities. There are varieties of products that are similar in the market and sometimes it is difficult to distinguish which one is qualitative and durable. This is the great opportunity for the business organization doing marketing of their products and services to understand what exactly customers are seeking for. Customer satisfaction is a key indicator of the marketplace that evaluates the success of the organization. People have varieties of tastes and choices and therefore, satisfaction also differs from one person to another. It also may vary the expectation of the consumer depending on the option they may have, such as the national and international market (Kotler & Keller 2006.)

 

A technique for assessing the customer satisfaction should also have to go through the international market procedure to meet the requirement internationally. In the process, granting the satisfaction to the customer in both physical and technological aspects have changed drastically. However, there is still no method of measuring customer satisfaction. But the feedback from the customer can be taken as a crucial tool for measuring customer satisfaction. (European Institute of Publication Administration 2017.)

 

On the other hand, it’s cheaper to retain customers than acquire new ones. To make a customer’s cost lot of money. Marketing team spends lots of money and time in convincing their excellence. Customer satisfaction is a primary aim of every company. Customer satisfaction ensures the customer wants to return to purchase the 19 service. Satisfied customers are more likely to recommend their friends and families which will help to grow the business. A totally dissatisfied customer decrease revenue, whereas satisfied customer has a positive effect on profitability.

efficiently is one the biggest challenge an organization face. The tools or methods to measure customer satisfaction needs to be defined sophisticatedly to fulfill the desired norms. There are following methods to measure customer satisfaction:

  1. Direct Methods: Directly contacting customers and getting their valuable feedback is very important. Following are some of the ways by which customers could be directly tabbed:
    1. Getting customer feedback through third party agencies.
    2. Direct marketing, in-house call centers, complaint handling department could be treated as first point of contact for getting customer feedback. These feedbacks are compiled to analyze customers’ perception.
    3. Getting customer feedback through face to face conversation or meeting.
    4. Feedback through complaint or appreciation letter.
    5. Direct customer feedback through surveys and questionnaires.

Organizations mostly employ external agencies to listen to their customers and provide dedicated feedback to them. These feedbacks need to be sophisticated and in structured format so that conclusive results could be fetched out. Face to face meetings and complaint or appreciation letter engages immediate issues. The feedback received in this is not uniformed as different types of customers are addressed with different domains of questions. This hider the analysis process to be performed accurately and consistently. Hence the best way is to implement a proper survey which consists of uniformed questionnaire to get customer feedback from well segmented customers. The design of the prepared questionnaire is an important aspect and should enclose all the essential factors of business. The questions asked should be in a way that the customer is encouraged to respond in a obvious way/. These feedbacks could receive by the organizations can be treated as one of the best way to measure customer satisfaction.

Apart from the above methods there is another very popular direct method which is surprise market visit. By this, information regarding different segment of products and services provided to the customers could be obtained in an efficient manner. It becomes easy for the supplier to know the weak and strong aspects of products and services.

  1. Indirect Method: The major drawback of direct methods is that it turns out to be very costly and requires a lot of precompiled preparations to implement. For getting the valuable feedbacks the supplier totally depends on the customer due to which they lose options and chances to take corrective measure at correct time. Hence there are other following indirect methods of getting feedback regarding customer satisfaction:
    1. Customer Complaints: Customer’s complaints are the issues and problems reported by the customer to supplier with regards to any specific product or related service. These complaints can be classified under different segments according to the severity and department. If the complaints under a particular segment go high in a specific period of time, then the performance of the organization is degrading in that specific area or segment. But if the complaints diminish in a specific period of time then that means the organization is performing well and customer satisfaction level is also higher.
    2. Customer Loyalty: It is necessarily required for an organization to interact and communicate with customers on a regular basis to increase customer loyalty. In these interactions and communications, it is required to learn and determine all individual customer needs and respond accordingly. A customer is said to be loyal if he revisits supplier on regular basis for purchases. These loyal customers are the satisfied ones and hence they are bounded with a relationship with the supplier. Hence by obtaining the customer loyalty index, suppliers can indirectly measure customer satisfaction.

 

It takes continuous effort to maintain high customer satisfaction levels. As markets shrink, companies are scrambling to boost customer satisfaction and keep their current customers rather than devoting additional resources to chase potential new customers. The claim that it costs five to eight times as much to get new customers than to hold on to old ones is key to understanding the drive toward benchmarking and tracking customer satisfaction.

Measuring customer satisfaction may be a new concept to companies that have been focused almost exclusively on income statements and balance sheets. Companies now recognize that the new global economy has changed things forever. Increased competition, crowded markets with little product differentiation, and years of sales growth followed by two decades of flattened sales curves indicate to today’s sharp competitors that their focus must change.

Customer Satisfaction Survey – Customer satisfaction surveys can provide your organization with the necessary knowledge and tools to improve customer satisfaction, intent to return, intent to recommend, and overall financial performance.

 

Competitors that are prospering in the new global economy recognize that measuring customer satisfaction is key. Only by doing so can they hold on to the customers they have and understand how to better attract new customers. Successful competitors recognize that customer satisfaction is a critical strategic weapon that can bring increased market share and increased profits.

 

The problem companies face, however, is exactly how to measure customer satisfaction and do it well. They need to understand how to quantify, measure, and track customer satisfaction. Without a clear and accurate sense of what needs to be measured and how to collect, analyze, and use the data as a strategic weapon to drive the business, no firm can be effective in this new business climate. Plans constructed using customer satisfaction research results can be designed to target customers and processes that are most able to extend profits.

Too many companies rely on outdated and unreliable measures of customer satisfaction. They watch sales volume. They listen to sales reps describing their customers’ states of mind. They track and count the frequency of complaints. And they watch aging accounts receivable reports, recognizing that unhappy customers pay as late as possible — if at all. While these approaches are not completely without value, they are no substitute for a valid, well-designed customer satisfaction survey program.

It’s no surprise to find that market leaders differ from the rest of their industry in that they have programs in place to hear the voice of the customer and achieve customer satisfaction. In these companies:

  • Marketing and sales employees are primarily responsible for designing (with customer input) customer satisfaction surveying programs, questionnaires, and focus groups.
  • Top management and marketing divisions champion the programs.
  • Corporate evaluations include not only their own customer satisfaction ratings but also those of their competitors.
  • Satisfaction results are made available to all employees.
  • Customers are informed about changes brought about as the direct result of listening to their needs.
  • Internal and external quality measures are often tied together.
  • Customer satisfaction is incorporated into the strategic focus of the company via the mission statement.
  • Stakeholder compensation is tied directly to the customer satisfaction surveying program.
  • A concentrated effort is made to relate the customer satisfaction measurement results to internal process metrics.

 

To be successful, companies need a customer satisfaction surveying system that meets the following criteria:

  • The system must be easy to understand.
  • It must be credible so that employee performance and compensation can be attached to the final results.
  • It must generate actionable reports for management.

The concept of customer satisfaction is new to some companies, so it’s important to be clear on exactly what’s meant by the term.

Customer satisfaction is the state of mind that customers have about a company when their expectations have been met or exceeded over the lifetime of the product or service. The achievement of customer satisfaction leads to company loyalty and product repurchase.

 

There are some important implications of this definition:

  • Because customer satisfaction is a subjective, nonquantitative state, measurement won’t be exact and will require sampling and statistical analysis.
  • Customer satisfaction measurement must be undertaken with an understanding of the gap between customer expectations and performance perceptions.
  • There is a connection between customer satisfaction measurement and bottom-line results.

 

“Satisfaction” itself can refer to a number of different facts of the relationship with a customer. For example, it can refer to any or all of the following:

  • Satisfaction with the quality of a particular product or service.
  • Satisfaction with an ongoing business relationship.
  • Satisfaction with the price-performance ratio of a product or service.
  • Satisfaction because a product/service met or exceeded the customer’s expectations.

 

Each industry could add to this list according to the nature of the business and the specific relationship with the customer. Customer satisfaction measurement variables will differ depending on what type of satisfaction is being researched. For example, manufacturers typically desire on-time delivery and adherence to specifications, so measures of satisfaction taken by suppliers should include these critical variables.

 

Clearly defining and understanding customer satisfaction can help any company identify opportunities for product and service innovation and serve as the basis for performance appraisal and reward systems. It can also serve as the basis for a customer satisfaction survey program that can ensure that quality improvement efforts are properly focused on issues that are most important to the customer.

In addition to a clear statement defining customer satisfaction, any successful customer survey program must have a clear set of objectives that, once met, will lead to improved performance.

 

The most basic objectives that should be met by any customer surveying program include the following:

  • Understanding the expectations and requirements of your customers.
  • Determining how well your company and its competitors are satisfying these expectations and requirements.
  • Developing service and/or product standards based on your findings.
  • Examining trends over time in order to take action on a timely basis.
  • Establishing priorities and standards to judge how well you’ve met these goals.

 

Before an appropriate customer satisfaction surveying program can be designed, the following basic questions must be clearly answered:

  • How will the information we gather be used?
  • How will this information allow us to take action inside the organization?
  • How should we use this information to keep our customers and find new ones?

 

Careful consideration must be given to what the organization hopes to accomplish, how the results will be disseminated to various parts of the organization, and how the information will be used. There is no point asking customers about a particular service or product if it won’t or can’t be changed regardless of the feedback.

 

Conducting a customer satisfaction survey program is a burden on the organization and its customers in terms of time and resources. There is no point in engaging in this work unless it has been thoughtfully designed so that only relevant and important information is gathered. This information must allow the organization to take direct action. Nothing is more frustrating than having information that indicates a problem exists but fails to isolate the specific cause. Having the purchasing department of a manufacturing firm rate the sales and service it received on its last order on a survey scale of 1 (terrible) to 6 (magnificent) would yield little about how to improve sales and service to the manufacturer.

 

The lesson is twofold. First, general questions are often not that helpful in customer satisfaction measurement, at least not without other more specific questions attached. Second, the design of an excellent customer satisfaction surveying program is more difficult than it might first appear. It requires more than just writing a few questions, designing a questionnaire, calling or emailing some customers, and then tallying the results.

The most basic objective of customer satisfaction surveys is to generate valid and consistent customer feedback (i.e., to receive the voice of the customer), which can then be used to initiate strategies that will retain customers and thus protect one of the most valuable corporate assets — loyal customers.

 

As it’s determined what needs to be measured and how the data relate to loyalty and repurchase, it becomes important to examine the mind-set of customers the instant they are required to make a pre-purchase (or repurchase) decision or a recommendation decision.

 

Surveying these decisions leads to measures of customer loyalty. In general, the customer’s pre-purchase mind-set will fall into one of three categories

Rejection (will avoid purchasing if at all possible)

Acceptance (satisfied, but will shop for a better deal)

Preference (delighted and may even purchase at a higher price).

 

This highly subjective system that customers themselves apply to their decisions is based primarily on input from two sources:

  • The customers’ own experiences — each time they experience a product or service, deciding whether that experience is great, neutral, or terrible. These are known as “moments of truth.”
  • The experiences of other customers — each time they hear something about a company, whether it’s great, neutral, or terrible. This is known as “word-of-mouth.”

 

There is obviously a strong connection between these two inputs. An exceptional experience leads to strong word-of-mouth recommendations. Strong recommendations influence the experience of the customer.

 

Obviously, the goal of every company should be to develop customers with a preference attitude (i.e., we all want the coveted preferred vendor status such that the customer, when given a choice, will choose our company), but it takes continuous customer experience management, which means customer satisfaction measurement, to get there and even more effort to stay there.

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