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COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license.
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Chapter 12
DEFINING AND MEASURING CUSTOMER
SATISFACTION
Chapter 12
DEFINING AND MEASURING CUSTOMER
SATISFACTION
COPYRIGHT ©2002 Thomson Learning, Inc. Thomson Learning is a trademark used herein under license.
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AMERICAN CUSTOMER SATISFACTION INDEX
(ACSI)
AMERICAN CUSTOMER SATISFACTION INDEX
(ACSI) Top Firms (all produce goods)Top Firms (all produce goods)
Dole FoodDole Food MarsMars H.J. HeinzH.J. Heinz Proctor & GambleProctor & Gamble PepsiCoPepsiCo HondaHonda Mercedes-BenzMercedes-Benz MaytagMaytag
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AMERICAN CUSTOMER SATISFACTION INDEX
(ACSI)
AMERICAN CUSTOMER SATISFACTION INDEX
(ACSI) Bottom Firms (all produce services)Bottom Firms (all produce services)
Internal Revenue ServiceInternal Revenue Service PolicePolice U.S. Postal ServiceU.S. Postal Service Continental AirlinesContinental Airlines McDonald’sMcDonald’s BankAmerica Corp.BankAmerica Corp. Unicom (electric utilities)Unicom (electric utilities) RamadaRamada Aetna Life & Casualty (insurance)Aetna Life & Casualty (insurance)
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RECIPE FOR CUSTOMER SERVICE DISASTERS
RECIPE FOR CUSTOMER SERVICE DISASTERS
Labor shortagesLabor shortages motivated employees are difficult to findmotivated employees are difficult to find
who can blame them…who can blame them…low paylow pay no career pathsno career paths no respectno respect little training in customer relationslittle training in customer relations
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RECIPE FOR CUSTOMER SERVICE DISASTERS
RECIPE FOR CUSTOMER SERVICE DISASTERS
AutomationAutomation effectiveness was sacrificed in the name of effectiveness was sacrificed in the name of
efficiencyefficiency general feeling that companies are continuing to general feeling that companies are continuing to
distance themselves from their customersdistance themselves from their customers examples are numerous …examples are numerous …
mounting frustrations with automated phone and mounting frustrations with automated phone and other service delivery systemsother service delivery systems
e-commerce strategies should take note!e-commerce strategies should take note!
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RECIPE FOR CUSTOMER SERVICE DISASTERS
RECIPE FOR CUSTOMER SERVICE DISASTERS
Customers are tougher to pleaseCustomers are tougher to please increasingly educatedincreasingly educated more informedmore informed more discretionary incomemore discretionary income
not at the mercy of shop keepers anymorenot at the mercy of shop keepers anymore
expectations have increasedexpectations have increased
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RECIPE FOR CUSTOMER SERVICE DISASTERS
RECIPE FOR CUSTOMER SERVICE DISASTERS
Skyrocketing inflationSkyrocketing inflation efforts to reduce pricesefforts to reduce prices
services were slashedservices were slashed
price competition ensued (price wars)price competition ensued (price wars) firms once again cut costs firms once again cut costs
service was sacrificed againservice was sacrificed againinterestingly, advertising was also cut during a interestingly, advertising was also cut during a
time customers were attempting to make more time customers were attempting to make more informed decisionsinformed decisions
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THE IMPORTANCE OF CUSTOMER SATISFACTION
THE IMPORTANCE OF CUSTOMER SATISFACTION
The average business does not hear from 96% of The average business does not hear from 96% of its unhappy customersits unhappy customers
For every complaint received, 26 customers For every complaint received, 26 customers actually have the same problemactually have the same problem
The average person with a problem tells 9 or 10 The average person with a problem tells 9 or 10 peoplepeople 13% tell more than 2013% tell more than 20
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THE IMPORTANCE OF CUSTOMER SATISFACTION
Customers who have their complaints resolved
tell an average of 5 peopleComplainers are more likely to do business
with you again than non-complainers54-70% if the complaint is resolved at all95% if the complaint is resolved quickly
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WHAT IS CUSTOMER SATISFACTION/DISSATISFACTION?
WHAT IS CUSTOMER SATISFACTION/DISSATISFACTION?
Expectancy Disconfirmation ModelExpectancy Disconfirmation Model ConfirmationConfirmation
perceptions = expectationsperceptions = expectations
Negative DisconfirmationNegative Disconfirmation perceptions < expectationsperceptions < expectations
Positive DisconfirmationPositive Disconfirmation perceptions > expectationsperceptions > expectations
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THE BENEFITS OF CUSTOMER SATISFACTION
THE BENEFITS OF CUSTOMER SATISFACTION
Positive word-of-mouth Positive word-of-mouth
Purchase more frequentlyPurchase more frequently
Less likely to be lost to competitorsLess likely to be lost to competitors
Insulated from price competitionInsulated from price competition
Positive work environmentsPositive work environments
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THE BENEFITS OF CUSTOMER SATISFACTION SURVEYS
THE BENEFITS OF CUSTOMER SATISFACTION SURVEYS
Provides a formal means of customer feedbackProvides a formal means of customer feedback
Conveys a caring message to customersConveys a caring message to customers
Used to evaluate employee performanceUsed to evaluate employee performance Merit and compensation reviewsMerit and compensation reviews Employee training programsEmployee training programs
Comparison against competitionComparison against competition
Provide information for advertisingProvide information for advertising
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MEASURING CUSTOMER SATISFACTION
MEASURING CUSTOMER SATISFACTION
Indirect MeasuresIndirect Measures sales records, profits, customer complaintssales records, profits, customer complaints
Direct MeasuresDirect Measures The Scale of 100 ApproachThe Scale of 100 Approach
Federal Express’ original approach (score = 83)Federal Express’ original approach (score = 83)
The “Very Dissatisfied/Very Satisfied” ApproachThe “Very Dissatisfied/Very Satisfied” Approach The Combined ApproachThe Combined Approach
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MEASURING CUSTOMER SATISFACTION
MEASURING CUSTOMER SATISFACTION
FedEx’s “Hierarchy of Horrors”FedEx’s “Hierarchy of Horrors” wrong-day deliverywrong-day delivery right day, late deliveryright day, late delivery pick-up not madepick-up not made lost packagelost package customer misinformed by FedExcustomer misinformed by FedEx billing and paperwork mistakesbilling and paperwork mistakes employee performance failuresemployee performance failures damaged packagesdamaged packages
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UNDERSTANDING CUSTOMER SATISFACTION RATING
UNDERSTANDING CUSTOMER SATISFACTION RATING
Virtually all self-reports of customer Virtually all self-reports of customer satisfaction possess a distribution that is satisfaction possess a distribution that is ………………???………………???
High dissatisfaction High satisfaction
Conceptual Distribution of Satisfaction Measurements
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.
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SAMPLING OF SATISFACTION RESULTSSAMPLING OF SATISFACTION RESULTS
SamplePercentageSatisfied
British Airways Customers 85
HMO Enrollees 92
Sear’s Customers 84
Children’s InstructionalPrograms/Parents
82
Medical Care 84
Clothing/and WhiteGoods/Adults
82
Shoes/Students 83
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.
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FACTORS INFLUENCING CUSTOMER SATISFACTION RATINGS
FACTORS INFLUENCING CUSTOMER SATISFACTION RATINGS
Customers are genuinely satisfiedCustomers are genuinely satisfied
Response biasResponse bias
Data collection methodData collection method personal vs. non-personalpersonal vs. non-personal
Question formQuestion form satisfied vs. dissatisfiedsatisfied vs. dissatisfied
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RESPONSE BY QUESTION FORMRESPONSE BY QUESTION FORM
Question Form
Response Category “Satisfied” “Dissatisfied”
Very Satisfied 57.4% 53.4%Somewhat Satisfied 33.6% 28.7%Somewhat Dissatisfied 5.0% 8.5%Very Dissatisfied 4.0% 9.4%
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.
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FACTORS INFLUENCING CUSTOMER SATISFACTION RATINGS
Question contextGeneral question prior to specific question
Timing of questionRecent vs. Past Purchase
Social desirability bias
Mood
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CUSTOMER SATISFACTION:HOW GOOD IS GOOD ENOUGH?
CUSTOMER SATISFACTION:HOW GOOD IS GOOD ENOUGH?
Should a firm invest $100,000 to attempt to Should a firm invest $100,000 to attempt to improve ratings from 95% to 98%?improve ratings from 95% to 98%?
Depends Upon:Depends Upon: satisfaction ratings of other firmssatisfaction ratings of other firms dollar investment needed relative to the impact on the bottom dollar investment needed relative to the impact on the bottom
line by increasing market shareline by increasing market share number of time periods needed to recoup the investmentnumber of time periods needed to recoup the investment opportunity costs associated with other uses of the firm’s opportunity costs associated with other uses of the firm’s
fundsfunds
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CUSTOMER SATISFACTION MODELSCUSTOMER SATISFACTION MODELS
[Panels A, B, and C of Figure 12.3, p.309.][Panels A, B, and C of Figure 12.3, p.309.]
Babich Satisfaction Models Illustrate:Babich Satisfaction Models Illustrate: the value of knowing competitive ratingsthe value of knowing competitive ratings
high customer satisfaction scores make the firm high customer satisfaction scores make the firm more resistant to competitive efforts to increase more resistant to competitive efforts to increase their market sharetheir market share
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CRITICISMS OF CUSTOMER SATISFACTION RESEARCHCRITICISMS OF CUSTOMER SATISFACTION RESEARCH
Does not necessarily translate into customer retentionDoes not necessarily translate into customer retention Focus is on current needs onlyFocus is on current needs only
Focuses on registered complaintsFocuses on registered complaints
Fails to involve employee viewpointsFails to involve employee viewpoints
Fails to involve customer viewpointsFails to involve customer viewpoints
surveys are generally designed internally by middle and surveys are generally designed internally by middle and
upper managersupper managers
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CUSTOMER SATISFACTION:CUSTOMER SATISFACTION:
A CLOSER LOOKA CLOSER LOOK
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The Zone of Tolerance
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.
Expectedservice
Desiredservice
Zone oftolerance
Adequateservice
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Factors Influencing Expected 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.
Enduring service intensifiers•Derived expectations•Personal service philosophies
Personal needs
Transitory service intensifiers•Emergencies•Service problems
Perceived servicealternatives
Self-perceivedservice role
Situational factors•Bad weather•Catastrophe•Random over-demand
Explicit service promises•Advertising•Personal selling•Contracts•Other communications
Implicit service promises•Tangibles•Price
Word-of-mouth•Personal•“Expert” (Consumer Reports, publicity, consultants, surrogates)
Past experience
Predicted service
Expectedservice
Desired service
Zone oftolerance
Adequate service
Perceived service