Customer Satisfaction Research

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Customer Satisfaction Research

• By Songlin Liu
• And
• Joe Glines

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Topics To Be Covered

• Why Customer Satisfaction Is Important
• Models of Customer Satisfaction
• Methodology of Monitoring Customer Satisfaction
• Customer Satisfaction A Closer Look
• Conclusions Dos of Customer Satisfaction Study

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Why Is Customer Satisfaction Important?

• Customer Loyalty
• Word of Mouth

• Ability to charge Higher prices
• Provide information for Investors
• Help Keep Employee Morale High
• Diagnosis Tool for Improvement

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Customer Satisfaction / Loyalty

• Xerox-
• Completely Satisfied customers (5)
• vs.
• Satisfied customers (3,4)

• Completely Satisfied where 6X more likely to
  repurchase over the next 18 months than its
  satisfied customers
• Source Harvard Business Review, Nov-Dec 95

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Customer Loyalty

• Costs for transforming an active customer into a
  loyal customer
• Costs for winning a new customer
• Costs for winning back dissatisfied customers

Esomar 1999
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Word of Mouth (WOM)

• Positive Word of Mouth 1 person tells 3
• Negative Word of Mouth 1 person tells 9-10

100 people Total (70 are Satisfied) 70
Positive tell 3 people each 210 WOM
30 Negative tell 9 people each 270 WOM
Source Esomar 1999
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Models of Customer Satisfaction

• ESOMAR- European Society for Opinion and
  Marketing Research, 1998
• ECSI- European Customer Satisfaction Index 1998
• Richard Oliver, 1997

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ESOMAR
Influence on other peoples Expectations and
Product Evaluation
Subjectively Perceived Performance
Customers Expectations
Customer Satisfaction
Product Value
Image
Expectation and Requirement
(re-) Purchase / Customer Loyalty
Price (Absolute and in comparison to competition)
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ECSI
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Richard Oliver
Expectations
Complaining
Dis- confirmation
Customer Satisfaction
Performance
Negative W-O-M
Affect
Repurchase Intention
Equity
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Monitoring Customer Satisfaction

• Set up the objectives
• Determine the target groups
• Choose the methods of data collection
• Develop the measurement
• Analyze and report the data

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Objectives of Customer Satisfaction Programs

• Measuring and tracking satisfaction
• Developing profiles of strengths and weaknesses
• Determining the relevance of specific performance
  aspects for global satisfaction
• Developing a list of actions to increase customer
  loyalty

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Methods of Data Collection

• Four sources of customer satisfaction data
• Customer complaint analysis
• Customer feedback through own staff
• Qualitative customer groups
• Quantitative customer satisfaction surveys
• Surveys
• Target groups
• Methods/Frequency of measurements/Sample size
• Development of a questionnaire
• Analysis/Benchmark

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Target Groups

• Customer
• Non-customer
• Defecting customer
• Competitors customer
• Dealer/trade

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Levels of Measurements
Global aspects of satisfaction
Satisfaction with performance dimensions
Satisfaction with performance attributes
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Example of Questionnaire Topics

• Overall satisfaction
• Sales support
• Availability/delivery
• Product
• After-sales service
• Recommendation
• Customer loyalty
• Purchase frequency
• Demographics

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Overall Satisfaction as Latent Variable- The use
of multiple questions measurement

• Considering all your experience of company X,
  how satisfied are you, in general?
• To what degree did company X fulfill your
  expectations?
• Imagine a company which is perfect in all
  aspects. How close to this ideal do you consider
  the company X to be?

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Structural Equation Model of Customer Satisfaction
The ECSI model for Post Denmark
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Indirect vs. Direct Measurement

• Direct measurement
• How satisfied are you with the delivery period?
• Indirect measurement the gap between expectation
  and performance
• Expectation Which of the following delivery
  periods would you expect when purchasing a new
  car?
• Performance What was the actual delivery period
  of your new car?

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Benchmarking Three Alternatives

• Comparative evaluation of different companies
• Each respondent evaluates the different companies
  one after the other
• Each respondent evaluates only one company
  competitors will be evaluated in separate samples

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Analysis and Reporting

• Customer Satisfaction Index (CSI)
• Impact of single satisfaction aspects on overall
  satisfaction and loyalty
• Stated importance
• Derived importance

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Analysis and Reporting relationship between
measurements

• Correlation analysis
• Combination of factor and regression analysis
• CHAID analysis and discriminant analysis
• Structural equation modeling
• Neural Network

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Customer Satisfaction A Closer Look

• Customers Satisfaction Needs and the
  relationship of customer satisfaction to loyalty
  differ by
• Customer Groups
• Industries/Products
• Competitive Situations

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Customer Groups

• Loyalist and Apostle-
• Completely satisfied customer
• Needs match companies offering very well
• Positive WOM
• Defector and Terrorist-
• More than dissatisfied, quite dissatisfied and
  Neutral.
• Spread Negative WOM
• Ready to switch

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Customer Groups

• The Mercenary-
• Defies Satisfaction Loyalty rule
• Maybe completely satisfied but isnt loyal
• Chase low prices, Fashion, Impulse
• The Hostage-
• Customers are stuck in virtual Monopoly
• Complain frequently,
• Create low morale with employees

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Customer Groups
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Industry / Products

• Automotive Study-
• low image model 50 of repurchasers are
  influenced by Satisfaction level
• High image model - 30 of repurchasers are
  influenced by Satisfaction level
• Source Esomar, 1999

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Competitive Situations
Source Harvard Business Review, Nov-Dec 95
High
Loyalty
Low
Completely Dissatisfied
Completely Satisfied
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Non-Linear Relationships
Asymmetric
Asymmetric
Symmetric
Satisfaction Maintaining
Satisfaction Enhancing
Linear
Source Strengthening the satisfaction-profit
chain E. Anderson
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Kado Model
Customer Satisfaction
Degree of Fulfillment
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Dos of Customer Satisfaction Study

• Correctly define target groups
• Prioritize customer groups by value
• Use multi-level measurements
• Use multiple questions in each each scale
• Determine the relevance of different satisfaction
  aspects to overall satisfaction and loyalty

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Dos of Customer Satisfaction Study (cont)

• Use benchmark over self, time and competitors
• Determine the relationship of satisfaction to
  loyalty
• Take into account of non-linear relationship
• Need support from top management
• Reflect organizational responsibilities
• Provide inputs for managerial improvement