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C hapter 12 D EFINING A ND M EASURING C USTOMER S ATISFACTION

C hapter 12 D EFINING A ND M EASURING C USTOMER S ATISFACTION. AMERICAN CUSTOMER SATISFACTION INDEX (ACSI). Top Firms (all produce goods) Dole Food Mars H.J. Heinz Proctor & Gamble PepsiCo Honda Mercedes-Benz Maytag. AMERICAN CUSTOMER SATISFACTION INDEX (ACSI).

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C hapter 12 D EFINING A ND M EASURING C USTOMER S ATISFACTION

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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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