Last updated: July 25, 2019
Topic: BusinessMarketing
Sample donated:

 

For the most part the existing literature on customer satisfaction is aimed at a customer as a market participant who buys products and services and possesses freedom to choose them on his own. The key purpose is to understand what affects him by his choice and by means of which methods the customers can be attracted and their number increased. This is quite a complex issue and, for sure, you will encounter difficulties and discover pitfalls as you will have “to measure not only what customers say but also what they do, which is often different from what they say” (1, 1997:2).

In other words, the definition of the customer satisfaction can be expressed as “the degree to which a customer’s expectations of a product or service are in line with what the product provides” (2, 1996:57).

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Before starting to examine the possible methods of measuring customer satisfaction one more question should be elucidated – why this issue is paid so much attention.  In a few words, it can be explained by being a basis for the customer-vendor relationships and directly affecting the company’s profit. The better the company reacts to the market needs and lack of something, the higher is its revenue and the more customers it wins. Furthermore, not only company in a whole gets a profit but also employees who benefit from positive customer feedbacks and receive extra money for them. For instance, at Sears Roebuck ; Co., customer satisfaction is a significant part of assessing the store’s performance. As David Gustat, director of compensation puts it, “we combine customer satisfaction with other key business measures like profit and revenue to get a complete picture of store performance” (3, 2005:2). Whether followed with some other measures or not, such customer satisfaction strategies are common for many fields of economy. Reasons for such wide use are various. The prime mover is severe competition between companies for superior quality of customer service along with higher revenue.  Combining performance assessment with customer satisfaction will, according to Vafa Akhavan, executive director of consulting at J.D. Power ; Associates, a global marketing information services firm with headquarters in Westlake Village, Calif, necessarily lead to “develop employee behaviors that are required to build and nurture an organizational culture centered on customer service” (3, 2005:3).

Still, focusing customer satisfaction should not be detrimental and made at the expense of its performance. Therefore, companies should seek for a happy medium between the cost of meeting their customer needs and their productivity.

On the other hand, one cannot diminish the role of customer satisfaction programs. With the rise of globalization, customers are regarded as “a group whose satisfaction with the enterprise must be incorporated in strategic planning efforts” (4, 2005:1). Far-sighted companies define customer satisfaction among their primary tasks, although the level of attention drawn to it varies considerably. While some companies claim that they do not concern themselves with customer satisfaction, there are others that are under delusion that customers are fully satisfied with their product and proving this forgone conclusion would be a mere waste of time. Eventually they will have to admit that their rivals who do consider customer satisfaction operate more effectively and have leading positions on the market.

Consequently, customer satisfaction programs are introduced worldwide and may be already found in such countries as Sweden, Germany, New Zealand, and Taiwan. Moreover, they are promoted by the European Union among the member-countries. However, due to the cultural differences the concept of customer satisfaction has not been embraced there equally (4, 2005:2).

The US deserves special attention as it is among pioneers in the business world to recognize the value of customer satisfaction. To provide an analytical tool for it the American Customer Satisfaction Index (ACSI) was developed that is often referred to as “the voice of the nation’s consumer” (5, 2005: 1). ACSI could be found in the Wall Street Journal and used to serve as a rate for business success. Yet, after the government undertook thoroughgoing reforms of 1999, the ACSI has started to be used for measuring the U.S. citizens’ satisfaction in different areas and demonstrated a positive change during 1999-2004. As Larry Freed, President and CEO ForeSee Results marked with regard to the latest ACSI E-Government Satisfaction Index, “what’s going on with government health sites is remarkable […] The NIH has embraced customer satisfaction as an enterprise-wide performance benchmark, evidence of their commitment to meeting citizens’ needs and exceeding their expectations” (5, 2005:2).  Such a breakthrough may serve as a vivid example for the companies, which are still sitting on the fence and spur them into action.

Last but not the least, it is commonly acknowledged that to retain an existing customer is five times cheaper than to find a new one. Thus, the key role plays the customer being very satisfied to prompt him turn to use you again.  For example, Xerox discovered that those customers who rated them five points instead of four (on a 5-point satisfaction scale) were six times more likely to buy more products (5, 2005:3). Furthermore, according to some analyst estimates on IT market, the cost of attracting new customers there due to fierce competition is approximately 10 times higher than selling to existing ones. To sum up, measuring customer satisfaction is crucial in business and it is highly recommended for those who want to succeed and make a profit.

Nevertheless, as customer satisfaction is just reflection of customers’ attitudes toward the provided range of goods and services it is very difficult to measure it. There are several possible ways of assessing customer satisfaction and perhaps the easiest (though not the most effective) is to talk to the customers in person and find out their attitude. However, this method cannot be recommended even if the number of customers to be polled exceeds a dozen.

In general, there are two approaches to getting the customer feedback. The first concerns situations when customers are asked to choose from the already given alternatives (e.g. surveys); while the second gives free hand to the customers (i.e. they may provide a feedback in any form they like, for example as a complaint or praise). As the second kind of feedbacks is done in the free form it may be difficult to define the satisfaction level. Thus and so, a concept known as ‘fuzzy logic’ has been introduced (6, 1995:25). It is based on the ‘degrees of truth’ and though assumes that 0 and 1 are opposite extremes, supposes different intermediate states.

The most popular example of the first approach is the use of surveys. As it was noted above, these have a standard form and customers answering the given questions in order to provide the same type of information are requested to choose from predetermined answers. Probably, the simplest survey s given in the book Marketing Your Services: For People Who Hate to Sell where the author advises putting just three questions: “What did/do you like about working with me?”, “What did/do you dislike about it?”, and “Is there anything else you can tell me that would help me provide better service?” (7, 2005:1). Such surveys can be conducted via different media, namely mail, e-mail, phone or Internet, etc. Previously the most common way was snail mail. However, the companies come into some difficulties such as unwillingness of customers to participate in surveys and waste time on filling in information requested. As to surveys by phone they may turn to be more successful but the number of questions asked in compliance with time of the phone talk is limited. Today, with the more and more extensive use of information technology Internet and e-mail seem to be a good solution for surveyors. The obvious advantages of these methods are simplicity of their conduction (both for surveyed and surveyors as the former can easily complete the forms and the latter can easily collect their responses and analyze the obtained data).

However, when working up a survey form one should keep in mind that irrespective of the chosen way of its conduction it should be aimed at increasing the level of customer satisfaction. What is more, this point should be clearly stated to make the customer interested in providing the requested information. Otherwise, the customer would regard it as a mere waste of his time.

Second, even in the case of a survey with a considerable number of participants, it is recommended to contact the clients of most importance directly (in person). It may be done before launching a survey and they may be invited to share their opinions and put forward their suggestions.   In the following way you will demonstrate your attention, generate their interest and determine typical questions. Nevertheless, be wary not to turn such conversations into surveys, quite the contrary, they should be far from standard questions-answers. Otherwise, your prime investors will feel themselves made use of.

Another tool for measuring customer satisfaction is focus groups that have become quite popular today. The idea is simple – to bring together a small group (from 5 to 10) existing or prospective customers and put them questions. Thus, you will not only obtain honest and complete responses but will have an opportunity to observe people’s reactions and hold debates. Such focus groups may also become an invaluable source of fresh ideas and sensible suggestions.

As a subtype of focus group are advisory groups, which are made up from customers but their brainstorming meetings are conducted on the regular basis and their members may be paid. The advantages of such groups cannot be called in question. They illustrate the customer view and promote better understanding between customers and vendors.

Customer complaints are also an important method of measuring customer satisfaction. To put it differently, customers who are not satisfied with the quality of goods or services and inform about the company about it should be paid attention as well. Their complaints may be used for improving and upgrading the produce and is a part of interaction with clients. Yet, the drawback of such method is that information is not provided continuously and is random. Moreover, positive feedbacks are uncommon and this gives rise to fixed negative opinion of the product.

Apart from the above-stated ways of measuring customer satisfaction many companies have their own ones based on practical experience. For instance, Jeff Moody, president of Waco, Texas-based Ping Technology, says that the best ways to measure customer satisfaction is to see whether the company receives repeat business (8, 2005:1).

No matter what method the company uses, the common idea is to interact with the customer effectively and respond to his needs rapidly. Thus, by viewing minor complaints the company will avoid problems that are more complicated.

The possible ways of improving customer satisfaction is listening to the customers and trying to understand their needs and meeting their expectations. This may be possible only with an integrated team and management, which is able to work under pressure and ready to deal with numerous problems.

To cut the long story short, customer satisfaction is the level to which the customer’s expectations are met and needs are satisfied. This factor has a great impact on attracting new clients and retaining the existing, which proves to be more cost-efficient. Measuring customer satisfaction enables companies worldwide to respond to market changes more quickly and contribute to more effective ways of running business. Customer satisfaction programs have already been launched in such countries as Sweden, Germany, New Zealand, Taiwan, and in the US one of such programs has been used for improving interaction between the U.S. citizens and the Federal government.

Measuring customer satisfaction is not an easy task. However, there are several major methods of determining the extent to which the customer’s needs are met, namely surveys, focus groups and advisory groups, claims, etc.  Each method has advantages as well as disadvantages and choice of one of them should be made taking into account peculiarities of the sector of industry and scale of research. However, the common advice is contact the most important clients directly and make up questions for the future survey together. Thus, the company will draw their attention and promote better understanding. Furthermore, use of information technologies is also highly recommended as it makes surveys, for instance, easier both for surveyed (as they become less time-consuming and simple – answers are given by click of a mouse on the button) and surveyors (as data is easier collected and processed and can be easily displayed in the form of tables and charts).

Focus groups are gaining popularity as they may be used as a source of bright ideas and clear-cut decisions.

No matter what method the company employs, the key principle should be effective interaction with the client and rapid respond to his needs and complaints.

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Bibliography

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Forler Massnick. The Customer Is CEO. Amacom, 1997, p. 2-3
J. Rosenberg. “Five Myths About Customer Satisfaction.” Quality Progress, vol. 29, no. 12, 57-60 (1996)
Measuring Customer Satisfaction. Retrieved on September 11, 2005 from  http://www.customerservice.gov/csat.htm
Customer Satisfaction Measurement Perceptions in German marketing research firms.  Retrieved on September 11, 2005 from
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Measuring Customer Satisfaction. Retrieved on September 11, 2005 from http://www.factiva.com/infopro/resources/Unit6FAQ.doc
G.J. Klir and B. Yuan. Fuzzy Sets and Fuzzy Logic. Prentice Hall, 25-28 (New York: 1995)
Why Measure Customer Satisfaction? Retrieved on September 11, 2005 from
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How to Measure Customer Satisfaction. Retrieved on September 11, 2005 from http://www.varbusiness.com/sections/strategy/strategy.asp?ArticleID=36107