Customer Satisfaction

Think of an incident in which you were “surprised and delighted” as a satisfied customer. How did that happen? Think of another situation where you were very disappointed as a customer, and you did not return or you told others about your negative experience. How did that happen?
“Another satisfied customer!”

Customer satisfaction means money!
• The lifetime value of a supermarket customer is estimated at $250,000 • IBM in Rochester, Minn., calculates that a 1 percent increase in customer satisfaction is worth $257 million in additional revenues over five years. • Marriott found that each percentage point increased in the customer-wide satisfaction measure of intent-to-return was worth some $50 million in revenues. • A study in the Harvard Business Review showed that just a 5 percent increase in customer retention boosts profits by 25 percent to 125 percent. • Winners of the Malcolm Baldrige National Quality Award ( heavily oriented toward customer satisfaction) outperform the Standard & Poor's 500-stock index by 3:1 in ROI • Sears, Roebuck operates on a financial model which shows that a 5 point improvement in employee attitudes will drive a 1.3 point improvement in customer satisfaction, which in turn will drive a 0.5 percent improvement in revenue growth. The model also established that 4 percent improvement in customer satisfaction translates into more than $200 million in additional revenues.

it takes 12 positive incidents to make up for a negative one • Customers are three times more likely than service providers to recall the quality of the personal element in a transaction • 96% of dissatisfied customers never complain to the business. when or why lost) • it’s more costly to win a new customer than to lose an existing one (5-7 times greater). and 95% of customers would do business again if a problem is resolved quickly and effectively • highly effective companies spend 10% of their operations budget on fixing problems related to customer complaints. satisfied people tell 5 friends (2:1 ratio) • 70% will return if complaint is resolved.Customer (dis)satisfaction • the average business loses 10-30% of its customers each year (without knowing which. 68% of customers who stop buying do so because they perceive an employee as discourteous or indifferent • dissatisfied customers on average tell 12 friends of the poor service. but 91% will not make return purchases • 70-85% of dissatisfaction is due to customer service not product. ineffective ones spend 40% .

but only 1 per 100/500 get addressed by a senior executive • Quick resolution results in higher satisfaction & loyalty than multiple contacts • losing customers is strongly related to employee turnover.More (dis)satisfaction Facts People who complain are generally younger. 17.5 percent vs. are less brand loyal. Fortune magazine found that the companies with the happiest employees also produced the highest returns to shareholders by a substantial margin. have more experience with the product. .3 percent for run-of-the-mill companies. 27. are better educated. and may have higher expectations • For every complaint there are an estimated 25 unnoted complaints • 75% of complaints reported to front line person do not get reported to management • Only 20% of complaints are directed to the manager by customers • 800# doubles calls to corporate. have higher incomes.

performance. features. trust.) Knowledge and Involvement with product and the purchase process Awareness of other brands Reasons for original product purchase (selection reasons) Primary benefits sought from the product Product Evaluation Attribute evaluation matrix: (quality. price.General Measures in a Customer Satisfaction Survey Product Use • Frequency of product use • Primary use location • Primary precipitating events or situations for product use or need • Usage rates and trends • • • Product Familiarity Degree of actual product use familiarity Knowledge (read product information. message fulfillment evaluation Value Analysis • Expectation of price • Expectation of relative price (full price. etc. on sale) • Current price paid Satisfaction Measurements • Overall Satisfaction • Reasons for Satisfaction Evaluation • Satisfaction with attributes. design • Advertising Promise. performance Identification of primary benefits sought Comparison to other brands (better. what could be done better Message and Package Evaluation • Packaging size. read product label. benefits • Satisfaction with use • Expected and Ideal Satisfaction-Performance Measures • Likelihood of recommending • Likelihood of repurchasing • • • • • • • . importance. worse) What is the best thing about the brand. value) Perceived benefit associations matrix Importance.

Customer expectations influence the evaluation of quality and forecast (from customers’ pre-purchase perspective) how well the product or service will perform. Customer satisfaction has a positive effect on retention. . Perceived quality refers to overall quality. Customer Loyalty is measured by likelihood to purchase a company’s products or services at various price points. reliability.ACSI Components (American Customer Satisfaction Index) Perceived value is measured through overall price given quality and overall quality given price. but the magnitude of that effect varies greatly across companies and industries. Customer complaint activity is measured as the percentage of respondents who reported a problem with the measured companies’ product or service within a specified time frame. it has an inverse relationship to customer complaints. it has somewhat less impact on satisfaction and repeat purchase. and the extent to which a product or service meets the customer’s needs. this shows the greatest impact on customer satisfaction.

Customer tells what is important. Build customer loyalty Meeting basic respect & courtesy needs. dissatisfaction if met Customer hopes & asks but doesn’t expect. satisfaction vs. Unlikely to cause dissatisfaction. indifference if met Benefits above & beyond expectations. if met then delighted. identify and suggest innovations with new products . dissatisfaction if not met.

the ability to adapt the service to each client. you must keep innovating Performance excellence occurs by design. August). Zeithaml. MA: Marketing Science Institute.. A conceptual model of service quality and Its implications for future research. . The ability to respond to enquiries and complaints in a timely fashion. accessibility and timeliness of the service. A. & Berry L. being thoroughly professional and ethical. • Assurance: Making the customer feel safe in their dealings with you. Doing things right the first time. • Responsiveness: The availability.Some key points on developing loyalty • • Since what was once unexpected/unstated becomes expected/stated. • Tangibles: How the product/service looks to the client. not default • All parts of the organization are part of creating customer loyalty • Reliability: Keeping your promise. Parasuraman. • Empathy: The degree to which the organization and service personnel understand the individual client and their needs. Cambridge. etc. doing what you said you will do. the willingness to 'go the extra' for the client. the appearance of personnel and equipment.. (1984. V.

within 3 months over and over. To get the cash back. as well as the babies birth date and sex. They went on a massive campaign to gather the names and addresses of mothers and babies through highly successful cash back sales promotion activities. Each percentage point was worth US$1million over the life usage of the product. Within 14 months (the fifth cycle of the ever-growing list of mothers) Pampers had moved to the number one position with 49% market share. That's $29mil just by staying in touch with the same base. . They also sent out discount vouchers when it was time to buy the next size up.Pampering Customer Loyalty Proctor & Gamble's Pampers product had 13% market share in Hong Kong. so that the nappies always performed well. telling them of their babies growth and what to expect at the various stages. Using this information they wrote to the mothers on a quarterly basis. mothers had to write in with full name and address details.

6 8.4 7.8 6.6 9.4 3.2 14.7 10.2 13.6 8.4 8.1 8.4 7.4 14.Rokeach’s Instrumental & Terminal Values (1973) Instrumental Value Ambitious* Broadminded Capable Cheerful Clean Courageous Forgiving* Helpful Honest Imaginative* Independent Intellectual Logical Loving* Obedient Polite Responsible Self-controlled Males 5.5 8.5 Females 10 15.1 7.2 14.3 9.8 9.0 13.2 12.4 9.5 10.9 7.4 8.9 3.6 8.7 Females 7.9 6.4 9.3 3.8 14.1 7.7 8.3 7.5 Value Comfortable life* Exciting life Accomplishment World peace World beauty Equality Family security Freedom* Happiness Inner harmony* Mature love National security Pleasure Salvation* Self-respect Social recognition True friendship wisdom Terminal Males 7.8 9.1 9.9 13.2 8.1 9.2 8.5 10.8 13.6 13.3 3.1 12.5 8.7 6.9 11.8 13.6 9.1 10.1 6.8 9.8 12.3 3.4 15 9.3 10.7 13.8 15 7.8 4.1 10.9 10.7 .9 8.6 7.1 3.2 16.

valued end-goals: • I am helpful & caring Psychosocial consequences: psychological & social outcomes • I can tell others Functional consequences: tangible outcomes of product use • gives me useful information Attributes: product characteristics & features • Editorial content & articles “Why is it important? What does it give to you? What is negative about it? What do you want to avoid” .Basic design of the Hierarchical Values Map for Means-Ends Chain Analysis Values: abstract consequences.

Laddering for promotional strategy .

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Laddering: Hierarchical Value Map for Wine Coolers Self esteem: •Feel better about self •Self image •Self worth Accomplishment: •Get most from life Impress others: •Successful image Reward: •Satisfying •compensation Belonging: •Security •Camaradarie •Friendship Family life •Maintain respect •Better family ties Sophisticated image: •Personal status •How others view me Socialize: •Easier to talk •Open to •More sociable Thirst quenching: •Relieves thirst •Not too sour Avoid negatives of alcohol: More feminine: •Socially acceptable •Not too drunk •Not too tired Avoid waste: •Doesn’t get warm Refreshing: •Feel alert & alive Quality: •Superior product •Superior quality Label (fancy) Bottle (shape) Less alcohol Consume less: • can’t drink more •Can sip carbonation crisp expensive Filling Smaller size (10 oz.) .

Consumer decision-making map for express mail delivery .

link to the terminal values it supports .Laddering practice: • form pairs (or triads) and take turns constructing value ladders for each other’s purchases • identify some product you purchase to which you have had some degree of brand loyalty over the years. • start by describing the attributes of the product • then link those to the benefits you obtain from it • then link to the (instrumental) values it satisfies • and finally.

Supplementary Slides (not for study) .

Key Elements of the Balanced Scorecard Financial Perspective Customer Perspective Operations Perspective Learning & Growth Perspective .

distributors & allies • < switching • enhance halo effect • insulate against short term adverse events Customer Satisfaction .Higher Profit Margins!!! • < price elasticity (tolerate price increases) • < transaction costs (not spend as much to attract new customers) • < product failure costs • < resources due to handling & returning • < reworking defective items. handling complaints • Increased Word of Mouth • > reputation of business • Repeat Sales • > effective advertising • > frequent purchases • help introduce new products via instant awareness • > purchase volume • lower buyer’s risk of trial • > other goods/services • + relationship with key suppliers.

the greater the elasticity. • Price points: decreasing the price from $2.00 to $1. • Permanent or temporary price change: a one-day sale will elicit a different response than a permanent price decrease.99 may elicit a greater response than decreasing it from $1. .99 to $1. • Degree of necessity or luxury: luxury products tend to have greater elasticity. Some products that initially have a low degree of necessity are habit forming and can become "necessities" to some consumers. • Proportion of the purchaser's budget consumed by the item: products that consume a large portion of the purchaser's budget tend to have greater elasticity.98. • Time period considered: elasticity tends to be greater over the long run because consumers have more time to adjust their behavior.Price Elasticity Price change causes change in demand Factors Affecting the Price Elasticity of Demand • Availability of substitutes: the more possible substitutes.

ACSI results provide: • an economic indicator of the quality of economic output • calculation of the net present value of their company’s customer base as an asset over time • information for strategic business applications • a predictor of consumer spending & corporate earnings . It focuses on different sectors of the economy ranging from autos to household appliances to government services to grocery items. is based on a quarterly survey by the National Quality Research Center at the University of Michigan business school. a professional group in Milwaukee. and Foresee Results. in partnership with the American Society for Quality. an Internet tracking firm.American Customer Satisfaction Index.

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