Chapter 11

Defining and
Measuring
Customer
Satisfaction
 Chapter Objectives

• Define customer satisfaction and understand the

benefits associated with satisfied customers.
• Appreciate various methods for measuring
customer satisfaction and discuss the limitations
of customer satisfaction measurements.
• Discuss factors to consider when investing in
customer satisfaction improvements.
• Understand the many factors that influence
customer expectations.

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 Opening Vignette:
Ratemyprofessor.com

• This website provides the means for

students to rate their satisfaction with their
professors
• Contains over 10 million ratings of over
one million instructors from 6,000 colleges
and universities
• www.ratemyprofessor.com

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 Consumer Movement:
1970s and Beyond

• Skyrocketing inflation during the 1970s forced many firms

to slash service in an effort to keep prices down
• Deregulation led to price competition (price wars) and
services were slashed to hold costs down
• Labor shortages also contributed to the decline in
customer service
• Automation distanced customers
• Customers have become more informed and tougher to
please

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 The Importance of
Customer Satisfaction

• The average business does not heard from 96 percent of its unhappy
customers
• For every complaint received, 26 customers actually have the same
problem
• The average person with a problem tells nine or 10 people; 13
percent will tell more than 20
• Customers who have their complaints satisfactorily resolved tell an
average of five people about the treatment they received
• Complainers are more likely to do business with you again than
noncomplainers:
– 54 percent to 70 percent if resolved at all, and 95 percent if handled
quickly

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 What Is Customer
Satisfaction and Dissatisfaction?

• Expectancy disconfirmation model: model proposing

that comparing customer expectations to their
perceptions leads customers to have their expectations
confirmed or disconfirmed
– Confirmed expectations: customer expectations that match
customer perception, resulting in customer satisfaction
– Disconfirmed expectations: customer expectations that do not
match customer perceptions
• Negative disconfirmation: customer perceptions that are lower
than customer expectations, resulting in customer dissatisfaction
• Positive disconfirmation: customer perceptions that exceed
customer expectations, resulting in delighting customers

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 The Benefits of
Customer Satisfaction

• Positive word-of-mouth generated from existing

customers often translates into more new customers
• Satisfied current customers often purchase more
products more often than dissatisfied customers
• Satisfied current customers are less likely to be lost to
competitors than dissatisfied customers
• High customer satisfaction ratings help insulate the firm
from price competition
• Firms that pride themselves on their customer satisfaction
efforts tend to have more positive work environments

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 Figure 11.1:
The Customer Service Hall of Fame

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 Figure 11.2:
The Customer Service Hall of Shame

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 Figure 11.3:
Nine Key Attributes of Reputation

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The Benefits of Customer Satisfaction Surveys

• Provide a formal means of customer feedback to

the firm
• Convey a caring message to customers
• Used to evaluate employee performance
– Merit and compensation reviews
– Employee training reviews
• Used for comparison against competition
• Provide information for advertising

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Measuring Customer Satisfaction
• Indirect measures: measures of customer satisfaction including
tracking and monitoring sales records, profits, and customer
complaints
• Direct measures: measures of satisfaction generally obtained
directly from customers using customer satisfaction surveys
– The scale of 100 approach
– The “very dissatisfied/very satisfied” approach
– The combined approach
• Provides a benchmark against which future satisfaction surveys should be
compared
• Provides diagnostic information that pinpoints specific areas for improvement

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 The Scale of 100 Approach

• Customers are asked to rate the firm’s

performance on a 100-point scale

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 The “Very Dissatisfied/
Very Satisfied” Approach

• This approach presents customers with a

five-point Likert scale, which is typically
labeled using the following format:

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 The Combined Approach

• This approach uses the quantitative scores obtained by

the “very dissatisfied/very satisfied” approach and adds a
qualitative analysis of feedback obtained from
respondents who indicated that they were less than “very
satisfied”

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 Figure 11.4:
FedEx’s Hierarchy of Horrors

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Understanding Customer Satisfaction Ratings

• Virtually all self-reports of customer

satisfaction possess a distribution in which
a majority of the responses indicate that
customers are satisfied and the distribution
itself is negatively skewed
• To feel above average is normal
• It is not unusual to see results in the 80 to
90 percent range

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Figure 11.5: Distribution of Satisfaction
Measurements

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 Factors Influencing
Customer Satisfaction Ratings

• Genuinely satisfied customers

• Response bias: a bias in survey results
because of responses being received from
only a limited group among the total survey
participants

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Factors Influencing Customer Satisfaction Ratings
(cont’d)

• Data collection method

– Personal (interviews, phone surveys) net more positive
results than nonpersonal methods (mail
questionnaires)
• Question form: the way the question is phrased,
i.e., positively or negatively
– Asking a question in a positive form (“How satisfied
are you?”) appears to lead to greater reported levels of
satisfaction than does posing the question in a
negative form (“How dissatisfied are you?”)

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Figure 11.6:
Responses by Question Form

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Factors Influencing Customer Satisfaction Ratings
(cont’d)

• Question context: the placement and tone of a

question relative to the other questions asked
– Satisfaction is highest if a general satisfaction question
(“In general, how satisfied are you with the products in
your house?”) is asked prior to a specific satisfaction
question (“How satisfied are you with your Toyota?”)
• Question timing: the length of time after the
date of purchase that questions are asked
– Satisfaction appears to be highest immediately after a
purchase

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Factors Influencing Customer Satisfaction Ratings
(cont’d)

• Social desirability bias: a bias in survey results

because of respondents’ tendencies to provide
information they believe is socially appropriate
• Mood

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 Are Customer Satisfaction
Surveys Worth It?

• Due to the already high levels of customer satisfaction

that already exist for most firms, it may not make sense to
try to increase satisfaction levels across the board
• Two areas that deserve special attention:
1. Company attempts to maintain satisfaction over time to counter
the decay effect
2. Concentration on the tail of the satisfaction distribution—those
customers who are dissatisfied
• Benchmarking: setting standards against which to
compare future data collected

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 Customer Satisfaction:
How Good Is Good Enough?

Should a firm invest $100,000 in an attempt

to improve customer satisfaction ratings from
95 percent to 98 percent?

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 Customer Satisfaction:
How Good Is Good Enough?

Should a firm invest $100,000 in an attempt to improve

customer satisfaction ratings from 95 percent to 98 percent?
• It depends upon:
– The satisfaction ratings of the firm’s competitors
– The dollar investment necessary to increase customer
satisfaction relative to the impact of increasing the firm’s market
share
– The number of time periods needed to recoup the investment
– The opportunity costs associated with other uses of the firm’s
$100,000

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 Criticisms of Customer
Satisfaction Research
1. Focuses on whether current needs are being met but
fails to investigate customers’ future needs
2. Tends to focus on registered complaints
3. Tends to focus on global attributes and ignores
operational elements
4. Often excludes the firm’s employees from the survey
process
5. Some firms are convinced that customers may not know
what they want and that sometimes ignoring the
customer is the best strategy to follow

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 Types of Customer Expectations
• Predicted service: the level of service quality a customer believes is
likely to occur
• Desired service: the level of service quality a customer actually
wants from a service encounter
• Perceived service superiority: a measure of service quality derived
by comparing desired service expectations and perceived service
received
• Adequate service: the level of service quality a customer is willing to
accept
• Perceived service superiority: a measure of service quality derived
by comparing adequate service and perceived service

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Figure 11.9: Comparison between Customer Evaluation
of Service Quality and Customer Satisfaction

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 Figure 11.10: The Zone of Tolerance

• Zone of tolerance: level of quality ranging from high to low and reflecting the difference
between desired service and adequate service; expands and contracts across
customers and within the same consumer, depending on the service and the conditions
under which it is provided

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 Figure 11.11:
Factors Influencing Expected Service

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Factors Influencing Service Expectations: Desired
Service

• Enduring service intensifiers: personal factors that are

stable over time and increase a customer’s sensitivity to
how a service should best be provided
– Derived expectations: expectations appropriated from and
based on the expectations of others
– Personal service philosophies: a customer’s own internal
views of the meaning of service and the manner in which service
providers should conduct themselves
• Personal needs: a customer’s physical, social, and
psychological needs
– Some customers are “higher maintenance” than others

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 Factors Influencing Service Expectations:
Desired Service and Predicted Service

• Explicit service promises: obligations to which the firm

commits itself through its advertising, personal selling,
contracts, and other forms of communication
• Implicit service promises: obligations to which the firm
commits itself by means of the tangibles surrounding the
service and the price of the service
• Word-of-mouth communications: unbiased information
from someone who has been through the service
experience, such as friends, family, or consultants
• Past experience: the previous service encounters a
consumer has had with a service provider

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Factors Influencing Service Expectations:
Adequate Service
• Transitory service intensifiers: personal, short-term factors that
heighten a customer’s sensitivity to service
• Perceived service alternatives: comparable services customers
believe they can obtain elsewhere and/or produce themselves
• Self-perceived service role: the input a customer believes he or she
is required to present in order to produce a satisfactory service
encounter
• Situational factors: circumstances that lower service quality but that
are beyond the control of the service provider
– Predicted service: the level of service quality a consumer believes is
likely to occur

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The Link between Expectations, Customer
Satisfaction, and Service Quality

• When evaluating the service experience,

consumers compare the three types of
expectations to the perceived service delivered
• Customer satisfaction is calculated by comparing
predicted service and perceived service
• Perceived service adequacy, which compares
adequate service and perceived service, and
perceived service superiority, which compares
desired service and perceived service, are
measures of service quality

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.