07Customer satisfaction by shitingting


									Customer Satisfaction
                             Too much emphasis
             IBM’s Crisis      on the external
                              image and profits
                              while ignoring the
                             customer demands

Market share decreased by 12 percent
Stock price dropped from 178$ to 50$
Annual loss amounted to more than 8
 billion dollars
100,000 employees fired

      Profit focus    Customer focus
Who Are Today’s
  The Rapidly Changing Consumer
• As we have seen in many industries, the
  expectations and behavior by today’s
  consumer is much different than 20 years
           Increasingly Time Poor

                More Savvy

              More Demanding
 The Rapidly Changing Consumer

• Increasingly Time Poor: Consumers
  have less time to shop. But will not
  trade-off quality service. . .

  – Shop at Home

  – Express Check-in/
 The Rapidly Changing Consumer

• Increasingly Time Poor: Consumers
  have less time to shop. But will not
  trade-off quality service. . .
                            Quik Lube
  – Express Auto Service

  – Banking and Trading on Internet
    is the
$$ Currency $$
 The Rapidly Changing Consumer
Speed is a new currency:
- Speed is the shortening product lifecycles
   from years to months and sometimes
- Speed is the worldwide financial network
   that transfers money at the rate of $41
   billion a minute
- Speed is real-time responsiveness, 24
   hours a day, 7 days a week
- Speed measures competitive advantage
 The Rapidly Changing Consumer
• As we have seen in many industries, the
  expectations and behavior by today’s
  consumer is much different than 20 years
          Increasingly Time Poor

                More Savvy

             More Demanding
 The Rapidly Changing Consumer

• The Consumer is More Savvy:
  Twice as many high school
  graduates today than 30 years ago.

                  1960s     1990s
  High School +    41%       82%
  The Rapidly Changing Consumer

• The Consumer is More Savvy:
  – Internet Usage
   Significant increase in those
   Those accessing are spending more
   Significant increase in those going on-
    line to shop
  The Rapidly Changing Consumer

• The distant relationship between the
  naïve buyer and the expert seller...

      Naïve Buyer        “Expert”
 The Rapidly Changing Consumer

…is going away!

        Naïve     “Expert”
        Buyer      Seller
 The Rapidly Changing Consumer
• As we have seen in many industries, the
  expectations and behavior by today’s
  consumer is much different than 20 years
           Increasingly Time Poor

                More Savvy

              More Demanding
 The Rapidly Changing Consumer

• The Consumer is More Demanding:

  – Across industries this New
    Consumer has higher expectations
    of service
 The Rapidly Changing Consumer

• This has resulted in Consumers
  – What they want

       – Where they want it

           – When they want it
The Rapidly Changing Consumer

• Loyalty is declining!
Example: The Automotive
  – 2 out of 3 people will buy a different
    brand than their previous choice

  – 4 out of 5 will buy from a different
    dealer than their previous choice
The Rapidly Changing Consumer
• Reasons for decline
  – More choices resulting in
    greater freedom
  – Mobile population
  – Limited product lines
  – Decline in negotiations
     • Information is now available to
       both parties
The Rapidly Changing Consumer
• The key to increasing loyalty is
  to build brand!

  – Brands differentiate competitors

  – Companies have brands
    whether they want them or not!
The Rapidly Changing Consumer

• Question: How closely matched
  is a company’s desired image
  versus the perception of its
  Why is Customer
Satisfaction Important?
    There is room to improve Overall Satisfaction!

    80% of homebuyers are less than completely
 % of                  16%
Home                                   12%
                                                                 5%       4%               4%

             10       9
                      9        8
                               8        77      6
                                                6        5
                                                         5        4
                                                                  4       3
                                                                          3        2
                                                                                   2       1
     Outstanding                          Average                                      Unacceptable
                    Overall Satisfaction with Home Builder
         Source: 2004 J.D. Power and Associates New Home Builder Customer Satisfaction Study
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
 Customers who have their complaints
 resolved tell an average of 5 people
Complainers are more likely to do business
 with the company again than
  -- 54-70% if the complaint is resolved at all
  -- 95% if the complaint is resolved quickly
Expectancy Disconfirmation Model
    perceptions = expectations

  Negative Disconfirmation
    perceptions < expectations

  Positive Disconfirmation
    perceptions > expectations
           THE BENEFITS OF
 Positive word-of-mouth
 Purchase more frequently
 Less likely to be lost to competitors
 Insulated from price competition
 Tolerance of quality problems
 Positive work environments
 Employee Loyalty
                Word of Mouth
When asked to share a significant experience
related to customer satisfaction (positive or
   •   People were about 50% more likely to tell us a story
       about a bad experience than a good experience.
   •   Of the good stories – where customers had such a
       good experience they may always try to do business
       with that company…
   – Almost all ended up indicating loyalty to the
Superior Customer Satisfaction
              Increased           Greater
              Customer            Pricing
                Loyalty          Leverage

   Share               Superior
  Financial                                   Increased
Performance                                     Usage


 Provides a formal means of customer
 Conveys a caring message to customers
 Used to evaluate employee performance
  -- Merit and compensation reviews
  -- Employee training programs
 Comparison against competition
 Provide information for R&D and advertising
 Customer Satisfaction Measurement

• Can and should CS be measured?
• What are the major issues that must be
  addressed in CS measurement?
• What are the major issues that must be
  addressed in CS data analysis and
  Can and Should CS be Measured?

• If a company does not measure CS, it
  probably will not manage CS very well. That
  which is measured gets managed.
• Unlike many other management fads, CS
  measurement seems to have enduring value.
• The major issue is not the importance of
  measuring CS, but how to effectively use the
  resulting data to improve organizational
  effectiveness to yield higher customer
   Major Issues in CS Measurement

• Goal Clarification:
  – Why do we want to measure CS?
  – What problems are we trying to solve?
  – Which goals are we trying to achieve?
• Before you start on the journey, it is helpful
  to get out the map and plot your route.
• This should be a process that involves most
  functional units and all levels of the
  Possible Reasons for Measuring CS
• As an “early warning system” to alert you to problems
  as early as possible.
• As a galvanizing process to focus all employees on the
  importance of CS to organizational success. These
  companies typically post CS scores prominently where
  all employees can see them.
• As a critical input factor for determining employees’
  compensation levels.
• As a competitive analysis process to determine how
  well you stack up against the competition.
• As a customer relationship tool to show customers
  how much you care about their satisfaction and loyalty.
   Major Issues in CS Measurement

• Financial Commitment
  – Measuring CS is a fairly expensive process.
    Therefore, upper management must be prepared to
    allocate sufficient financial resources to do this job
  – If upper management is not committed to CS
    measurement, it is best to not even begin the process.
  – Upper management must believe fervently in the
    values of defensive marketing (retaining loyal
    customers) if a CS measurement program is to be
   Major Issues in CS Measurement

• Output Utilization and Organizational Impact
  – You should measure CS so that you can change and
    improve critical organizational systems and processes.
  – If upper management or key employee groups are
    resistant to change, measuring CS is not a worthwhile
  – You must develop a “thick skin” because CS
    measurement should tell you exactly what your worst
    critics (dissatisfied customers) think of your company.
    Major Issues in CS Measurement

• Assuming the organization is fully committed to CS
  measurement, who should do it?
• Most companies now turn to specialty research
  firms that focus on CS measurement contracting
• Advantages in using external agencies?
   – Experienced and more highly skilled
   – Able to generate results more quickly
   – More objective in analyzing results
• Disadvantages in using external agencies?
   – Higher expense?
   – Less direct knowledge of company’s unique situation
       Setting Up an Effective CS
        Measurement Program
• 1) Respondent identification
• 2) Selecting the most appropriate survey
• 3) Selecting constructs to measure
• 4) Question format and scaling issues
• 5) Sampling issues
• 6) Implementation issues
 Step 1: Respondent identification
• From whom do you want to obtain data?
  – Customers?
    • Current customers?
    • Former customers?
    • New customers?
  – Distribution channel members?
    • Wholesalers?
    • Retailers?
 Step 1: Respondent identification
• How much do you currently know about your target
  – Do you even know who your customers are?
     • Do you currently have a customer database?
     • Who in your company collects data on your customers?
  – Do you have information so that you could contact your
    customers by mail, telephone, e-mail, or the Internet?
  – Do you have information regarding your customers’ purchasing
    history with your company?
  – Do you have any information regarding your customers’
    complaint history? Don’t overlook the information that you
    already have!
    Step 2: Selecting the Most
    Appropriate Survey Method
• Alternative methods for collecting CS
  information from target respondents:
  – mail survey
  – e-mail survey
  – Internet survey
  – telephone survey
  – personal interviews
  Considerations in selecting the most
     appropriate survey method
• Do you have the necessary customer information to
  use this survey method (mailing addresses, phone
  numbers, etc.)?
• What types of information do you want to collect?
  – Closed-ended questions work fine in printed surveys (mail, e-
    mail, Internet) and can work well in telephone surveys with
    trained interviewers.
  – Open-ended questions work best when trained interviewers
    (telephone or personal interviews) can write down or record
    respondents’ verbatims. Respondents typically dislike open-
    ended questions on mail, e-mail, and Internet surveys.
    Xerox’s Emphasis on Verbatims
                  (Fortune, 5-10-99)

• Xerox has increased customer satisfaction
  and loyalty by capturing customers’ verbatim
  responses to surveys.
• Dan Holtshouse, director of corporate
  business strategy: “Capturing the verbatims,
  the exact words, the ‘voice of the customer,’
  carries a lot of weight. It makes the
  customer’s experience real, personal, and
  more actionable. Hearing the voice helps
  remove distance between us.”
  Considerations in selecting the most
     appropriate survey method
• How important is the timeliness of the
  – If you want to accurately measure CS with a specific
    purchase, you need to use a method (telephone,
    Internet, or e-mail) that can ask for customer
    feedback soon after the purchase event. Telephone
    interviewers can also verify the occurrence of the
    event and that the proper person is responding to the
  Considerations in selecting the most
     appropriate survey method
• How much money is available for collecting
  CS data?
  – Least expensive options?
     • Mail surveys
     • Internet surveys
     • E-mail surveys
  – Most expensive options?
     • Personal interviews
     • Telephone interviews can be quite expensive if multiple
       callbacks are required to get data from specific respondents.
 Considerations in selecting the most
    appropriate survey method
• How important is response rate?
  – Highest response rates?
     • Telephone surveys
        – However, respondents are becoming increasingly reluctant to
          cooperate with telephone surveys.
  – Lowest response rates?
     • Mail surveys
        – As more companies have implemented CS measurement
          systems, respondents have become overloaded and less likely
          to respond.
     • Not much response rate data yet from e-mail and Internet
  – Do inducements improve response rates?
  The Methodology Used for the American
    Customer Satisfaction Index (ACSI)
• The National Quality Research Center at the Univ. of
  Michigan conducts telephone surveys with 12,500
  current consumers of the companies being surveyed
  that quarter.
• Each year, that amounts to about 50,000 customers
  of products from 175 companies and 5 governmental
• Consumers are asked about their expectations and
  their perceptions of value and quality of goods and
  services they have purchased.
              Online CS Surveys
• Pittsburgh-based PNC Bank offers an online banking
  product called Account Link by Web.
• In 1999 it conducted an online CS survey by inviting
  a random sample of Account Link customers to fill
  out a questionnaire after they finished their banking
• Almost 39% of the 1,300 invited customers agreed to
  take the survey.
• They were asked to rate the quality of various
  aspects of the service, including the ease of
  checking balances and transferring funds, as well as
  providing basic demographic data.
                 Online CS Surveys

• Response rates?
   – Some e-tailers can garner response rates of 30-40%
   – However, the response rates to pop-up CS surveys may be only
• cPulse, a company based in New York, offers an
  online CS monitoring tool for online companies to
  assess their customers’ satisfaction.
   – cPulse offer its monitoring service free of charge and then sells
     the compiled results as syndicated industry satisfaction trend
   Step 3: Selecting Constructs to
• Typically, most organizations will want to measure:
   – overall satisfaction
   – repeat purchase intentions
   – word-of-mouth (WOM) communication activity or intentions
• In addition, organizations may also want to measure:
   – comparative satisfaction with competitors’ products or services
   – satisfaction with specific product or service features
   – satisfaction with key service providers (sales staff, installation
     personnel, etc.)
 Step 4: Question Format and Scaling
• Open-ended questions work well to:
  – capture the customer’s “voice”
  – reveal unanticipated concerns or issues
  – allow dissatisfied consumers an opportunity to “vent”
• However, open-ended questions can create
  – require a lot of respondent effort
  – make a survey instrument appear long and thus reduces
    response rate
  – difficult to quantify responses and track trends in results over
    time. Some progressive companies use “content analysis” to
    categorize open-ended responses.
   Question format and scaling issues

• Closed-ended questions work well to:
  – capture data regarding specific constructs
  – generate data that can be compared across different groups of
  – generate data that can be used to compare the performance of
    various service providers
  – yield data that is amenable to sophisticated statistical analysis
• The drawbacks of closed-ended questions:
  – do not allow respondents to voice their feelings
  Question format and scaling issues

• How many scale points should be used for
  closed-ended questions?
  – 7 or 10 point scales generally work best, but 5 point
    scales are acceptable
   Question format and scaling issues

• Should identifiers be used for scale points?
   – Typically the extreme points on scales are identified
       • 1 = extremely dissatisfied; 10 = delighted
       • 1 = definitely will not recommend; 7 = definitely will recommend
   – Often it is useful to identify each scale point
       •   1 = extremely dissatisfied
       •   2 = somewhat dissatisfied
       •   3 = neither satisfied nor dissatisfied
       •   4 = somewhat satisfied
       •   5 = extremely satisfied
   – Identifiers help to ensure that all respondents are interpreting the
     scale points similarly.
        Step 5: Sampling Issues
• Rarely do you conduct a census and attempt
  to collect information from all members of a
• Instead, you collect information from a
  sample of respondents from this target
• Margin of error becomes a critical issue.
  – How important are the findings to the company?
  – To reduce the margin of error, the sample size must
    be increased. However, this also increases the
    expense and time involved to obtain results.
                  Sampling issues
• How do you select this sample?
  – To ensure generalizability of results, random samples are
      • Random mail surveys: For example, surveys are sent to every 5th
        name on an alphabetized list of customers.
      • Random telephone surveys: For example, calls are placed to every
        5th name of an alphabetized list of customers, or random digit
        dialing is used.
  – Stratified random samples are also often used in CS
    measurement so that comparative responses are obtained from
    distinct sets (or strata) of consumers.
      • Long-term customers vs. first-time customers
      • Customers from various service areas or offices
              Sampling issues
• Unfortunately, many organizations rely on
  convenience samples to collect CS data
  – For example, a restaurant may ask patrons on a
    Saturday night to complete a CS survey for a free
  – Problem: Are these patrons representative of patrons
    on other nights or lunch time patrons?
  – Because random samples were not used, the
    resulting data are not generalizable.
    Step 6: Implementation Issues

• How often should CS be measured?
  – Some companies measure CS continually
    and post daily results.
  – But most companies measure CS on a
    quarterly or annual basis.
  – The key point is that CS must be measured
    on a regular and consistent basis.
          Implementation issues

• How do you ensure that the validity of
  your CS measurement system is not
  – If employee or channel member
    compensation is tied to CS results, special
    precautions must be taken to safeguard the
          CS Data Analysis and
          Interpretation Issues
• How high of a response rate do you need?
  – If the response rate is too low, this threatens the
    validity and generalizability of the results.
  – Mid-Atlantic Medical Services reported a member
    satisfaction score of 90%, but later conceded that the
    CS survey was answered by only 11% of those who
    received it.
  – Multiple reminders, mailings, or call-backs are often
    required to ensure higher response rates.
           CS Data Analysis and
           Interpretation Issues
• Who responds to CS surveys?
  – Typically highest response rates come from the very satisfied
    and the very dissatisfied
• Question wording can impact responses
  – Responses to “How would you rate (company A)?” are typically
    more negatively than responses to “How satisfied are you with
    (company A)?”
• Survey method may impact responses
  – Telephone surveys and personal interviews typically yield more
    positive responses
      • Why? Respondents want to please the interviewers
         CS Data Analysis and
         Interpretation Issues
• Responses to satisfaction questions tend to
  be skewed toward the satisfied end of the
  scale. In many surveys, the modal response
  is the most satisfied category.
• In general, customer satisfaction appears to
  be highest immediately subsequent to
  purchase but to decrease somewhat over
          CS Data Analysis and
          Interpretation Issues
• How you aggregate the results can be a
  major issue
  – Who are your “satisfied” customers?
     • If a 1 - 10 scale (10 = delighted) is used, should all
       respondents who marked 6 or higher be classified as
     • For advertising and PR purposes, many companies include
       as many respondents as possible in the “satisfied” category.
     • However, the real behaviors of respondents in this overly
       inclusive satisfied category are very different.
             CS Data Analysis and
             Interpretation Issues
• Findings from the ACSI studies:
   – Manufacturing companies, which are better able to maintain
     quality control and produce uniform results, achieve higher
     satisfaction ratings from customers than the more people-
     dependent service companies do.
   – Female consumers show markedly higher satisfaction with their
     consumption experiences than do male consumers.
   – Customer satisfaction is correlated with age. Older consumers,
     particularly those over 55, report being more satisfied with their
     consumption experiences than younger consumers.
   – To a limited extent, satisfaction goes down as education and
     income levels go up.
Toyota’s Focus on Unusual Complaints

• Roughly 96% of customer calls and
  complaints to Toyota’s Customer Relations
  Department are directly recorded by reps on
  the Toyota database.
• However, for unusual complaints the reps fill
  out a special “blue card”.
• Each week a team of 10 customer service
  supervisors reviews the blue cards and often
  launches a statistical study to determine root
  causes and possible trends.
Customer satisfaction

       Exceed         Partnership
   customer needs

   satisfy unstated   Confidence
   customer needs

                       Prevent customer
   meet validated
   customer needs
           Customer Satisfaction
1. Customer decide the fate of an enterprise
2. Because customer have needs,
   we have work.
3. Customer have the right to choose,
   so we have to become their best choice.
4. Customer are people, people are
   individualistic. There fore, we need to have
   great flexibility.
5. Customer have great expectation!
   We have to exceed their expectations.
6. Customer Satisfaction is NOT a slogan,
   it is the MISSION of the entire staff.
Only with customer can the enterprise survive.

To top