Pietrangeli

							    Customer Satisfaction and Customer Loyalty in an
    after call situation: An international comparison



    Sandra Pietrangeli
    in cooperation with Frank Fenrich (T-Mobile International AG & Co.
    KG)
    23.05.2007




1
Customer Satisfaction vs. Customer Loyalty
Guideline




    1. Definitions

    2. State of research
    3. Empirical evidence (ICCA)
         3.1 Operationalization
         3.2 Typical frequency distribution
         3.3 NPS and Correlation (Recommendation*Overall
    Satisfaction)

    4. Results




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Customer Satisfaction vs. Customer Loyalty
1. Definitions




    Customer loyalty
    is the behaviour customers exhibit when they make frequent repeat
    purchases of a brand and recommend it to her friends and business
    partners.


    Customer Satisfaction
    is the degree to which customer expectations of a product or service
    are met or exceeded.




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Customer Satisfaction vs. Customer Loyalty
2. State of research




    • Customer Satisfaction and Customer Loyalty are disjoint
         constructs
    • Customer Satisfaction is linked to Customer Loyalty
    • Customer Satisfaction correlates significant positive with
         Customer Loyalty
    • Expected correlation r = 0.5 to 0.61)



    1)   q.v. Hermann/Johnson 1999; 594; own research




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Customer Satisfaction vs. Customer Loyalty
3. Empirical evidence (ICCA)
    • Database: T-Mobile International Customer Contact Analysis
     (ICCA)
    • Survey since 2003 in eight countries
    • Samples: 16.000 interviews per month
    • Three-step-process:
     1. Data collection:
     T-Mobile gets adresses from customers, who have called/written
     to a T-Mobile Contact Centre (e.g. to ask for a new tariff). These
     data are provided to an external agency.
     2. After call interviews:
     The agency staff call above mentioned customers and interview
     them.
     3. Reflux of information:
     The agency replaces the interview data to T-Mobile.
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Customer Satisfaction vs. Customer Loyalty
3. Empirical evidence (ICCA)
3.1 Operationalization



     Operationalization of Customer Satisfaction (Overall Satisfaction)

     “Now, please think about the call to the T-Mobile Contact Centre
     during the last two days…How satisfied are you with the service you
     got overall?”1)




    1)T-Mobile ICCA Master Questionnaire „Residental + Business“
    2005/2006 and ICCA Questionnaire „Written + E-mail“ 2005/2006



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Customer Satisfaction vs. Customer Loyalty
3. Empirical evidence (ICCA)
3.1 Operationalization




    extremly
    satisfied                                    dissatisfied




        1             2         3            4          5




      8 means ‘don‘t know’
      9 means ‘no answer’



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Customer Satisfaction vs. Customer Loyalty
3. Empirical evidence (ICCA)
3.1 Operationalization



    Operationalization of Customer Loyalty (Recommendation)
    “On a scale of 1 to 4, what is the possibility that you would
    recommend T-Mobile      to a friend (residental) or a business partner
    (business line) based on this experience?”   1)




    1)T-Mobile ICCA Master Questionnaire „Residental + Business“ 2005
    and ICCA Questionnaire „Written + E-mail“ 2005



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Customer Satisfaction vs. Customer Loyalty
3. Empirical evidence (ICCA)
3.1 Operationalization


    definitel                                                 definitely
     yyes                                                        no



       1                     2                     3                4




            Promoters            Passively satisfied   Detractors

       8 means ‘don‘t know’
       9 means ‘no answer’



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Customer Satisfaction vs. Customer Loyalty
3. Empirical evidence (ICCA)
3.1 Operationalization



     Operationalization of Customer Loyalty (Recommendation)
     “On a scale of 0 to 10, how likely is it that you would recommend
     the provider T-Mobile to a friend (residential) or a business partner
     (business line)?”1) (The ultimate Question)




     1)T-Mobile ICCA Master Questionnaire „Residental + Business“ 2006
     and ICCA Questionnaire „Written + E-mail“ 2006



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Customer Satisfaction vs. Customer Loyalty
3. Empirical evidence (ICCA)
3.1 Operationalization



      Very                                                            not at all
     likely                                                             likely



     10        9      8       7        6      5         4   3     2       1
     0


              Promoters           Passively satisfied       Detractors

      98 means ‘don‘t know’
      99 means ‘no answer’



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Customer Satisfaction vs. Customer Loyalty
3. Empirical evidence (ICCA)
3.2 Typical frequency distribution


     Overall Satisfaction1)

                  extremely    very    satisfied   fairly  dissatisfied   don’t     no
                   satisfied satisfied           satisfied                know    answer

       2005         14%       44%        34%       4%          4%         0%       0%

       2006         16%       46%        31%       3%          4%         0%       0%




     1) as   an example Germany Residental




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Customer Satisfaction vs. Customer Loyalty
3. Empirical evidence (ICCA)
3.2 Typical frequency distribution


     Recommendation1)

                   Promoter   passively   Detractor don’t know no answer
                              satisfied

        2005         77%        17%          5%        1%        0%

        2006         52%        30%          17%       1%        0%




     1) as   an example Germany Residental




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Customer Satisfaction vs. Customer Loyalty
3. Empirical evidence (ICCA)
3.3 NPS and Correlation (Recommendation*Overall Satisfaction)


                    T-Mobile Gemany


                    T-Mobile Austria


                    T-Mobile Czech Republic


                    T-Mobile Netherlands


                    T-Mobile United Kingdom




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Customer Satisfaction vs. Customer Loyalty
3. Empirical evidence (ICCA)
3.3 NPS and Correlation (Recommendation*Overall Satisfaction)
                     Business          Residental              E-mail           Written
                   NPS          r     NPS       r       NPS             r    NPS          r
           2005   66,49%   .347**    71,63%   .317**    n.a.                45,45%    .475**
     GER
           2006   30,38%   .058**    35,40%   .068**    n.a.                2,67%     .168**

           2005   62,22%   .366**    78,08%   .076**    n.a.                59,55%    .506**
     AUT
           2006   30,21%   .177**    43,68%   .076**    n.a.                29,42%    .208**

           2005   73,59%   .251**    79,05%   .183**   50,91%      .292**   53,03%    .315**
     CZE
           2006   44,08%   -.059**   51,19%   -.009     n.a.                13,77%    -.030

           2005   47,85%   .296**    53,14%   .312**    n.a.                36,55%    .384**
     NL
           2006   -4,43%   .054*     4,54%    .028*    2,06%       .080**   -26,79%   .066**

           2005   34,28%   .481**    45,48%   .422**   41,27%      .506**   -14,67%   .468**
     UK
           2006   -2,77%   .089**    8,25%    0.69**   -1,50%      .099**   -41,87    .181**




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Customer Satisfaction vs. Customer Loyalty
4. Results




     • Changing the question is leading to changing in the NPS
     • NPS of 2006 seems to be more realistic than the NPS of 2005
      (closer to well-established survey
     • Low correlation between Customer Satisfaction and Customer
      Loyalty in 2005 (.3 to .4)
     • Dramatically low correlation between Customer Satisfaction and
      Customer Loyalty in 2006 (normally >.1)
     • Research requirement: Validity of the constructs




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