Chapter 11 Defining and Measuring Customer Satisfaction.

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Chapter 11 Defining and Measuring Customer Satisfaction
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Transcript of Chapter 11 Defining and Measuring Customer Satisfaction.

Page 1: Chapter 11 Defining and Measuring Customer Satisfaction.

Chapter 11Defining and Measuring Customer Satisfaction

Page 2: Chapter 11 Defining and Measuring Customer Satisfaction.

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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.

©2011 Cengage Learning. All rights reserved.

Page 3: Chapter 11 Defining and Measuring Customer Satisfaction.

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Opening Vignette: ratemyprofessor.com

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• This website provides the means for students to rate their satisfaction with their professors. Contains over 10 million ratings of over 1 million instructors from 6,000 colleges and universities.

• www.ratemyprofessor.com

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Recipe for Customer Service Disasters

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• Skyrocketing inflation• Price competition ensued (price wars) • Labor shortages• Automation• Customers are tougher

to please

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Technical Assistance Research Program (TARP)

• The average business does not hear from 96% of its unhappy customers

• For every complaint received, 26 customers actually have the same problem

• The average person with a problem tells 9 or 10 people. 13 percent will tell more than 20

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• Customers who have their complaints resolved tell an average of 5 people• Complainers are more likely to do business with you again than non-complainers• 54-70% if the complaint is resolved at all• 95% if the complaint is resolved quickly

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Technical Assistance Research Program (TARP)

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• Expectancy Disconfirmation Model• Confirmation

• Negative Disconfirmation

• Positive Disconfirmation

What is Customer Satisfaction / Dissatisfaction?

Perceptions Expectations

Perceptions Expectations

Perceptions Expectations>

=

<

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Benefits of Customer Satisfaction

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• Positive word-of-mouth

• Purchase more frequently

• Less likely to be lost to competitors

• Insulated from price competition

• Positive work environments

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Figure 11.2: The Customer Service Hall of Fame

The 2009 Customer Service Hall of Fame

% of Respondents who rated the Company’s Service as “Excellence”

1. USAA (insurance provider) 56.5%

2. Trader Joes (food retailer) 50.6%

3. Netflix (movie retailer) 45.8%

4. Amazon (online retailer) 43.0%

5. Nordstrom (fashion retailer) 42.2%

6. Publix (food retailer) 41.5%

7. Whole Foods (food retailer) 40.5%

8. Apple (electronics retailer) 39.6%

9. Costco (general retailer) 37.9%

10. Southwest Airlines (air carrier)

36.7%

©2011 Cengage Learning. All rights reserved.

Source: http://articles.moneycentral.msn.com/smartspending/consumeraction guide/10-companies-that-treat-you-right.aspx?slide-number=10 accessed 10 June, 2009.

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Figure 11.3: The Customer Service Hall of Shame

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The 2009 Customer Service Hall of Shame

% of Respondents who rated the Company’s Service as “Poor”

1. AOL (online service provider) 44.8%

2. Comcast (cable provider) 41.3%

3. Sprint Nextel (phone company)

40.5%

4. Capital One (financial service) 34.7%

5. Time Warner Cable (cable) 32.0%

6. HSBC (financial service) 31.8%

7. Qwest (phone company) 31.6%

8. Abercrombie & Fitch (retailer) 31.4%

9. Bank of America (financial) 28.5%

10. Citigroup (financial services) 28.4%Source: http://articles.moneycentral.msn.com/smartspending/consumeraction guide/the-customer-service-hall-of-shame-2009.aspx accessed 10 June, 2009.

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Figure 11.4: Eight Key Attributes of Reputation

Attributes Most Admired Companies

1. Innovativeness Charles Schwab, Herman Miler

2. Quality of management General Electric, Omnicom Corp

3. Employee talent Goldman Sachs, Cisco Systems

4. Financial soundness Microsoft, Intel, Cisco Systems

5. Use of corp. assets Berkshire Hathaway, Cisco, GE

6. Long-term investment value Microsoft, Home Depot, Cisco

7. Social responsibility McDonald’s, DuPont, Herman Miler

8. Quality of product/services Omnicom Group, Philip Morris, UPS

©2011 Cengage Learning. All rights reserved.

Source: Geoffrey Colvin, “America’s Most Admired Companies,” Fortune, 141, no. 4 (February 21, 2000), 110.

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Benefits of Customer Satisfaction Surveys

• Provides a formal means of customer feedback

• Conveys a caring message to customers

• Used to evaluate employee performance• Merit and compensation reviews• Employee training programs

• Comparison against competition

• Provide information for advertising

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Measuring Customer Satisfaction

• Indirect Measures• sales records, profits, customer complaints

• Direct Measures• The Scale of 100 Approach

• Federal Express’ original approach (score = 83)• The “Very Dissatisfied/Very Satisfied”

Approach• The Combined Approach

• Benchmark

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Figure 11.6: FedEx’s “Hierarchy of Horrors”

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1. wrong-day delivery2. right day, late delivery3. pick-up not made4. lost package5. customer misinformed by FedEx6. billing and paperwork mistakes7. employee performance failures8. damaged packages

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Understanding Customer Satisfaction Ratings

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• 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.

• Customer satisfaction ratings are fairly high.

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High dissatisfaction High satisfaction

Conceptual Distribution of Satisfaction Measurements

Source: Robert A. Peterson and William R. Wilson, “Measuring Customer Satisfaction: Fact and Artifact,” Journal of the Academy of Marketing Science 20,1 (1992), p. 61.

Figure 11.7: Conceptual Distribution of Satisfaction Measurements

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Source: v* Robert A. Peterson and William R. Wilson, “Measuring Customer Satisfaction: Fact and Artifact,” Journal of the Academy of Marketing Science 20,1 (1992), p. 61.http://www.theacsi.org/ accessed 23 September, 2009.

Figure 11.8: Sampling of Satisfaction Results

Sample Percentage Satisfied

HMO enrollees 92

Buick (GM) 88

Google 86

British Airways customers 85*

Sears’ customers 84*

Apple 84

FedEx 84

Medical care 84*

Whirlpool 83

Shoes/students 83*

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Factors Influencing Customer Satisfaction Ratings

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• Customers are genuinely satisfied

• Response bias

• Data collection method• personal vs.

non-personal

• Question form• satisfied vs.

dissatisfied

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Source: Robert A. Peterson and William R. Wilson, “Measuring Customer Satisfaction: Fact and Artifact,” Journal of the Academy of Marketing Science 20,1 (1992), p. 65.

Figure 11.9: Responses By Question Form

Question Form

Response Category “Satisfied” “Dissatisfied”

Very Satisfied 57.4% 53.4%Somewhat Satisfied 33.6% 28.7%Somewhat Dissatisfied5.0% 8.5%Very Dissatisfied 4.0% 9.4%

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•Context of the Question general question prior to specific question

•Timing of Question recent vs. past purchase

•Social Desirability Bias

•Mood©2011 Cengage Learning. All rights reserved.

Factors Influencing Customer Satisfaction Ratings

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Customer Satisfaction: How Good is Good Enough?

• Should a firm invest $100,000 to attempt to improve ratings from 95% to 98%?

• Depends Upon:• satisfaction ratings of other firms• dollar investment needed relative to the impact on

the bottom line by increasing market share• number of time periods needed to recoup the

investment• opportunity costs associated with other uses of the

firm’s funds

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1. Focus is on current needs only

2. Focus on registered complaints

3. Focus on global attributes

4. Fails to involve employee

viewpoints

5. Customers may not know what

they want

Criticisms of Customer Satisfaction Research

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Types of Customer Expectations

• Predicted service

• Probability expectation

• Desired service

• Ideal expectation

• Perceived service

superiority

• Adequate service

• Minimum tolerable expectation

• Perceived service adequacy

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Source: Valerie A. Zeithaml, Leonard L. Berry, and A. Parasuraman, “The Nature and Determinants of Customer Expectations of Service,”Journal of the Academy of Marketing Science 21,1 (1993), pp. 1-12.

Expectedservice

Desiredservice

Zone oftolerance

Adequateservice

Figure 11.13: The Zone of Tolerance

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Page 25: Chapter 11 Defining and Measuring Customer Satisfaction.

Source: Adapted from Valerie A. Zeithaml, Leonard L. Berry, and A. Parasuraman, “The Nature and Determinants of Customer Expectations of Service,” Journal of the Academy of Marketing Science 21,1 (1993), pp. 1-12.

Enduring service intensifiers•Derived expectations•Personal service philosophies

Personal needs

Transitory service intensifiers•Emergencies•Service problems

Perceived servicealternatives

Self-perceivedservice role

Situational factors•Bad weather•Catastrophe•Random over- demand

Explicit service promises•Advertising•Personal selling•Contracts•Other communications

Implicit service promises•Tangibles•Price

Word-of-mouth•Personal•“Expert” (Consumer Reports, publicity, consultants, surrogates)

Past experience

Predicted service

Expectedservice

Desired service

Zone oftolerance

Adequateservice

Perceived service

Figure 11.14: Factors Influencing Expected Service

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mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Copyright © 2011 Cengage Learning.

©2011 Cengage Learning. All rights reserved.