Managing Customer Managing Customer SatisfactionSatisfaction

Week 3Week 3

Customer Expectations & Customer Expectations & SatisfactionSatisfaction

Customer satisfaction, service Customer satisfaction, service quality & confidencequality & confidence

The purpose of understanding customers’ The purpose of understanding customers’ expectations is to design services that expectations is to design services that meet their expectationsmeet their expectations

Satisfaction is a result of the customers’ Satisfaction is a result of the customers’ assessment of a service based on their assessment of a service based on their prior expectationsprior expectations

Figure 4.1 Customer satisfaction

Customer satisfactionCustomer satisfaction

Excellent service & Excellent service & customer delightcustomer delight

Delivering the promise—reliability & Delivering the promise—reliability & consistencyconsistency

Dealing well with problems & queries—Dealing well with problems & queries—service recoveryservice recovery

When possibleWhen possible Treat the customer as an individualTreat the customer as an individual Provide something ‘extra’Provide something ‘extra’

Customer satisfaction continuumCustomer satisfaction continuum

Service qualityService quality

Service quality definitions differ, but Service quality definitions differ, but usually include:usually include:

SatisfactionSatisfaction A relative impression of the organization & A relative impression of the organization &

its servicesits services Quality deliveredQuality delivered

Whose perspective? Service manager or Whose perspective? Service manager or customer? customer?

Gaps Gaps

Figure 4.3 Simplified gap model

Service gap modelService gap model

Table 4.1 Reasons for gaps

Reasons for service gapsReasons for service gaps

Expectation-perception downsidesExpectation-perception downsides

Service perceived as good when it is badService perceived as good when it is bad Vulnerable to competitionVulnerable to competition Vulnerable to government interferenceVulnerable to government interference

Service perceived as bad when it is goodService perceived as bad when it is good Over-promisingOver-promising

Expectation-perception downsidesExpectation-perception downsides

Service good last time but just “okay” this Service good last time but just “okay” this timetime Disney’s repeat visitors to the Magic KingdomDisney’s repeat visitors to the Magic Kingdom

Satisfied customer switching suppliersSatisfied customer switching suppliers Must measure post-purchase intentionsMust measure post-purchase intentions

Set appropriate expectationsSet appropriate expectations

Customer confidenceCustomer confidence

Satisfaction requires experience, confidence Satisfaction requires experience, confidence does not does not

Confidence is the belief, trust in servicesConfidence is the belief, trust in services Influencers of confidence—not controllableInfluencers of confidence—not controllable

Personal beliefsPersonal beliefs MediaMedia Word-of-mouthWord-of-mouth

Influencers of confidence—controllable Influencers of confidence—controllable VisibilityVisibility FamiliarityFamiliarity Communication (knowledge of the organization)Communication (knowledge of the organization)

Customer expectationsCustomer expectations

IdealIdeal Ideal feasible (industry standard)Ideal feasible (industry standard) Desirable (customer expects)Desirable (customer expects) Deserved (customer ought to receive Deserved (customer ought to receive

given the cost)given the cost) Minimum tolerable (must be achieved)Minimum tolerable (must be achieved) Intolerable Intolerable

Customer expectationsCustomer expectationszone of tolerancezone of tolerance

Factors influencing expectationsFactors influencing expectations

Defining expectationsDefining expectations Service quality factors—attributes of Service quality factors—attributes of

service customers may expectservice customers may expect

Hygiene & enhancing factorsHygiene & enhancing factors

Hygiene Factors—those that need to be in place Hygiene Factors—those that need to be in place to satisfy; if not they are a source of to satisfy; if not they are a source of dissatisfaction. (ATM machines always work)dissatisfaction. (ATM machines always work)

Enhancing factors—absence has little effect on Enhancing factors—absence has little effect on satisfaction (caring bank staff)satisfaction (caring bank staff)

Critical factors—have the potential to both Critical factors—have the potential to both delight and dissatisfy (competent bank staff)delight and dissatisfy (competent bank staff)

Neutral factors—little effect on satisfaction (well Neutral factors—little effect on satisfaction (well decorated bank lobby)decorated bank lobby)

Delighting and dissatisfying factors

Four types of factors for a bank

Delight versus dissatisfaction

Finding expectations & Finding expectations & assessing satisfactionassessing satisfaction

Questionnaires and surveysQuestionnaires and surveys Focus groupsFocus groups Customer advisory panelsCustomer advisory panels New/lost customer surveysNew/lost customer surveys Complaint/compliment analysisComplaint/compliment analysis Critical incident technique (CIT)Critical incident technique (CIT) Sequential incident analysis (walk through)Sequential incident analysis (walk through)

Assessing satisfactionAssessing satisfaction

Questionnaires and surveysQuestionnaires and surveys SERVQUAL scoreSERVQUAL score

Mystery shoppers—assessing the customer Mystery shoppers—assessing the customer experience experience

Problems with assessments & dataProblems with assessments & data Changing questionsChanging questions Too many questionsToo many questions Missing the pointMissing the point Qualitative vs. quantitativeQualitative vs. quantitative Survey-weary customersSurvey-weary customers Analysis fodderAnalysis fodder

Resource hungryResource hungry Little or no impactLittle or no impact Satisfaction vs. successSatisfaction vs. success Open to manipulation Open to manipulation

Managing perceptions Managing perceptions

Control chart—a way of identifying customer Control chart—a way of identifying customer expectations then assess the impact of each expectations then assess the impact of each factor during the service processfactor during the service process

Medical examinationMedical examination Arrival at clinicArrival at clinic ReceptionReception Waiting for the doctorWaiting for the doctor ExaminationExamination Discussion of findingsDiscussion of findings departuredeparture

Managing perceptions during the process

Managing perceptions at a clinic

Adequate performance satisfies the customer

Using enhancers to delight the customer

Delight shifts the zone of tolerance

Service excellenceService excellence

Transaction satisfaction vs. Transaction satisfaction vs. overall satisfactionoverall satisfaction

How do transaction satisfactions develop How do transaction satisfactions develop into overall satisfaction with the service into overall satisfaction with the service experience and outcome?experience and outcome?

Rational approach—customers use a Rational approach—customers use a weighted average weighted average SERVQUAL uses weighted factorsSERVQUAL uses weighted factors

Incidence approach—customers are less Incidence approach—customers are less rational and react to individual incidencesrational and react to individual incidences