Measuring Customer Satisfaction and Loyalty

Measuring Customer Satisfaction and Loyalty

I. The value of measuring customer satisfaction

II. Conducting a customer satisfaction survey

III. Satisfaction and quality measureIV. Measurement of brad loyaltyV. Measurement of employee satisfaction

and loyalty

I. The value of measuring customer satisfaction

• measuring satisfaction over time—allows an organization to communicate a message of caring and to determine whether customers believe the organization is continuously improving, losing ground to a competitor, or stagnating

• objective measure—considered to be hard data, such as number of units sold or time that customers spend in a queue waiting for service, that is not affected by perceptions of people

• subjective measures—attempt to measure people’s perceptions of a brand, process, or experience with the organization in relation to competitive offerings

II. Conducting a customer satisfaction survey(1/9)

• basic survey—eight steps include: (1) define the problem and objectives, (2) plan the survey design, (3) design a questionnaire, (4) select a sample, (5) collect data, (6) analyze data, (7) draw conclusions and prepare a report, and (8) follow up as input to strategy– Exhibit 10.1: A Survey Research Process

II. Conducting a customer satisfaction survey(2/9)

• Stage 1: Defining the Problem– exploratory research—an informal study to provide

background information that is usually needed to clarify the nature of a customer satisfaction problem

– focus group interviews—loosely structured discussions with groups of 6 to 12 people who “focus” on a product or some aspect of the buying process

– community complaint rooms—sites on the Internet that are designed to allow customers to complain about specific products, organizations, and services

II. Conducting a customer satisfaction survey(3/9)

• Stage 2: Planning the Survey Design– survey design—specifies the specific techniques and

procedures that will be used to collect and analyze data relevant to the satisfaction issue

– descriptive research—a study to measure the characteristics (who buys, what do they buy, how much do they spend, when do they buy, where do they shop/purchase), of defined segments

– causal research—uses carefully controlled experiments to isolate reasons for behaviors or outcomes

II. Conducting a customer satisfaction survey(4/9)

• Stage 3: Designing the Questionnaire– wording survey questions—a skill in which the

goal is to ask relevant questions that respondents can answer

– double barreled questions—questions with two subjects or nouns. i.e., how satisfied are you with the cost and quality of the product?

• Exhibit 10.2: Examples of Types of Satisfaction Questions for Tires

II. Conducting a customer satisfaction survey(5/9)

• Stage 4: Selecting a Sample– sampling—any any procedure in which a small part of the whole is used as the basi

s for conclusions regarding the whole– who will be sampled—specifies the target population, the total group of interest– what is the sample size—big enough to represent the target population– probability sample—each element or person in the population has a known and no

n-zero chance of being selected for the sample– simple random sample—each element has an equal chance of inclusion– sampling error—the difference between the sample results and the results you woul

d have gotten if you had been able to poll the entire population– nonprobability sample—sample units are selected on the basis of convenience or pe

rsonal judgment– unrepresentative samples—the organization can use the results for exploratory ideas

but should not base costly decisions on the results since the sample does not necessarily represent the views of the larger population

II. Conducting a customer satisfaction survey(6/9)

• Stage 5: Collecting Data– field service firms—organizations that

specialize in the collection of data– computer assisted telephone interview (CATI)

—field workers enter the respondent’s answer directly into the database, minimizing translation errors

II. Conducting a customer satisfaction survey(7/9)

• Stage 6: Analyzing the Data– coding—assigns numbers to subjective

responses, e.g., the reasons for switching may be given identification numbers such as 1=cheaper price, 2=better value, 3=coupon, etc.

– analysis—ranges from simple frequencies to complicated mathematical modeling and is beyond the scope of this text

II. Conducting a customer satisfaction survey(8/9)

• Stage 7: Drawing Conclusions and Preparing the Report– purpose of customer satisfaction research—aid

managers in making effective marketing decisions

II. Conducting a customer satisfaction survey(9/9)

• Stage 8: Following Up– output of one study—typically the input for

defining research objectives for the next one, thus, the ending discussion is the time to consider the specific issues in need of better description as well as the steps that should be taken to initiate the next measure

III. Satisfaction and quality measure

3-1 Perceptual drivers

3-2 Quality of tangible goods

3-3 Quality of services and service components of products

3-1 Perceptual drivers

• perceptual driver—similar to a key performance indicator, it identifies which issues seem to affect satisfaction the most

• drivers of customer perceptions of brand, value, and relationship/retention equity:– Value equity– Brand equity– Relationship equity

3-2 Quality of tangible goods

• quality dimensions—include such aspects as performance, conformance to specifications, features, reliability, durability, and styling – Exhibit 10.3: Quality Dimensions for Goods

3-3 Quality of services and service components of products

• gap analysis model—defines potential problems between what customers expect and what the organization delivers– Exhibit 10.4: SERVQUAL: Five Dimensions of

Service Quality

3-3 Quality of services and service components of products

• Four gaps of service delivery:– management perception-consumer expectation– management perception-service quality specific

ation– service quality specification-service delivery– service delivery-external communications

IV. Measurement of brand loyalty

• traditional behavioral measure—the number of times the brand is purchased divided by the total number of times the product category is purchased

• customer loyalty—a customer’s commitment or attachment to a brand, store, manufacturer, service provider, or other entity based on favorable attitudes and behavioral responses, such as repeat purchase– Exhibit 10.5: Differentiating Levels of Sports Loyalty

IV. Measurement of brand loyalty

• behavioral intention--assessed with surveys by asking about the customer’s willingness to repurchase and likelihood of recommending the brand or organization to a family member, friend, or associate– Exhibit 10.6: An Example Measure of Store Loyalty

• e-loyalty—a customer’s favorable attitude toward an online retailer– Exhibit 10.7: Example Issues to Measure E-Loyalty

V. Measurement of employee satisfaction and loyalty

• Internal customers vs. external customers

• A key task for managers is to define the drivers of employee satisfaction and improve those components over time.

V. Measurement of employee satisfaction and loyalty

• internal marketing—applying the basic principles to internal employees to ensure that frontline personnel, in particular, are providing desires levels of service

• measurement options—include objective indicators (turnover), subjective answers (surveys of satisfaction), mystery shoppers, and other approaches

V. Measurement of employee satisfaction and loyalty

• Internal customers vs. external customers

• A key task for managers is to define the drivers of employee satisfaction and improve those components over time.