1. Defining and Measuring Customer Satisfaction
Chapter 11
Defining and Measuring Customer Satisfaction

2. 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.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

3. Opening Vignette: Ratemyprofessor.com
This website provides the means for students to rate their satisfaction with their professors
Contains over 10 million ratings of over one million instructors from 6,000 colleges and universities
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

4. Consumer Movement: 1970s and Beyond
Skyrocketing inflation during the 1970s forced many firms to slash service in an effort to keep prices down
Deregulation led to price competition (price wars) and services were slashed to hold costs down
Labor shortages also contributed to the decline in customer service
Automation distanced customers
Customers have become more informed and tougher to please
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

5. The Importance of Customer Satisfaction
The average business does not heard from 96 percent of its unhappy customers
For every complaint received, 26 customers actually have the same problem
The average person with a problem tells nine or 10 people; 13 percent will tell more than 20
Customers who have their complaints satisfactorily resolved tell an average of five people about the treatment they received
Complainers are more likely to do business with you again than noncomplainers:
54 percent to 70 percent if resolved at all, and 95 percent if handled quickly
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

6. What Is Customer Satisfaction and Dissatisfaction?
Expectancy disconfirmation model
Confirmation
Negative disconfirmation
Positive disconfirmation =
Perceptions
Expectations
Perceptions
<
Expectations
>
Perceptions
Expectations
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

7. The Benefits of Customer Satisfaction
Positive word-of-mouth generated from existing customers often translates into more new customers
Satisfied current customers often purchase more products more often than dissatisfied customers
Satisfied current customers are less likely to be lost to competitors than dissatisfied customers
High customer satisfaction ratings help insulate the firm from price competition
Firms that pride themselves on their customer satisfaction efforts tend to have more positive work environments
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

8. Figure 11.1: The Customer Service Hall of Fame
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9. Figure 11.2: The Customer Service Hall of Shame
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10. Figure 11.3: Nine Key Attributes of Reputation
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

11. The Benefits of Customer Satisfaction Surveys
Provide a formal means of customer feedback to the firm
Convey a caring message to customers
Used to evaluate employee performance
Merit and compensation reviews
Employee training reviews
Used for comparison against competition
Provide information for advertising
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

12. Measuring Customer Satisfaction
Indirect measures
Sales records, profits, customer complaints
Direct measures
The Scale of 100 approach
The “very dissatisfied/very satisfied” approach
The combined approach
Provides a benchmark against which future satisfaction surveys should be compared
Provides diagnostic information that pinpoints specific areas for improvement
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

13. Figure 11.4: FedEx’s Hierarchy of Horrors
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

14. Understanding Customer Satisfaction Ratings
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
To feel above average is normal
It is not unusual to see results in the 80 to 90 percent range
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

15. Figure 11.5: Distribution of Satisfaction Measurements
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

16. Factors Influencing Customer Satisfaction Ratings
Genuinely satisfied customers
Response bias
Data collection method
Personal (interviews, phone surveys) vs. nonpersonal (mail questionnaires)
Question form
Positive form (“How satisfied are you?”) vs. negative form (“How dissatisfied are you?”)
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

17. Figure 11.6: Responses by Question Form
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18. Factors Influencing Customer Satisfaction Ratings (cont’d)
Question context
A general satisfaction question (“In general, how satisfied are you with the products in your house?” prior to a specific satisfaction question (“How satisfied are you with your Toyota?”)
Question timing
Recent vs. past purchase
Social desirability bias
Mood
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

19. Are Customer Satisfaction Surveys Worth It?
Benchmarking with past satisfaction measures and comparisons with competition provide more meaningful feedback to companies
When firms use satisfaction surveys in conjunction with other measures, the information provided is invaluable
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

20. Customer Satisfaction: How Good Is Good Enough?
Should a firm invest $100,000 in an attempt to improve customer satisfaction ratings from 95 percent to 98 percent?
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

21. Customer Satisfaction: How Good Is Good Enough?
Should a firm invest $100,000 in an attempt to improve customer satisfaction ratings from 95 percent to 98 percent?
It depends upon:
The satisfaction ratings of the firm’s competitors
The dollar investment necessary to increase customer satisfaction relative to the impact of increasing the firm’s market share
The number of time periods needed to recoup the investment
The opportunity costs associated with other uses of the firm’s $100,000
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

22. Criticisms of Customer Satisfaction Research
Focuses on whether current needs are being met but fails to investigate customers’ future needs
Tends to focus on registered complaints
Tends to focus on global attributes and ignores operational elements
Often excludes the firm’s employees from the survey process
Some firms are convinced that customers may not know what they want and that sometimes ignoring the customer is the best strategy to follow
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

23. Types of Customer Expectations
Predicted service
Desired service
Comparing desired service expectations to perceived service received results in a measure of perceived service superiority
Adequate service
Comparing adequate service with perceived service produces a measure of perceived service adequacy
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24. Figure 11.9: Comparison between Customer Evaluation of Service Quality and Customer Satisfaction
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25. Figure 11.10: The Zone of Tolerance
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

26. Figure 11.11: Factors Influencing Expected Service
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.