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.
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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 1 million instructors from 6,000 colleges and universities.
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4. Recipe for Customer Service Disasters
Skyrocketing inflation
Price competition ensued (price wars)
Labor shortages
Automation
Customers are tougher to please
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5. 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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6. Technical Assistance Research Program (TARP)
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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7. What is Customer Satisfaction / Dissatisfaction?
Expectancy Disconfirmation Model
Confirmation
Negative Disconfirmation
Positive Disconfirmation =
Perceptions
Expectations
<
Perceptions
Expectations
>
Perceptions
Expectations
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8. Benefits of Customer Satisfaction
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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9. Figure 11.2: The Customer Service Hall of Fame
% of Respondents who rated the Company’s Service as “Excellence”
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%
Source: guide/10-companies-that-treat-you-right.aspx?slide-number=10 accessed 10 June, 2009.
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10. Figure 11.3: The Customer Service Hall of Shame
% of Respondents who rated the Company’s Service as “Poor”
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: guide/the-customer-service-hall-of-shame-2009.aspx accessed 10 June, 2009.
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11. Figure 11.4: Eight Key Attributes of Reputation
Most Admired Companies
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
Source: Geoffrey Colvin, “America’s Most Admired Companies,” Fortune, 141, no. 4 (February 21, 2000), 110.
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12. 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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13. 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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14. Figure 11.6: FedEx’s “Hierarchy of Horrors”
wrong-day delivery
right day, late delivery
pick-up not made
lost package
customer misinformed by FedEx
billing and paperwork mistakes
employee performance failures
damaged packages
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15. 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.
Customer satisfaction ratings are fairly high.
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16. Conceptual Distribution of Satisfaction Measurements
Figure 11.7: Conceptual Distribution of Satisfaction Measurements
Conceptual Distribution of Satisfaction Measurements
High dissatisfaction
High satisfaction
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.
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17. 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
Medical care
Whirlpool 83
Shoes/students
83*
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.
accessed 23 September, 2009.
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18. Factors Influencing Customer Satisfaction Ratings
Customers are genuinely satisfied
Response bias
Data collection method
personal vs. non-personal
Question form
satisfied vs. dissatisfied
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19. Figure 11.9: Responses By Question Form
Response Category
“Satisfied”
“Dissatisfied”
Very Satisfied
57.4%
53.4%
Somewhat Satisfied
33.6%
28.7%
Somewhat Dissatisfied
5.0%
8.5%
Very Dissatisfied
4.0%
9.4%
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.
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20. Factors Influencing Customer Satisfaction Ratings
Context of the Question
general question prior to specific question
Timing of Question
recent vs. past purchase
Social Desirability Bias
Mood
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21. 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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22. Criticisms of Customer Satisfaction Research
Focus is on current needs only
Focus on registered complaints
Focus on global attributes
Fails to involve employee viewpoints
Customers may not know what they want
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23. Types of Customer Expectations
Predicted service
Perceived service superiority
Adequate service
Probability expectation
Minimum tolerable expectation
Desired service
Ideal expectation
Perceived service adequacy
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24. Figure 11.13: The Zone of Tolerance
Expected
service
Desired
service
Zone of
tolerance
Adequate
service
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
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25. Figure 11.14: Factors Influencing Expected Service
Explicit service
promises
Advertising
Personal selling
Contracts
Other communications
Enduring service
intensifiers
Derived expectations
Personal service
philosophies
Implicit service promises
Tangibles
Price
Personal needs
Expected
service
Transitory service
intensifiers
Emergencies
Service problems
Word-of-mouth
Personal
“Expert” (Consumer
Reports, publicity,
consultants, surrogates)
Desired service
Perceived service
alternatives
Zone of
tolerance
Past experience
Self-perceived
service role
Adequate
service
Predicted service
Situational factors
Bad weather
Catastrophe
Random over- demand
Perceived service
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

26. Copyright © 2011 Cengage Learning.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, 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.