2Customer satisfaction refers to the extent to which customers are happy and satisfied with the products and services provided by a business. Consumer satisfaction is important because when a customer is happy with a service or goods provider, they are most likely to be loyal and to make repeat orders and to use a wide range of services offered by a business. This will boost business sales.
3Customer satisfaction is the key aim in selling process Customer satisfaction is the key aim in selling process. It is estimated that it costs five times as much to attract new customers as to retain an existing one. The relationship between the customer and the organisation is very important.
4The level of satisfaction a customer has with a company has profound effects. Studies have found that the level of customer’s satisfaction has a positive effect on profitability:A totally satisfied customer contributes 2.6 times as much revenue to a company as a somewhat satisfied customer.
5A totally satisfied customer contributes 17 times as much revenue as a somewhat dissatisfied customer.A totally dissatisfied customer decreases revenue at a rate equal to 18 times what a totally satisfied customer contributes to a company.
6Research has shown that when a person is satisfied with a company or service they are likely to share their experience with other people to the order of perhaps five or six people. However, dissatisfied customers are likely to tell another ten people of their unfortunate experience. With social media readily available for consumers to tell their story to all of those online, you can easily go to Twitter or Facebook and read about someone’s experience with a company or service.
7Customer loyalty is much harder to obtain than satisfaction Customer loyalty is much harder to obtain than satisfaction. Even though customers are satisfied with the company there are several factors that could cause the customer to defect to the competition, such as finding a better value or the competitor is more convenient. With that said, having high levels of customer satisfaction does not always lead to customer loyalty. However, a company cannot achieve customer loyalty without having customer satisfaction.
8Creating loyalty among customers can help the company to increase purchases of existing products, charge premium prices for appreciation of your added-value services, and create positive word-of-mouth promotion for your company, which is the core marketing objective for companies.
9Thus, though customer satisfaction does not guarantee the repurchase from a company but it does play a very important role in achieving customer loyalty. Conducting customer satisfaction research will provide your company with the necessary insight it needs to make informed decisions in order to retain and increase your customer base and improve customer relationships.
10“Another satisfied customer!” Customer SatisfactionThink of an incident in which you were “surprised and delighted” as a satisfied customer. How did that happen?Think of another situation where you were very disappointed as a customer, and you did not return or you told others about your negative experience. How did that happen?“Another satisfied customer!”
11Customer satisfaction means money! The lifetime value of a supermarket customer is estimated at $250,000IBM in Rochester, Minn., calculates that a 1 percent increase in customer satisfaction is worth $257 million in additional revenues over five years.Marriott found that each percentage point increased in the customer-wide satisfaction measure of intent-to-return was worth some $50 million in revenues.A study in the Harvard Business Review showed that just a 5 percent increase in customer retention boosts profits by 25 percent to 125 percent.Winners of the Malcolm Baldrige National Quality Award ( heavily oriented toward customer satisfaction) outperform the Standard & Poor's 500-stock index by 3:1 in ROISears, Roebuck operates on a financial model which shows that a 5 point improvement in employee attitudes will drive a 1.3 point improvement in customer satisfaction, which in turn will drive a 0.5 percent improvement in revenue growth. The model also established that 4 percent improvement in customer satisfaction translates into more than $200 million in additional revenues.
12Customer (dis)satisfaction the average business loses 10-30% of its customers each year (without knowing which, when or why lost)it’s more costly to win a new customer than to lose an existing one (5-7 times greater); it takes 12 positive incidents to make up for a negative oneCustomers are three times more likely than service providers to recall the quality of the personal element in a transaction96% of dissatisfied customers never complain to the business, but 91% will not make return purchases70-85% of dissatisfaction is due to customer service not product; 68% of customers who stop buying do so because they perceive an employee as discourteous or indifferentdissatisfied customers on average tell 12 friends of the poor service; satisfied people tell 5 friends (2:1 ratio)70% will return if complaint is resolved, and 95% of customers would do business again if a problem is resolved quickly and effectivelyhighly effective companies spend 10% of their operations budget on fixing problems related to customer complaints; ineffective ones spend 40%
13More (dis)satisfaction Facts People who complain are generally younger, have higher incomes, are better educated, have more experience with the product, are less brand loyal, and may have higher expectationsFor every complaint there are an estimated 25 unnoted complaints75% of complaints reported to front line person do not get reported to managementOnly 20% of complaints are directed to the manager by customers800# doubles calls to corporate, but only 1 per 100/500 get addressed by a senior executiveQuick resolution results in higher satisfaction & loyalty than multiple contactslosing customers is strongly related to employee turnover; Fortune magazine found that the companies with the happiest employees also produced the highest returns to shareholders by a substantial margin, 27.5 percent vs percent for run-of-the-mill companies.
14General Measures in a Customer Satisfaction Survey Product UseFrequency of product usePrimary use locationPrimary precipitating events or situations for product use or needUsage rates and trends Product FamiliarityDegree of actual product use familiarityKnowledge (read product information, read product label, etc.)Knowledge and Involvement with product and the purchase processAwareness of other brandsReasons for original product purchase (selection reasons)Primary benefits sought from the product Product EvaluationAttribute evaluation matrix: (quality, price, trust, importance, performance, value)Perceived benefit associations matrix Importance, performanceIdentification of primary benefits sought Comparison to other brands (better, worse)What is the best thing about the brand, what could be done betterMessage and Package EvaluationPackaging size, designAdvertising Promise, message fulfillment evaluationValue AnalysisExpectation of priceExpectation of relative price (full price, on sale)Current price paidSatisfaction MeasurementsOverall SatisfactionReasons for Satisfaction EvaluationSatisfaction with attributes, features, benefitsSatisfaction with useExpected and Ideal Satisfaction-Performance MeasuresLikelihood of recommendingLikelihood of repurchasing
15Customer hopes & asks but doesn’t expect; if met then delighted Customer hopes & asks but doesn’t expect; if met then delighted. Unlikely to cause dissatisfaction. Build customer loyaltyCustomer tells what is important; satisfaction vs. dissatisfaction if metBenefits above & beyond expectations; identify and suggest innovations with new productsMeeting basic respect & courtesy needs; dissatisfaction if not met; indifference if met
16Some key points on developing loyalty Since what was once unexpected/unstated becomes expected/stated, you must keep innovatingPerformance excellence occurs by design, not defaultAll parts of the organization are part of creating customer loyaltyReliability: Keeping your promise, doing what you said you will do. Doing things right the first time.Assurance: Making the customer feel safe in their dealings with you, being thoroughly professional and ethical.Tangibles: How the product/service looks to the client, the appearance of personnel and equipment, etc.Empathy: The degree to which the organization and service personnel understand the individual client and their needs, the ability to adapt the service to each client, the willingness to 'go the extra' for the client.Responsiveness: The availability, accessibility and timeliness of the service. The ability to respond to enquiries and complaints in a timely fashion.Parasuraman, A., Zeithaml, V., & Berry L. (1984, August). A conceptual model of service quality and Its implications for future research. Cambridge, MA: Marketing Science Institute.
17Pampering Customer Loyalty Proctor & Gamble's Pampers product had 13% market share in Hong Kong. They went on a massive campaign to gather the names and addresses of mothers and babies through highly successful cash back sales promotion activities. To get the cash back, mothers had to write in with full name and address details, as well as the babies birth date and sex. Using this information they wrote to the mothers on a quarterly basis, telling them of their babies growth and what to expect at the various stages. They also sent out discount vouchers when it was time to buy the next size up, so that the nappies always performed well.Within 14 months (the fifth cycle of the ever-growing list of mothers) Pampers had moved to the number one position with 49% market share. Each percentage point was worth US$1million over the life usage of the product. That's $29mil just by staying in touch with the same base, within 3 months over and over.
18Customer Value Determination Process SelectTargetCustomersIdentify CustomerValue DimensionsDetermine StrategicallyCritical Value DimensionsPredictCustomerValueChangeDetermine CustomerSatisfaction WithValue DeliveryExplore Causes of ValueDelivery ProblemsDevelop/ImplementAction Plans
19Feedback (inc. satisfaction) Engagement (design)Service dataUtilisation (analyse)Classification groupsSegmentation (predict)To close gap; prediction v realityEngage & involve; service redesignExpectations v predictionsCUSTOMER INSIGHTOUTCOMES: service improvement, efficiency, satisfaction (customer & job)Audit Commission – robust process, impact on service improvement, local priorities
20customer satisfaction Customer satisfaction measurement helps an organisation focus on its customers, and should galvanise service owners, customer-facing staff, policy, strategy, and research staff, as well as senior management, around the aim of improving the customer experience(Cabinet Office)Focusing on measurement is the wrong place to start. It’s not about data collection, it’s about changing what people think, so the challenge is how to create a shift in thinking in the organisation, not just to get customer information.
21customer satisfaction 5 DriversFinal outcomeKept promiseHandled problemsDelivery30%Initial waitOverall timeTimes to contactTimeliness24%AccurateComprehensiveKept informedSatisfaction with serviceInformation18%16%CompetentFairProfessionalism12%Polite & friendlySympatheticStaff attitude
22Contextualised customer satisfaction Typical of what we do:How do you rate the waiter?5 Very satisfied4 Satisfied3 Neither satisfied nor dissatisfied2 Dissatisfied1 Very dissatisfiedHow does this feel as a customer?What was important to you?
23customer satisfaction How do you find out?Individual interviewsFocus groupsStaff feedbackCustomer feedbackExpert viewsCustomer defined criteria:Fast service Friendly atmosphereGood food Good musicValue for money Child-friendly3 questions: Score these out of 10 for importanceRate these out of 10If you didn’t give a 10, what can we do to make it a 10?
24Customer satisfaction 4-step process:Identify what’s importantCompare expectation and experienceGather opportunities for improvementAddress the biggest gap not the lowest scoreChanges in expectation over time can be accommodated
25Measuring customer satisfaction through mystery shopping
26Mystery ShoppingIt is a form of Market Research where individuals are trained toobserve,experience andevaluate the customer service process of an organization.
27It is to evaluate the quality of service Get that service information anonymously/secretly.Notice the customers in their natural environmentDoes not troubles or irritates the customers
28WALK-IN SHOPPERA Shopper acts as a customer and undertakes a series of agreed tasks,These tasks monitor the quality of customer service.PHONE SHOPPINGMonitor how long it took staff to answer,how they were greeted, and how professionally your request was handledwas the member of staff polite and informative?Report back accurately and objectively by completing a questionnaire.
29Service quality measurement General level of service deliveryTest product knowledgeMonitor turnaround timeprovide the bank with information on the quality of its current service.provide management information to the organization – your suggestions are welcome.Intended to assist the organization to focus on customer service improvements
30Efficiency and effectiveness of Telephone conversation Environment (ACs, lighting, noise levels, flags, clean desk etc)Facilities (washrooms, signages, suggestion boxes etc)Brochures and SlipsProduct Knowledge
31Staff Attitude and service delivery Security Other customers’ views Staff AppearanceStaff Attitude and service deliverySecurityOther customers’ viewsOverall satisfactionHow long it took you to get services.Smartness of the attendantCustomer service professionalism
33Origins of the Kano Model Noriaki KanoProfessor at Tokyo Rika UniversityInternational ConsultantReceived individual Demming Prize in 1997Know the Voice of the CustomerTranslate the VKano Model concept first published in an article by Kano, N., Takahshi, F & Tsuji, S. (1984). Attractive quality and must-be quality. The Journal of the Japanese Society for Quality Control, April, pp
34Origins of the Kano Model Noriaki KanoDeveloped foundation for an approach on “Attractive Quality Creation” commonly referred to as the “Kano Model”Challenged traditional Customer Satisfaction Models that More is better, i.e. the more you perform on each service attribute the more satisfied the customers will be.Proposed new Customer Satisfaction model (Kano Model)Performance on product and service attributes is not equal in the eyes of the customersPerformance on certain categories attributes produces higher levels of satisfaction than others.
35When to use the Kano Model Project SelectionNew Product DevelopmentNew Service DevelopmentDetermine Market Strategies
36Key Elements Identify the Voice of the Customer Translate Voice of the Customer into Critical to Quality Characteristics (CTQs)Rank the CTQs into three categories:Dissatisfier - Must be’s – Cost of EntrySatisfier – More is better – CompetitiveDelighter – Latent Need – DifferentiatorEvaluate Current PerformanceSurveysInterviewsFocus GroupsObservationsCustomer Complaints
37Kano Model The Kano Model is a tool that can be used to prioritize the Critical to Quality characteristics, as defined by the Voice of the Customer and the three categories identified by the model are:Must Be: Whatever the quality characteristic is, it must be present, such that if it is not, the customer will go elsewhere!Performance: The better we are at meeting these needs, the happier the customer is.Delighter: Those qualities that the customer was not expecting, but received as a bonus.Link to Six Sigma:LeanSix SigmaDesign for Six SigmaModel StructureThe model is represented in an (x, y) graphThe x-axis represents how good we are at achieving the customer’s outcome (s), or CTQ’s.The y-axis records the customer’s level of satisfaction the customer should have, as a result of our level of achievement.
38Kano Model Process Research Analyze & Brainstorm Plot & Diagram StrategizeResearch available data sourcesDetermine data collection strategyDesign data collection instrumentsCollect and summarize dataAnalyze results from data collectionBrainstorm list of features and functionalityDevelop Functional and Dysfunctional QuestionnaireDistribute QuestionnaireDevelop Customer Requirement MatrixRecord Questionnaire results in Matrix and SummarizePlot results on Kano ModelDetermine Project selectionProduct DevelopmentService DevelopmentIdentify Marketing Strategy
39Research Must Be’s - Focus Groups, expert opinions, Buzz on Internet Satisfiers - Competitive Analysis, Interviews, Surveys, Search Logs, Usablity Testing, Customer ForumsDelighters - Field Research, Marketing/Branding Vision, Industrial Design, Packaging, Call Center Data, Site Logs
40Strategize Project Selection Organizational Strategy Lean Six Sigma Design for Six SigmaOrganizational StrategyDissatisfier – Must be’s – Cost of EntrySatisfier – More is better – CompetitiveDelighter – Latent Need – Differentiator
41Summary of Kano Model Analyze and rank the voice of the customer data Develop into CategoriesDissatisfier – Must be’s – Cost of EntrySatisfier – More is better – CompetitiveDelighter – Latent Need – DifferentiatorIdentify and implement strategy