Effectively Measuring Customer Satisfaction
One of the most common applications of market research involves measuring customer satisfaction. From the American Customer Satisfaction Index, increased customer satisfaction leads to increased consumer spending. For this reason, many companies have been instituting customer satisfaction surveys to try and measure this elusive metric.
Customer satisfaction research may also be completed to assess customer expectations for new products or services. If a company is developing a new word processing package, it would be important to know if it must have implemented a thesaurus and spell checking. Another example in manufacturing would be knowing the packaging requirements for a new consumer good. Is a blister pack acceptable, or does it need to be a self-standing carton. Failing to meet these expectations would lead to poor customer satisfaction
Another reason why market research on customer satisfaction is completed is for competitive analysis. Toyota automobiles and Dell computers have long lead the competition for customer satisfaction in their respective industries. An automobile manufacturer might want to know in what areas their customers have experienced complete satisfaction so they could improve their own offerings.
Loyalty
The first measure that is often determined from a survey is loyalty. Loyalty is the probability that a customer will continue to purchase a company's product or service in the future. This is best measured with a projective technique where a person is asked if he or she would recommend the product or service to another person. This removes some of the bias associated with giving a negative answer while accurately determining what the company wants to know.
The important aspect of loyalty measurement is the difference between highest score and the rest of the scores. For example, if loyalty is measured on a 10 point scale, there is a tendency to say that everyone answering 5 or greater is loyal, and everyone less than 5 is disloyal. This is fundamentally incorrect. For it is the customers answering 10 who are truly loyal. It is the tens that will continue to purchase and convert other customers through word-of-mouth advertising. For example, the highly competitive airline industry is known for its poor customer loyalty. While many customers will use an airline, almost all have some complaints with their preferred airline. These customers are not truly loyal, because they are themselves looking for better prices or service. Keeping customers loyal and converting existing customers to loyal is one of the best methods companies have for improving profitability.
Drivers of Dissatisfaction
Customer satisfaction results can also be decomposed to identify the key drivers of dissatisfaction. Oftentimes, companies are providing products or services that the customer does not want, but the company wants to provide. Maybe it used to be important, but now is not. For many years, consumers wanted IBM compatible computers. A key driver of dissatisfaction was the cost of replacing failed original equipment manufacturing (OEM) components like memory, disk drives, and monitors. Today, the market for personal computers have changed so that personal computer components are interchangeable and the computers themselves disposable. Because the costs are comparable, most people and companies prefer to buy a new personal computer rather than upgrade the old one.
The way to measure this property is to ask about overall satisfaction with a company's product or service, and then break out individual sources of dissatisfaction. For example, for an automobile, there would be a single score for the satisfaction of a car, and then individual scores for areas such as price, styling, warranty, noise, and reliability. The individual scores can be correlated to the overall to determine a weighting. For example, if most people are very satisfied with a car are usually dissatisfied with the price, then price does not contribute much, if any, to satisfaction. This could be associated with a luxury car where high prices are as much a selling feature as opposed to a source of dissatisfaction. On the other hand, if many dissatisfied consumers are unhappy with the styling, then this may be the key driver of dissatisfaction for that automobile, such as what happened to the Edsel where styling destroyed an otherwise good automobile.
Identifying Future Trends
Because statistics and surveys measure the past, it is in the actual comments that future trends can be identified. All surveys should include a section for comments. While these are almost always less in number than the number of respondents and their qualitative nature tends to eschew traditional analysis, comments are usually made by customers who are passionate about a product or service.
For example, if the customer satisfaction of a service group indicates high satisfaction levels, but the comments from a few of the respondents indicate a lack of courtesy, then the organization may be losing its customer service focus in a way that is not measurable to the survey, but is apparent to the customers. Conversely, comments may also indicate a source of strength that was previously unknown. If a company is always focusing on the quality of its products, and it turns out that one of its greatest strengths is its ability to help its customers buy the right product, then this temporary advantage could go away with a change in the local management if this is not institutionalized as an advantage.
Conclusion
In order to effectively measure customer satisfaction, determining loyalty, identifying the drivers of satisfaction/dissatisfaction, and reviewing the comments for trends should be completed. Without knowing what is causing one's success or failure, it is difficult to focus the improvement efforts.