RUNING HEAD: BEST PRACTICES IN CUSTOMER SATISFACTION MEASUREMENT

Customer Satisfaction Measurement Best Practices

Devry University
Keller Graduate School Of Management
Managing Quality

09/21/2012

Customer satisfaction is the state of mind that customers have about a company when their expectations have been met or exceeded over the lifetime of the product or service. The achievement of customer satisfaction leads to company loyalty and product repurchase. Customer satisfaction is very important in all types of business operations and the best practices that deliver such a satisfaction are the tools that lead to the best results and gains that many firm and companies enjoy at the end of the quest. The best practices in customer service are the engine of the company future and this does reflect in the culture of the company and how it handles the most important factor in its look for best results and shines the road for the competitive leadership awards. Being able to understand the satisfaction level of customer can make the fine lines between loss and profit. Top managers and responsible executives need to assess the importance of understanding if their customers are still satisfied with their products and services as they were last year or last quarter. They also need to know how that level of satisfaction can affect the profits of the firm or company and if those changes in the satisfaction level are not giving advantage to the competitors in the market place. Moreover, one bad experience can outweigh a whole lot of good experiences. Because of e-mail and instant messaging, that bad experience can quickly be broadcast to dozens, hundreds, or thousands of other customers, magnifying its impact.

Best practices in customer satisfaction are tied directly to profitability. If a customer is happy with the product or services of a firm they will certainly come back and buy more. Plus, the happy customer will spread the word and bring in more prospect clients to the firm. Also, the cost associated with retaining an existing client or customer is less by five or six times the cost of acquiring the new customer. But if that retained customer does not feel satisfied it can destroy the whole efforts and the satisfaction practices project stumbles. Customer satisfaction is an important factor for the bottom line. Statistics show that the typical company gets 65 percent of its business from existing customers and their repeat business choices. “One study found that businesses with a 98 percent customer retention rate are twice as profitable as those at 94 percent. Johnson Controls, Inc. (JCI) discovered that 91 percent of contract renewals came from customers who were either satisfied or very satisfied.”(Text, p.193) Organizations first need to understand the drivers of customer satisfaction; what do customers want or expect from our goods and services? By understanding such needs and expectation the design process of the product and the delivery of the services does become a great tool for measuring the satisfaction levels that are reflections of the aligned design and service with the needs. There are many great and best practices to measure the levels of customer satisfaction by any firm or company that seeks to maximize the chances of wining the customer business and increase their loyalty as well. Some firms and companies are differentiating their approach to the satisfaction measurement process, but the outcomes are identical as they serve clear the vision about the future of the company in a consistent manner. Such examples illustrate the importance of the best practices in measuring satisfaction. Web analytics, if done properly, will provide key data on customers’ behavior on the site, information for customer segmentation, and major sources of customer abandonment. However, it will not give you any qualitative information, such as why did something happen, what was the customer’s motivation? Plus, surveys, Focus Groups, Eye Tracking studies, Voice of the Customer and Customer Experience Management systems can be used to find the reasons behind customers’ behavior. Having the qualitative information is the missing link in most retail customer satisfaction initiatives. Moreover, determining how customer satisfaction in one channel affects satisfaction in other channels or how it affects purchasing behavior on other channels is key to understanding customer. Therefore, Measuring customer satisfaction right after customers complete the purchase online will give a firm’s marketing department an insight into the purchase process. Last, but not least, customer satisfaction is an indicator of how your customers will purchase from you in the future and how they might recommend your products. Think about your needs in terms of current improvements and future initiatives. Measuring customer satisfaction is a relatively new concept to many companies that have been focused exclusively on income statements and balance sheets. Competitors that are prospering in the new global economy recognize that measuring customer satisfaction is key. The competitors who will be successful recognize that customer satisfaction is a critical strategic weapon that can bring increased market share and increased profits. “Not everyone can satisfy customers, though, and satisfied customers can move your company miles ahead of the competition.” (Parsons, 1995). Customer satisfaction measurement variables will differ depending on what type of satisfaction is being researched. For example, manufacturers typically desire on-time delivery and adherence to specifications, so measures of satisfaction taken by suppliers should include these critical variables. Auto makers are advised to design products and features that will suit most drivers and make sure the models appeal to the customers by asking them what they want and what kind of features they prefer to have in a car so that the choices and needs will be combined at the to deliver a successful hit if a model that satisfied a wide base of consumers. Retailers who are constantly in the business of innovating the design of clothes and accessories for homes are obligated to use the best practices of customer satisfaction that creates value and quality both delivered for the end use. Relatively important, company leaders must be active, regularly visiting with key customers and spending time and effort communicating the customer-based focus to employees. More important “some companies spread the customer satisfaction focus throughout the workplace by pinning financial incentives to customer satisfaction numbers or awarding employees for going beyond the call of duty.” (Doing It Right, 1996)

References

Doing it right. (1996). Executive Report, 15(3), 41.

Evans, Lindsay. Managing for Quality and Performance Excellence, 8th Edition. South Western Educational Publishing, 01/2010.

Parsons, W. T. (1995). Give the lady what she wants. Chain Store Age, 71(11), 86.