MKT420
HW1
Article Summary

Omar Salim AL-Ghamdi
201182370

The article:
Why Customer Satisfaction Still Matters
How attitudes, opinions and beliefs come together to form the basis for brand loyalty

Perhaps the most disruptive of ideas to hit the market research community in the past several years has been the notion of ditching the long relied upon “customer satisfaction” model that researchers have leaned so heavily upon for years. A wave of recent methodological research has suggested that our five-point, Likert-scaled question “How satisfied were you with your experience?” no longer cuts it. It just doesn’t do an adequate job of predicting future customer spend. This attack has principally been led by proponents of the Net Promoter Score (NPS) method, which argues that it’s not satisfaction that matters, but rather, loyalty.

According to studies by NPS architect Satmetrix, utilizing the assigned loyalty metric of how likely a customer is to recommend a brand or product produces predictive models that do a significantly stronger job of forecasting future brand spend than simply asking how satisfied customers were with their experience. As they rightfully argue, plenty of customers will leave a store completely satisfied with their experience, yet remain entirely unlikely to return based upon an abundance of variables that satisfaction models can’t account for. This results in retailers and service providers who sit befuddled in conference rooms across the country, trying to figure out why their high satisfaction scores aren’t translating into greater sales.

NPS evangelists have taken their data on the road to preach the notion that customer satisfaction no longer matters and that clients should no longer bother tracking it. While it’s a compelling and disrupting case, I would argue that it’s the wrong one, as it reflects a considerable misunderstanding of the nature of the relationship between satisfaction and loyalty.

The crux of this misunderstanding of satisfaction and loyalty has to do with poor insight into the cognitive factors specific to each. Satisfaction is a measure of attitude, and attitudes are simply knee-jerk, low investment responses to basic stimuli. If a barista at the local coffee shop hands me my morning cup of coffee and it burns my lips as I touch it to my mouth, I will form a very simple and clear attitude that the coffee is too hot. Attitudes require little to no contemplation or introspection. I didn’t have to mentally evaluate previous cups of coffee to form my attitude. They are also easily malleable, thus, changing my attitude is simply a function of the barista turning down the coffee pot.

Loyalty, on the other hand, cannot be conceptualized as a mere attitude because it’s a belief. To help explain this distinction, imagine that our consumer evaluations comprise a pyramid. Attitudes form the bottom layer, comprised of a large number of stones that support each layer above. Opinions live a row above and are slightly more reflective evaluations based on two or more attitudes linked in our brains. If my attitudes are that the local shop’s coffee is too hot, tastes funny and has a foul smell, I might link these together to form the opinion that its coffee is of poor quality. While it might be easy for the shop to change my specific attitudes regarding the coffee, they’d have to change more than one before influencing my opinion.

In much the same way that a multitude of attitudes formulate opinions, a series of linked opinions are relied upon to create belief constructs—the basis of brand loyalty. My wife and I are loyal customers of a restaurant for which very little on the menu appeals to me, but which has a tremendous atmosphere and service quality. If you asked me how likely I would be to recommend the restaurant, I would provide the most positive response option available. My loyalty is based upon my beliefs—the third tier of the pyramid—which are supported by a series of positive opinions. The pitfall, however, is that if the restaurant were to only look at my loyalty score, they’d fail to recognize that they were missing considerable spend opportunity related to my base attitudes about their menu. As it turns out, I typically order my meal from the appetizer menu as few of the entrees appeal to me, leading to considerable spend of wallet loss.

While satisfaction may not have as strong a correlation with customer spend as loyalty, loyalty relies upon granular attitudes about specific product and brand features. Even NPS advocates concede that loyalty takes, on average, two to three years to build. The reason for this is simple: It takes consumers time to connect their various experiential attitudes into opinions. It takes even longer to formulate those opinions into the type of beliefs that support consumer loyalty. Strictly measuring loyalty only gives us insight into outcomes, not the processes that led to them.

Giving greater credence to the notion that we shouldn’t be quick to give up on customer satisfaction is the fact that while beliefs are difficult to change, your competitors are still trying. Most lifecycle marketing models don’t perceive death as the end of the customer loyalty experience, but rather account for attrition due to changing market circumstances. The beliefs that formulate the loyalty in your brand are only as strong as the opinions and attitudes that support them. A poor understanding of the base attitudes customers have for your brand makes that bottom layer susceptible to being wiped out due to market shifts, taking all of the layers above it out as well.

I would further argue that capturing customer satisfaction is particularly salient to two customer groups—new customers and top decile (a group of 10 in a population divided according to values of a particular variable) customers. Although on opposite ends of the loyalty spectrum, each presents a strong case for due diligence in monitoring attitudinal feedback. First-time customers simply haven’t had the breadth of experience with your product or brand to formulate the type of beliefs metrics that NPS track. While you may be able to capture likelihood to recommend scores from these respondents, they’re not in fact a measure of loyalty—they’re a measure of attitudes, which is all the respondent has to cognitively pull from.

Top decile customers are loyal by their very definition. As such, tracking loyalty becomes far less important than maintaining it. Maintaining loyalty is a function of monitoring cracks and structural breakage in the layers below the beliefs that drive their preferences. These customers have tremendous insight into your base level business practices and will be the first to notice when something changes, be it positive or negative.

There is undoubtedly a political objective to the “customer satisfaction is dead” rhetoric popular today among market research professionals. It’s certainly difficult to sell a new and groundbreaking idea without first telling potential consumers why the incumbent methods they’ve invested in are no longer adequate. From a methodological perspective, however, we should work to temper the growing backlash aimed at customer satisfaction tracking and suggest ways of managing awareness and tracking campaigns around both the attitudinal- and belief-oriented facets of our customer-facing policies and behaviors. While loyalty is key, there is still an important place for satisfaction monitoring and tracking in the modern era market research budget. Satisfaction and loyalty shouldn’t work against one another, they should work together to provide a complete and holistic strategy for driving retention.
The Summary:
This article has talked about why the customer satisfaction still matters?
Then the author started to explain why he is writing about the customer satisfaction and its impotency because it’s been forgotten by the companies.
Most of the companies now days focus on the loyalty not the customer satisfaction, but there are always new customers enter the company so customer satisfaction is more important than loyalty because it’s the way to loyalty. Customer satisfaction leads to loyalty and also leads to good reputation among loyal customers and the new customers.
In my opinion, I agree with this article because the customer satisfaction is the most important factor that companies should focus on, because it leads to everything like profit, loyalty, reputation, market share, etc..
If you can earn a customer satisfaction you will earn his friends money. (by me)

References:
Strickland, K. (2014). Why Customer Satisfaction Still Matters. Retrieved from https://www.ama.org/publications/MarketingInsights/Pages/why-customer-satisfaction-still-matters.aspx