Customer Satisfaction
Measurement
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Why CSM?
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Why satisfied customers?




Buy more often
Buy more (range)
Pay more (9% less price sensitive)
Recommend more
 Free
advertising
 Referred customers are best
 Stay longer
Make companies
more profitable
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Satisfaction - Loyalty links
Apostle
100%
Zone of affection
80%
Zone of indifference
60%
Loyalty
40%
Zone of defection
20%
Terrorist1
Satisfaction
5
10
Source: Professor J. Heskett, Harvard Business School
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Customer satisfaction pays
 Customer loyalty is a better predictor of profit
than market share (Harvard)
 Dow Chemicals: 1% increase in loyalty
generates 1.2% increase in account share
 IBM: 1% gain in customer satisfaction index
results in $100 million extra sales over 5 years
 Poor service is the main reason for customer
defections
 Service differentiates more than product or
price in most markets
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Why measure satisfaction?
 Traditional measures not adequate
 Customer complaints
Most dissatisfied customers don’t complain
 Most complaints don’t reach senior management

 Salesforce
Selective feedback of information
 Subjective knowledge based on relationships

 Only objective third party surveys provide a
reliable customer satisfaction indicator
 Requirement of ISO 9001:2000
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Continual improvement of Quality
Management System
CR
u e
q
s u
t ire
o m
m en
e t
s
r
Management
responsibility
Resource
management
Input
Measurement
analysis
improvement
Product
realisation
Output
Product
S
a
t
i
s
f
a
c
t
i
o
n
C
u
s
t
o
m
e
r
Source of diagram: BSI
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
How to measure
customer satisfaction
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Whose perspective?
Lens of the
organisation
people
products
processes
results
outcomes
benefits
Lens of the
customer
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Exploratory research
 Depth interviews or focus
groups
 Range of customer types
It is essential that customers
set the agenda
 customer value
 market segments
 full coverage of DMU
(decision making unit)




Talk to customers to fully
understand the lens of
the customer
Customer Satisfaction Measurement
Ltd
‹#›
Customer requirements
Forced trade off
Relative importance
Questionnaire based on
what’s most important to
customers
© The Leadership Factor
The main survey
Personal interviews
Telephone interviews
Self-completion questionnaires
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Choice of survey
 Personal interviews
 Too expensive
 Postal survey




Lowest cost
Likely to be a low response rate (20%)
Makes the sample unrepresentative
May not be able to trust the result
 Telephone survey
 Good response rate – reliable result
 Low satisfaction probed – understand reasons
 On balance the most cost-effective
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Telephone survey
 Introductory letter to customers
 Explain the purpose of the survey
We need your feedback
 We want to make you as satisfied as possible

 15 minute telephone interview
At a time convenient to you
 Only once a year

 Sample of 200 customers
 Representative
 Based on customer value
 Range of decision making roles covered
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
The results
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Importance
6.5
7
7.5
8
8.5
9
9.5
10
Accuracy of deliveries
Trade margin
Product development
On time delivery
Problem resolution
Treat me like a customer
Staff training
Brand promotion
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Satisfaction
6.5
7
7.5
8
8.5
9
9.5
10
Accuracy of deliveries
Trade margin
Product development
On time delivery
Problem resolution
Treat me like a customer
Staff training
Brand promotion
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
90%
ABC
LtdLtd.
ABC
Satisfaction
Index
70%
80.4%
60%
50%
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Moving forward
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Satisfaction IndexTM targets
87.0%
86.0%
85.5%
Very good
84.7%
85.0%
84.0%
83.4%
83.0%
82.0%
Good
82.0%
81.0%
80.4%
80.0%
Borderline
79.0%
2000
Customer Satisfaction Measurement
Ltd
2001
2002
2003
‹#›
2004
© The Leadership Factor
Improving customer satisfaction
6.5
7
7.5
8
8.5
9
9.5
10
Accuracy of deliveries
Trade margin
PFI
Product development
On time delivery
PFI
Problem resolution
PFI
Importance
Treat me like a customer
Satisfaction
Staff training
Brand promotion
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Mirror survey
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Mirror survey (optional)
 Simultaneous survey of employees who affect
customer satisfaction
 Self-completion questionnaire
 “How important or unimportant do you think these
things are to our customers?”
 “How satisfied or dissatisfied do you think
customers are with our performance in these
areas?”
 Involves employees in the CSM process
 Highlights causes of customer dissatisfaction
by identifying ‘understanding gaps’
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Mirror survey: importance
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Accuracy of deliveries
Trade margin
Product development
On time delivery
Problem resolution
Treat me like a customer
Staff training
Customer
Employee
Brand promotion
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Mirror survey: satisfaction
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Accuracy of deliveries
Trade margin
Product development
On time delivery
Problem resolution
Treat me like a customer
Staff training
Customer
Employee
Brand promotion
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Overview of the process





Project planning
Exploratory research
Questionnaire design
Main survey
Analysis and reporting
Measure based on what’s
important to customers
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
How to proceed
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
DIY or use external specialist
 Advantages of DIY approach
 Less expenditure
 Learn new skills
 Advantages of specialist agency
 Use their expertise – get it right
 Customers have option of anonymity, making them
more honest (many will be happy to be identified)
 Will show we are taking the concept seriously
 Agency will do the work much more quickly
 Agency can help with next steps after the survey
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Agency timescales
 Exploratory research phase: 6 weeks




Briefing and project planning
Conduct 12 depth interviews
Design questionnaire
Interim review meeting
 Main survey: 6 weeks





Sampling
Interviews
Analysis and reporting
Presentation of results
Feedback to customers
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Estimated agency cost options
 Exploratory research
 Face to face depth interviews £6,000
 Telephone depth interviews £3,000
 Focus groups £8,000
 Main survey
 Telephone survey (200 interviews) £10,000
 Postal survey £6,000
 Mirror survey (optional) £1,750
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
Suggested agency
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor
The Leadership Factor
 Leading specialist provider of research in
customer satisfaction measurement
 100 staff
 HQ in Huddersfield, plus offices in France,
Italy, USA and Australia
 ISO 9001 registered
 Over 200 satisfaction studies per annum – the
most by any UK agency
 Large Satisfaction Benchmark database
 Can make comparisons across many blue chip
companies
Customer Satisfaction Measurement
Ltd
‹#›
© The Leadership Factor