Customer Satisfaction Measurement

1. Customer Satisfaction Measurement

2. Why CSM?

3. 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

4. Satisfaction - Loyalty links Apostle 100% Zone of affection 80% Zone of indifference 60% Loyalty 40% Zone of defection 20% Satisfaction Terrorist 1 5 10 Source: Professor J. Heskett, Harvard Business School

5. 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

6. 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

7. Continual improvement of Quality Management System Management responsibility Measurement analysis improvement Resource management Product realisation Product Customer Customer Sat isfact ion Requirements Input Output Source of diagram: BSI

8. How to measure customer satisfaction

9. Whose perspective? Lens of the organisation people products processes results outcomes benefits Lens of the customer

10. Exploratory research It is essential that customers set the agenda • Depth interviews or focus groups • Range of customer types • customer value • market segments • full coverage of DMU(decision making unit) • Customer requirements • Forced trade off • Relative importance • Questionnaire based on what’s most important to customers Talk to customers to fully understand the lens of the customer

11. The main survey Personal interviews Telephoneinterviews Self-completion questionnaires

12. 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

13. 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

14. The results

15. Importance

16. Satisfaction

17. ABC Ltd. Satisfaction Index 80.4%

18. Moving forward

19. 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 2001 2002 2003 2004

20. Improving customer satisfaction PFI PFI PFI

21. Mirror survey

22. 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’

23. Mirror survey: importance

24. Mirror survey: satisfaction

25. Overview of the process • Project planning • Exploratory research • Questionnaire design • Main survey • Analysis and reporting Measure based on what’s important to customers

26. How to proceed

27. 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

28. 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

29. 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

30. Suggested agency

31. 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