Customer Satisfaction Research

Customer Satisfaction Research Customer Satisfaction Research An introduction to customer satisfaction research techniques and how it can help your business January 2001 Customer Satisfaction Research fact sheet I 2/11 ‘an introduction to customer satisfaction research’ The majority of organisations today, both public and private, include customer satisfaction as a primary business or organisational objective. Indeed, most aim to deliver high levels of customer satisfaction and many have made significant investments in Customer Care or Customer Service programmes. The ability to set customer satisfaction objectives is dependent on the organisation’s ability to understand the priorities of its customers in the first place, and subsequently to put in place mechanisms to measure accurately levels of customer satisfaction. Customer Satisfaction Measurement (CSM) is the term used by market researchers to describe broad research activities that help to understand and measure customer satisfaction. This document provides an overview of why CSM is important to all organisations no matter how large or small, outlines the objectives of different types of customer satisfaction research studies, and highlights some of the primary objectives of effective CSM programmes. Why Measure Customer Satisfaction? Most businesses lose a certain proportion of their customers in every year they trade, and in many cases the customer is lost because they have defected to the competition. This is often referred to by marketeers as ‘customer decay’ or ‘customer attrition’. In some markets, the average attrition rate is between 10 and 30%! There are many reasons why a customer defects, but without a doubt the primary driver is dissatisfion with the product or service being offered. Providing organisations can replace the lost customer with a new customer, ‘customer decay’ is not necessarily perceived as an urgent problem. But ‘customer decay’ should in fact be a problem for all organisations and ignoring it is both dangerous and inefficient. The underlying logic for minimising `customer decay’ is simple: the cost of acquiring new customers is higher than the cost of retaining existing customers. As we shall see, there is such a thing as an unprofitable customer and, therefore, circumstances when acquiring new customers is a better strategy than holding on to undesirable customers, but in general it is now a widely accepted business theory that customer retention optimises profitability. So, there is a fundamentally good reason for measuring customer satisfaction: understanding customer needs and delivering high levels of customer satisfaction ensures a high levels of customer loyalty, and this in turn enhances profitability. For public sector organisations also, customer loyalty is a key measure of their performance. Public sector bodies which provide excellent service to their “customers” are fulfilling a key tenet of contemporary public service philiosophy and most government departments now set rigorous requirements for meeting the highest customer service standards. Customer Satisfaction Research fact sheet I 3/11 ‘an introduction to customer satisfaction research’ Defining Customer Loyalty – three underlining principles In the early 1990s UK supermarkets, followed by a host of other retail businesses, began introducing new consumer incentive schemes usually referred to as loyalty programmes. If customers signed up to the loyalty scheme and continued to shop at the supermarket with their personalised loyalty card, they would enjoy regular price discounts on their purchases through accrued loyalty points. Years later some of those supermarkets withdrew their loyalty schemes because they realised loyalty wasn’t so easily bought. Indeed, it became clear that many customers were simultaneously holders of several loyalty cards from competing supermarkets! More recently, internet retailers basing their customer loyalty strategies purely on discounted pricing also found to their dismay that customers were only loyal to the latest highest discount. First principle – loyalty isn’t bought cheap Loyalty is not bought through discounts or cheap bribes. Demonstrating competitive pricing can have a crucial role in winning or retaining customers, but this has to be seen in a wider context of a valuable product or service proposition. The most effective way to retain profitable customers is, therefore, to offer a product or a service package which the customer values as superior to the competition. But before you can put together a value proposition which will generate customer loyalty, you have to understand what customers really value the most. Second principle – there are different types of loyalty The second principle of loyalty is about differentiation. Your customers are not a homogeneous group; they do not all have the same buying characteristics. Equally, there are fundamentally different types of customer loyalty. Customer Satisfaction Research fact sheet I 4/11 ‘an introduction to customer satisfaction research’ Customer Loyalty At the bottom end of the scale there are customers who are simply ‘locked in’ with their supplier or have limited scope to change supplier regularly. This is not uncommon in business to business markets. For example, the significant investments made by manufacturing companies to acquire ERP software stops them purchasing new systems regularly. They are, to all intents and purposes, ‘locked in’ with their supplier for a minimum of a few years no matter how dissatisfied they may be with its performance. Consumers are in a similar position with monopoly suppliers - they are forced to be loyal. Customers who are forced to be loyal are not really loyal at all. Loyalty, and more importantly, genuine commitment to a supplier, is a voluntary action and has to be earned ultimately by consistently giving the customer what they need. Customer Satisfaction Research fact sheet I 5/11 ‘an introduction to customer satisfaction research’ The second type of loyalty is often referred to as ‘incentivised loyalty’, as manifested by supermarket loyalty cards, airline ‘frequent flyer programmes’ and pricing discounts among telecoms companies (e.g. BT “friends and family”). As mentioned earlier, loyalty cards or other incentive schemes are no guarantee of loyalty and often only succeed in reducing the customer relationship to that of price. The third type of loyalty is sometimes called ‘habitual loyalty’. If the customer continues to buy from a supplier merely because it is easier to do so but without truly valuing the supplier’s products or services, then the customer has a relatively low level of commitment to that supplier. In these circumstances the chances of a new supplier surplanting the incumbent is high and becomes more likely over time. In business to business markets the buying decision is frequently more complex than consumer markets. In general, the higher the purchase value and the more important to the business of a single purchase, the more likely the decision will be made by a group of influencers, users and decision makers. But uncomplicated, low value, low risk purchases frequently become habitual purchases. It is also the case that in many business and industrial markets, companies will generally seek to specify several sources of supply. Multiple sourcing helps companies to negotiate with suppliers and minimises supply chain problems. In these circumstances, even the most loyal business customer may be unwilling to rely on a single supplier. The most valuable type of loyalty is often referred to as ‘committed loyalty’. Those customers who are committed to a supplier place a lot of value in using that supplier. More importantly, they believe their chosen supplier is the best choice for them in the market as a whole. There are a number of distinguishing characteristics to help identify the ‘committed loyalist’: they tend to buy more products, more often and spend a higher proportion of their budget on their chosen supplier; they consider competitors less often and recommend their supplier more willingly and frequently to colleagues; they are emotionally committed to their chosen supplier. Hence, committed customers are a valuable asset. Truly committed customers are more like partners than customers - they actively support the supplier and recommend the supplier to other customers. As such, marketeers often refer to these types of customer as ‘loyal advocates’. ... - tailieumienphi.vn