Customer is defined as one who receives the product or service which is provided by the organization and which has value. Customer satisfaction is a term which is frequently used in marketing. The term is the measure of the degree to which a product or service provided by the organization meets or exceeds the expectations of the customer.
Customer satisfaction is defined as ‘the number of customers, or percentage of total customers, whose reported experience with the organization, its products, or its services (ratings) exceeds specified satisfaction goals’.
Customer expectations are continuously increasing. Brand loyalty is a thing of the past. Customer seeks out products and organizations that are best able to satisfy his requirements. A product does not need to be rated highest by the customer on all dimensions, only on those he thinks are important.
The customer is always right. The job of the organization is to provide the customer what he wants and when he wants it. Customer satisfaction is the perception of the customers that the organization has met or exceeded their expectations.
Customer satisfaction is important since it provides the management of the organization with a metric that can be used to manage and improve the operations and the functioning of the organization. It is also essential for the organization so that it can achieve success in today’s competitive market place.
An organization cannot create customer satisfaction just by meeting customer’s requirements fully because these are to be met in any case. However falling short is certain to create dissatisfaction of the customers.
Customer satisfaction is seen as a key performance indicator within an organization and is often part of a balanced score card. Low levels of customer satisfaction adversely affect the sales and profitability of the organization. In a competitive marketplace where organizations compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of the strategy for the success of the organization. Further when the organizational products have loyal customers, it gains positive word of mouth marketing, which makes both free and highly effective contribution to the organization’s reputation.
Customer satisfaction is an abstract concept and involves such factors as the quality of the product, the quality of service provided, the environment at the location where the product or service is purchased, and the price of the product or service. Major attributes of customer satisfaction can be summarized as given below.
- Quality of the product meeting the needs of the customer
- Value of product relative to price – a function of quality and price
- Packaging of the product
- Issues related to timeline, such as product availability, availability of marketing assistance, and keeping of delivery commitments
- Marketing personnel issues, such as politeness, attentiveness, helpfulness and healthy environment of marketing department
- Systematization of marketing procedures to eliminate adhocism
- Responsiveness and ability to resolve complaints
- Overall communication, accessibility and attitude
- Convenience, such as location, and hours of operation
Within the organization, customer satisfaction normally has powerful effects. It makes the employees of the organization to focus on the importance of fulfilling the expectations of the customers. This provides an important input towards improvement in the performance of the organization. Therefore, it is essential for the organization to effectively manage customer satisfaction.
Quality manage system (QMS) also give importance to customer satisfaction and it is one of the key indicator for the organization to document it. The relevant clauses of QMS are described below’
- “As one of the measurements of the performance of the quality management system, the organizations shall monitor information relating to customer perception as to whether the organization has met customer requirements. The methods for obtaining and using this information shall be determined”
- “… Trends in customer satisfaction and key indicators of customer dissatisfaction shall be documented and supported by objective information. These trends shall be compared to those of competitors, or appropriate benchmarks, and reviewed by senior management.”
There is a strong link between customer satisfaction and customer retention. Customers’ perception of service and quality of product determines the success of the product or service in the market.
With better understanding of customers’ perceptions, organization can determine the actions required to be taken to meet the needs of the customers. Organization can identify its own strengths and weaknesses, where it stands in comparison to its competitors. It can chart out path of future progress and improvement. Customer satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate improvements in the work practices and processes used within the organization.
Customer’s expectations are the customer defined attributes of the products or services which the organization must meet or exceed to achieve customer satisfaction. Customer expectations are of two types namely expressed and implied.
- Expressed customer expectations – These expectations are those requirements that are written down in the contract and agreed upon by both parties, for example, product specifications and delivery requirements. The performance of the organization against these requirements is most of the times directly measurable.
- Implied customer expectations – These expectations are not written or spoken but are the ones the customer expects the organization to meet nevertheless. For example, a customer would expect the service representative who calls on him to be knowledgeable and competent to solve a problem on the spot.
Customer’s expectations are likely to change with the time. There are many reasons for this change which includes process improvements, advent of new technology, changes in customer’s priorities, improved quality of service provided by competitors are just a few examples.
We cannot begin to address the customer satisfaction issue till we define the parameters and measures clearly.
It may be easier to track organization’s performance against stated requirements of quality and timeliness because there is documentary evidence. Some indication of whether the organization is meeting the requirements can also be obtained from data on complaints database, sales improvements, repeat orders, customer audit reports etc.
It is far more difficult to measure the level of performance and satisfaction when it comes to the implied expectations.
Customers’ expectations can be identified using various methods/tools such as
- Periodic contract reviews
- Customers meet
- Market research
- Telephonic interviews
- Personal visits
- Warranty records
- Informal discussions
- Satisfaction surveys
Depending upon the customer base and available resources, organization can choose a method that is most effective in measuring the customers’ perceptions. The purpose of the exercise is to identify priorities for improvement. Organization must develop a method or combination of methods that helps to continually improve service.
It is far less costly to keep existing customers than to win new ones. Loyal customers buy more products and help bring in more business by recommending the organizational products to others. So if customer loyalty is the goal, then the organization’s efforts should begin with the knowledge of what constitutes value to its customers and the market.
Organization must always keep on improving so as to achieve a greater profitability. This can be achieved by knowing the market well, i.e. understanding exactly what the customer wants. By discovering what the customer wants, the organization can begin to understand how its products and services provide value for the customers. Customer satisfaction plays a significant role in how much revenue a customer generates for the organization. .
Customer satisfaction is tightly linked to revenue and repeat purchases. What often gets forgotten is how customer dissatisfaction negatively impacts the sales of the organization. Organization cannot afford to lose a customer since the loss of a customer can result into loss of more customers because of some bad word of mouth from the lost customer. To eliminate bad word of mouth organization need to have its customers satisfied on an ongoing basis
Organizations which succeed in the cut throat environments are the ones that make customer satisfaction a key element of their strategies. For customer satisfaction, organization must evolve the customer oriented strategies since it is cheaper to retain a customer than to acquire a new customer. These should include providing more value to the customer than competitors for the price he is paying to the organization, improving relationships with the customer, and having more interactive sessions with him to get first hand user experiences. Listening to the customer is a very important strategy for achieving customer loyalty. This evolution of customer oriented strategies can help not only to improve the quality and efficiency of interactions, but also provide competitive differentiation.
For keeping its customers satisfied and to gain his loyalty, organization must provide him consistency in the services, and consistency in communication. The customer must get a feeling of trust from the organization and he should get the confidence that he can depend on the organization for his needs. Further the organization should provide him communication channels for reaching it. These channels can be in person, by phone, by e mail, on line, or through social media etc.
The customer satisfaction pyramid
Understanding overall customer satisfaction is a bit more complicated than saying that there are no complaints or having an excellent rating during customer satisfaction survey. A customer survey has indicated that for every customer who called and complained about a product or service, there are 26 more who say nothing.
The concept of customer satisfaction pyramid is described below.
- Level one or the basics – It is the lowest level of satisfaction and includes trust, reliability, and value. These are the key elements to why customer makes a selection to do business with the organization. This is meeting the minimum requirement, showing up, and doing what the customer paid the organization to do. If the organization is to perform at this level alone, then it will probably have satisfied customers, but rarely customer will have word of praise for the organization in the market. In fact, customer will probably forget the organization name quickly after the transaction is over because the experience has nothing special.
- Level two or the courtesy counts – Level two includes the words namely timeliness, knowledgeable, and responsible. This includes showing up when promised, returning phone calls, giving solid intelligent choices and recommendations, and taking responsibility should something go awry. Another area is confidence and consistency. Anyone who has contact with a customer must make sure the intended message is communicated with confidence and consistency.
- Level three or the emotion – If the organization desires to have a customer for life it has to connect to the customer emotionally. Level three consists of the words caring, concerned and helpful. These are not just words, but emotions. This is when the customer sincerely believes, based on organizational words and actions that the organization does indeed care for him. Organization must make intelligent and honest recommendations based on the needs of the customer.
- At the top or a customer for life – The top of the customer satisfaction pyramid shows environment which is full of fun, friendly, enjoyable and entertaining. At this level there is something so rare and unusual that the customer is so overwhelmed he cannot wait to tell someone about the great experience he had. First impressions mean everything. The customers will compare the interaction with the organization with every interaction they have had with others.
Fig 1 shows a customer satisfaction pyramid