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White Paper: Customer Satisfaction Surveys

White Paper: Customer Satisfaction Surveys

Paul Hague and Nick Hague

It seems self evident that companies should try to satisfy their customers. Satisfied customers usually return and buy more, they tell other people about their experiences, and they may well pay a premium for the privilege of doing business with a supplier they trust. Statistics are bandied around that suggest that the cost of keeping a customer is only one tenth of winning a new one. Therefore, when we win a customer, we should hang on to them. Why Customer Satisfaction Is So Important
Why is it that we can think of more examples of companies failing to satisfy us rather than when we have been satisfied? There could be a number of reasons for this. When we buy a product or service, we expect it to be right. We dont jump up and down with glee saying isnt it wonderful, it actually worked. That is what we paid our money for. Add to this our world of ever exacting standards. We now have products available to us that would astound our great grandparents and yet we quickly become used to them. The bar is getting

higher and higher. At the same time our lives are ever more complicated with higher stress levels. Delighting customers and achieving high customer satisfaction scores in this environment is ever more difficult. And even if your customers are completely satisfied with your product or service, significant chunks of them could leave you and start doing business with your competition. A market trader has a continuous finger on the pulse of customer satisfaction. Direct contact with customers indicates what he is doing right or where he is going wrong. Such informal feedback is valuable in any company but hard to formalise and control in anything much larger than a corner shop. For this reason surveys are necessary to measure and track customer satisfaction. Developing a customer satisfaction programme is not just about carrying out a survey. Surveys provide the reading that shows where attention is required but in many respects, this is the easy part. Very often, major long lasting improvements need a fundamental transformation in the company, probably involving training of the staff, possibly involving cultural change. The result should be financially beneficial with less customer churn, higher market shares, premium prices, stronger brands and reputation, and happier staff. However, there is a price to pay for these improvements. Costs will be incurred in the market research survey. Time will be spent working out an action plan. Training may well be required to improve the customer service. The implications of customer satisfaction surveys go far beyond the survey itself and will only be successful if fully supported by the echelons of senior management. There are six parts to any customer satisfaction programme:

1. 2. 3. 4. 5. 6.

Who should be interviewed? What should be measured? How should the interview be carried out? How should satisfaction be measured? What do the measurements mean? How to use customer satisfaction surveys to greatest effect?

Who Should Be Interviewed?

Some products and services are chosen and consumed by individuals with little influence from others. The choice of a brand of cigarettes is very personal and it is clear who should be interviewed to find out satisfaction with those cigarettes. But who should we interview to determine the satisfaction with breakfast cereal? Is it the person that buys the cereal (usually a parent) or the person that consumes it (often a child)? And what of a complicated buying decision in a business to business situation. Who should be interviewed in a customer satisfaction survey for a truck manufacturer the driver, the transport manager, the general

management of the company? In other business to business markets there may well be influences on the buying decision from engineering, production, purchasing, quality assurance, plus research and development. Because each department evaluates suppliers differently, the customer satisfaction programme will need to cover the multiple views. The adage in market research that we turn to again and again is the need to ask the right question of the right person. Finding that person in customer satisfaction research may require a compromise with a focus on one person - the key decision maker; perhaps the transport manager in the example of the trucks. If money and time permit, different people could be interviewed and this may involve different interviewing methods and different questions. The traditional first in line customer is an obvious candidate for measuring customer satisfaction. But what about other people in the channel to market? If the products are sold through intermediaries, we are even further from our customers. A good customer satisfaction program will include at least the most important of these types of channel customers, perhaps the wholesalers as well as the final consumers. One of the greatest headaches in the organisation of a business to business customer satisfaction survey is the compilation of the sample frame the list from which the sample of respondents is selected. Building an accurate, up-to-date list of customers, with telephone numbers and contact details is nearly always a challenge. The list held by the accounts department may not have the contact details of the people making the purchasing decision. Large businesses may have regionally autonomous units and there may be some fiefdom that says it doesnt want its customers pestered by market researchers. The sales teams Christmas card lists may well be the best lists of all but they are kept close to the chest of each sales person and not held on a central server. Building a good sample frame nearly always takes longer than was planned but it is the foundation of a good customer satisfaction survey. Customer satisfaction surveys are often just that surveys of customers without consideration of the views of lost or potential customers. Lapsed customers may have stories to tell about service issues while potential customers are a good source of benchmark data on the competition. If a survey is to embrace noncustomers, the compilation of the sample frame is even more difficult. The quality of these sample frames influences the results more than any other factor since they are usually outside the researchers control. The questionnaire design and interpretation are within the control of the researchers and these are subjects where they will have considerable experience.

What Should Be Measured?

In customer satisfaction research we seek the views of respondents on a variety of issues that will show how the company is performing and how it can improve. This understanding is obtained at a high level (how

satisfied are you the ABC Ltd overall?) and at a very specific level (how satisfied are you with the clarity of invoices?). High level issues are included in most customer satisfaction surveys and they could be captured by questions such as:

What is your overall satisfaction with ABC Ltd? How likely or unlikely are you to buy from ABC Ltd again? How likely or unlikely would you be to recommend ABC Ltd to a friend or colleague?

It is at the more specific level of questioning that things become more difficult. Some issues are of obvious importance and every supplier is expected to perform to a minimum acceptable level on them. These are the hygiene factors. If a company fails on any of these issues they would quickly lose market share or go out of business. An airline must offer safety but the level of in-flight service is a variable. These variables such as in-flight service are often the issues that differentiate companies and create the satisfaction or dissatisfaction. Working out what questions to ask at a detailed level means seeing the world from the customers points of view. What do they consider important? These factors or attributes will differ from company to company and there could be a long list. They could include the following:

Quality of the product Length of life of the product

The product

Design of the product Consistency of quality Range of products Processibility of the product Delivery on time Speed of delivery Courtesy from sales staff Representative's availability Representative's knowledge Reliability of returning calls Friendliness of the sales staff Complaint resolution Responsiveness to enquiries After sales service

Delivery

Staff and service

Technical service Reputation of the company

The company

Ease of doing business Invoice clarity Invoices on time Market price

Price

Total cost of use Value for money

The list is not exhaustive by any means. There is no mention above of environmental issues, sales literature, frequency of representatives calls or packaging. Even though the attributes are deemed specific, it is not entirely clear what is meant by product quality or ease of doing business. Cryptic labels that summarise specific issues have to be carefully chosen for otherwise it will be impossible to interpret the results. Customer facing staff in the research-sponsoring organisation will be able to help at the early stage of working out which attributes to measure. They understand the issues, they know the terminology and they will welcome being consulted. Internal focus groups with the sales staff will prove highly instructive. This internally generated information may be biased, but it will raise most of the general customer issues and is readily available at little cost. It is wise to cross check the internal views with a small number of depth interviews with customers. Half a dozen may be all that is required. When all this work has been completed a list of attributes can be selected for rating.

How Should The Interview Be Carried Out?

There are some obvious indicators of customer satisfaction beyond survey data. Sales volumes are a great acid test but they can rise and fall for reasons other than customer satisfaction. Customer complaints say something but they may reflect the views of a vociferous few. Unsolicited letters of thanks; anecdotal feedback via the salesforce are other indicators. These are all worthwhile indicators of customer satisfaction but on their own they are not enough. They are too haphazard and provide cameos of understanding rather than the big picture. Depth interviews and focus groups could prove very useful insights into customer satisfaction and be yet another barometer of performance. However, they do not provide benchmark data. They do not allow the comparison of one issue with another or the tracking of changes over time. For this, a quantitative survey is required.

The tool kit for measuring customer satisfaction boils down to three options, each with their advantages and disadvantages. The tools are not mutually exclusive and a self-completion element could be used in a face to face interview. So too a postal questionnaire could be preceded by a telephone interview that is used to collect data and seek co-operation for the self-completion element.

Tools Postal surveys (or e-research)

Advantages

Disadvantages

Typical Applications

Easy for a DIY

researcher to administer

Low response
rates

Where there is a
strong relationship with the subject (eg new car and new home buyer surveys)

Poor response to
open ended questions

Low cost Respondents

can complete in a time to suit them

Misunderstanding
of questions can not be rectified by an interviewer

Where there is a
strong relationship with the company (key supplier surveys, employee attitude surveys)

Easy to complete
scalar questions

Visual
explanations can be provided

Attracts response
from complainers or the very satisfied

Where people
feel obliged to fill it in (eg utilities research) Face to face interviews

Ability to build
rapport and hold the respondent longer

Expensive for a
geographically dispersed population

For key
customers

Where
customers are tightly grouped geographically

Queries can be
answered

Takes longer to
carry out the fieldwork because of the logistics

Show cards can

be used

Where the
subject is complicated or lengthy

Good response
to open ended questions

Can ask
respondent to self complete tedious scalar response Telephone

Low cost

Tedious for

Used widely in

interviews

High control of
interviewer standards

respondents when there are dozens of attributes to rate

all types of business to business surveys

High control of
sample

Some consumers
are hard to access by phone

Easy to ask for

ratings using simple scales

Cannot show
explanatory visuals

Quick turnaround
of fieldwork

When planning the fieldwork, there is likely to be a debate as to whether the interview should be carried out without disclosing the identify of the sponsor. If the questions in the survey are about a particular company or product, it is obvious that the identity has to be disclosed. When the survey is carried out by phone or face to face, co-operation is helped if an advance letter is sent out explaining the purpose of the research. Logistically this may not be possible in which case the explanation for the survey would be built into the introductory script of the interviewer. If the survey covers a number of competing brands, disclosure of the research sponsor will bias the response. If the interview is carried out anonymously, without disclosing the sponsor, bias will result through a considerably reduced strike rate or guarded responses. The interviewer, explaining at the outset of the interview that the sponsor will be disclosed at the end of the interview, usually overcomes this.

How Should Satisfaction Be Measured?

Customers express their satisfaction in many ways. When they are satisfied, they mostly say nothing but return again and again to buy or use more. When asked how they feel about a company or its products in open-ended questioning they respond with anecdotes and may use terminology such as delighted, extremely satisfied, very dissatisfied etc. Collecting the motleys variety of adjectives together from open ended responses would be problematical in a large survey. To overcome this problem market researchers ask people to describe a company using verbal or numeric scales with words that measure attitudes. People are used to the concept of rating things with numerical scores and these can work well in surveys. Once the respondent has been given the anchors of the scale, they can readily give a number to express their level of satisfaction. Typically, scales of 5, 7 or 10 are used where the lowest figure indicates extreme dissatisfaction and the highest shows extreme satisfaction. The stem of the scale is usually quite short since a scale of up to 100 would prove too demanding for rating the dozens of specific issues that are often on the questionnaire. Measuring satisfaction is only half the story. It is also necessary to determine customers expectations or the

importance they attach to the different attributes, otherwise resources could be spent raising satisfaction levels of things that do not matter. The measurement of expectations or importance is more difficult than the measurement of satisfaction. Many people do not know or cannot admit, even to themselves, what is important. Can I believe someone who says they bought a Porsche for its engineering excellence? Consumers do not spend their time rationalising why they do things, their views change and they may not be able to easily communicate or admit to the complex issues in the buying argument. The same interval scales of words or numbers are often used to measure importance 5, 7 or 10 being very important and 1 being not at all important. However, most of the issues being researched are of some importance for otherwise they would not be considered in the study. As a result, the mean scores on importance may show little differentiation between the vital issues such as product quality, price and delivery and the nice to have factors such as knowledgeable representatives and long opening hours. Ranking can indicate the importance of a small list of up to six or seven factors but respondents struggle to place things in rank order once the first four or five are out of the way. It would not work for determining the importance of 30 attributes. As a check against factors that are given a stated importance score, researchers can statistically calculate (or derive) the importance of the same issues. Derived importance is calculated by correlating the satisfaction levels of each attribute with the overall level of satisfaction. Where there is a high link or correlation with an attribute, it can be inferred that the attribute is driving customer satisfaction. Deriving the importance of attributes can show the greater influence of softer issues such as the friendliness of the staff or the power of the brand things that people somehow cannot rationalise or admit to in a stated answer.

What Do The Measurements Mean?

The scores that are achieved in customer satisfaction surveys are used to create a customer satisfaction index or CSI. There is no single definition of what comprises a customer satisfaction index. Some use only the rating given to overall performance. Some use an average of the two key measurements - overall performance and the intention to re-buy (an indication of loyalty). Yet others may bring together a wider basket of issues to form a CSI. The average or mean score of satisfaction given to each attribute provides a league table of strengths and weaknesses. As a guide, the following interpretation can be made of scores from many different customer satisfaction surveys:

Scores Mean scores of over 8 out of 10 Mean scores of 7 to 8 out of 10

What This Means Market leader, excellent supplier Adequate but needs attention

Labels: Customer Satisfaction & Loyalty

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