Tracking Customer Satisfaction

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Marketing Highlight

11.1

Complaint and Suggestion Systems

A customer-centred organization makes it easy for customers to make suggestions or complaints. Hospitals place suggestion boxes in the corridors, supply comment cards to existing patients and employ patient advocates to solicit grievances. Some customer-centred companies may set up free customer hot lines to make it easy for customers to enquire, suggest or eom-plain.

Successful companies try very hard- All visitors to Richer Sounds shops get a card showing the shop's team and saying: 'We're listening,' It's a Freepost letter addressed to Julian Richer, the owner of the chain. Inside it reads:

Thank you for your support and making us the UK's most successful hi-fi retailer. In order to maintain No. 1 position, we need to know where we've gone wrong. Suggestions or comments regarding customer service, however small, are gratefully received. Every one has Mr Richcr's personal attention ... Please, please, please let us know, as we really do care!

Such systems help companies to act quickly to resolve problems and provide ideas for improved products and service.

Customer Satisfaction Surveys Simply running complaint and suggestion systems may not give the company a full picture of customer satisfaction. One out of every four purchases results in consumer dissatisfaction, but less than 5 per cent of dissatisfied customers complain. Rather than complain, most customers simply switch suppliers. As a result, the company needlessly loses customers.

Responsive companies take direct measures of customer satisfaction by conducting regular surveys. They send questionnaires or make telephone calls to a sample of recent customers to find out how they feel about various aspects of the company's performance.

Belgacom is the new name for Belgium's revitalised Regie des Telcgraphes et des Telephones, the state-owned telecommunications monopoly. It placed a questionnaire about its service in -newspapers and got 65,000 replies. These highlighted the firm's weaknesses and reputation for "customer unfriendliness'. Not surprising when a law exists that allows Belgacom employees to slam the phone down on irate customers. Belgacom has changed its ways so as not to be crushed in the European telecom market.

Magazines and consumers' associations often conduct independent surveys. Honda, Dell and dan Technologies strive to come out on top in these measures. Companies can easily be deluded by their own results. For instance, a conference centre may be happy that 85 per cent of its customers say its service is good, but what if 95 per cent of the customers also rate a competitor as excellent?

The ad agency Bozell Worldwide's Quality Poll gives a league table and shows how biased local perceptions can be. Gallup conducted a study that asked 20,000 people in 20 countries to rate the quality of manufactured goods from 12 countries (see Table 1). All countries rated themselves higher than other people did. The French put French goods on top, while the Japanese gave themselves twice the rating (76 per cent) that the full sample did (38.5). All other countries were optimistic too: Germans gave themselves 49 per cent against the full sample's 36 per cent and the United Kingdom 39 per cent against 22 per cent.

Ghost Shopping

Another useful way of assessing customer satisfaction is to hire people to pose as buyers. These 'ghost shoppers' can even present specific prol>-

TABLE 1 QUALITY RATING OK MANUFACTURED HOODS

RESPONDENTS RATING GOODS VERY GOOD OR EXCELLENT

lems in order to test whether the company's personnel handic difficult situations well. For example, ghost shoppers can complain about a restaurant's food to see how the restaurant handles this complaint. Research International's Mystery Shopper surveys can measure many dimensions of customer performance. By telephoning it can measure a firm's telephone technique: how many rings it takes to answer, the sort of voice and tone and, if transferred, how many leaps it took before being correctly connected. Not only should companies hire ghost shoppers, but managers themselves should leave their offices from time to time and experience firsthand the treatment they receive as 'customers'. As an alternative, managers can phone their companies with different questions and complaints to see how the call is handled.

Lo.st Customer Analysis

Companies should contact customers who have stopped buying or those who have switched to a competitor, to learn why this happened. When IBM loses a customer, it mounts a thorough effort to learn how it failed: was IBM's price too high, its service poor or its products substandard? Not only should the company conduct such exit interviews, it should also monitor the customer toss rate. A rising loss rate indicates that the company is failing to satisfy its customers.

Some Cautions in Measuring Customer Satisfaction

Customer satisfaction ratings are sometimes difficult to interpret. When customers rate their satisfaction with some element of the company's

MEMBERS (RANKED IN ORDER OF THEIR SCORE)

Japan, Germany and USA UK, France, Canada and Italy Spain, China and Taiwan Mexico and Russia performance - say, delivery - they can vary greatly in how they define good delivery. It might mean early delivery, on-time delivery, order completeness or something else. Customers can report being 'highly satisfied' for different reasons. One might be easily satisfied most of the time, whereas the other might be hard to please but was pleased on this occasion. Further, managers and salespeople can manipulate their ratings on customer satisfaction. They can be especially nice to customers just before the survey or try to exclude unhappy customers from the survey. If customers know that the company will go out of its way to please them, even if they are satisfied some customers may express high dissatisfaction in order to receive yet more concessions.

International measurement of satisfaction has its own problem. It is part of the British character not to complain, so global competitors like British Airways have to try very hard to obtain information that other nationals give freely. In many eastern countries, customers would worry about people losing face if they complained, whereas in other countries complaining is all part of getting a good service.

Sources; Quote from Sally Solo, 'Whirlpool: how to listen to consumers', Fortune ( 11 Jaiiuaiy 1993), pp. 77-9; see also Measure (July August 1990), p. 28. 'A new line fer l!eli>aeom\ Thu Economist. (8 January 1994), p, 6; Peter Barley, 'Looking for trouble', Marketing Business (September 1994), pp. 21-4, Richard Tomkins, 'Japan tops consumer list for best quality goods', Financial Times (11 February 1994), p. 6; Bozell Worldwide, IlozeU-Gallup Worldwide Quality Poli (New York: Bozeii Worldwide, 1994); David Reed, "Setting a new benchmark', Marketing Week (4 November 1994), pp. 55-8.

About 30 to 40 per cent About 15 to 20 per cent About 10 per cent About 5 per cent

Inn ran a campaign a few years ago called 'No Surprises', which promised consistently trouble-free accommodation and service. However, Holiday Inn guests still encountered a host of problems and the expectations created by the campaign only made customers more dissatisfied. Holiday Inn had to withdraw the campaign.

Still, some of today's most successful companies are raising expectations -and delivering performance to match. These companies embrace total customer satisfaction. For example, Honda claims, 'One reason our customers are so satisfied is that we aren't' or, as dan Technology puts it, 'We value your business. We want you to buy from us again.' These companies aim high because they know that customers who are only satisfied will still find it easy to switch suppliers when a better offer conies along. In one consumer packaged-goods category, 44 per cent of consumers reporting satisfaction later switched brands. In contrast, customers who are highly satisfied arc much less ready to switch. One study showed that 75 per cent of Toyota buyers were highly satisfied and about 75 per cent said they intended to buy a Toyota again. Thus customer delight creates an emotional affinity for a product or service, not just a rational preference, and this creates high customer loyalty.

Today's winning companies track their customers' expectations, perceived company performance and customer satisfaction. They track this for their competitors as well. Consider the following:

A company was pleased to find that 80 per cent of its customers said they were satisfied with its new product. However, the product seemed to sell poorly on store shelves next to the leading competitor's product. Company researchers soon learned that the competitor's product attained a 90 per cent customer satisfaction score. Company management was further dismayed when it learned that this competitor was aiming for a 95 per cent satisfaction score.

Marketing Highlight 11.1 describes the way in which companies can track customer satisfaction.

For customer-centred companies, customer satisfaction is both a goal and an essential factor in company success. Companies that achieve high customer satisfaction ratings make sure that their target market knows it. In the car industry, the Honda Accord received the no. 1 rating in customer satisfaction by J.D. Powers for several years running and Honda advertising touting helped sell more Accords. Similarly, dan Technology's success in the personal computer industry-was partly because it achieves and advertises its no. 1 ranking.5

These and other companies realize that highly satisfied customers produce several benefits for the company. They are less price sensitive and they remain customers for a longer period. They buy additional products over time as the company introduces related products or improvements. And they talk favourably to others about the company and its products.

Although the customer-centred firm seeks to deliver high customer satisfaction relative to competitors, it does not attempt to maximize customer satisfaction. A company can always increase customer satisfaction by lowering its price or increasing its services, but this may result in lower profits. In addition to customers, the company has many stakeholders, including employees, dealers, suppliers and stockholders. Spending more to increase customer satisfaction might divert funds from increasing the satisfaction of these other 'partners'. Thus the purpose of marketing is to generate customer value profitably. Ultimately, the company must deliver a high level of customer satisfaction, while at the same time delivering at least acceptable levels of satisfaction to the firm's other stake-

holders. This requires a very delicate balance: the marketer must continue to generate more customer value and satisfaction, but not 'give away the house'.6 Many of the world's most successful companies build their strategies on customer satisfaction, but as Marketing Highlight 11.2 shows, you do not have to be big to succeed.7

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