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Friday, December 25, 2020

Global Customer Satisfaction and Experience Management [12] *


Customer satisfaction (CS) is a key performance measure for global marketers. Recently, there has been a shift to applying newer digital metrics. Others contend that customer delight may be a more relevant construct than customer satisfaction. How has customer satisfaction measurement changed in the past few years? Does it differ by country and industry sector?

Many marketers believe that customer satisfaction is the one customer value metric that matters the most.  A large research study (70,000 customers, 1,068 managers, and 97 countries) revealed that managerial perceptions of CS is not aligned with customer perceptions. Managers overstated CS and loyalty rates and underestimated the impact of customer complaints on future loyalty (Hult, et al., 2016).  The University of Michigan’s American Customer Satisfaction Index (ACSI) has found a strong correlation between CS and firm’s financial performance. Customer satisfaction analysis can predict and improve financial outcomes such as sales growth, gross margin, operating cash flow, market share, and shareholder return (Mittal & Frennea, 2010). 

Customer Satisfaction and Experience Management Applications

HappyOrNot is a Finnish company and innovator in customer satisfaction research. Their experience shows that if product/service assessment is made easy, people will readily provide feedback without the need for consumer incentives. Their core research tool is a terminal with four large buttons -- dark green/smiley (very happy), light green/less smiley (happy), light red/frowny (unhappy) and dark red (very unhappy) – accompanied with a sign asking customers to rate today’s experience by pushing one of the buttons. This simple premise has been used effectively by their global clients. This includes: a European gas station chain which measured managers’ overall performance; a Swedish sofa retailer for understanding why sales varied greatly throughout the day; medical facilities that evaluated doctors’ care and treatment; and the San Francisco 49ers football team to monitor the NFL game-day fan experience. In the latter application, more than 20,000 responses were recorded during the first game of the season via 60 devices – this was equivalent to the total feedback the team received for the entire previous season. The HappyOrNot devices track responses instantaneously to provide data-based, real-time feedback to organizations (Owens, 2018).      

The Temkin Experience Ratings (headed by Bruce Temkin, formerly of Forrester) ranks 331 companies in 20 industries based on feedback from 10,000 U.S. consumers. Three dimensions of customer experience are evaluated -- success, effort, and emotion. For example, in 2017, the wireless industry tied for 16th place with a 65.5% customer experience rating which is up 7.5% from 2011. While AT&T matched the industry average (66%), they did increase their customer experience rating an impressive 10% from 2016 showing a strong commitment to improving customer service. (Their overall rank in the study was number 224). The top wireless carrier was US Cellular at 71%, ranked number 137, overall (Temkin Group, 2017).            

Customer Experience Impacts Business Performance

While under-performing firms may survive in the short term, they will not last long-term unless they change their ways and become truly value creating for customers. Two global billion-dollar companies clearly illustrate this point. A transaction-based company learned that customers with the best experiences spend 140% more than those with the poorest experiences. The second firm was subscription-based; they found that customers with the best experiences had a 74% likelihood of renewing for another year versus 43% of those with the worst experiences. Furthermore, those with the highest customer experience scores were likely to remain members for six more years (Demere, 2017).

METHODOLOGY

The “State of Marketing – Fifth Edition” provides insights and trends on customer satisfaction and related metrics from 4,100 marketing leaders in 17 countries in 13 business sectors (Salesforce Research, 2018). This report identifies the top 13 marketing metrics used by global companies and contrasts high- performing from under-performing organizations. Four metrics – revenue growth (74%), sales effectiveness (64%), web traffic analytics (61%), and customer satisfaction (60%) were used by 60% or more of the respondents. Nine other popular metrics – customer retention, customer acquisition rates, qualified leads, digital engagement, social analytics, customer referrals, customer acquisition cost, mobile analytics, and customer lifetime value – were used by 43-59% of the global marketing organizations.

Research Questions

RQ1. The usage of customer satisfaction as a marketing metric varies by country

RQ2. The usage of customer satisfaction as a marketing metric varies by business sector

RQ3. High-performing organizations are more likely to track customer satisfaction than low- performing organizations.

RQ4. The use of customer satisfaction as a performance measure has declined as global organizations are prioritizing new marketing metrics.

RESULTS AND DISCUSSION                                                                                                           

The following findings are based on the “State of Marketing” report. Customer satisfaction was rated as a top 5 marketing metric in 11 countries - Australia, Belgium, Canada, France, Ireland, Mexico, Netherlands, New Zealand, Singapore, The Nordics, and the United Kingdom. Surprisingly, it was not ranked as a top 5 metric in 6 major countries -  Brazil, Germany, Hong Kong, India, Japan, and the United States (see Table 1). Hence, RQ1 was supported.

Customer satisfaction was rated as a top 5 marketing metric in 9 business sectors – communications, financial services, healthcare, hospitality, life sciences, manufacturing, media, transportation, and travel. It was not ranked as a top 5 metric in automotive, professional services, retail and consumer services, and various business sectors (see Table 2). Hence, RQ2 was supported.

High-performing organizations were 1.4 times more likely to track customer satisfaction than under-performing organizations (RQ3 was supported). The use of customer satisfaction has declined as global organizations are prioritizing new marketing metrics. Overall, CS has slipped from the number 1 marketing metric in 2016 to the number 4 marketing metric in 2018 by global companies (RQ4 was supported).

CONCLUSIONS AND IMPLICATIONS FOR THEORY AND PRACTICE

Undoubtedly, customer satisfaction is a key metric for global marketing. New digital metrics (e.g., customer acquisition and retention, mobile analytics, social engagement, and web traffic)  have grown in  importance in recent years. As a result, CS now shares the marketing dashboard with other insightful performance measures. Nonetheless, the effective use of customer satisfaction tracking is a strong differentiator for how high performing companies outpace their rivals.  Since customer satisfaction usage varies by country and business sector, specialized multi-country, multi-market studies represent  a useful stream of inquiry. Marketing scholars may emulate the research approach used by John L. Graham and his team as they studied international sales negotiations in many countries for more than two decades (e.g., Campbell, Graham, Jolbert, and Meissner, 1988).

In addition, customer delight is related to customer satisfaction and has received much attention in the marketing literature. Barnes & Krallman (2019) advocate that customer delight is a distinct marketing construct – i.e., “an emotional state where customer expectations are exceeded.” Others believe that customer delight is an extreme form of customer satisfaction (i.e., highly satisfied) or a customer-centric business philosophy (marketing strategy). It is  recommended that this variable be incorporated into future studies.

Art Weinstein, Ph.D., is a Professor of Marketing at Nova Southeastern University. His research interests are customer value, market segmentation and entrepreneurial marketing strategies. He may be reached at art@nova.edu 

* This material was presented at the Academy of Marketing Science, Annual Conference (virtual), December 14, 2020. Here's the 10 minute video 2020 AMS Annual Conference (conferencespot.org)

Key References

Barnes, D.C. and Krallman, A. (2019), “Customer Delight: A Review and Agenda for Research,” Journal of Marketing Theory and Practice, 27 (2), 174-195.

Campbell, N.C.G.,  Graham, J.L, Jolbert, A. and Meissner, H.G. (1988), “Marketing Negotiations in France, Germany, the United Kingdom, and the United States,” Journal of Marketing, 52 (2), 49-62.

Demere, N.E. (2017), There’s a Correlation between CX and Revenue – and Here’s the Data to Back it Up”, Medium.com (January 25).

Hult, T., et al. (2016), “Do Managers Know What Their Customers Think and Why?,” Journal of the Academy of Marketing Science, 45 (1), 1-18.

Mittal,V. and Frennea, C. (2010), Customer Satisfaction: A  Strategic Review and Guidelines for Managers, Cambridge, MA: Marketing Science Institute, msi.org/.

Owens, D. (2018), Customer Satisfaction at the Push of a Button,” New Yorker (February 5).

Salesforce Research (2018), State of Marketing – Insights and Trends from over 4,100 Marketing Leaders Worldwide, Fifth Edition.

Temkin Group (2017), Temkin Ranking, Temkin Group Q1 2017 Consumer Benchmark Study, temkingroup.com/.

Table 1.  Customer Satisfaction as a Marketing Metric – A Global Perspective *

 

Countries

Respondents/

Percent of Sample

Customer Satisfaction Rating   in Top 5 Metrics

Belgium

    150 / 3.7 %

1st

Singapore

    150 / 3.7 %

2nd

France, Mexico, Netherlands

    800/ 19.5%

3rd

The Nordics, United Kingdom/ Ireland

                   450/ 11.0%

4th

Australia/New Zealand, Canada

                   600/  14.6%

5th

Brazil, Germany, Hong Kong, India , Japan, United States

                 1,950/ 47.6% 

Not ranked in top 5

17 countries

                 4,100/ 100%

                       Varies

*Adapted from State of Marketing 2018

Table 2. Customer Satisfaction as a Marketing Metric by Global Business Sector *

 

Business Sector

Respondents/

Percent of Sample

Customer Satisfaction Rating   in Top 5 Metrics

Healthcare, Life Sciences

                   320/   7.8 %

2nd

Financial Services, Hospitality, Transportation, Travel

    838/ 20.4%

3rd

Communications, Media, Manufacturing

    674/ 16.4%

                        5th

Automotive, Professional Services, Retail and Consumer Services, Other

                 2,268 /55.3%

Not ranked in top 5

Various Business Sectors

                 4,100/ 100%

                       Varies

*Adapted from State of Marketing 2018

 

2 comments:

  1. The fact that customer satisfaction plays such a key part in the success of a business is no surprise. My mind goes to Chik-Fil-a, a super successful fast food business that exemplifies high customer satisfaction.

    ReplyDelete
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