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Showing posts with label Customer Satisfaction. Show all posts
Showing posts with label Customer Satisfaction. Show all posts

Tuesday, September 28, 2021

Customer Delight - That Sounds About Right or Not Quite? * [36]



There are two schools of thought on customer delight -- it is an extreme form of customer satisfaction (very satisfied) or it is a distinct marketing construct. While the latter position has gained traction recently, this debate is far from settled.

Highly Satisfied or Customer Delight?

> Position A - Highly Satisfied

Customer satisfaction is frequently measured on a five-point Likert scale. While there are many variants of the approach, it is typically measured as follows: 1) highly dissatisfied, 2) dissatisfied, 3) neither satisfied or dissatisfied, 4) satisfied, and 5) highly satisfied. The “5” option may be viewed as a proxy for customer delight. In such cases, customers tend to be highly loyal and not prone to defection. The “4” score implies satisfaction but since it is not strong, customers generally are not very loyal and may defect. Customer satisfaction measures of 1-3 imply major or minor levels of dissatisfaction. In such cases, customers are likely to seek alternative vendors.  

This is analogous to the single-item, 11-point Net Promoter Score scale where respondents that give the organization a 9 or 10 are highly satisfied (promoters); 7 or 8 are somewhat satisfied (passives); and 0-6 are dissatisfied (detractors). Bain & Company has found that long-term value creators such as American Express, Publix Super Markets, Ritz-Carlton, and USAA have NPS scores of twice that of the average company and leaders grow at twice the rate of competitors. The customer satisfaction metric is so important that Lexus uses this basic scale in assessing service quality for their vehicles. In fact, one of their research instruments advised customers to immediately call the service manager if they were not totally satisfied with the service experience (i.e., unable to respond with a “5”).                          

> Position B - Customer Delight

Superior customer value means to continually create business experiences that exceed customer expectations. Innovative companies such as Tesla are not content with customer satisfaction; they strive to amaze, astound, delight or wow them (at least some of the time). Tesla’s $35,000 Model 3 electric vehicles received more than 400,000 pre-orders more than a year before it went to market. Other exciting business initiatives by Tesla include its multi-billion dollar Gigafactory (a battery production facility) and futuristic Hyperloop transportation system. 

While the pursuit of exceeding customer expectations is quite desirable, reality often dictates that customers are most satisfied when firms avoid disappointing them rather than trying too hard to delight them. Therefore, organizations must focus on the business fundamentals and have a flawless execution of operational basics. In rare instances of service failure, service recovery must be a priority. In most cases, customers can not truly articulate how to improve service experiences or what they are seeking to be delighted. 

In contrast, customers can readily identify attributes that are dissatisfiers/hygiene factors (must-haves) and satisfiers (nice-to-have attributes). The hygiene factors constitute the minimally acceptable level of service attributes that customers would expect to be present in the service offering.  For example, a mid-priced hotel catering to business travelers would be expected to offer such services as express check-out, fitness room, high-speed internet connections, a restaurant, and a lounge. Failure to offer these services or to perform or deliver them poorly will likely lead to dissatisfaction. In contrast, simply offering these services and performing them adequately will not delight the customer --the customer expects them as part of doing business. 

Truly delighting customers requires service providers to carefully consider satisfiers.   Satisfiers are those service attributes that both differentiate the service firm from its competitors, while at the same time exceeding customer expectations in one or more areas of service by delivering above what is expected.  Hygiene factors need to be delivered at an acceptable level before satisfiers become important. Satisfiers have the potential to create high customer satisfaction levels once expectations on hygiene factors have been met.  Firms that would offer satisfiers need to consider the value-added services that would both delight and surprise the customer. It should be emphasized that service quality is more than simply meeting specifications and that the customer's point of view is what matters (i.e., is the customer delighted?) Hence, customer satisfaction is what the customer says it is.

Consider some of the following examples in the effective use of satisfiers. Before a guest ever sets foot in Le Parker Meridian Hotel in New York they can use the hotel’s QuickTime Virtual Reality (QTVR) enabling potential guests to "walk" through the lobby and rooms.  In addition to virtual reality tours, the site offers in depth, timely information about room rates, events and points of interest for the business and pleasure traveler. The hotel also welcomes repeat guests with amenity baskets accompanied by handwritten notes.                          

Zappos, a billion dollar shoe, handbag, and clothing company owned by Amazon, aims to deliver “Happiness in a Box.” Their three-part formula is to: 1) meet expectations by delivering the right items, 2) meet desires through free shipping, free return shipping when necessary, and a 365 day return policy and 3) often delight customers via surprise upgrades to overnight shipping.

And conversely, bad-mouthing by dissatisfied customers can be not only harmful, but the very death knell to a company. Consider a case in point: one unhappy buyer at a computer superstore determined that this company lost $50,000 of his business (direct lifetime value) and another $350,000 (indirect lifetime value) due to negative word-of-mouth comments to his family and friends! Today, it’s very likely that dissatisfied consumers will post a bad review on Yelp, Facebook or Google. Negative comments via social media (word-of-mouse) can easily go viral leading to the need for damage control, a potential significant loss of business or even consumer boycotts.

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 

 

Friday, December 25, 2020

Global Customer Satisfaction and Experience Management [25] *


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. 

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

 

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