Knowing the customer feedback or getting customer satisfaction is very important for any company.Customer satisfaction in marketing is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals. In a survey of nearly 200 senior marketing managers, 71 percent responded that they found a customer satisfaction metric very useful in managing and monitoring their businesses.Knowing the customer feedback or getting customer satisfaction is very important for any company. It is seen as a key performance indicator within business and is often part of a Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy.
Within organizations, customer satisfaction ratings can have powerful effects. They focus employees on the importance of fulfilling customers’ expectations. Furthermore, when these ratings dip, they warn of problems that can affect sales and profitability. These metrics quantify an important dynamic. When a brand has loyal customers, it gains positive word-of-mouth marketing, which is both free and highly effective.Therefore, it is essential for businesses to effectively manage customer satisfaction. To be able do this, firms need reliable and representative measures of satisfaction.
In researching satisfaction, firms generally ask customers whether their product or service has met or exceeded expectations. Thus, expectations are a key factor behind satisfaction. When customers have high expectations and the reality falls short, they will be disappointed and will likely rate their experience as less than satisfying. For this reason, a luxury resort, for example, might receive a lower satisfaction rating than a budget motel—even though its facilities and service would be deemed superior in ‘absolute’ terms.
The importance of customer satisfaction diminishes when a firm has increased bargaining power. For example, cell phone plan providers, such as AT&T and Verizon, participate in an industry that is an oligopoly, where only a few suppliers of a certain product or service exist. As such, many cell phone plan contracts have a lot of fine print with provisions that they would never get away if there were, say, 100 cell phone plan providers, because customer satisfaction would be far too low, and customers would easily have the option of leaving for a better contract offer.
There is a substantial body of empirical literature that establishes the benefits of customer satisfaction for firms. This literature is summarized by Mittal and Frennea (2010). They summarize the outcomes in terms of customer behaviors, immediate financial outcomes such as sales and revenues, and long-term outcomes based on the stock market.
Purpose
A business ideally is continually seeking feedback to improve customer satisfaction.Customer satisfaction provides a leading indicator of consumer purchase intentions and loyalty. Customer satisfaction data are among the most frequently collected indicators of market perceptions. Their principal use is twofold:
- Within organizations, the collection, analysis and dissemination of these data send a message about the importance of tending to customers and ensuring that they have a positive experience with the company’s goods and services.
- Although sales or market share can indicate how well a firm is performing currently, satisfaction is perhaps the best indicator of how likely it is that the firm’s customers will make further purchases in the future. Much research has focused on the relationship between customer satisfaction and retention. Studies indicate that the ramifications of satisfaction are most strongly realized at the extremes.
Research also shows that a majority of the firms invest in measuring, monitoring, and disseminating customer satisfaction information; in fact, these authors found that customer satisfaction research is one of the most widely conducted marketing research activities in the firms.
On a five-point scale, individuals who rate their satisfaction level as ‘5’ are likely to become return customers and might even evangelize for the firm. (A second important metric related to satisfaction is willingness to recommend. This metric is defined as the percentage of surveyed customers who indicate that they would recommend a brand to friends. When a customer is satisfied with a product, he or she might recommend it to friends, relatives and colleagues. This can be a powerful marketing advantage. Individuals who rate their satisfaction level as ‘1,’ by contrast, are unlikely to return. Further, they can hurt the firm by making negative comments about it to prospective customers. Willingness to recommends a key metric relating to customer satisfaction.
Customer satisfaction survey program
An effective customer satisfaction survey program should focus on measuring customer perceptions of how well the company delivers on the critical success factors and dimensions of the business. These usually include factors like service promptness, staff responsiveness, and understanding of the customer’s problem.
The Question Pro customer satisfaction solution includes industry standard survey templates, a platform for hosting data collection, automatic notifications, and an advanced suite of analysis tools for analyzing customer satisfaction.
Building and deploying a customer satisfaction survey solution is simple and fast. QuestionPro survey software does not require any programming skills. Surveys are customized by navigating an intuitive wizard interface. Responses are automatically tabulated and presented in an easy to read graphical format in real time. QuestionPro includes a full library of customer satisfaction survey templates.