Analyzing Customer Satisfaction

Analyzing customersatisfaction

Analyzing customer satisfactionOutline The psychology of customer satisfaction The concept of customer satisfactionDeterminants of customer satisfaction and theexpectancy-disconfirmation model of customersatisfaction Designing a customer satisfaction survey Measuring customer satisfaction and relatedconcepts Analyzing customer satisfaction

Analyzing customer satisfactionLearning goals Understand what customer satisfaction means andwhy satisfying customers is important to marketers Know what determines customer satisfactionaccording to the expectancy-disconfirmation model Be familiar with both qualitative and quantitativeapproaches to measuring satisfaction Know how to design a quantitative customersatisfaction study and measure satisfaction and itsantecedents and consequences Be able to analyze satisfaction data and conduct animportance-performance analysis

Analyzing customer satisfactionThe concept of customersatisfaction/dissatisfaction satisfaction refers to a customer’s judgment that aproduct or service (or its features) provided apleasurable level of consumption-relatedfulfillment (Oliver 1997); distinguish: transaction-specific satisfactioncumulative satisfaction very high levels of customer satisfaction result incustomer delight;

Analyzing customer satisfactionSatisfaction and loyalty(Heskett et al.)Loyalty(retention)apostle100%zone of affection80%60%zone of indifference40%zone of dsatisfiedverysatisfied

Analyzing customer satisfactionA model of the satisfaction process:The expectancy-disconfirmation frameworkPast experienceAdvertisingexpectationsWOMOther uencesperceivedperformancesatisfaction

Analyzing customer satisfactionDeterminants of satisfaction Expectations: anticipation of future consequences Will expectations: predicted product performanceShould expectations: deserved product performanceIdeal expectations: optimal product performanceidealshouldwill

Analyzing customer satisfactionDeterminants of satisfaction (cont’d) Product performance: Perceptions of product performance or qualityMay differ from objective product quality Disconfirmation: Comparison of product performance with priorexpectations (gap judgment);Results in confirmation, positive disconfirmation, ornegative disconfirmationPerformancePositive disconfirmationExpectations

Analyzing customer satisfactionA model of the satisfaction process:The expectancy-disconfirmation frameworkPast experienceAdvertisingexpectationsWOMOther uencesperceivedperformancesatisfaction

Analyzing customer satisfactionA model of the satisfaction process:The expectancy-disconfirmation frameworkPast experienceAdvertising expectationsWOM-Other sources(dis-)confirmation e satisfaction

Analyzing customer satisfactionAssessing customer satisfaction Various qualitative approaches exist Ghost shoppingComplaint and suggestion systemsCritical incident method Here we will focus on quantitative approachesbased on customer satisfaction surveys

Analyzing customer satisfactionThe customer satisfaction survey process Determine survey objectives (what’s the purpose ofmeasuring satisfaction?) Transaction vs. cumulative satisfactionTracking satisfaction over time vs. process improvementFocus on satisfaction per se or the entire satisfaction process Sampling of respondents (who should be asked?) Current customers, former customers, prospective customers,competitors’ customers Designing the questionnaire (what should be asked?) Overall satisfaction vs. attribute satisfactionAntecedents and consequences of satisfactionStructure of the questionnaire Analyze the data and implement the findings

Analyzing customer satisfactionMeasuring satisfaction At least one and preferably several overall satisfactionscales should be administered (e.g., How satisfied areyou with this brand? How satisfied were you with thisvisit to the restaurant?); four or more response optionsshould be provided (e.g., very satisfied, satisfied,dissatisfied, very dissatisfied); To assess the emotional component of satisfaction, aterrible-delighted scale can be useful; If process improvement is the goal, satisfaction withvarious components of the consumption and useexperience will provide additional insights (unlessperformance and disconfirmation are assessed forspecific attributes);

Analyzing customer satisfactionMeasuring expectations Question of which type of expectation is most relevant,or whether multiple expectations should be measured; Examples: Medicine X will be easy/hard to swallow Medicine X should be easy/hard to swallow Ideally, medicine X would be easy/hard to swallow Usually, expectations are not assessed prior topurchase, so customers are asked to reflect back to thesituation prior to purchase and recall what they expectedbeforehand; Expectations are important when performance isambiguous and difficult to judge (wine, technicalproducts);

Analyzing customer satisfactionMeasuring perceived performance Overall performance vs. attribute performance; Attributes have to be satisfaction drivers rather thanchoice criteria; Issue of specificity of attributes (tradeoff of length andmanagerial usefulness); Measurement of beliefs, evaluations, and importance ofattributes: Question whether beliefs (the extent to which a productdelivers a certain benefit), evaluations, or both should bemeasured; Example: carbonation in a soft drink Importance ratings can be useful, but rating importancemay be difficult for respondents;

Analyzing customer satisfactionMeasuring disconfirmation During consumption, expectations can be confirmedor positively or negatively disconfirmed; Disconfirmation (of the consumption experienceoverall or in terms of specific attributes) is usuallyrated on a much worse than expected-as expectedmuch better than expected scale; Gaps could also be calculated based on thedifference between performance and expectations,but subjective disconfirmation ratings usually workbetter; Disconfirmation is salient when customers areinvolved and outcomes are unambiguous;

Analyzing customer satisfactionSummary of measures I expected this product to be excellent-poor This product has performed very well-very poorly This product (or the performance of this product)has exceeded/met/fallen short of my expectations I am satisfied/dissatisfied with the choice of thisproduct I intend to repurchase this product I have complained to/complimented managementabout this product I have told other people good (favorable)/bad(unfavorable) things about this product

Analyzing customer satisfactionSequence of measurement Overall measures first and then specific measures Halo effectsSummary judgment based on overall impression Specific measures first and then overall measures Primacy and recency effectsSummary judgment based on attribute ratings The measurement of expectations, performance,disconfirmation, and satisfaction should follow the logicimplied by the expectancy-disconfirmation model; If possible, consequences of satisfaction should bemeasured as well; Include classification questions if subgroup analyses areto be conducted;

Analyzing customer satisfactionAnalyzing customer satisfaction data Summarize degree of satisfaction (overall and bysubgroups) Compare satisfaction (or performance) to some standard ExpectationsRatings of competitors Analyze determinants of satisfaction Overall satisfaction as a function of satisfaction with particularcomponents of satisfactionOverall satisfaction as a function of expectations, perceivedperformance, and disconfirmation (overall or for particularattributes of the product)Importance-performance mapping Analyze consequences of satisfaction Intentions, complaining/praising, WOM/recommendations

Analyzing customer satisfactionImportance-performance mappingLeverageIgnoreAdd resourcesPerformanceStatus quoImportance

Analyzing customer satisfactionUsing regression analysis to analyzesatisfaction data Regression analysis is used to analyze the relationshipbetween a (metric) dependent (criterion) variable (DV)and one or more independent (predictor) variables (IVs):𝑌 𝑏0 𝑏1 𝑋1 𝑏2 𝑋2 𝑏𝐾 𝑋𝐾 𝑒Interpretation: 𝑏0 is the predicted value of Y when all the IVs arezero 𝑏𝑘 is the change in Y due to a unit change in 𝑋𝑘 whenall the other IVs are held constant

Analyzing customer satisfactionUsing regression analysis to analyzesatisfaction data (cont’d) Assessing the statistical significance of the regression:To test whether an estimated regression coefficient 𝑏𝑘 issignificantly different from zero, look at whether theconfidence interval around the estimate (which provides arange of plausible values for the estimate) includes zero; To test whether the regression coefficients associated withall IVs are simultaneously different from zero, look at thesignificance of the overall F-value for the regression; To assess the “practical” significance of the regression,look at the R2 of the regression (i.e., the proportion of thevariation in Y explained by the IVs);

Analyzing customer satisfactionExample: Satisfaction with a restaurantas a function of food and 45635342654275448345944310345Note: Only first 10 respondents are shown; total number of respondentsis 200. Ratings are on a 1-7 scale.

Analyzing customer satisfactionAnalysis Toolpak -- Regression

Analyzing customer satisfactionSatisfaction example – Analysis ToolpakRegression StatisticsMultiple RR Square0.660.43Adjusted R Square0.42Standard nts1.35Standard Error0.29t Stat4.68P-value0.00Lower 95%0.78Upper ept

Analyzing customer satisfaction

Analyzing customer satisfactionSatisfaction example – EnginiusModel 660.10Model statisticsR-squaredAdjusted R-squaredValues0.430.42Standard deviations0.2890.060.05P-values0.0000.000.08

Analyzing customer satisfactionSatisfaction exercise 1:What determines satisfaction withpersonalized envelopes? Do consumers’ pre-experience expectations influence their postexperience quality ratings? What are the managerial implications ofyour findings? Do expectations and performance evaluations influence perceiveddisconfirmation as predicted by expectancy-disconfirmation theory? Do expectations, performance, and disconfirmation influence ratingsof satisfaction as predicted by expectancy-disconfirmation theory?Which variable is the strongest predictor of satisfaction? What arethe implications of your findings for satisfaction management? Does satisfaction influence future product purchase (choice)? If you wanted to improve consumers’ satisfaction with First Class,which attributes should you focus on?[See the file EnvelopeSatisfactionMeasurement.pdf for details on this assignment.]

Analyzing customer satisfactionSatisfaction exercise 2:Importance-performance mapping for aluxury sport cruiser How satisfied are customers with the company’sproduct? What are the company’s strengths and weaknesses?Conduct an importance-performance analysis to answerthis question. What recommendations would you make to themanagement of this company in order to improvecustomer satisfaction?[See the file PleasureBoatSatisfactionMeasurement.pdf for details on this assignment.]

Analyzing customer satisfactionConsequences of satisfaction Repurchase and repatronage intentions: Likelihood of (re)purchaseUsually overstated and have to be adjusted Complaining and praising Whether or not a customer complained, to whom,how many times, and why WOM and recommendations How many other people a customers talked to,whether they mentioned mostly positive or negativethings about the product, and whether theyrecommended that the other person buy or not buy aproduct;

Analyzing customer satisfactionAmerican Customer Satisfaction Index(ACSI)market-based performance measure for firms, industries,economic sectors, and national economies; assessment ofoverall customer satisfaction as well as its antecedents andconsequences; can be used for benchmarking over time andcross-sectionally;

Analyzing customer satisfaction