Customer Satisfaction
Customer satisfaction is typically defined as the feeling or belief that a person experiences when an offering meets his or her expectations. Companies evaluate their salespeople in part based on how well they satisfy their customers. Satisfying customers is a minimal level of performance; however, it isn't a good predictor of a customer's future purchases or brand loyalty. Sales revenues may increase with customer satisfaction but additional spending costs associated with satisfying customers leads to marginal or even negative profits.
Customer Satisfaction Strategies
Two critical ways to improve customer satisfaction: establish appropriate expectations in the minds of customers and deliver on those expectations.
- Establishing appropriate expectations is a function of the pre-purchase communications the seller has with the customer. "Under-promise and over-deliver." Set consumer expectations a bit low, and then exceed those expectations in order to create delighted customers who are enthusiastic about your product.
- Customer-facing personnel is a customer satisfaction strategy where employees are empowered to meet, interact, and delight customers. A budget for special treatment of customers and training for employees in customer service are requirements for this strategy to be successful.
- Another strategy is offering warranties and guarantees. This strategy reduces post-purchase dissonance or "buyer's remorse."
Measuring Customer Satisfaction
- Effective customer satisfaction measures have several components:
- Customer's expectations
- Whether the firm performed well enough to meet them
- Degree of satisfaction
- Companies often break the offering into components and ask how satisfied customers were with each one. Surveys may assume each aspect is equally important or ask customers to rate each component's importance.
Complaint Management Strategies
"Customer complaints are the schoolbooks from which we learn." Unknown
With the Internet, customers have a new way to complain about products or companies. Verbal terrorists are people who use every Internet site possible to bash a company they are dissatisfied with. A recent study indicates that customer satisfaction scores could be less important to a firm's success or failure than the number of complaints it gets. Customer service guru Fred Reicheld developed the "net promoter score." This score is the number of recommenders of an offering minus the number of complainers. "Studies show that if a company can resolve a customer's complaint well, then the customer's attitude toward the company is improved, possibly even beyond the level of his or her original satisfaction. Customers often judge companies as much for whether their response processes seem fair as whether they get what they wanted. Some companies create customer service departments with specially trained personnel who can react to complaints.
Handling the Complaint Process
- Steps in handling a complaint:
- Listen carefully to the complaint
- Acknowledge the customer's feelings
- Determine the root cause of the problem
- Offer a solution
- Gain agreement on the solution and communicate the process of resolution
- Follow up, if appropriate
- Record the complaint and resolution
- Recording the complaint and the resolution is important not only for consistent responses to customer issues, but also for identifying weak points with the offering, whether they are with the design of the product or miscommunications that raise customer expectations unreasonably.
- Four possible gaps where complaints occur:
- Communication gap - overstating the offering's performance level
- Knowledge gap - not understanding what the customer expects and creating an inferior product because of it.
- Standards gap - setting performance standards that are too low in spite of what is known about the customer requirements.
- Delivery gap - failing to meet the performance standards established for an offering.
- After identifying the gap, a company can use the information to figure out what must be done to fix the problem