- Meaning of Customer Satisfaction.
- Building Customer Satisfaction.
- Importance of Customer Satisfaction.
- Factors Influencing Customer Satisfaction.
- Determinants of Customer Satisfaction.
What is Customer Satisfaction ?
The term 'customer satisfaction' is basically used to measure bow well the expectations of a customer are fulfilled by utilizing he products and services of a company. Customer satisfaction acts as an important performance indicator of a business and is also one of the four perspectives that together constitute a 'balanced scorecard'.
Marketing professionals consider customer satisfaction as the most important point of interest. In other words, customer satisfaction means how much the customer is pleased with the performance and delivery of products and services offered by the company. 'Gap Model' is used most frequently in order to measure the level of customer satisfaction.
The equation given below defines the gap model :
Customer Satisfaction = Delivery - Expectations
The term Delivery denotes the opinion that n customer constructs, regarding the product and service, after consuming it. Whereas, Expectations denote what customer had expected from he product and service offered by the company. Hence, customer satisfaction is the gap or difference between his expectations and what he or she has actually received. For example, if a customer bought a product which he thought will last for 3 months but it actually lasted for 6 months, this will made the customer feel much satisfied. On the other hand, if the same product lasts only for 1 month, then the customer may feel extremely discontented. Hence, expectations can be considered as a base point for measuring customer satisfaction.
The marketing executives of the company not only focus on the process of launching the product or services in the market but they also focus on managing the insights of the customers, about the quality and delivery of product and services offered to them. Marketing also helps customers lo create more genuine and practical expectations about the product.
Building Customer Satisfaction
Customer satisfaction and loyally are considered to be the most important factors by any business or organization for achieving success. Difference in the value of what customer receives in the form of product or service and what he pays to acquire hat product or service, helps in determining his level of satisfaction. In this era of competition, the companies can foster necessary customer satisfaction by adopting following practices :
1) Incorporating Good Business Practices :
When the company integrates good business practices regarding business processes, stakeholders, and organization, hen hey are able to achieve customer satisfaction. It is essential for the companies to create business processes in such a way that expectations of customers can be met and maximum customer satisfaction can be achieved. These business practices can be accomplished by creating teams from employees of different departments for tackling critical issues and processes in order to ensure smooth functioning of the organization. It is necessary for the companies to recognize their capabilities and develop them in order to manage their resources successfully.
2) Creating and Delivering Value :
Companies can develop customer satisfaction by creating and delivering the value to customers which can satisfy their requirements. Company involves the combination of both the primary as well as the secondary activities. Primary activities include inbound materials, operations, delivery of finished products, sales and marketing activities, and after sales service of clients. Whereas, secondary activities involve the functioning of several other departments such as, procurement department, technology department, finance department, and human resource department The value then created is supplied to consumers with the help of distribution channel in accordance with the supply chain management.
3) Customer Relationship Management :
Customer relationship management helps in designing he policies which in turn help in retaining of the current customers and attracting the new customers. The main objective of CRM is to create a brand equity among the customers, and this objective can be achieved by converting an irregular buyer into a regular buyer, then to a client, then to an advocate, and finally into a partner. Companies can associate themselves with the social causes, and they can also benefit their regular customer by offering them financial benefits in terms of discount.
Importance of Customer Satisfaction
Establishing strong relationship with customers and serving them better in order to make them feel satisfied not only help in making profits but it also help the company in many other ways, some of such benefits are explained below :
1) Customer-Oriented Management :
Customers share heir objectives, Requirements, and experiences when he company performs the customer satisfaction analysis. With the help of this, company can develop or improve the product and services to match the expectation level of customers.
2) Comparison with the Competitors :
In order to gain information about the competitors, Customers are considered to be the best source because customers can give information about the better products and services available in the market and also do not ask for any payment against it.
3) Comparison Over Time :
Customer satisfaction analysis is used for determining the causes of satisfaction and dissatisfaction. Along with this, it should also be used for the development or evaluation of strategies to achieve the organizational goals. Changes in the quality of offering over a period of time can be determined, if the analysis is done on regular basis.
4) Profit from Specific Insights :
The customer satisfaction can be achieved early and quickly by bringing strategic changes and innovations within an organization, such as by goal oriented team work and by developing or modifying the products and services according to the requirements of prospects.
5) Loyalty :
Customers who are extremely satisfied from the product or service of a company are more likely to become the loyal customers of that company. A brand loyal customers goes for repetitive purchases, and gives positive feedback, ratings, or reviews to the company. Brand loyalty describes that trail of a customer due to which he/she selects one company or product over another, for satisfying his/her specific need.
6) Reduced Costs :
Retaining of loyal customers costs very less than that of acquiring new customer because a highly satisfied customer goes for repetitive purchases and may also pay more for product or service of a particular company. A highly satisfied customer also tells his friends and relatives about the product and the organization has to pay nothing for this word of mouth publicity, which in tum reduces he cost of advertisement.
7) Leads and Referrals :
The current base of highly satisfied customers is a great source that helps the organization to generate sales leads and referrals. The employees only have to ask every other customer for leads and references.
8) Ideas for New Developments :
Customers know best about their needs and the amount they are willing to pay to satisfy them. Hence, companies can extract newer as well as better ideas from customers regarding the product development. Such information from customers also helps the companies in retaining them for a longer term.
Factors Influencing Customer Satisfaction
Four factors, as identified by the marketing researchers that impact the customer satisfaction are as follows :
1) Product (Basic Design):
Product is the basic factor that influences customer satisfaction. So, companies must design products and services according to the requirements of customers.
2) Sales Activity :
Sales activity such as advertisement of he product, promotional programs, supply or delivery channel to reach out the customer, etc., also influence the satisfactions level of customers.
3) After-Sales:
Alter sales service also plays an important role in satisfying the needs of customer. It involves guarantee, service, grievance handling, feedback, and a complete solution to all sorts of customer's problems.
4) Culture:
Customer satisfaction is also influenced by the culture of the organization. Culture not only includes fundamental values and principles of an organization, but it also includes methods through which the organization attempts to impart those values in the behavior of employees at various levels.
Marketers should understand as well as convey the difference between the basic product and the additional utility it may provide against some cost or for free. This may help them to study the satisfaction level of consumers more accurately.
When marketers studied about customer satisfaction in various industries they found that customers evaluate the products on the basis of little things such as, additional benefits.
Various reasons concluded for this behavior are as follows :
- Customers generally think that in this era of competition, companies are offering them best quality core products and there is not much difference in their core products. For example, medical treatments are fairly accurate, hotels provide similar ambiance and planes usually do arrive safely.
- The core of some services was found very difficult to be judged by customers such as legal advice on single aspect varies from lawyer to lawyer. Additional services also vary but they are easily understandable by consumers such as interpersonal skills vary from lawyer to lawyer and doctor to doctor.
Determinants of Customer Satisfaction
There are various factors that determine customer satisfaction, some of them art explained below :
1) Features of Products and Services :
Customers feel satisfied when they evaluate products and services on the basis of their features. For example, a customer can evaluate a hotel on the basis of many of its features such as facility for playing golf, pool area, comfortable rooms, privacy, restaurants, politeness and helpfulness of staff, tariffs, etc.
2) Consumer Emotions :
Emotions of consumers also play an important role in determining customer satisfaction with the products and services offered. Sometimes emotions exist beforehand such as, temperament, life situations, etc., while some may develop after consuming the product.
3) Attributions for Service Success or Failure :
Customer satisfaction is also determined by, how the customer perceives the reasons behind the occurrence of any event When the outcome of any service surprises the customer, i.e., either the service does not meet the expectation or it goes beyond the level, then the customer starts searching for the reasons behind such outcome. That evaluation of the reasons may impact the level of satisfaction.
4) Perceptions of Equity or Fairness :
Opinion of a customer regarding fairness, equality, etc., also determines customer satisfaction, where the principle of fairness plays a key role in determining the opinion of customer regarding a product.
5) Other Consumers Family Members and Co-Workers :
Customer satisfaction is not only influenced by the features of product or service and the beliefs or emotions of the customer, but also by other people such as family members, co-workers and other consumers. For example, on a Vacation trip, satisfaction level of person also depends on the behavior and responses of members during the trip.