Measuring customer satisfaction


A company would be wise to measure customer satisfaction regularly because one key to customer retention is customer satisfaction. A highly satisfied customer generally stays loyal longer, buys more as the company introduces new products and upgrades exiting products, talks favorably about the company and its products, pay less attention to competing brands and is less sensitive to price, offers product or service ideas to the company, and costs less to serve than new customers because transactions are routine.

Many companies systematically measure customer satisfaction and the factors shaping it. For example, IBM tracks how satisfied customers are with each IBM salesperson, the encounter, and makes this a factor in each sales person’s compensation.

The link between customer satisfaction and customer loyalty, however, is not proportional. Suppose customer satisfaction is rated on a scale from one to five. At a very low level of customer satisfaction (level one), customers are likely to abandon the company and even bad-mouth it. At levels two to four, customers are fairly satisfied but still find it easy to switch when a better offer comes along. At level five, the customer is very likely to repurchase and even spread good word of mouth about the company. High satisfaction or delight creates an emotional bond with the brand or company, not just a rational preference.

Xerox’s senior management found out that it’s “completely satisfied� customers were six times more likely to repurchase Xerox products over the following 18 months than its “very satisfied� customers.

When the customers rates their satisfaction with the element of the company’s performance say delivery—the company needs to reorganize that customers vary in how they define good delivery. It could mean early delivery, on-time delivery, order completing on time, so on. The company must also realize that two customer can report being “highly satisfied� for different reasons. One may easily be satisfied most of the time and the other might be hard to please but was pleased on this occasion.

A number of methods exist to measure customer satisfaction. Periodic surveys can track customer satisfaction directly. Respondents can also be asked additional questions to measure the purchase intention and the likelihood or willingness to recommend the company and brand to others.

Paramount attributes the success of its five theme parks to the thousands of Web-based guest surveys it sends to customers who have agreed to be contacted. During past year, the company conducted more than 55 Web-based surveys and netted 100,000 individual responses that described guest satisfaction on topics including rides, dining, shopping, games, and shows.

Companies can monitor the customer loss rate and contact customers who have stopped buying or who have switched to another supplier to learn why this happened. Finally, companies can hire mystery shoppers to pose as potential buyers and report on strong and weak points experienced in buying the company’s and competitors’ products. Managers themselves can enter company and competitor sales situations where they are unknown and experience firsthand the treatment they receive, or phone their own company with questions and complaints to see how the calls are handled.

For customer satisfaction surveys, it’s important that companies ask the right question. Only one question really matters that is “Would you recommend this product or service to a friend?� Marketing department typically focus on surveys on the areas they can control, such as brand image, pricing, and product features. According to Reichheld, a customer’s willingness to recommend to a friend results from how well the customer is treated by the front-line employees, which in turn is determined by all the functional areas that contribute to a customer’s experience.

In addition to tracking customer value expectations and satisfaction, companies need to monitor their competitors’ performance in these areas. One company was pleased to find that 80 % of its customers said that they were satisfied. Then the CEO found out that its leading competitor had a 90% customer satisfaction score. He was further dismayed when he learned that this competitor was aiming for a 95% satisfaction score.

For customer-centered companies, customer satisfaction is both a goal and a marketing tool. Companies need to be especially concerned today with their customer satisfaction level because the Internet provides a tool for consumers to spread bad word of mouth-as well as good word of mouth—to the rest of the world. On Web sites like and, angry Mercedes –Benz owners have been airing their complaints on everything from faulty key fobs and leaky sunroofs to balky electronics that leave drivers and their passengers stranded.

Companies that do not achieve high customer satisfaction ratings make sure that their targets market knows it. When J D Power began to rate national home mortgage leaders, Countrywide was quick to advertise its number-one ranking in customer satisfaction Dell Computer’s meteoric growth in the computer system industry can be partly attributed to achieving and advertising its number-one rank in customer satisfaction.

The University of Michigan’s Claes Fornell has developed the American Customer Satisfaction Index (ACSI) to measure the perceived satisfaction consumers feel with different firms, industries economic sectors, and national economies.