Customer Satisfaction and Loyalty Measurement

True "customer satisfaction" is an organization's ability to attract & retain customers and enhance the customer relationship over time. It is not simple and the answer cannot be collapsed into a single "customer satisfaction index." Every interaction a customer has with a company’s products & services is a reflection on quality.

Customer satisfaction measurement (CSM) is a management information system that continuously captures the voice of the customer through the assessment of performance from the customer's point of view. This information provides a platform for the strategic alignment of organizational resources to deliver whatever is most important to customers.

Customer satisfaction measurement is an evolving tool that is moving beyond early, basic measures of satisfaction toward approaches that enable a business to compete more effectively in its targeted market.

Simple approaches to assessing customer satisfaction fail to measure:

  • Perceptions of non-customers
    Tracking "market satisfaction" requires input from non-customers as well as customers.
  • Performance relative to competitors
    Customers judge your product/service offering relative to offerings of your key competitors. If your performance is improving, but your competitors are improving faster, your relative perceived quality would actually decline.
In contrast, market-perceived quality versus competitors involves a dramatic shift in focus — from satisfying your current customers to beating competitors through customer value management. Firms that succeed in holding onto their customer relationships:
  • Seek out features that are both unique and worth a lot to customers
  • Differentiate their product/service offerings to meet differing segment needs better than their competitors

True customer value management entails integration of total quality management with the company’s classic management systems (strategic planning, budgeting & control, capital investment, competitive analysis, performance measures & reward) to ensure that companies enter and invest only in businesses where they can be quality & value leaders.

The payoff from customer satisfaction measurement comes from its ability to define & direct a company’s quality improvement efforts, and its quality/value position in the marketplace. Customer satisfaction measurement and quality impact profits by:

  • Reducing costs
  • Preventing erosion in revenues over time
  • Increasing market share
  • Increasing gross margins

SMART conducts customer satisfaction measurement research that enables firms to determine whether
they have "value-driven" relationships with their customers. A business’ customer value position, relative
to competitors, has a dramatic impact on its market-share gain and profitability.

 
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