MARKETING STRATEGIES: Customer satisfaction

Whether it is a repeat purchase or simply a referral to other potential consumers, customer satisfaction is a key objective for vendors.

Customer satisfaction, in its simplest form, is the relationship of perceived performance to expectation. It is anticipated that higher satisfaction levels increase customer loyalty, reduce price elasticities, insulate market share from competitors, lower transaction costs, reduce failure costs and the costs of attracting new customers and improve the firm’s reputation.

Satisfied customers lead to long term business viability through repeat purchases, brand loyalty and word-of-mouth referrals. Satisfaction relates to the entire purchase experience and not just to post use reflection. Therefore, attention needs to be given to ensuring that all stages of the purchase experience result in positive satisfaction. It can be expected that early dissatisfaction can result in a negative intention to purchase.

Satisfaction and dissatisfaction will exist in varying degrees, therefore highly satisfied customers can be expected to display much higher levels of repeat buyer intention and a higher level of positive referrals. Those customers who are only satisfied or neutral are unlikely to provide strong referrals and their repeat buying intentions will be significantly lower. At both extremes, highly satisfied and highly dissatisfied, these customers will have a multiplier effect on outcomes. They are much more likely to be vocal about their experiences and impact on many potential purchasers – either negatively or positively.

Satisfaction and dissatisfaction can coexist for the same purchase experience. I can be dissatisfied with the information available on the product and the service I received and yet be delighted by the product in use. My dissatisfaction may lead me to tell others of the poor information and service while still saying how good the product is.

Satisfaction can change over time depending on subsequent personal experience with the original and alternative products and with the reported experience of others. Positive or negative comments from reference groups such as family or friends may also affect post purchase satisfaction. The intensity of satisfaction or dissatisfaction may change over time, often depending on the original intensity of the emotional response around the time of the original purchase experience.

Satisfaction itself may comprise a number of components, some explicit while others may be implicit. Some basic characteristics of the product or service are taken for granted; it works, it exists, it is safe to use and so on. These are sometimes referred to as hygiene factors. Consumers only think of these when they are absent and that can lead to serious dissatisfaction.

At a more practical level, expressed or anticipated performance is what the consumer expects and it is against this hurdle that satisfaction is normally measured. At a higher level, the surprise or delight in an experience can increase satisfaction but the absence of these experiences will not cause dissatisfaction as they were not anticipated or expected.

Measuring satisfaction in service delivery has additional challenges as there is an interaction between service provider and consumer. There is also an aspect of collective and individual performance as a single service person can skew the outcome through poor performance even if all other staff perform well.

One methodology for measuring satisfaction in service delivery uses the following dimensions of service quality:

• Access means approachability and ease of contact;
• Communication means informing the customers in an understandable way and listening to them. It may imply that companies need to use different languages to talk to different customer groups (i.e. professional and private customers) in explaining what the service comprises, how much various service elements and offers cost, and other features of the service;
• Competence means possession of required skills (i.e. organisational and personal) and knowledge to perform the service;
• Courtesy comprises politeness, respect, friendliness of the service provider personnel;
• Credibility includes trustworthiness and honesty;
• Reliability means that the service is performed with high accuracy and thoroughness every time;
• Responsiveness concerns the willingness of employees to provide the service and how fast the service is provided;
• Security comprises physical and financial safety and confidentiality;
• Tangibles include all physical products that are involved in service delivery and even other customers;
• Understanding the customer means taking steps to know the customer better, learning their specific requirements, providing individual attention and recognising regular customers.

As you can see there are many dimensions in delivering a satisfactory experience. Just because a restaurant has good food, does not by itself result in a satisfied customer. What we have to accept is that satisfaction is a complex feeling made up of inputs and experiences across the entire customer experience. It is by understanding the components which make up this experience that we can begin to tackle the objective of improving the customer experience.

The management of satisfaction by marketing focuses on the gap between expected and perceived service. This focus suggests that marketing need to work on both, expectations and what is perceived as delivered.

If the objective of a marketing program is to gain repeat sales and referral business then satisfaction of the current customer is critical. We cannot expect the customer to return or to refer us to others unless we provide a satisfactory customer experience, certainly one which they are willing to repeat or to recommend. Therefore, understanding what creates a satisfied customer is where we need to start our marketing planning.

Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia. A series of free eBooks for entrepreneurs and angel and VC investors can be found at his site here.