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Measuring Customer Satisfaction to Identify Areas of Sales

Improvements in Saturated B-2-B Markets

Seminar Paper 2008 22 Pages

Business economics - Business Management, Corporate Governance

Excerpt

Table of Contents

Executive Summary

List of abbreviations

List of figures

1. Introduction
1.1 Customer Satisfaction
1.2 Business Markets
1.3 The Advantages of Satisfying Customers
1.4 Risk of a Poorly Conceived Survey

2. Tailoring a Successful Survey
2.1 Exploratory Research
2.2 Sampling
2.2.1 Survey Objectives
2.2.2 Sampling Frame and Segmentation
2.2.3 Method of Collecting Data
2.2.4 Design of the Questionnaire
2.3 Analysing and Reporting

3. Importance of Customer Satisfaction in Saturated Markets

4. Conclusion

Appendix

Bibliography

ITM Checklist – 360° Analysis

Executive Summary

"The gulf between satisfied customers and completely satisfied customers can swallow a business."

--Harvard Business Review, November/December 1995

This work is about measuring customer satisfaction with the focus on B-2-B markets. In the first chapters the determinants are explained along with the problem of a not well designed measuring program. The intention of this work is to analyze and describe a thoroughly conducted research on satisfaction of industrial customers. The main chapter is organised according the chronological steps for a common research in that field. Each chapter or research element illustrates a correlation to the specific situation of suppliers in B-2-B markets. Basically, this work suggests planning a survey on customer satisfaction in two major steps: firstly, to explore the expectations and attitudes in a qualitative research, and then, based on the first step, to interview customers on their perceptions concerning how well the firm is meeting those expectations.

Before drawing the conclusion of this work, the importance of customer satisfaction for companies competing in saturated markets is investigated.

List of abbreviations

illustration not visible in this excerpt

List of figures

Figure 1: Attributes to consider when designing a successful survey

Figure 2: Different types of interviews in market research

1. Introduction

1.1 Customer Satisfaction

In the 1990s, corporations focused on improving quality to compete effectively in a fast-changing world. By 2000, the spotlight had shifted to globalization as a means of gaining higher profits from sales. Now, in the 21st century, customer satisfaction has taken a focal point, as companies consolidate and concentrate on increasing market share. Listening to and acting on the voice of the customer has become crucial for companies to survive in saturated markets.1

Customer satisfaction depends on the product’s perceived performance relative to a buyer’s expectations. If the product’s performance falls short of expectations, the customer is dissatisfied. If the performance matches expectations, the customer is satisfied. If performance exceeds expectations, the customer is highly satisfied or delighted.2

Another definition is more descriptive while explaining customer satisfaction as the state of mind that customers have about a company when their expectations have been met or exceeded over the lifetime of the product or service.3 Satisfaction itself is related to a number of customer relationship issues. For example, satisfaction can refer to any or all of the following:

- Satisfaction with the quality of a particular product or service
- Satisfaction with an ongoing business relationship
- Satisfaction with the price-performance ratio of a product or service
- Satisfaction because a product/service met or exceeded the customer's expectations

1.2 Business Markets

The business market is huge. In fact, business markets involve far more dollars and items than do consumer markets. But both markets involve people who assume buying roles and make purchase decisions to satisfy needs. However, business markets differ in many ways from consumer markets. The main differences are in market structure and demand, the nature of buying unit, and the types of decisions and the decision process involved.4 For example, the purchasing decision process is influenced by a number of departments such as engineering, production, purchasing, quality assurance, plus research and development. Because each department evaluates suppliers differently, the customer satisfaction programme will need to cover the multiple views.5

1.3 The Advantages of Satisfying Customers

Satisfied customers are the cheapest and most effective form of advertising a company can get. A customer who is satisfied because he is well treated is more likely to bring more business to the company, by repeat purchase, recommendation, and is willing to accept higher prices.6 Conversely, disappointed customers will not only take their business away but will tell probably tell several others about the experience too.

Dissatisfied customers by word of mouth will tell eight to sixteen others about their dissatisfaction.7 With the web some are now telling thousands. 91% of not disappointed customers never purchase goods or services from the company again. A prompt effort to resolve a disappointed customer's issue will result in about 85% of them as repeat customers. Depending upon the business, new customer sales may cost 4 to 100 times that of a sale to an existing customer. Therefore, it is important that every firm should have customer satisfaction program.

1.4 Risk of a Poorly Conceived Survey

Competitors that are prospering in the new global economy recognize that measuring customer satisfaction is key. But too many companies rely on outdated and unreliable measures of customer satisfaction.8 They watch sales volume, they listen to sales reps describing their customers' states of mind, or they track and count the frequency of complaints. While these approaches are not completely without value, they cannot replace a valid, well-designed customer satisfaction surveying program.

During designing a customer satisfaction survey, a number of company’s have failed. Reichheld has this to say about customer satisfaction surveys: “Most customer satisfaction surveys aren’t very useful. They tend to be long and complicated, yielding low response rates and ambiguous implications that are difficult for managers to act on.”9

A common failure of customer satisfaction research is lack of clear, comprehensive, and measurable goals.10 There are two problems when objectives are not clearly set by involving key persons. Firstly, the questionnaire almost always ends up far too long.

The second, and more serious problem is that the questionnaire invariably covers issues of importance to the company’s managers rather than those of importance to customers.11

2. Tailoring a Successful Survey

There are many pitfalls when measuring customer satisfaction. To avoid becoming trapped in pitfalls but to gain most valuable outcomes, the survey needs to be well designed. Significant elements are described within this chapter. illustration not visible in this excerpt

Figure 1: Attributes to consider when designing an successful survey, adopted from The Leadership Factor.12

2.1 Exploratory Research

Commonly research methods are divided into two traditional paradigms – qualitative and quantitative.13 In practice, many market research studies lend themselves to a multi- method design, incorporating aspects of both qualitative and quantitative methodologies. A customer satisfaction survey might require depth interviewing at the front end of the survey to establish issues that people should be questioned about. illustration not visible in this excerpt

Figure 2: Different types of interviews in market research.14

The purpose of the exploratory stage as qualitative research in any project is to ensure that the researcher understands enough about the composition and attitudes of the target population to draw an accurate sample and to design an appropriate questionnaire.15 Two main qualitative exploratory research techniques are widely accepted, the depth interviews and the focus groups.16 Contrary to the focus groups approach, depth interviews are usually face to face and are more commonly used in business to business markets.17 The duration of a depth interview can range from 30 to 90 minutes depending on the complexity of the customer – supplier relationship Around 12 depth interviews are typically adequate for exploratory research in a B-2-B market.

In business to business markets the decision-making process and the decision-making unit (DMU) are almost always complex.18 Exploratory research must therefore probe the make-up of the DMU, the roles played by its members and the relative influence of each DMU member on the organisation’s level of satisfaction with the supplier. Within the exploratory phase the firm probes their customer’s priorities, attitudes and beliefs in order to develop a full understanding of the customer-supplier relationship from the customers’ perspective.

[...]


1 David (2006)

2 Kotler, Armstrong (2006), p. 13

3 Cacioppo (2000)

4 Kotler, Armstrong (2006), p. 171

5 Paul & Nick Hague (2008)

6 Hill, Alexander (2006), p. 21

7 Adams (2003)

8 Cacioppo (2000)

9 Reichheld (2003), p. 46

10 AAker, Kumar, Day (2007), p. 686

11 Hill, Roche, Allen (2007), p. 43

12 The Leadership Factor (2008)

13 Hague, Hague, Morgan (2004), p. 60

14 Hague, Hague, Morgan (2004), p. 61

15 Hill, Alexander (2006), p. 65

16 Hill, Roche, Allen (2007), p. 43

17 Hill, Alexander (2006), p. 58

18 Hill, Alexander (2006), p. 66

Details

Pages
22
Year
2008
ISBN (eBook)
9783640169771
ISBN (Book)
9783640172375
File size
512 KB
Language
English
Catalog Number
v115448
Institution / College
University of applied sciences, Düsseldorf
Grade
2,0
Tags
Measuring Customer Satisfaction Identify Areas Sales Account Management

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Title: Measuring Customer Satisfaction to Identify Areas of Sales