By Prof Somali Ghosh
Businesses aim for the highest levels of customer satisfaction (CS) to ensure repeat purchases and to minimize negative word of mouth and increase positive word of mouth about the brand or product. But setting and achieving CS goals can be frustrating. CS comes at a cost, and it is often difficult to justify additional resources spent to nudge up the existing levels of CS without a solid basis for a specific level of CS to aspire to. The question that often plagues businesses is whether to aim for the highest possible level, (i.e. 100%) of CS or not. It is important to understand at the outset that in most cases 100% CS is not feasible due to resource constraints, and because there are always some consumers who simply cannot be satisfied. What then is an acceptable figure? That is the question most business struggle with. There is a strategic approach to setting and achieving an optimal level of customer satisfaction goal to aspire to, that takes the following factors into consideration:
Relative Price Level: Customer satisfaction is related to customer expectations and when expectations are met customers are satisfied. When expectations are exceeded, they are delighted and move to higher levels of customer satisfaction. Products with relatively higher price levels should always be associated with higher CS levels to aspire to. The choice of a benchmark CS (market leader or competitor level) is a subjective one, and is determined by internal resources to achieve the desired level of CS. In order to gauge the competitor’s CS or the Market leader’s CS, businesses can carry out simple customer satisfaction surveys for their own products and for competitor’s product and/or the market leader’s product, and then compare results.
Customer satisfaction data is generally gathered through surveys and includes Likert scales with questions such as: “On a scale of 1(not satisfied)-9(Highly Satisfied), How satisfied are you with this product/service?
Or On a scale of 1-9, How satisfied are you with the product quality?” etc. Other questions to ask include feedback on satisfaction with customer service, value for money etc. Then the data gathered should be analyzed, for mean, median, mode etc. and tracked over time to see how CS is performing relative to set benchmarks. CS surveys can be run via social media, in person surveys from customers or via digital polls on mobile devices like cellphones.
Breadth of Customer Base: For businesses such as telecommunications providers, internet providers etc. the customer base is wide and varied in terms of demographics (age, income, gender) and psychographics (lifestyles, attitudes, opinions etc.), CS tends to be generally low, because it is impossible to satisfy every customer when consumer characteristics vary tremendously. How low that CS level is depends on the specific market and market being considered. The best CS to aim towards for products in this category is to aim for the satisfaction levels of the market leader, but not to despair about the generally low level of CS since the costs of going beyond the market leader’s CS level may not be cost-justified. On the other hand, for products or services such as luxury goods, Sports products etc., with a narrow or niche market, the customer characteristics tend to be more homogenous, making CS easier to achieve. In this case general CS is high, how much higher to aim for is determined by the market leader’s CS , the higher the CS the higher the competitive advantage, so the aim should be to meet and exceed the benchmark to the extent possible.
Level of Competition: In markets marked by a high level of competition, CS is generally higher as businesses constantly innovate and improve as a natural outcome for survival in the competitive scenario. In this case the CS benchmark should be that of the market leader for the product.
Setting and Meeting Customer Expectations: When advertising and value communication indicate product features or outcomes which confirm that a product is doing what consumers can expect it to do, then that leads to CS. Satisfaction is a perception ( a subjective feeling), and as such must be set using specific product-use related cues that confirm expectations are being met. New cars are infused with a “new car scent” to let consumers perceive through a planted scent cue, that they just got a new car. This triggers customer satisfaction. In general, there is no reason for new cars to have any specific fragrance. Luxury cars known for power and speed, channel the engine noise back through internal speakers, and have seats that vibrate at higher speeds to help consumers understand that expectations of power and speed are being met. This too is an example of planted cues to substantiate perceptions of power and speed in the car (through vibrations and loud engine sound). In reality the cars can be fast and powerful without these added cues but then consumers have no way of understanding if they are truly getting what they are paying for, since most consumers don’t pay attention to product information or objective information, they seek perceptive cues to decide if they are satisfied or not. In products and services where it is possible to plant cues to help customers realize expectations have been met, general levels of CS will be higher, and it would be best to use the market leader’s CS as a benchmark to strive toward.
Brand Promise: When a brand is centered on high levels of customer satisfaction, such as Zappos or Ritz Carlton in the US, then striving toward the highest possible level of CS is the goal to strive toward, while understanding that once CS levels tend to reach a point where it gets sluggish and involves exorbitant amounts to increase further, that is the satisfactory CS level for that brand.
In summary, CS levels are dependent on multiple factors that determine general levels of CS in a market. It is important to understand exactly which factors lead to increasing levels of CS and use that knowledge to raise CS to the extent possible, and to compare it to the right benchmarks. Calculating and benchmarking CS are long term activities that ensure that consumer interests are being monitored. It helps businesses expand by identifying when and why CS is rising towards or falling short of benchmarks and helps address inherent flaws. The ability to identify and calculate feasible CS goals to aspire to, can save businesses a lot of time and money.
(The author is Prof Somali Ghosh, Associate Professor, Weatherhead School of Management at Case Western Reserve University, USA, and the views expressed in this article are his own)
