Customer satisfaction (often abbreviated as CSAT) is a term frequently used in
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to empha ...
. It is a measure of how products and services supplied by a company meet or surpass
In sales, commerce, and economics, a customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service, product or an idea - obtained from a seller, vendor, or supplier via a financial transaction or exchange f ...
expectation. Customer satisfaction is defined as "the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction
[Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). ''Marketing Metrics: The Definitive Guide to Measuring Marketing Performance.'' Upper Saddle River, New Jersey: Pearson Education, Inc. .]
Customers play an important role and are essential in keeping a product or service relevant; it is, therefore, in the best interest of the business to ensure customer satisfaction and build customer loyalty.
Marketing Accountability Standards Board (MASB)
The Marketing Accountability Standards Board (MASB), authorized by the Marketing Accountability Foundation,MASB''Marketing Accountability Foundation (MAF)''. ited 8 December 2010/ref> is an independent, private sector, self-governing group of aca ...
endorses the definitions, purposes, and measures that appear in ''Marketing Metrics'' as part of its ongoing Common Language in Marketing Project. In a survey of nearly 200 senior marketing managers, 71 percent responded that they found a customer satisfaction metric very useful in managing and monitoring their businesses.
[ Customer satisfaction is viewed as a ] key performance indicator
A performance indicator or key performance indicator (KPI) is a type of performance measurement. KPIs evaluate the success of an organization or of a particular activity (such as projects, programs, products and other initiatives) in which it e ... within business and is often part of a Balanced Scorecard
A balanced scorecard is a strategy performance management tool – a well structured report, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from .... In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a major differentiator and increasingly has become an important element of business strategy.
Faris et al. wrote that " stomer satisfaction provides a leading indicator of consumer purchase intentions and
Loyalty, in general use, is a devotion and faithfulness to a nation, cause, philosophy, country, group, or person. Philosophers disagree on what can be an object of loyalty, as some argue that loyalty is strictly interpersonal and only anothe ...." [
The authors also wrote that "customer satisfaction data are among the most frequently collected indicators of market perceptions. Their principal use is twofold:" ] [
# "Within organizations, the collection, analysis and dissemination of these data send a message about the importance of tending to customers and ensuring that they have a positive experience with the company's goods and services."] [
# "Although sales or market share can indicate how well a firm is performing ''currently'', satisfaction is perhaps the best indicator of how likely it is that the firm’s customers will make further purchases ''in the future''. Much research has focused on the relationship between customer satisfaction and retention. Studies indicate that the ramifications of satisfaction are most strongly realized at the extremes."
On a five-point scale, "individuals who rate their satisfaction level as '5' are likely to become return customers and might even evangelize for the firm. A second important metric related to satisfaction is willingness to recommend. This metric is defined as " e percentage of surveyed customers who indicate that they would recommend a brand to friends." A previous study about customer satisfaction stated that when a customer is satisfied with a product, he or she might recommend it to friends, relatives and colleagues. This can be a powerful marketing advantage. According to Faris et al., " dividuals who rate their satisfaction level as '1,' by contrast, are unlikely to return. Further, they can hurt the firm by making negative comments about it to prospective customers. Willingness to recommend is a key metric relating to customer satisfaction."] [
In the research literature, the antecedents of customer satisfaction are studied from different perspectives. These perspectives extend from the psychological to the physical as well as from the normative perspective. However, in much of the literature, research has been focused on two basic constructs, (a) expectations prior to purchase or use of a product and (b) customer perception of the performance of that product after using it.
A customer's expectations about a product bear on how the customer thinks the product will perform. Consumers are thought to have various "types" of expectations when forming opinions about a product's anticipated performance. Miller (1977) described four types of expectations: ideal, expected, minimum tolerable, and desirable. Day (1977) underlined different types of expectations, including ones about costs, the nature of the product, benefits, and social value.
It is considered that customers judge products on a limited set of norms and attributes. Olshavsky and Miller (1972) and Olson and Dover (1976) designed their researches as to manipulate actual product performance, and their aim was to find out how perceived performance ratings were influenced by expectations. These studies took out the discussions about explaining the differences between expectations and perceived performance."
[Kucukosmanoglu, Ahmet Nuri; Sensoy Ertan (2010). "Customer Satisfaction: A Central Phenomenon in Marketing"]
In some research studies, scholars have been able to establish that customer satisfaction has a strong emotional, i.e., affective, component. Still others show that the cognitive and affective components of customer satisfaction reciprocally influence each other over time to determine overall satisfaction.
Especially for durable goods that are consumed over time, there is value to taking a dynamic perspective on customer satisfaction. Within a dynamic perspective, customer satisfaction can evolve over time as customers repeatedly use a product or interact with a service. The satisfaction experienced with each interaction (transactional satisfaction) can influence the overall, cumulative satisfaction. Scholars showed that it is not just overall customer satisfaction, but also customer loyalty that evolves over time.
The Disconfirmation Model
"The Disconfirmation Model is based on the comparison of customers’ xpectationsand their erceived performanceratings. Specifically, an individual’s expectations are confirmed when a product performs as expected. It is negatively confirmed when a product performs more poorly than expected. The disconfirmation is positive when a product performs over the expectations (Churchill & Suprenant 1982).
There are four constructs to describe the traditional disconfirmation paradigm mentioned as expectations, performance, disconfirmation and satisfaction."
"Satisfaction is considered as an outcome of purchase and use, resulting from the buyers’ comparison of expected rewards and incurred costs of the purchase in relation to the anticipated consequences. In operation, satisfaction is somehow similar to attitude as it can be evaluated as the sum of satisfactions with some features of a product."
"In the literature, cognitive and affective models of satisfaction are also developed and considered as alternatives (Pfaff, 1977).
Churchill and Suprenant in 1982, evaluated various studies in the literature and formed an overview of Disconfirmation process in the following figure:"
Organizations need to retain existing customers while targeting non-customers. Measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace.
"Customer satisfaction is measured at the individual level, but it is almost always reported at an aggregate level. It can be, and often is, measured along various dimensions. A hotel, for example, might ask customers to rate their experience with its front desk and check-in service, with the room, with the amenities in the room, with the restaurants, and so on. Additionally, in a holistic sense, the hotel might ask about overall satisfaction 'with your stay.'"
As research on consumption experiences grows, evidence suggests that consumers purchase goods and services for a combination of two types of benefits: hedonic and utilitarian. Hedonic benefits are associated with the sensory and experiential attributes of the product. Utilitarian benefits of a product are associated with the more instrumental and functional attributes of the product (Batra and Athola 1990).
Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organization's products.
Work done by Parasuraman, Zeithaml and Berry (Leonard L) between 1985 and 1988 provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer's expectation of performance and their perceived experience of performance. This provides the measurer with a satisfaction "gap" which is objective and quantitative in nature. Work done by Cronin and Taylor propose the "confirmation/disconfirmation" theory of combining the "gap" described by Parasuraman, Zeithaml and Berry as two different measures (perception and expectation of performance) into a single measurement of performance according to expectation.
The usual measures of customer satisfaction involve a survey using a ] Likert scale
A Likert scale ( , commonly mispronounced as ) is a psychometric scale commonly involved in research that employs questionnaires. It is the most widely used approach to scaling responses in survey research, such that the term (or more fully the .... The customer is asked to evaluate each statement in terms of their perceptions and expectations of performance of the organization being measured. [
Good quality measures need to have high satisfaction loading, good reliability, and low error variances. In an empirical study comparing commonly used satisfaction measures it was found that two multi-item ] semantic differential
The semantic differential (SD) is a measurement scale designed to measure a person's subjective perception of, and affective reactions to, the properties of concepts, objects, and events by making use of a set of bipolar scales. The SD is used to a ... scales performed best across both hedonic and utilitarian
In ethical philosophy, utilitarianism is a family of normative ethical theories that prescribe actions that maximize happiness and well-being for all affected individuals.
Although different varieties of utilitarianism admit different charac ... service consumption contexts. A study by Wirtz & Lee (2003), [Wirtz, Jochen; Chung Lee, Meng (2003), “An Empirical Study on The Quality and Context-specific Applicability of Commonly Used Customer Satisfaction Measures,” Journal of Service Research, Vol. 5, No. 4, 345-355.] found that a six-item 7-point semantic differential
The semantic differential (SD) is a measurement scale designed to measure a person's subjective perception of, and affective reactions to, the properties of concepts, objects, and events by making use of a set of bipolar scales. The SD is used to a ... scale (for example, Oliver and Swan 1983), which is a six-item 7-point bipolar scale, consistently performed best across both hedonic and utilitarian services. It loaded most highly on satisfaction, had the highest item reliability, and had by far the lowest error variance across both studies. In the study, the six items asked respondents’ evaluation of their most recent experience with ATM services and ice cream restaurant, along seven points within these six items: “''pleased me'' to ''displeased me''”, “''contented with'' to ''disgusted with''”, “''very satisfied with'' to ''very dissatisfied with''”, “''did a good job for me'' to ''did a poor job for me''”, “''wise choice'' to ''poor choice''” and “''happy with'' to ''unhappy with''”. A semantic differential
The semantic differential (SD) is a measurement scale designed to measure a person's subjective perception of, and affective reactions to, the properties of concepts, objects, and events by making use of a set of bipolar scales. The SD is used to a ... (4 items) scale (e.g., Eroglu and Machleit 1990), which is a four-item 7-point bipolar scale, was the second best performing measure, which was again consistent across both contexts. In the study, respondents were asked to evaluate their experience with both products, along seven points within these four items: “''satisfied'' to ''dissatisfied''”, “''favorable'' to ''unfavorable''”, “''pleasant'' to ''unpleasant''” and “''I like it very much'' to ''I didn’t like it at all''”. The third best scale was single-item percentage measure, a one-item 7-point bipolar scale (e.g., Westbrook 1980). Again, the respondents were asked to evaluate their experience on both ATM services and ice cream restaurants, along seven points within “'' delighted'' to ''terrible''”.
Finally, all measures captured both affective and cognitive aspects of satisfaction, independent of their scale anchors. Affective measures capture a consumer’s attitude (liking/disliking) towards a product, which can result from any product information or experience. On the other hand, cognitive element is defined as an appraisal or conclusion on how the product’s performance compared against expectations (or exceeded or fell short of expectations), was useful (or not useful), fit the situation (or did not fit), exceeded the requirements of the situation (or did not exceed).
Recent research shows that in most commercial applications, such as firms conducting customer surveys, a single-item overall satisfaction scale performs just as well as a multi-item scale. Especially in larger scale studies where a researcher needs to gather data from a large number of customers, a single-item scale may be preferred because it can reduce total survey error. An interesting recent finding from re-interviewing the same clients of a firm is that only 50% of respondents give the same satisfaction rating when re-interviewed, even when there has been no service encounter between the client and firm between surveys. The study found a 'regression to the mean' effect in customer satisfaction responses, whereby the respondent group who gave unduly low scores in the first survey regressed up toward the mean level in the second, while the group who gave unduly high scores tended to regress downward toward the overall mean level in the second survey.
American Customer Satisfaction Index The American Customer Satisfaction Index (ACSI) is an economic indicator that measures the satisfaction of consumers across the U.S. economy. It is produced by the American Customer Satisfaction Index (ACSI LLC) based in Ann Arbor, Michigan.
The ... (ACSI) is a scientific standard of customer satisfaction. Academic research has shown that the national ACSI score is a strong predictor of Gross Domestic Product
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is of ... (GDP) growth, and an even stronger predictor of Personal Consumption Expenditure (PCE) growth. On the microeconomic
Microeconomics is a branch of mainstream economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics foc ... level, academic studies have shown that ACSI data is related to a firm's financial performance in terms of return on investment
Return on investment (ROI) or return on costs (ROC) is a ratio between net income (over a period) and investment (costs resulting from an investment of some resources at a point in time). A high ROI means the investment's gains compare favourably ... (ROI), sales, long-term firm value ( Tobin's ''q''), cash flow
A cash flow is a real or virtual movement of money:
*a cash flow in its narrow sense is a payment (in a currency), especially from one central bank account to another; the term 'cash flow' is mostly used to describe payments that are expected ..., cash flow volatility, human capital
Human capital is a concept used by social scientists to designate personal attributes considered useful in the production process. It encompasses employee knowledge, skills, know-how, good health, and education. Human capital has a substantial ... performance, portfolio
Portfolio may refer to:
* Portfolio (briefcase), a type of briefcase
* Portfolio (finance), a collection of assets held by an institution or a private individual
* Artist's portfolio, a sample of an artist's work or a ... returns, debt
Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The de ... financing, risk, and consumer spending. Increasing ACSI scores have been shown to predict loyalty, word-of-mouth recommendations, and purchase behavior. The ACSI measures customer satisfaction annually for more than 200 companies in 43 industries and 10 economic sectors. In addition to quarterly reports, the ACSI methodology can be applied to private sector companies and government agencies in order to improve loyalty and purchase intent.
The Kano model is a theory of product development and customer satisfaction developed in the 1980s by Professor Noriaki Kano that classifies customer preferences into five categories: Attractive, One-Dimensional, Must-Be, Indifferent, Reverse. The Kano model offers some insight into the product attributes which are perceived to be important to customers.
SERVQUAL is a multi-dimensional research instrument designed to capture consumer expectations and perceptions of a service along five dimensions that are believed to represent service quality. SERVQUAL is built on the expectancy-disconfirmation p ... or RATER is a service-quality framework that has been incorporated into customer-satisfaction surveys (e.g., the revised Norwegian Customer Satisfaction Barometer) to indicate the gap between customer expectations and experience.
J.D. Power and Associates provides another measure of customer satisfaction, known for its top-box approach and automotive industry rankings. J.D. Power and Associates' marketing research consists primarily of consumer surveys and is publicly known for the value of its product awards.
Other research and consulting firms have customer satisfaction solutions as well. These include A.T. Kearney's Customer Satisfaction Audit process, which incorporates the Stages of Excellence framework and which helps define a company’s status against eight critically identified dimensions.
The Net Promoter Score
Net promoter score (NPS) is a widely used market research metric that is based on a single survey question asking respondents to rate the likelihood that they would recommend a company, product, or a service to a friend or colleague. The NPS is a ... (NPS) is also used to measure customer satisfaction. On a scale of 0 to 10, this score measures the willingness of customers to recommend a company to others. Despite many points of criticism from a scientific point of view, the NPS is widely used in practice. Its popularity and broad use have been attributed to its simplicity and its openly available methodology.
For B2B customer satisfaction surveys, where there is a small customer base, a high response rate to the survey is desirable. The American Customer Satisfaction Index The American Customer Satisfaction Index (ACSI) is an economic indicator that measures the satisfaction of consumers across the U.S. economy. It is produced by the American Customer Satisfaction Index (ACSI LLC) based in Ann Arbor, Michigan.
The ... (2012) found that response rates for paper-based surveys were around 10% and the response rates for e-surveys (web, wap and e-mail) were averaging between 5% and 15% - which can only provide a straw poll of the customers' opinions.
In the European Union member states, many methods for measuring impact and satisfaction of e-government
E-government (short for electronic government) is the use of technological communications devices, such as computers and the Internet, to provide public services to citizens and other persons in a country or region. E-government offers new ... services are in use, which the eGovMoNet project sought to compare and harmonize.
These customer satisfaction methodologies have not been independently audited by the Marketing Accountability Standards Board (MASB)
The Marketing Accountability Standards Board (MASB), authorized by the Marketing Accountability Foundation,MASB''Marketing Accountability Foundation (MAF)''. ited 8 December 2010/ref> is an independent, private sector, self-governing group of aca ... according to MMAP (Marketing Metric Audit Protocol).
There are many operational strategies for improving customer satisfaction but at the most fundamental level you need to understand customer expectations.
Recently there has been a growing interest in predicting customer satisfaction using big data and machine learning methods (with behavioral and demographic features as predictors) to take targeted preventive actions aimed at avoiding churn, complaints and dissatisfaction.
Business case A business case captures the reasoning for initiating a project or task. It is often presented in a well-structured written document, but may also come in the form of a short verbal agreement or presentation. The logic of the business case is that ...
* Computer user satisfaction
* Customer satisfaction research
Customer satisfaction research is that area of marketing research, customer intelligence, and customer analytics which focuses on customers' perceptions with their shopping or purchase experience.
Companies are interested in understanding what ...
* Customer service
Customer service is the assistance and advice provided by a company to those people who buy or use its products or services. Each industry requires different levels of customer service, but in the end, the idea of a well-performed service is that ...
* Customer Loyalty
* The International Customer Service Institute
Customer Satisfaction: A Central Phenomenon in Marketing