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Researching customer satisfaction, loyalty and the relationship with service quality

October 31st 2013, by glyn

Identifying your customer, their needs and your service quality to improve customer loyalty

VA Zeithaml said “customer satisfaction is about balancing customer perceptions with their expectations”.

How can organisations achieve that goal? Customers have all sorts of needs and these will evolve different expectations, so how do you go about satisfying customer expectations?

Define the customer

Organisations use different terms to describe customers - in retail we often hear the word “consumer” used; transport companies use the word “passenger”, the Inland Revenue use “taxpayers”… the common link is customers exchange money for a product or service.

Organisations will often have different groups of customers. For example, power generators see the customer as the power distributors, who then sell their power on to the consumer. Manufacturers see their customer as the distributors or retail outlets, who then sell on to the consumer.

What customers need

In any of these environments, organisations need to appreciate what influence service quality has on customer satisfaction. And to understand this, we need to identify what those different customers need and the services they expect at the start of buying a product or service.

Many organisations feel they already understand this, but the view is often somewhat distorted when compared to reality. This distortion can be driven from a business view that customers are better informed than they actually are.

PZB service quality performance model

Determinants of expectation we frequently see include those established in the PZB service quality evaluation:

  • Accessibility
  • Competency
  • Courtesy
  • Credibility
  • Reliability
  • Responsiveness
  • Understanding / knowing the customer

Each of these determinants can be broken down into a series of attributes. For example, competence could include people listening skills, staff knowledge and organisational ability to deal with problems.

These areas can be explored and understood using qualitative or quantitative research techniques. Facilitated one-to-one or group sessions work well to ensure comprehensive and real understanding of customer expectations or needs.

Identifying satisfaction drivers

Information collected at this establishment stage should be measured using a quantitative data collection method and needs converting into questions reflecting soft measures such as awareness raising and promotion, rather than hard activity measures.

From understanding service quality from a customer’s perspective, the next step is to identify which areas of service quality are drivers of satisfaction. We often see these “drivers” at specific points along the customer journey; they will be different across sector, organisation and different customer groups.

To understand the performance of each service or product attribute, each should be measured against two dimensions:

  • its importance to the customer, and
  • the extent a customer perceives its presence in the service or relationship experienced.

Using a two-dimensional approach to measurement will enable questions to be plotted on a matrix, supporting understanding of its priority to customers and relative performance. Performance and service activities can be tailored accordingly to meet customer expectations, enabling service quality improvement.

Performance insights to empower organisations

There is significant correlation between customer loyalty and customer satisfaction. The link is direct and when plotted directly in real time environments demonstrate that relationship.

The outcome of this approach to researching customers and understanding service quality has a significant number of benefits for organisations, including:

  • Operating standards validation
  • Training needs validation
  • Brand and service strategy
  • Product strategy

Given the importance of performance measurement in many organisations, the implementation of a questionnaire and survey capable of tracking service quality empowers organisations with the insight needed to help further bolster values with their customers and act as an enabler in promoting positive customer relations on an ongoing basis.

This approach facilitates development of a tracking study, supporting the progress of improvement actions and where dissatisfaction is perceived.

The frequency of administering this measure should be determined by:

  • The speed actions can be implemented
  • The type of service provided/products sold
  • The number of customers available to interview

Service is the differentiating element organisations can influence, people are the enabler to make it happen, customer satisfaction is the outcome and loyalty is the benefit.

If you think your organisation could benefit from a conversation about research or a program of research measuring service quality, call us - we'll be happy to help.

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