Understanding Customer Satisfaction
Customer satisfaction is a fundamental concept in modern marketing. In many organizations, customer satisfaction is considered the most important marketing metric, primarily because it is considered a key driver of customer loyalty and bottom-line financial performance.
In most cases, customer satisfaction is more important to service firms (as opposed to manufacturers). This is because service firms (which also include retailers) usually have direct contact with the end-customer, usually via sales people, service staff, call center staff and so on.
Customer satisfaction is generally considered a less important issue in the manufacturing sector as these types of firms typically sell their products through distribution channels including retailers.
Customer satisfaction (CSat) is generally considered the most important marketing metric.
When studying this important topic, introductory students need to review three key aspects, which are:
- How customer satisfaction is constructed (that is, the disconfirmation model of customer satisfaction),
- The benefits of customer satisfaction, and
- Suitable tactics to improve customer satisfaction.
More advanced marketing students should also consider:
- The limitations of customer satisfaction as an effective marketing metric,
- How customer satisfaction can be measured, and
- How customer satisfaction levels evolve over time.
To start the review of understanding customer satisfaction it is important to understand its construction in the mind of the consumer. Please note the word “customer", which clearly indicates that the consumer has had at least one purchase encounter with the firm. And also remember that customer satisfaction is in the mind of the consumer, it is their perception, rather than reality.
The following is a simple model of customer satisfaction, as an introduction to this topic. A more detailed model of customer satisfaction is available that can be reviewed for more advanced students, such as those studying services marketing or preparing an university assignment on this key topic.
As can be seen, customer satisfaction is a derived outcome, where the customer compares the value that they believe they received against the level of value that they expected to receive prior to the purchase.
A nice easy way to think about this is by using a personal example. If you were expecting a $100 gift for your birthday and you only received $50, you would be disappointed (dissatisfied). But if you were only expecting $10 and received $50, you would be delighted (highly satisfied). As you can see, in this example you received $50 in both instances, but it was your initial level of expectation that heavily contributed to your level of satisfaction.
- Benefits of Customer Satisfaction
- Definitions of Customer Satisfaction
- Disconfirmation Model of Customer Satisfaction
- Limitations of Customer Satisfaction
- How Customer Satisfaction Evolves over Time
- What is the difference between customer satisfaction and customer value?
- Why under-promising and over-delivering is a poor strategy
- Understanding the SERVQUAL Model
Here is a link to an academic article by Oliver for further research if required.