HO W TO M EASURE CU STO M ER

SATISFACTION

Second edition
HOW TO
MEASURE
CUSTOMER
SATISFACTION
Second edition

Nigel Hill, John Brierley and

Rob MacDougall
First published 1999 by Gower Publishing

Published 2017 by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
711 Third Avenue, New York, NY 10017, USA

Routledge is an imprint of the Taylor & Francis Group, an informa business

Copyright ©Nigel Hill, John Brierley and Rob MacDougall 2003

Nigel Hill, John Brierley and Rob MacDougall have asserted their right under the
Copyright, Designs and Patents Act 1988 to be identified as the authors of this work.

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any
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Product or corporate names may be trademarks or registered trademarks, and are used
only for identification and explanation without intent to infringe.

British Library Cataloguing in Publication Data

Hill, Nigel
How to measure customer satisfaction. - 2nd ed.
1. Consumer satisfaction - Research 2. Consumer satisfaction
- Evaluation 3. Market surveys
I. Title II. Brierley, John III. MacDougall, Rob
658.8'12

Library of Congress Cataloging-in-Publication Data

Hill, Nigel, 1952-
How to measure customer satisfaction I Nigel Hill, John Brierley, and
Rob MacDougalL--2nd ed.
p.cm.
Includes index.
ISBN 0-566-08595-X
1. Consumer satisfaction--Evaluation. I. Brierley, John. II.
MacDougall, Rob. III. Title.
HF5415.335.H553 2002
658.8'12--dc22
2003057131

Typeset in Plantin Light by IML Typographers, Birkenhead

ISBN 13: 978-0-566-08595-6 (pbk)

CONTENTS

List of figures vii

1. Introduction 1
2. Setting objectives and project planning 7
3. Exploratory research 11
4. Sampling 26
5. Survey options 36
6. Maximising response rates 48
7. Questionnaire design 56
8. Rating scales 65
9. Introducing the survey 75
10. Analysing the results 80
11. Benchmarking and improving your performance 95
12. The mirror survey 106
13. Feedback 110
14. The business case for customer satisfaction 118

Appendices
1. Self-completion questionnaire 123
2. Telephone survey questionnaire 129
3. Mirror survey questionnaire 137
4. Satisfaction Benchmark 143
5. Web links 145

Index 147
LIST OF FIGURES

1.1 An overview of the CSM process 4

2.1 Customer satisfaction - a definition 7
2.2 CSM objectives 7
2.3 Customer survey schedule 10
3.1 The lens of the customer 12
3.2 Introductory letter for depth interview participants 16
3.3 Confirmation letter for focus group participants 21
4.1 Sampling options 26
4.2 Stratified random sampling 29
4.3 Sampling steps 30
4.4 Normal distribution curve 32
4.5 Sample size and reliability 33
4.6 Sampling summary 34
5.1 Multiple callbacks for accurate sampling 38
5.2 The satisfaction improvement loop 46
6.1 Multiple follow-up strategy 49
6.2 Effectiveness of techniques for maximising response rates 54
7.1 Questionnaire checklist 56
7.2 Ambiguous question 57
7.3 Precise question 58
7.4 A positively biased rating scale 59
7.5 A balanced rating scale 60
7.6 Questionnaire layout 61
7.7 Questions by section 62
8.1 Rating scales 65
8.2 Likert scale 66
8.3 Verbal scale 67
8.4 SIMALTO scale 68
8.5 Numerical scale 69
8.6 Ungraded scale 70
V ili • HOW TO MEASURE CUSTOMER SATISFACTION

9.1 Introducing the survey - an overview 76

9.2 Introductory letter for the main survey 78
10.1 Importance scores 81
10.2 Varying data producing the same average score 82
10.3 Importance scores with standard deviations 83
10.4 Satisfaction scores 84
10.5 Gap analysis to highlight PFIs 86
10.6 Business impact matrix 88
10.7 Performance profiles 89
10.8 Frequency distribution 90
10.9 Changing verbal into numerical scales 91
10.10 Interval and categorical scaling 91
10.11 Calculating the weighting factors 92
10.12 Calculating the satisfaction index 93
11.1 Satisfaction benchmark league table 96
11.2 Comparative performance at attribute level 97
11.3 Benchmarking against the best 97
11.4 General comparison indicator 98
11.5 Competitor comparisons at attribute level 99
11.6 Market standing 100
11.7 Top US companies and customer satisfaction 101
11.8 Characteristics of companies achieving high levels of
satisfaction 101
12.1 Customers’ priorities - the employees’ view 107
12.2 Customer satisfaction - the employees’ view 108
13.1 The satisfaction improvement loop 110
13.2 Internal feedback 112
13.3 Accurate feedback 114
13.4 Indicative feedback 115
1 INTRODUCTION

Contrast most markets today with their equivalents even a few decades ago.
Today’s markets are characterised by:

1. Oversupply
Advances in productivity due to new technology, investment in new
production capability driven by the need for quoted companies to
continually grow profits and the ease of supplying products globally have
all led to a huge increase in output, especially of products but of most
services too. In many markets the world is awash with products. Buyers
are spoilt for choice.
2. High quality
Along with the increase in supply, we have also seen a massive
improvement in quality, driven once more by new technology but also by
better management systems such as ISO 9000 and Six Sigma. As recently
as two decades ago it came as little surprise when manufactured goods
proved unreliable. Now fitness for purpose and total reliability in use have
become givens. In a growing number of industries, quality has virtually
disappeared as a differentiator.
3. Commoditisation
The over supply of high quality, largely undifferentiated products and
services is reducing most companies to suppliers of commodities. This ha
been exacerbated in many markets by the growing power of retailers who
are driving prices down and reducing differentiation further with own
label products.
4. Information
Compared with historical markets, where buyers often had to make
decisions based on imperfect information, today’s customers know
virtually everything. They can compare prices for most products and
services instantly over the Internet. They can also compare specifications
and other relevant information (for example, delivery times) and reach
knowledgeable value for money judgements for most purchases.
5. Education
Around the world people are being educated to ever higher levels.
Moreover, they have continually expanding life experiences, whether first
hand through travel or second hand via the media. These have been the
main drivers of consumerism - confident and selective customers who car
2 • HOW TO MEASURE CUSTOMER SATISFACTION

see through false advertising or selling claims and can make rational
judgements about the products and services that will provide them with
best value. If they don’t receive the value they were promised, or had
expected, they are confident about complaining and/or changing their
supplier.
6. Balance of power
Added together these trends have produced a huge shift in the balance of
power between suppliers and customers. Not only do suppliers face
intense competition for every sale, they have to work increasingly hard to
meet the customer’s requirements. To gain and even to maintain share in
today’s crowded markets, a supplier has to be very, very good.

By contrast, customers have never had it so good. They have a huge choice of
high quality products and services at exceptionally competitive prices. The
customer really is king, so it pays to keep them happy.

Most organisations do now accept the importance of customer focus.

Certainly, all pay lip service to the concept. Finding a Chief Executive Officer
of a quoted company who does not say that customers are crucial to the
success of their business is very difficult. However, some ‘walk the talk’ more
than others. MBNA (one of the most successful financial services companies
in the world over the last two decades), measures customer satisfaction daily
and rewards its staff monthly for exceeding customer satisfaction targets.
Others are less inclined to put their money where their mouth is. Short term
cost reduction and profit maximisation decisions often outweigh investment
in service levels and customer satisfaction. This is a short sighted view. There
is growing evidence that customer satisfaction pays, as we will demonstrate in
Chapter 14.

Even if you accept the financial benefits of satisfied customers, why measure
customer satisfaction? You could just work very hard to deliver the kind of
results that you would want if you were a customer. This would be a good
start. However, tests have shown that suppliers’ knowledge of customers’
requirements is usually far from complete. Their understanding of the
customer experience and the extent to which that experience meets their
expectations is usually even less accurate. If you are serious about the
importance of satisfied customers, you’ve got to have objective measures of
the extent to which you are succeeding. Feedback from customer contact
staff is very useful, but it won’t be objective. Monitoring complaints is
essential, but it won’t be representative. Not all dissatisfied customers
complain, and even if they did, a complaints measure provides no indication
of the extent to which you are satisfying and retaining the customers who are
not complaining. It is well established that satisfied customers do defect. Due
 INTRODUCTION • 3

to all the reasons outlined at the beginning of this chapter, being a good
supplier that merely satisfies its customers is no longer enough. Today’s
confident consumers will decide whether the value delivered by your business
is better than they could get elsewhere. It’s only by offering best value, by
making your customers very satisfied, that you can be sure of retaining their
loyalty.

Objective and accurate measures of customer satisfaction provide the best

lead indicator of future loyalty. A customer satisfaction measurement
programme will enable you to:

• Understand how customers perceive your organisation and whether your

performance meets their expectations.
• Identify PFIs (priorities for improvement) - areas where improvements in
performance will produce the greatest gain in customer satisfaction.
• Undertake a cost-benefit analysis to assess the overall business impact of
addressing the PFIs.
• Pinpoint ‘understanding gaps’ where your own staff have a
misunderstanding of customers’ priorities or their ability to meet
customers’ needs.
• Set goals for service improvement and monitor progress against a customer
satisfaction index.
• Benchmark your performance against that of other organisations.
• Increase profits through improved customer loyalty and retention.

A n overview of the customer satisfaction measurement

process
This book will explain how to produce reliable measures of customer
satisfaction and what needs to be done if those measures are to be successfully
used as the basis for effective action. But first, an overview of the customer
satisfaction measurement (CSM from now on) process (see Figure 1.1).

The starting point for any project is to set objectives and plan a detailed
critical path for the exercise, and these will be covered in Chapter 2. The first
stage of the research proper is to clarify with customers exactly what their
requirements and supplier selection criteria are so that an appropriate
questionnaire, which asks the right questions, can be designed. This is done
through exploratory research using focus groups (typically in consumer
markets) or one-to-one depth interviews (the norm in business markets). It is
customers’ most important requirements, as stated by the customers
themselves, that must form the basis for a CSM questionnaire and not
-+::-

Figure 1.1 An overview of the CSM process

 INTRODUCTION • 5

assumptions you make in-house about what you think might be important to
customers. The exploratory research process is covered in Chapter 3.

Two main factors determine the accuracy of a CSM study. The first is asking
the right questions (hence the exploratory research); the second is asking
them of the right people - a sample of customers that accurately reflects your
customer base. Three things decide the accuracy of a sample. It must be
representative, it must be randomly selected and it must be large enough. In
Chapter 4 we examine the various sampling options.

Once you are confident that you will be asking the right questions of the right
people, you can design the final questionnaire and begin the main survey.
The first decision here is to determine how the survey will be carried out. It
could be done using interviews or self-completion questionnaires, and the
latter can come in a number of forms, including postal, point of sale and
electronic. Chapter 5 outlines the survey options, together with their
advantages and disadvantages. Whatever survey type you adopt, it will be
important to maximise response rates and this topic is covered in Chapter 6.

Having determined the type of survey you will carry out, an appropriate
questionnaire can be designed. Chapter 7 will examine general questionnaire
design principles, whilst Chapter 8 will focus on the specific issue of rating
scales. Even now one more step is necessary before launching into the survey.
It must be properly introduced to customers. How this should be done is
outlined in Chapter 9.

At this point the survey can finally be carried out, followed swiftly by an
analysis of the results. Chapter 10 examines several analytical techniques and
highlights some common mistakes to avoid. We also explain how to calculate
an accurate customer satisfaction index. Having produced a set of results and
established a satisfaction index, it is useful to know how your performance
compares with that achieved by other organisations. Chapter 11 therefore
covers the subject of satisfaction benchmarking.

A worthwhile addition to a CSM study is a mirror survey where the same set
of questions is administered to your own employees to discover whether they
understand what’s important to customers and how closely they are meeting
customers’ requirements. Typically conducted using self-completion
questionnaires, a mirror survey will often trace the origin of customer
satisfaction problems to employees’ inaccurate understanding of the
customer perspective - the so-called ‘understanding gaps’. Chapter 12
explains how to conduct and analyse a mirror survey.
6 • HOW TO MEASURE CUSTOMER SATISFACTION

After analysing the data and producing a report, feedback should be provided
swiftly to employees and customers. Inadequate feedback is a common
reason why some organisations fail to reap the full rewards of their CSM
process. Only if employees fully understand the survey results and their
implications will effective action be taken. Chapter 13 suggests how effective
internal and external feedback can be provided.

The final chapter will return to the benefits of customer satisfaction and will
recommend the key areas to focus on for an effective CSM process in your
organisation.