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Customer Satisfaction Monitoring – An overview


QualityZoneAny road will do if you don't know where you want to go..

Research indicates that acquiring one new customer can sometimes cost more than the revenues that one customer will eventually generate. Faced with this grim fact, businesses are increasingly making customer care a top priority within their business strategy.

The fundamental goal of an ISO 9001:2000 quality management system is to satisfy the customer, today and in the future. In the new ISO standard, measuring the level of Customer Satisfaction is meant to be a measure of success and a driver of improvement. Achieving this is not easy, but it is worthwhile.

click here to see what the Standard says

Firstly, let's examine some of the background considerations before embarking on a CSM study.

Cost, Quality and Delivery
In developing customer satisfaction monitoring, it is not uncommon for companies to fall back on The Big Three - Cost, Quality, Delivery.

Not long ago, operational improvement was the main competitive battlefield. While this is important, you must ask yourself whether this alone will give your company an edge over its competitors. Will this alone provide you with an early warning of market problems and drive improvement in ways that bring superiority in the marketplace?

If cost were all-important then the leading brand in each product area would be the one with the lowest cost. A look around at your competitors will quickly convince you that this is not so. In fact, the leading brands are generally more expensive. What kind of cost is important to your customers - lifetime cost, initial price, support cost, financing?

If product quality were all-important, then the best quality product would be the winner. However, even when Japanese cars were grabbing market share in the UK, it was always the case that British cars were superior in terms of their features, and often too as examples of engineering. The Japanese companies targeted a different kind of product quality, which was what mattered to the largest customer segment, reliability. The focus on a specific kind of quality was the key to their success.

Delivery is only one aspect of the communication you have with your customers. It is not always the most important one. What kind of delivery performance is important to your customers -lead-time, reliability, being kept informed?

Today, while the above factors are still important, other competitive factors may be equally or more important to your customers.

Innovation & Customer Relationships
Innovation has become a popular buzzword and certainly a key area of performance in many industries. How many companies assess the impact their innovation efforts have on customer satisfaction? We all want customers that are expanding. Growth often requires developing innovative new products. So, how attractive are you, as a partner for developing innovative products?

Over the last few years we have discovered, or re-discovered, the importance of customer relationships. What is quality in customer relationships? How do you measure it? Does your customer satisfaction survey address it, in its different aspects? Do you assess the depth of your customer relationships?

The Starting Point
Before embarking on measuring customer satisfaction, ask yourself these questions:
  • Who are our leading customers and what are they looking for?

  • What specific problems or decisions are we considering in the near future?

  • What are all the factors that our customers are concerned about?

Taking time to think this through will set the basis for developing customer satisfaction monitoring that really delivers.
A Cross-Functional Opportunity
In our view, the best outcomes are achieved when CSM is addressed in a cross-functional way. It is not something just for Quality, or just for Sales, or Marketing, or Production. Involving different business areas will not only help you address the key strategic issues, but also assist you in gathering interest in using the results to drive your improvement program.

Customer Satisfaction Part 2 - Objectives & Planning
So, let’s recap, “what will a CSM study give you?” It will allow your company to:
  • Identify your customer's priorities;

  • Receive first-hand input on your company's performance;

  • Obtain performance ratings relative to your customer's priorities;

  • Learn performance ratings relative to your competitors' performance;

  • Establish priorities for improvement;

  • Retain or gain market share;

  • Improve customer, client, or employee loyalty;

  • React quickly to changes in the market;

  • Identify and capitalize on opportunities.

When you survey your customers, you are sending a message not only to customers, but also to your employees. Both customers and employees know that you are focused on the quality of your services and/or products when they see that you are paying attention to customer satisfaction.

In fact, you can even improve customer satisfaction before the survey results are tabulated. If employees know you are monitoring customer satisfaction, they will pay closer attention to the customer service they provide.

Customers will also see that you are listening to their concerns, which can give them an outlet for any frustrations they might have.

Before embarking on any CSM project, you must set your objectives. These can include all or some of the following list:

  • Identifying what your customers require (importance rating);

  • Identifying how satisfied your customer are (satisfaction rating);

  • Customer Satisfaction Index;

  • Identifying Priorities for Improvement (see Part 6 of this series “Analysis and Benchmarking”);

  • Getting a perspective from your own employees.

Customer Satisfaction, however, is not simply about how satisfied your customers are – it is a measure of how your total product or service performs in relation to the requirements of your customer. So, Customer Satisfaction is relative…. to the expectations of the customer.
This means that you must ask the question “How important is…..” as well as “How satisfied are you with….” Take time to think about what you want to learn from the results and construct questions that will gather these data. Broad questions like "How satisfied are you with our customer service" are of little use since they do not tell you what you might be doing right or wrong. Be as specific as possible when constructing questions. You should also include a few "write-in" questions that allow respondents to provide comments. Even though these qualitative data are more time-consuming to analyse, they can reveal invaluable information.

By analysing the results and comparing “importance” with “satisfaction”, you can then identify Priorities for Improvement or PFIs. There is little point in implementing changes to improve your customers’ satisfaction in an area which is not important to them. Concentrate on improving what’s most important.

CSM studies should be run regularly – it’s very easy to take your eye off the ball in an ever-changing market. Using the results of your survey, you can calculate your Customer Satisfaction Index (CSI). This is an overall measure of customer satisfaction against which you can measure the results of future studies. Let’s go back to our original definition of CSM - “it is a measure of how your total product or service performs in relation to the requirements of your customer”. Regardless of what questions you are posing your customers, the CSI is a reflection of this definition. It is a reliable, trackable indicator against which you can measure future CSM results, regardless how your business and, hence, your questions may change.

As part of the study, you may also want to compare yourself to your competitors. This is called “Benchmarking” (see Part 6 of this series). However, let’s just consider this for a moment - this is not always the best comparison to make. Think how you feel, yourself, when you are a customer. You don’t compare the service you receive in your bank to the service offered by another bank. Most customers rarely change from one supplier to another. In fact, a commonly quoted statistic is that you are more likely to get divorced than you are to change your bank. So, you, as a customer, compare the service you receive in your bank with the service you receive at the supermarket or the garage. Customers compare, not with direct competition, but with other organisations that they deal with. This theory, of course, is not set in stone; and your industry may be one where your customers do have personal knowledge of your direct competitors.

Customer Satisfaction Part 3 - Exploratory Research/Samples/Survey Options
So, you’ve done your planning and you’ve identified your objectives. There is now one very important principle you need to understand if you are to gather accurate data:

You must ask the right questions of the right customers.

This is why exploratory research is so important. It will identify who are the right customers and what are the right questions.

Don’t make the mistake of using internal management to identify the questions and topics. They may not match the needs of your customers but will, inevitably, cover what is important to your managers. So your starting point must be asking your customers what their main requirements are and what is most important to them. This will then give you the topics for your questionnaire. And this is what a Focus Group can provide you with.

What is a focus group? It’s a discussion group where a number of different customers are represented. You may want to hold several different focus group meeting where you can get the views of a representative sample of your customers. For example, you may be in an industry where the needs of female customers may differ from the needs of male customers. In this instance, you may consider holding a focus group for each customer group.

How do you recruit a focus group? Let’s not pretend that this is easy. It is time consuming; typically, the groups will meet in the evening and will have to travel to a venue, therefore, it will help to offer the participants an incentive which may be cash or goods.

Getting agreement to attend is the easy part; the hard part is ensuring that they turn up. Therefore, pay attention to your invitation process. Provide written details of the event and remind them by telephone the day before.

How do you run the focus group? This is generally chaired by a facilitator who will explain the purpose of the group and ask the questions. Take care when deciding who will take on this role. The facilitator needs to be an excellent communicator and, perhaps more importantly, a good listener. You may like to consider using a facilitator who is not part of the company – this will ensure that you get objective feedback. Record the session on tape; written notes will never be complete.

What is the outcome of the focus group? The information you gather from a focus group is termed “Qualitative”, as opposed to “Quantitative”. Qualitative data means getting a lot of data from a small number of people. At this stage, you need as much information as you can get so that you gain a greater understanding of your customers and what they need. This means that you can designed accurate questions for your questionnaire.

Why not simply use the information gathered from the focus group? As this information is qualitative, ie a great deal of information from a small number of people, it will not be statistically reliable. For reliable statistics, you need quantitative data ie a small amount of information from a large number of people. By using the information from the focus group, you can ensure that you are asking the correct questions. To then get reliable data, you ask those questions of a lot of customers.


Having done the exploratory research, it is now time to “sample” your customers. For companies with a large customer base, surveying each customer is simply not viable. Therefore, select a sample which is representative of the whole customer base. There are two different kinds of sample:

  • Probability - random;

  • Non Probability – not random.

A simple definition, but an example will put it into context.

Probability-based sampling would be used when a totally unbiased survey is required. For example, a supermarket with a very large customer base might use this method.

Non-Probability based sampling is used when you want to make sure that you get to the right customers. You are biasing the sample but ensuring that no significant customers will be excluded.

Having decided upon you sample type, you need to decide on the number of customers. This will very much depend upon your business. In a business-to-business environment, you may have a small number of very high spending clients. In this scenario, you may well have a number of different contacts within the same customer site whom you want to survey. Alternatively, in a business-to-consumer environment, the customer base is much larger and a single contact within the company will probably suffice. However, be mindful that the smaller the sample size, the greater the risk of inaccurate data.

Survey Options

Lastly, how do you delivery your survey? There are three main options:

  • Face-to-Face Interview;

  • Telephone Interviews;

  • Self-completion questionnaires.

Each of these methods suits different scenarios but there are pros and cons to all three.

For example, if you have a small sample size, face-to-face interviews would be an option. Although expensive to run, they can provide the most accurate feedback.

Telephone interviews are the quickest way of gathering data. Compared to face-to-face interviews, they are low-cost but provide the benefits of two-way communication with the customer.

Lastly, self-completion questionnaires; generally, this is the most cost effective method of data collection (although make sure you include printing/postage when budgeting for this method). However, the use of technology means that it is now feasible to deliver these questionnaires electronically, which will significantly reduce the cost of delivery and collection.

Customer Satisfaction is a discussion topic in our forum, click here to have your say.

Part 4 - Questionnaire Design/Layout/Rating Scales
One of the most critical activities, in running a survey, is the design of the questionnaire.

The design can be broken down into three specific areas:

  • The Questions;

  • The Layout;

  • The Rating Scales.

The Questions

When designing your questions, make sure that you ask yourself:

  • Does the respondent have the knowledge?

  • Will the respondent understand the questions?

  • Will the question bias the response?

Let’s look at each of these in turn. Firstly, respondent knowledge; let’s say that you are asking rail passengers their views on the differences between 1st class and economy travel. Most people would answer the questions even if they had no experience of travelling in both classes. So, you would have to ensure that your sample had the necessary experience and, therefore, knowledge.

Secondly, understanding the questions. For example, the question “Which of the following magazines do you read regularly?” Your definition of “regularly” may not be the same as your respondents. Regularly could mean twice a year or once a month, depending upon your opinion. Avoid ambiguity!

Lastly, introducing bias. This is probably the biggest potential problem when wording your questions. Asking the question “How satisfied are you…” implies that your customers are satisfied, it’s just a matter of how much. However, asking “How satisfied or dissatisfied are you…” will eliminate the bias.

The Layout
When designing your questionnaire, you should pay attention to the following:
Space and colour
Here you need to balance the length of your questionnaire against the layout. On the one hand, you don’t want it to be too long, but on the other hand, you don’t want it to appear cluttered. Space out the questions, even if it increases the length. Use of colour can also make the questionnaire appear more interesting. Again, it’s a trade off against the cost of printing.
These need to be clear, concise and unambiguous. If the questionnaire is incorrectly completed, they are wasted responses and, as you’ll see later, responses are very valuable.
Opening Questions
People often make a decision, as to whether or not to fill in a questionnaire, based on the simplicity of the first few questions. Consider asking easy questions that don’t require too much thinking-power on the part of the respondent. These questions may have little or no value to your company, but they give the respondents an easy start. You can then lead into the questions which ask for opinions
Question Sequence
Depending upon your business, you can choose to ask the questions in one of two sequences:
    Firstly, you can base the order on the sequence of events that customers typically go through when dealing with your company. This works well for one-off events which have a process, such as taking out an insurance policy.

    Alternatively, for organisations to have on-going relationships with their clients, you can “group” questions by topic, eg delivery, product quality etc.

Classification Questions
These include personal questions about the respondent, ie industry type, position within the company, age, sex etc. Leave these until last. Some people may consider these impertinent and not answer them.
The Rating Scale
The Rating Scale is the tool used to do the measuring and is the most critical aspect of your questionnaire design. They fall into two main categories:
  • Numerical Scales;

  • Verbal Scales.

Numerical scales use a scale of, for example, 1 to 10 where 1 is “Of No Importance At All” or “Totally Dissatisfied” and 10 is “Extremely Important” or “Totally Satisfied”.

Typically, verbal scales use words instead of numbers. For example, instead of the scale reading 1 to 10, it would read “Very Dissatisfied” to “Extremely Satisfied”.

Let’s now examine the pros and cons of each scale. Firstly numerical scales:

  • Easy to fill in

  • As the data is numeric, it is easier to analyse;

  • It is easier to have a wider scale, as it’s not practical to have many points on a verbal scale. This allows the respondent to be more discriminating.

As for verbal scales:

  • Simple and clear;

  • More likely to be filled in accurately.

On balance, the 10-point numerical scale is the most suitable for measuring satisfaction.

Part 5 - Running the Survey
When looking at maximising the rate of response, you should always use an introductory letter. Keeping your customers informed is important and so the introductor letter has a very important part to play. It will:
  • Increase your response rate;

  • Improve the quality of your responses by raising the perceived value of the exercise in customers’ minds.

Who to inform:

If you are serious about customer satisfaction monitoring, there is only one answer to this question. You should inform all customers. Making sure that all customers know that you are committed to customer satisfaction and are prepared to invest to achieve it is a significant factor in making satisfaction gains. Take control – don’t rely on your customers noticing your efforts.

How to inform them:

If you have a small customer base, you could explain the process personally using your own internal contact staff.

With a medium-sized customer base, this could become costly but you could consider a personalised mailing.

With a very large customer base, personalised mailing would be costly, although it might be worth considering as a long-term investment in building customer loyalty as opposed to a similar spend on advertising. However, if mailing is not an option, consider including the information on a company newsletter and on your website

What to tell them:

There are three topics you need to tell them:

  • Why you are running the survey;

  • How you are going to conduct it;

  • What feedback they will get.

Don’t assume that your customers will correctly interpret why you are asking them questions. It could be viewed as a selling tactic or as a exercise which is designed to benefit you rather than them. By pre-empting these misconceptions, you can maximise on the value and the response of your survey. Clearly state that the reason you are conducting the survey is to benefit the customer by identifying if their requirements are being met.

Tell them how you are going to carry out the survey. If you are including a postal questionnaire with the letter, make sure you give clear instructions on completion and returning. If you are introducing a telephone questionnaire, give an overview of the topics you will be covering and that an appointment time will be made to interview customers at a time convenient to them. With all customer correspondence of this type, make sure you reiterate how valuable customer feedback it. This will encourage the highest possible participation rates.

Research evidence suggests that promising feedback is the single most effective element in increasing response rates. Therefore, make sure that your introductory letter informs customers that they will receive feedback on the survey results and on any key issues which the survey identifies.

You should also provide a post-csm action list so that customers can see what improvements you are making, with implementation times.

Part 6 – Analysis and Benchmarking
This final part of our Customer Satisfaction series explains how to analyse your results and how to calculate a customer satisfaction index.

All of your analysis can be conducted using a product such as Microsoft Excel – no special software is needed.

Assuming that each questionnaire contains 10 questions and each of those questions are tested for:

  • Importance

  • Satisfaction
The simplest way of analysing your results is to add all the scores for each attribute and calculate the average. This can then be displayed in a bar chart which gives a visual representation of what is most important to your customers and how satisfied they are.

The bar chart scales should not go from 1 to 10, as big differences are not immediately apparent. The scale needs to be truncated to highlight the differences. This simple analysis will show you:

  • Your customers’ views of Importance

  • Your customers’ views of Satisfaction
You can now compare the two tables which will give you a comparison of your customers’ satisfaction against what is important to them. This “gap analysis” will identify what your “Priorities for Improvement ” or “PFIs” are. If the satisfaction bar for any one attribute, is shorter than the importance once, you may have a problem. On a ten point scale, any gap greater than 1 is significant and gaps in excess of 2 are series. When decided which gaps are the most serious, consider these factors:
  • The size. Normally, a greater gain in customer satisfaction will be achieved by closing a large gap rather than a small gap.

  • Importance to the customer. Closing a slightly smaller gap on something that is not a top priority to the customer, may generate more satisfaction gain than addressing a larger gap on an issue of lower importance.

  • Quick wins. Some PFIs will be more difficult, more time-consuming and most costly to address than others. Any PFI, which can be addressed relatively easily, is a quick win. It also shows your customers prompt action has been taken.
Standard Deviation
Wherever average scores are shown, standard deviation must be done as averages can sometimes mask wide variations in the meaning of the data. For example, in a survey of 10 people:
  • 5 are totally dissatisfied and 5 are very satisfied
would give the same average score as:
  • 10 people being moderately satisfied.

On a ten point scale, a standard deviation of around 1 or below indicates that there is a strong consensus of opinion. On the other hand, a standard deviation of 2 or above demonstrates a wide disparity of views. Again, Microsoft Excel has a standard deviation function which simply calculates this figure for you.
Business Impact
However important customer satisfaction is, it cannot be bought at any price. Ultimately, the decision to invest in improvement has to be a trade-off between the cost of making those improvements and the potential gain from doing so.

The most positive business impact will be made by adopting PFIs that will generate the greatest possible gains in customer satisfaction at the lowest possible cost.

The Satisfaction Index
After the PFIs have been identified, the second major outcome to be produced is an overall index of customer satisfaction, often called a satisfaction index. The basic question that the SI answers is:
“How successful are we at satisfying our customers according to the 20 things that are most important to them?”

The Satisfaction Index is produced by calculating a weighted average of all the satisfaction scores. This is a 2-step process:

1. Use the importance scores to calculate the weighting factor. Total all the importance scores and express each one as a percentage of the total to give the weighting factor.

2. Now multiply each satisfaction score by its corresponding weighting factor. Add all the weighted scores to give the overall weighted average. It is normal to convert that score into a percentage

Using this method, the Satisfaction Index is updateable. It provides a comparable measure of satisfaction that can be monitored in the years ahead even if the questions have to change as customers’ requirements change.

If the questionnaire has to change in the future, the SI remains a measure of exactly the same thing. This means that the SI from 2 or more surveys asking different questions are directly comparable.

Since satisfaction indexes are directly comparable, it is perfectly feasible to compare performance across a large number and a wide variety of organisations. However, in order to do this, you need access to an existing customer satisfaction database. ISO 2000 has access to a large database of csm results so that our clients can benchmark their performance.

Being able to benchmark against other companies is a valuable benefit to companies. Doing a CSM study in isolation gives results which, too, are in isolation. For example, if a CSM study shows a Satisfaction Index of 84%, how does the company know if that is good? Unless they can compare to other companies (not necessarily within the same industry), they have no way of knowing.

Using the database of results, the company’s results can become part of a “Satisfaction Benchmark” league table. This compares their relative position against all other companies. As the database is being constantly added to, it reflects up-to-date performance standards.

However, a simple way of gaining an understanding of your position against your competitors, is to add a basic question to your questionnaire such as:

“Compared with similar companies (name your industry sector here) that you deal with, would you say that we are:

  • The best

  • Better than most

  • About the same as most

  • Worse than most

  • The Worst?

This can then be analysed and form the basis for a very clear “comparison indicator” to monitor over the years.
Lastly….. ACTION
Clearly, all the measuring, the reporting and analysis must then lead to action. The whole point of conducting a CSM survey is to improve customer satisfaction and that will only be achieved through taking action on your Priorities for Improvement.

Improving customer satisfaction is very much a journey and not a destination.

ISO 2000 Worldwide is launching a low cost customer satisfaction monitoring solution. Email us for details


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