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Measuring Customer Satisfaction

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Vanja Jeđud

on 13 December 2014

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Transcript of Measuring Customer Satisfaction

Measuring Customer Satisfaction
1. Overall satisfaction measure
Dissatisfaction is synonymous for: purchase regret

Satisfaction is linked to: positive ideas (‘it was a good choice’ or ‘I am glad that I bought it).

This measure assesses your customers' experience with your product or service.

It’s the direct response to perceived quality based on the perceived needs and expectations customers had.

Perceived quality is often measured in one of three contexts:

Overall quality
Perceived reliability
Extent of customer’s needs fulfilled

Overall satisfaction can be measured : through a survey conducted from your customers after they finished the purchase process

2. The loyalty measurement
Customer loyalty is an excellent mirror describing the behavior of repeat customers, those who offer good ratings, reviews and testimonials.

Loyalty can also be measured via a survey after the purchase process.

Customer loyalty reflects :

the likelihood of repurchasing products or services.

So customer satisfaction is a major predictor of repurchase

Strongly influenced by explicit performance evaluations of product performance, quality, and value.

3. A series of attribute satisfaction measurement
4. Intention to repurchase
Customer satisfaction can influence customers on whether they will renew their contracts or purchase more products from you.

Directly asking: you can gauge a good indication on how satisfied the customers are and will they continue to purchase.

Behavioral measures: “purchasing this product would be a good choice” or “I would be glad to purchase this product.”

Represent past experiences with customer representatives

5. Customer Lifetime Value
Customer lifetime value is the financial value of a customer relationship based on the present value of the projected future cash flows from the customer relationship.




Customer lifetime value is an important concept in that it encourages firms to shift their focus quarterly profits to the long-term health or their customer relationships.

This is an important number because it represents an upper limit on spending to acquire new customers.
Team 3: Beata Bobinac, Vanja Jeđud, Vanja Jovanović
Main issues
More powerful to measure the actual behavior than the intention.
emotional (feel) and behavioral (actions)

A common measure of loyalty might be the sum of scores for the following three questions:

Overall
, how satisfied are you with [brand]?
How likely are you to continue to
choose/repurchase
[brand]?
How likely are you to
recommend
[brand] to a friend or family member?

Loyalty - measured as: a combination of 3 measures

Client Heartbeat surveys - a great representation of how happy your customers are (If your customers are willing to put their reputation on the line to recommend you, they are satisfied).

An example
Net Promoter Score (NPS) is useful, simple metric that offers a snapshot of a company’s performance through its customers (overall happiness with your brand). Correlated with how likely a customer is to continue to purchase from you.

Customer survey that asks participants to rank (1-10) how likely they are to recommend you:







Final calculation of your NPS = useful benchmark
Easy Interpretable Customer Satisfaction Score, One single question, Indication of the growth potential of your company or product, Measure continuously, and watch customer satisfaction and loyalty rise.





Main issues
Consumer attitudes toward a product develop as a result of product information or any experience with the product (perceived or real)

Measure attitudes towards a product or service that a consumer has never used - not meaningful to measure when a product or service has not been used.

Cognition refers to judgment: the product was useful (or not useful), fit the situation (or did not fit), exceeded the requirements of the problem/situation (or did not exceed), was an important part of the product experience (or was unimportant).

Affect and satisfaction are closely related concepts
Satisfaction is “post experience” and represents the emotional affect (product’s quality or value).

An example
"How important is Feature A in your decision to buy from XYZ Company?"
"How satisfied are you with the “taste” of your cake?"
"How important is “taste” in your decision to select Sofra restaurant?"
"How important are our service level agreements in your decision to select our company?"

These sorts of questions are great for improving the product/service and they can also be applied to support.

Useful tools in gathering responses to these questions are Qualaroo, Temper... allows you to monitor the customer mood, spot frustrating experiences for further development, and clearly understand customer satisfaction regarding different pages, different products or scenarios.

Main issues
Heightened satisfaction during the post-purchase process can influence the score.

A customer’s willingness to recommend the business to others.

Satisfaction can influence other post-purchase/post-experience actions: communicating to others – WORD OF MOUTH/SOCIAL NETWORKS

Additional post-experience actions might reflect heightened levels of product involvement

Repurchasing is vital for constant profit and customer lifetime value

Improving customer support channels, Improvement in page layout and insight in design and available information on pages


An example
"Do you intend to repurchase from Konzum when your subscription runs out?"
"Do you intend to renew your contract when it ends?"
"Do you intend to return to the Sofra restaurant in the next 30 days?"

This question is obviously relational to the offering at hand (some products are purchased regularly, some at longer intervals).

Hold Time & Abandonment Rates - digital support channels that do require a live person, keeping tabs on abandonment rates and hold time is important.

Customers are much less patient with live support channels:

A high exit or abandonment rate is a direct behavioral indication of customer dissatisfaction.

Unnatural high percentage indicates that your page and process could be optimized

Main issues
Accuracy in this parameter is vital to meaningful results. The retention rate is assumed to be constant across the life of the customer relationship.

Products and services that go through a trial, conversion and loyalty progression, retention rates will increase over the lifetime of the relationship. In those situations, this model might be too simple.

The discount rate should also be chosen with care because small changes can make major difference to CVL.

Don’t use this formula for relationships in which customer inactivity doesn’t signal the end of the relationship.

An example
An Internet service provider charges $19.95 per month. Variable costs are about $1.50 per account per month. With marketing spending of $6 per year, their attrition is only 0.5% per month. At a monthly discount rate of 1%, what is CLV of a customer?

CVL = $17.95 * [ 0.995 / ( 1 + 0.001 – 0.995 ) ]
CVL = [ $17.95 ] * [ 66.33 ]
CVL = $1.91


Main issues
Need to have a strong read on your overall quality of service, especially as it pertains to fulfilling customers’ needs on a regular basis and creating the sense that your company is reliable.

Accomplished with a simple follow-up question to describe overall service quality.

An example
"Overall, how was your experience with PBZ?"
"Overall, how satisfied are you with Sofra restaurant?"

Reflection of the overall opinion of a consumer’s satisfaction experience with a product.

This can be an open-ended question: mentions of quality, reliability and customer fulfillment.

Google Forms, Survey Monkey, Floq…



Literature
Dawn Iacobucci, 2013 Marketing Models: Multivariate Statistics and Marketing Analytics.

Paul W. Farris, Neil T. Bendle, Phillip E. Pfeifer, David J. Reibstein, Marketing Metrics: The Definitive Guide to Measuring Marketing Performance, 2/E

http://www.helpscout.net/blog/customer-satisfaction/
http://blog.clientheartbeat.com/customer-satisfaction-metrics-6-metrics-you-need-to-be-tracking/
http://www.qualtrics.com/blog/customer-satisfaction-measurement/
http://blog.clientheartbeat.com/measuring-customer-satisfaction/
https://www.userlike.com/en/blog/2014/06/24/6-proven-methods-for-measuring-your-customer-satisfaction


Thanks for listening!
Introduction
Metrics encourages rigor and objectivity.

Measuring customer satisfaction is one of the most important factors.

It helps with the product development and company support.

Important: knowing the needs of your potential and current customers, how to attract the new ones, but also, how to keep the old ones loyal.

Additional numbers and calculations = profitability of the business, champagne, product or service.
Measuring the like/dislike of a certain product (how they perceive the product): frame questions in the context of a specific attribute.

Gives an insight into the overall mood of the customers.

Define and develop measures for each attribute that pertains to a customer’s satisfaction.

Collecting feedback about support team allows you to understand how important these elements are - gives managers better opportunities to handle customer feedback

Customer satisfaction is influenced by perceived quality of product and service attributes.

The researcher must define and develop measures for each attribute.

71% of consumers expect assistance in 5 minutes, and 31% want you to respond immediately.
A majority (48-65%) of consumers will outright abandon a site if they don’t hear from someone.
6. "Things gone wrong measure"
This is a negative measure.

Your goal is to minimize its score to zero points.

TGW is calculated by dividing the number of complaints by the total number of units sold.

In the worst possible scenario your score is 1 or higher = meaning that you get at least 1 complaint per unit sold.
Main issues
Careful when analyzing the results from this measure.

Many people don’t autonomously complaint, they simply never buy again.

Having a good TGW score doesn’t necessarily mean that things are going well.

Find out where you’re failing.


An example
If you’re not meeting customer requirements, you need to find out where the failure is occurring. 

Examples of general questions that would behave the company to know where the lines of communication are breaking down so that relationship with customers can be mended are as follows:

"Are the products less than what is advertised?"
"Are employees making promises that cannot be met?"
"Are customer service representatives dropping the call on customer concerns and managing their complaints?"

Today we're going to talk about...
Overall satisfaction measure

The loyalty measurement

A series of attribute satisfaction measurements

Intention to repurchase

Customer lifetime value

„Things gone wrong measure”

Conclusion
Customer satisfaction is a marketing term that measures how products or services supplied by a company meet or surpass a customer’s expectation. It’s important because it provides marketers and business owners with a metric that they can use to manage and improve their businesses.

Customer satisfaction plays an important role within your business.

Not only is it the leading indicator to measure customer loyalty, identify unhappy customers, reduce churn and increase revenue; it is also a key point of differentiation that helps you to attract new customers in competitive business environments.

Questions

1.) Which metrics can we use for measuring customer satisfaction?

2.) How can you measure overall satisfaction?

3.) What are the issues of loyalty measurement?

4.) How do you calculate customer lifetime value (CVL)?
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