BACKGROUND OF STUDY

Customer satisfaction

Customer satisfaction, a business term, is a measure of how products and services

supplied by a company meet or surpass customer expectation. It is seen as a key
performance indicator within business and is part of the four perspectives of a Balanced
Scorecard.

In a competitive marketplace where businesses compete for customers, customer

satisfaction is seen as a key differentiator and increasingly has become a key
element of business strategy. (The Future of Business: The Essentials By
Lawrence J. Gitman, Carl D McDaniel ISBN 0324320280.)

Customer satisfaction is an ambiguous and abstract concept and the actual manifestation
of the state of satisfaction will vary from person to person and product/service to
product/service. The state of satisfaction depends on a number of both psychological and
physical variables which correlate with satisfaction behaviors such as return and
recommend rate. The level of satisfaction can also vary depending on other options the
customer may have and other products against which the customer can compare the
organization's products.

Because satisfaction is basically a psychological state, care should be taken in the effort
of quantitative measurement, although a large quantity of research in this area has
recently been developed. Work done by Berry, Brodeur between 1990 and 1998
Marketing Services: Competing Through Quality by Leonard L Berry, A Parasuraman
defined ten 'Quality Values' which influence satisfaction behavior, further expanded by
Berry in 2002 and known as the ten domains of satisfaction. These ten domains of
satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access, Environment,
Inter-departmental Teamwork, Front line Service Behaviors, Commitment to the
Customer and Innovation. These factors are emphasized for continuous improvement and
organizational change measurement and are most often utilized to develop the
architecture for satisfaction measurement as an integrated model. Work done by
Parasuraman, Zeithaml and Berry between 1985 and 1988 provides the basis for the
measurement of customer satisfaction with a service by using the gap between the
customer's expectation of performance and their perceived experience of performance.
This provides the measurer with a satisfaction "gap" which is objective and quantitative
in nature. Work done by Cronin and Taylor propose the "confirmation/disconfirmation"
theory of combining the "gap" described by Parasuraman, Zeithaml and Berry as two
different measures (perception and expectation of performance) into a single
measurement of performance according to expectation. According to Garbrand, customer
satisfaction equals perception of performance divided by expectation of performance.
Wood Holmes group said that customer Satisfaction research identifies how well an
organization is performing from the customer’s viewpoint. It allows any organization to
understand how their customers are with the level of service they are providing at any
point in time, and to track how satisfaction levels change over time.

It does not investigate the reasons or reality behind the Customer Satisfaction, unlike
Service Evaluation research but still provides extremely valuable information – such as
highlighting an area where service needs improving.

Tracking satisfaction levels can be particularly powerful when it concentrates on

identifying levels of satisfaction against the specific elements of service that most matter
to customers and which the organization can change; and where possible, compare
satisfaction levels across competing organizations. This can also be used to highlight
differences between customer segments, potentially identifying segments at greatest risk.

Customer Satisfaction research is often used as part of a wider project designed to help an
organization or company improve its service provision, customer satisfaction and
customer interaction.

A variety of techniques can be used depending on the aims of the project, the nature of
the organization and the extent of the customer base but would typically incorporate a
customer survey and may include depth interviews or focus groups in order to more fully
understand the service elements which most matter to customers,

Customer Satisfaction, by nature, is dependent on an individual’s expectations and

previous experience of service.

In order get the most out of the research for your organization, it is best for a Customer
Satisfaction research project to link to your organization’s service standards (whether
formal or informal). For example, there may be a service standard which states that all
customers should be given an appointment within two weeks of making a request. It
would be relatively easy to ascertain whether this standard was being met in practice. But
customers’ satisfaction with how quickly they receive an appointment would need to be
tested through direct research with customers.

Customer Expectations

Customer is defined as anyone who receives that which is produced by the individual or
organization that has value. Customer expectations are continuously increasing. Brand
loyalty is a thing of the past. Customers seek out products and producers that are best
able to satisfy their requirements. A product does not need to be rated highest by
customers on all dimensions, only on those they think are important.

Customer Satisfaction

Exceptional customer service results in greater customer retention, which in turn results
in higher profitability. Customer loyalty is a major contributor to sustainable profit
growth. To achieve success, you must make superior service second nature of your
organization. A seamless integration of all components in the service-profit chain –
employee satisfaction, value creation, customer satisfaction, customer loyalty, and profit
and growth – links all the critical dynamics of top customer service.

Customers for Life

By: Brian Tracy

The purpose of a business is to create and keep a customer. If a business successfully

creates and keeps customers in a cost-effective way, it will make a profit while
continuing to survive and thrive. If, for any reason, a business fails to attract or sustain a
sufficient number of customers, it will experience losses. Too many losses will lead to the
demise of the enterprise.

According to Dun and Bradstreet, the single, most important reason for the failure of
businesses in America is lack of sales. And, of course, this refers to resales as well as
initial sales. So your company’s job is to create and keep a customer, and your job is
exactly the same. Remember, no matter what your official title is, you are a salesperson
for yourself and your company

"Why do heaven and earth last forever? Because they are not self-serving." – Lao Tzu.

In my opinion, Lao Tzu said that customer and seller are need to each other. While,
Henry Ford said that :

"A business absolutely devoted to service will have only one worry about profits. They
will be embarrassingly large." – Henry Ford.

Henry Ford said profits come from costumer. Then Tom Peters provide with his
statements :

"Treat the customer as an appreciating asset." – Tom Peters

"We learned to identify our core strengths," says Michael Dell, Founder of Dell Inc. “We
wanted to earn a reputation for providing great customer service, as well as great
products. Engaging the entire company – from manufacturing to engineering to sales to
support staff – in the process of understanding customer requirements became a constant
focus of management, energy, training, and employee education
"Satisfying the customer is a race without finish."

– Vernon Zelmer

There is widespread belief that firms should pursue superiority in both customer
satisfaction and productivity. However, there is reason to believe these two goals are not
always compatible. If a firm improves productivity by "downsizing," it may achieve an
increase in productivity in the short-term, but future profitability may be threatened if
customer satisfaction is highly dependent on the efforts of personnel. If so, there are
potential tradeoffs between customer satisfaction and productivity for industries as
diverse as airlines, banking, education, hotels, and restaurants. Managers in these types of
service industries, as well as goods industries in which the service component is
increasing, need to understand whether or not this is the case. For example, if efforts to
improve productivity can actually harm customer satisfaction-and vice-versa-the
downsizing of U.S. and European companies should be viewed with concern. It follows
that developing a better understanding of how customer satisfaction and productivity
relate to one another is of substantial and growing importance, especially in light of
expected continued growth in services throughout the world economy. The objective of
this paper is to investigate whether there are conditions under which there are tradeoffs
between customer satisfaction and productivity. A review of the literature reveals two
conflicting viewpoints. One school of thought argues that customer satisfaction and
productivity are compatible, as improvements in customer satisfaction can decrease the
time andeffort devoted to handling returns, rework, warranties, and complaint
management, while at the same time lowering the cost of making future transactions. The
second argues that increasing customer satisfaction should increase costs, as doing so
often requires efforts to improve product attributes or overall product design. A
conceptual framework useful in resolving these contradictory viewpoints is developed.
The framework serves, in turn, as a basis for developing a theoretical model relating
customer satisfaction and productivity. The model predicts that customer satisfaction and
productivity are less likely to be compatible when: 1) customer satisfaction is relatively
more dependent on customization-the degree to which the firm's offering is customized to
meet heterogeneous customers' needs-as opposed to standardization-the degree to which
the firm's offering is reliable, standardized, and free from deficiencies; and 2) when it is
difficult (costly) to provide high levels of both customization and standardization
simultaneously. To move forward from the model's propositions to the development of
testable hypotheses, we argue that services are more likely than goods to have the
preceding characteristics. Hence, tradeoffs between customer satisfaction and
productivity should be more prevalent for services than for goods. Although this
classification is not precise-many services are standardizable and many goods have a
service component-it has the advantage of allowing an initial test of the propositions. The
empirical work employs a database matching customer-based measures of firm
performance with traditional measures of business performance, such as productivity and
Return on Investment (ROI). The central feature of this database is the set of customer
satisfaction indices provided by the Swedish Customer Satisfaction Barometer (SCSB).
The SCSB provides a uniform set of comparable customer-based firm performance
measures and offers a unique opportunity to test the study's hypotheses. The findings
indicate that the association between changes in customer satisfaction and changes in
productivity is positive for goods, but negative for services. In addition, while both
customer satisfaction and productivity are positively associated with ROI for goods and
services, the interaction between the two is positive for goods but significantly less so for
services. Taken together, the findings suggest support for the contention that tradeoffs are
more likely for services. Hence, simultaneous attempts to increase both customer
satisfaction and productivity are likely to be more challenging in such industries. Of
course, this does not imply that such firms should not seek improvements in both
productivity and customer satisfaction. For example, appropriate applications of
information technology may improve both customer satisfaction and productivity
simultaneously. The findings should provide motivation for future research concerning
the nature of customer satisfaction and productivity, as well as appropriate strategy and
tactics for each one. It is worth emphasizing that this is an issue that is not only important
today, but certainly will become even more important in the future. As the growth of
services continues and world markets become increasingly competitive, the importance
of customer satisfaction will also increase. To compete in such a world, firms must strike
the right balance between their efforts to compete efficiently and their efforts to compete
effectively.