Customer Satisfaction-Whats it

Because the concept of customer satisfaction is new to many companies, it’s important to be clear on exactly what’s meant by the term.

Customer satisfaction is the state of mind that customers have about a company when their expectations have been met or exceeded over the lifetime of the product or service. The achievement of customer satisfaction leads to company loyalty and product repurchase. There are some important implications of this definition:

– Because customer satisfaction is a subjective, nonquantitative state, measurement won’t be exact and will require sampling and statistical analysis.

Customer satisfaction measurement must be undertaken with an understanding of the gap between customer expectations and attribute performance perceptions.

– There should be some connection between customer satisfaction measurement and bottom-line results.

– Satisfaction itself can refer to a number of different facts of the relationship with a customer. For example, it can refer to any or all of the following:
– Satisfaction with the quality of a particular product or service
– Satisfaction with an ongoing business relationship
– Satisfaction with the price-performance ratio of a product or service
– Satisfaction because a product/service met or exceeded the customer’s expectations
Each industry could add to this list according to the nature of the business and the specific relationship with the customer. Customer satisfaction measurement variables will differ depending on what type of satisfaction is being researched. For example, manufacturers typically desire on-time delivery and adherence to specifications, so measures of satisfaction taken by suppliers should include these critical variables.
True customer value management entails integration of total quality management with the company’s classic management systems (strategic planning, budgeting & control, capital investment, competitive analysis, performance measures & reward) to ensure that companies enter and invest only in businesses where they can be quality & value leaders.
The payoff from customer satisfaction measurement comes from its ability to define & direct a company’s quality improvement efforts, and its quality/value position in the marketplace. Customer satisfaction measurement and quality impact profits by:
– Reducing costs
– Preventing erosion in revenues over time
– Increasing market share
– Increasing gross margins

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