Editor’s note: Maria E. Ramos is a senior analyst in the Digital and Applied Imaging Division of Eastman Kodak Co., Rochester, N.Y. She was previously manager, customer satisfaction research in the company’s Office Imaging Division.

The growing popularity of customer satisfaction measurement has given rise to the development of different programs for measuring customer satisfaction. Although these programs vary widely in scope and methodology, most are designed to produce a single satisfaction metric based on random sampling of customers at a single point in time. This common approach ignores the fact that, in many cases, such as equipment and other durable products, customers use products over a relatively long life cycle (usually in years) made up of a sequence of distinct phases. These products may require the investment of significant resources by the customers and the longer the life of the product the greater the potential for customer satisfaction to change (usually decrease) over time. These aspects tend to increase a customer’s recollections of his/her experiences with the product throughout its life.

The product’s life cycle, and the key phases and events that define it, can be very important to understanding customer satisfaction and to designing effective strategies for enhancing customer satisfaction. First, life cycle events have the potential of influencing customer satisfaction and loyalty. This means that stratifying or segmenting customers according to where they are in the life cycle will reveal more information about the nature of customer satisfaction.

Second, designing and conducting surveys according to where the customers are in their cycle (e.g., having recently purchased or about to replace the product), will provide more accurate customer feedback by capturing the customers’ most recent experiences with the product. Such information also enables the company to design finely targeted intervention strategies to increase customer satisfaction.

The customer satisfaction system

In an organization, customer satisfaction should be a system that involves everyone. Customer satisfaction is a systematic process for collecting customer data (e.g., via surveys, complaints, sales calls), analyzing this data to make it into actionable information, driving the results throughout an organization, and implementing satisfaction improvement plans. Therefore, the main components of a customer satisfaction system are the measurement programs coupled with other information provided by the customer (e.g., customer complaints, sales and service information) and customer satisfaction improvement plans. The measurement programs should be designed to assess satisfaction levels at different periods during the life cycle of a customer and should clearly point out what aspects of the business need to be improved. The satisfaction measures and analysis obtained are then used to create close-looped customer satisfaction improvement plans which should be devised and implemented by the different functions in an organization. Once improvement plans are implemented, follow-up surveys should be done to track progress.

A product goes through different phases during its life: installation, use of the product and replacement decision. At the end of the product’s life, the customer decides whether or not to replace the product with the same or another manufacturer’s new product. One can then think of the customer as having a "life cycle" which ends and may be renewed when the product’s life ends. The events preceding the "replacement" phase can strongly influence customer satisfaction and a customer’s willingness to repurchase a company’s products. Figure 1 shows the life cycle phases and the measurement programs that will allow a company to monitor customer satisfaction and make necessary improvement as the product goes through the different phases.

Installation phase

After the customer purchases, rents or leases a product, the installation experience can affect customer satisfaction, not only during or right after the installation of the product but also over the life of the product. This is particularly true when problems that surfaced during installation are not resolved to the satisfaction of the customer. Therefore, it is important to conduct a post-installation survey right after the product "settle-down" period, i.e., when the product begins its normal or expected way of operation. A product’s "settle-down" period may differ from product to product and industry to industry.

A post-installation survey is an excellent vehicle to obtain the most accurate information about the customer’s satisfaction and dissatisfaction with the equipment’s initial performance and features, the operator’s training and manuals, and other aspects important to the customers. Ideally, a company should contact all of its new and repeat customers, particularly customers of products that the company has just introduced into the marketplace. If budget and resources are not sufficient to contact all customers, random sampling of customers or concentrating on those customers purchasing newly introduced products and/or products that are key revenue earners are alternative approaches. A post-installation survey also is a way to tell customers that the company cares and it realizes that customer has just invested considerable resources in its product.

Use phase

Once the equipment has been installed and settles into a "normal" pattern of operation, the customer moves to the use phase. By then the customer has become accustomed to the product’s way of operation and what was initially novel or disturbing about the product may be taken for granted. The customer may have actually changed or accommodated his or her way of operating to fit the product. Several measurement programs should be carried out with customers who are in this phase. Customer needs assessment is at the heart of customer satisfaction. Understanding customers’ current and future needs and expectations will unveil the added benefits that a company can provide in its future products and services. These are also the aspects that can give a company an edge over its competitors.

Ongoing tracking and competitive surveys are the vehicles most companies have traditionally used to measure customer satisfaction. They track customer satisfaction with the company’s overall performance and with its functional areas such as product, service, sales, support and installation, customers’ image of the company and their perceived value of the products, and willingness to recommend and repurchase. An overall metric of satisfaction is derived from these surveys to be used for tracking the company’s performance over time. Statistical models are developed using these surveys to identify the key drivers of overall satisfaction. The ongoing tracking survey usually identifies the company sponsoring the survey while the competitive survey does not.

Despite the importance of the ongoing tracking and competitive surveys, they typically do not explore, in-depth, recent customer events. They tend to sample customers randomly, without regard to the life cycle phase, and track customer satisfaction over time. Some companies have integrated these two surveys and expanded them to explore, in more detail, recent customer events such as the installation or the replacement of the product. However, the design of this single survey vehicle and the information derived can become cumbersome and difficult to manage and, often, companies will ignore the information obtained on the individual phases of the customer life cycle.

Due to the nature of the measurement programs discussed so far, large customers may not be sampled and surveyed in an appropriate manner. Large account customers may require a different survey vehicle since they may have different buying processes such as a centralized group or committee making overall purchasing decisions. Also, the life cycle of these customers, in particular the "replacement decision," may be influenced by other factors such as corporate mandates to buy uniform products for all of its sites from a few companies or a single company. A large account survey will allow a company to obtain a global understanding of large or complex customers. It is designed to gain an in-depth understanding of these customers’ satisfaction levels and expectations, business needs, buying processes and repurchase intent. This survey may be conducted via personal interviews by a team of individuals responsible for the account. The customers or participants are the individuals responsible for making the purchasing decisions, individuals that provide input to the purchasing group or committee and users of the products.

Replacement decision

Moving along the customer life cycle, there comes a point when the customer decides to replace or stop using the product. If a decision is made to replace the product, it is important for the company to understand satisfaction levels during this phase and the different aspects of the decision making process. Learning about satisfaction levels with the new product is especially valuable when lost customers are contacted in the future.

Lost/gained customer surveys have been given little attention in customer satisfaction research even though the information obtained can be critical to the success of a company. These surveys explore: the reasons for high or low satisfaction ratings; the reasons why the company’s customers and its competitor’s customers decide to replace the product; the brand and model purchased, and the reasons for purchasing the new brand and model. The data from these surveys can be used to develop switching behavior models to understand the key reasons for replacing a product with the company or a competitor’s product(s). One can then plot the importance of each key factor versus the percent of the time the factors are mentioned and determine whether the company or the competitor is advantaged, disadvantaged or neither. This analysis will provide valuable insight into what needs to be improved in order to gain competitive advantage. Lost customer surveys can also be conducted with customers lost in a contract bid and with partially-lost customers, i.e., customers who have replaced a portion of the company’s products with those of a competitor. These surveys can provide insights into the bidding process, the reasons for not selecting the product or the reasons for replacing a portion of the products. Customers who partially replace their product are considered as being vulnerable; the company should devise plans to avoid completely losing these customers.

Beyond "event driven"

A mature customer satisfaction measurement process will include and integrate each of the different surveys discussed above. When a company surveys its customers throughout their life cycle, a combined measure or index of overall customer satisfaction can be derived by using weighted averages of surveys during the life cycle.

In recent years, some companies have opted for conducting customer satisfaction surveys that are "event driven," such as after providing service or support. The information provided by these surveys is actionable and accurate. However, using just event driven surveys will miss those customers who do not trigger these events and the information may not be representative of the total population of customers. Also, unless an appropriate sample weighting scheme is used, those customers who frequently trigger these events tend to be oversurveyed.

To effectively manage the wealth of data and its analysis, a customer database can be set up such that each customer’s account can be readily accessed to learn such information as the customer’s responses to the surveys,* sales and service information and customer comments. Additionally, charts and data summaries can be made available to all employees in the organization which allow employees to be better educated about the company’s customers and its products and can lead to better customer service and response.

In acquiring a more complete picture of satisfaction levels over the life of its customers, a company can more effectively devise strategies and improvement plans to keep its customers and attract new customers. A company will also have the information necessary to make short-term ongoing improvements as well as long-term improvements that may require substantial investment of resources. The customer satisfaction process can be set up and managed by a cross-functional team until it is well established throughout the organization. And, one last but important point, the customer satisfaction system needs to have management support and resources in order to succeed.

*Only possible when the survey identifies the company sponsoring it and the customer agrees to disclose the information provided.

References

1. Managing Customer Value, Bradley T. Gail, The Free Press, 1994.

2. "A National Customer Satisfaction Barometer: The Swedish Experience," Claes Fornel, Journal of Marketing, June 1988.

3. "Designing a Customer Retention Plan," G. Desouza, The Journal of Business Strategy, March/April 1992.

4. "The Four Fundamentals of Customer Satisfaction," M. Lele and N. Sheth, Business Marketing, June 1988.