Customer Satisfaction

Customer satisfaction, a term frequently used in marketing, is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals." In a survey of nearly 200 senior marketing managers, 71 percent responded that they found a customer satisfaction metric very useful in managing and monitoring their businesses.

It is seen as a key performance indicator within business and is often part 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.

"Within organizations, customer satisfaction ratings can have powerful effects. They focus employees on the importance of fulfilling customers’ expectations. Furthermore, when these ratings dip, they warn of problems that can affect sales and profitability. . . . These metrics quantify an important dynamic. When a brand has loyal customers, it gains positive word-of-mouth marketing, which is both free and highly effective."

Therefore, it is essential for businesses to effectively manage customer satisfaction. To be able do this, firms need reliable and representative measures of satisfaction.

"In researching satisfaction, firms generally ask customers whether their product or service has met or exceeded expectations. Thus, expectations are a key factor behind satisfaction. When customers have high expectations and the reality falls short, they will be disappointed and will likely rate their experience as less than satisfying. For this reason, a luxury resort, for example, might receive a lower satisfaction rating than a budget motel—even though its facilities and service would be deemed superior in 'absolute' terms."

The importance of customer satisfaction diminishes when a firm has increased bargaining power. For example, cell phone plan providers, such as AT&T and Verizon, participate in an industry that is an oligopoly, where only a few suppliers of a certain product or service exist. As such, many cell phone plan contracts have a lot of fine print with provisions that they would never get away if there were, say, a hundred cell phone plan providers, because customer satisfaction would be way too low, and customers would easily have the option of leaving for a better contract offer.

There is a substantial body of empirical literature that establishes the benefits of customer satisfaction for firms.

Read more about Customer Satisfaction:  Purpose, Construction, Methodologies

Other articles related to "customer satisfaction, customer, customers":

Customer Satisfaction - Methodologies
... American Customer Satisfaction Index (ACSI) is a scientific standard of customer satisfaction ... The ACSI measures customer satisfaction annually for more than 200 companies in 43 industries and 10 economic sectors ... The Kano model is a theory of product development and customer satisfaction developed in the 1980s by Professor Noriaki Kano that classifies customer preferences into five categories Attractive, One-Dimensional ...
Mobile Operating Systems - Customer Satisfaction
... Choice Awards survey conducted by PC Magazine in 2012, iOS and Windows Phone customers gave their phones a rating of 8.7 on a 0 (extremely dissatisfied) to 10 (extremely satisfied) scale, an improvement of 0.3 and 0.6 ...
Clientele
... A customer (also known as a client, buyer, or purchaser) is the recipient of a good, service, product, or idea, obtained from a seller, vendor, or ... Customers are generally categorized into two types An intermediate customer or trade customer (more informally "the trade") who is a dealer that purchases goods for re-sale ... An ultimate customer who does not in turn re-sell the things bought but either passes them to the consumer or actually is the consumer ...
Service-profit Chain - Linking The Service-Profit Chain
... Customer loyalty drives Profit and Growth The service-profit chain research suggests that customer loyalty is the key determinant of profitability (Frederich ... This same research suggested that a 5% improvement in customer loyalty results in a 25-85% improvement in profits ... Customer satisfaction drives Customer Loyalty There are two things about loyalty which are important to notice ...
Bright House Networks - Awards and Recognition
... Bright House Networks has ranked highest in customer satisfaction among U.S ... Residential Telephone Customer Satisfaction Study for seven years in a row ... Power and Associates Internet Service Provider Residential Customer Satisfaction Study ...

Famous quotes containing the words satisfaction and/or customer:

    Desire is wakeful; satisfaction dozes.
    Mason Cooley (b. 1927)

    The elements of success in this business do not differ from the elements of success in any other. Competition is keen and bitter. Advertising is as large an element as in any other business, and since the usual avenues of successful exploitation are closed to the profession, the adage that the best advertisement is a pleased customer is doubly true for this business.
    Madeleine [Blair], U.S. prostitute and “madam.” Madeleine, ch. 5 (1919)