Customer Satisfaction Measurement
Literature Review
30 June 2014
2 / Document DateDocument Title
Contents
Executive Summary 3
1. Introduction 5
2. What is customer satisfaction measurement? 5
3. Why is measuring customer satisfaction important? 6
3.1. Engagement and empowerment tool 6
3.2. Service improvement tool 7
3.3. Performance management tool 8
3.3.1. Accountability and compliance 8
3.3.2. Customer feedback and benchmarking tool 9
3.3.3. Tool to support funding proposals 10
4. Application of customer satisfaction measurement processes 10
5. How is customer satisfaction measured? 12
5.1. Key drivers or determinants of satisfaction 12
5.2. What does the drivers or determinants of satisfaction literature tell us? 16
6. Methodological considerations 18
6.1. Timing 18
6.2. Sampling bias 19
6.3. Customer benefit 19
6.4. Confidentiality 20
6.5. Customer expectations and experiences 20
6.6. Social and cultural background of customers 21
6.7. Capacity to respond 22
6.8. Carer involvement in assessing satisfaction 22
6.9. Response bias 23
7. Conclusion 23
Endnotes 25
Executive Summary
This paper reviews the existing literature on customer satisfaction measurement and provides the theoretical background for the development of a number of tools to help the community services industry in Queensland measure customer satisfaction.
In the context of community service delivery, there are a range of issues to be considered when designing and using satisfaction measurement tools. There is a growing expectation, in the literature that individuals and their family should be at the centre of service design, delivery and review. Tools and processes for measuring satisfaction need to accommodate individual needs and preferences around literacy, timing and form. There is also an expectation that people who have contributed to such processes will receive information on the broader outcomes from their feedback and ideas.
At a broader policy level, contestability and a move to self-directed and in some cases, self-managed funding means the people who use services may be doing so under market or market-like conditions. This requires that people shift from being consumers to “discerning customers” which will bring challenges and opportunities for both organisations and the people who use their services.
The paper begins by outlining a brief definition of customer satisfaction measurement drawing on the extant literature. At the most basic level, customer satisfaction measurement involves assessing the difference between a customer’s expectation of a product or services and a customer’s experience of a product or service.
The paper investigates the main reasons why measuring customer satisfaction is important. Through the review of the literature it is shown that customer satisfaction measurement provides a means to better understand the needs of social service customers and to empower customers by creating customer-centred services. It is also argued that customer satisfaction measurement provides a means of creating ongoing service improvement by identifying areas of improvement. Lastly it is argued that customer satisfaction measurement provides a performance management tool that can be used to generate data to meet compliance and reporting requirements, provide customers with information about service performance and provide evidence for future funding proposals.
The paper also discusses how customer satisfaction is measured by analysing the literature on key drivers or determinants of satisfaction. This section of the report demonstrates the importance of understanding satisfaction from the point of view of the customer. It argues that the drivers or determinants of satisfaction will differ in different service contexts and discusses the importance of including service customers in the design of customer satisfaction surveys. Doing so, ensures that customer satisfaction processes are able to accurately reflect the needs and values of customers and can be effective in driving service improvement.
The final section reviews a number of methodological considerations. This includes discussion of the impact of timing, sampling bias, customer benefit and confidentiality on participation and the impact of customer expectations and experiences, social and cultural background, intellectual disability and mental illness and response bias on participation and response quality. As it is noted it is useful to gain direct feedback from customers about how they would prefer customer satisfaction surveys to be administered, as this can have a significant impact on participation and on the quality of responses.
The paper provides a starting point for social service organisations in developing more rigorous customer satisfaction processes and will be augmented by the development of tools that can be used to assist in the measurement of customer satisfaction. As part of the development of these tools, QCOSS will be undertaking consultation with the social service sector to ascertain current practice and capacity. This will include consultation with customers to better understand how customer satisfaction measurement processes can be engaged in the development of customer satisfaction processes.
1. Introduction
This paper examines a range of existing national and international literature on the development and use of customer satisfaction measurement. It suggests that customer satisfaction measurement is potentially a useful mechanism for identifying and verifying customer needs and preferences which can, in turn, inform product and service design and improvement. It begins with an overview of why customer satisfaction is important as both an engagement and service improvement tool, and where it can contribute to performance management and meeting compliance requirements for organisations. It explores the relative merits of a range of approaches and discusses a range of methodological issues associated with the administration of customer satisfaction measurement processes.
This paper uses the term ‘customer’ to refer to the various populations and contexts in which satisfaction is measured. In some instances people using public or social services may be more appropriately referred to as ‘patients’, ‘consumers’, ‘users’, ‘citizens’ or ‘clients’ depending on the type of service being offered. Much work has been undertaken, for example, to empower ‘clients’ by reconceptualising them as ‘consumers’ in the mental health and disability service areas. We acknowledge that the use of the term ‘customer’ can be problematic as it refers to a situation of empowered choice that does not necessarily reflect the reality of people using many public services, some of which are not voluntary. We use the term ‘customer’ for simplicity acknowledging that it may be more appropriate to use more specific terms when referring to specific groups or populations.
2. What is customer satisfaction measurement?
While there are many different models used within the literature to conceptualise customer satisfaction measurement, at its most basic level customer satisfaction measurement involves an assessment of the difference between a customer’s expectation of a product or service and a customer’s experience of a product or service.
Quite simply, customer satisfaction measurement involves the collection of data that provides information about how satisfied, or otherwise, customers are with a service.[i]
In general, customer satisfaction measurement utilises quantitative questionnaires to elicit information from service users about the level of satisfaction with aspects of the service experience. This can involve structured survey questions where service users are asked to rank their levels of satisfaction using predetermined scales or open-ended questions where a respondent can provide rich detail about their satisfaction with various aspects of a service experience.
At a more advanced level, customer satisfaction measurement is part of a service improvement process. The act of administering a customer satisfaction survey is only one part of a larger process in which a service provider uses data collected from service customers to refine and improve the experience of the customer.
Customer satisfaction measurement draws on insights and tools grounded in academic theories of customer satisfaction and service quality from the fields of business, marketing and management. One of the more widely adopted theories is the disconfirmation model, which conceptualises satisfaction as the relationship between expectations and perceived performance[ii],[iii].
Given that customer satisfaction measurement emerged in the fields of business and marketing it has become well established as a tool within the commercial sector. In competitive markets, customer satisfaction measurement is a key marketing tool used to understand and drive business performance. In marketing, customer satisfaction is viewed as the ultimate goal of any business because satisfied customers are more likely to become repeat customers and to recommend a business to other potential customers.
While customer satisfaction measurement processes were developed originally for use in competitive markets, they are increasingly being applied to public sector settings as a means of monitoring performance and improving service quality. Customer satisfaction measurement is being more commonly used in a range of public sector areas, including transport, health and disability, to measure performance in a range of customer service settings.
3. Why is measuring customer satisfaction important?
There are a number of reasons why it is important to measure customer satisfaction:
· As an engagement and information collection tool, customer satisfaction measurement provides service delivery organisations with a structured means of collecting information from service users to better infuse the needs and values of the customer into their organisation.
· As a service improvement tool, customer satisfaction measurement provides a means of assessing what the main drivers of satisfaction or dissatisfaction are and focusing efforts on improving customer experience as part of an ongoing cycle of service improvement.
· As a performance management tool, customer satisfaction measurement provides a means of meeting reporting requirements for funding, demonstrating effectiveness when tendering for new funding opportunities and providing potential customers with information about performance.
3.1. Engagement and empowerment tool
Customer satisfaction measurement provides a structured means of engaging with and collecting information from customers, which can be used to infuse the voice of the customer within an organisation. As Rapp and Poertner (1987) have argued, a key challenge for service managers is adopting a more customer-centred approach to service delivery[iv]. Seeking input and ideas from customers creates a more customer-centred intervention[v]. Customer satisfaction measurement focuses an organisation on the needs of the people it serves to better position them at the centre of the service delivery experience.
In this regard, processes to assess customer satisfaction are not just about gaining information from customers, they can also be an effective tool to promote customer empowerment[vi]. Empowerment is particularly important for parents and children marginalised as a result of statutory interventions, such as those associated with child protection. Processes that empower parents to participate in the planning, delivery and evaluation of family preservation programs, for example, serve to enhance the strengths and competencies of parents[vii].
The literature on customer satisfaction measurement emerging from the United Kingdom Government, for example, views customer satisfaction measurement as a means of focusing on the customer and the customer experience[viii]. As such, the process of customer satisfaction measurement can be viewed as a method for reflecting upon the needs of the customer.
While service based organisations involve intensive interaction with customers on a daily basis this does not mean that information about customer needs and values are automatically absorbed into the service operation and culture. Customer satisfaction measurement provides a structured tool for actively engaging with customers; seeking out information about how they view the services being offered to them; and enabling them to have input into the delivery of these services. This includes the involvement of customers in the process of designing the methods used and the questions asked to elicit information from customers.
3.2. Service improvement tool
The measurement of customer satisfaction provides a means of creating broader service improvement. Organisations armed with the right information about customer satisfaction can use it to better target services to their customers’ needs or better manage customer expectation by improving the way program benefits are communicated. This information also allows organisations to improve those aspects of service delivery which are most important to customers[ix], focusing time and resources more effectively.
It is important to note that the measurement of customer satisfaction is not the same as measuring overall service quality but one distinct part of an integrated framework for analysing service quality and efficacy. A broader quality improvement framework would likely include methods and processes to measure unmet service demand, customer outcomes, evaluation of external programs impacting on customers and support for continuous quality improvement[x].
While customer satisfaction measurement at its most basic level generally involves some form of survey to elicit this information about customer satisfaction, this is only one part of an ongoing service improvement cycle. It should be seen as a means to an end, in which the measurement of customer satisfaction forms one part of an ongoing process of ‘insight, measurement and improvement’[xi].
There are a number of examples of attempts to conceptualise customer satisfaction measurement as part of an ongoing service improvement cycle. One useful example is a guide developed for public services in King County in the United States. In this guide, the service improvement cycle is viewed as consisting of a number of clear steps[xii]:
• defining and reflecting about the service and its customers
• gathering existing customer-related data
• measuring customer experience
• analysing data and developing insights
• developing an action plan and communicating about that plan and
• taking action to improve the service.
According to this example, it is critical to conduct initial scoping and research before undertaking satisfaction surveys in order to understand what is valuable to measure from the perspective of the service and the customer. While it may be easier to develop a survey based on staff knowledge of the program and the customer group, it is useful to gauge customer’s own level of understanding to ascertain expectations about what they may view as being most important to them.
Equally, it is critical to take steps to develop an action plan that guides the process of service improvement ensuring the information gathered from customers is actually put to use. As a cycle this process would be repeated to learn the impact that improvements have on customer satisfaction and to continue the service improvement process over time.
3.3. Performance management tool
Aside from providing a structured tool for engagement and information gathering and acting as part of the process to promote service improvement, customer satisfaction measurement is also a useful tool for performance management. It provides a method for collecting useful data that can be used to meet contract reporting and accountability requirements, provide customers with information about service performance, create opportunities to compare and contrast performance and demonstrate effectiveness when tendering for new funding.