The majority of organisationstoday, both public and private, include customer

satisfaction asa primary businessor organisational objective. Indeed, most aim to

deliver high levelsof customer satisfaction and many have made significant
investmentsin Customer Care or Customer Service programmes. The ability to set
customer satisfaction objectivesisdependent on the
organisation’sability to understand the prioritiesof itscustomersin the first place, and
subsequently to put in place mechanismsto measure accurately levelsof customer
satisfaction.
Customer Satisfaction Measurement (CSM) isthe term used by market researchersto
describe
broad research activitiesthat help to understand and measure customer satisfaction.
This
document providesan overview of why CSM isimportant to all organisationsno
matter how large
or small, outlinesthe objectivesof different typesof customer satisfaction research
studies, and
highlightssome of the primary objectivesof effective CSM programmes.
Why Measure Customer Satisfaction?
Most businesseslose a certain proportion of their customersin every year they trade,
and in many
casesthe customer islost because they have defected to the competition. Thisisoften
referred
to by marketeersas‘customer decay’ or ‘customer attrition’. In some markets, the
average
attrition rate isbetween 10 and 30%! There are many reasonswhy a customer defects,
but
without a doubt the primary driver isdissatisfion with the product or service being
offered.
Providing organisationscan replace the lost customer with a new customer,
‘customer decay’ is
not necessarily perceived asan urgent problem. But ‘customer decay’ should in
fact be a
problem for all organisationsand ignoring it isboth dangerousand inefficient.
Th e u nd er ly in g lo gi c fo r mi ni mi si ng `customer decay’ is simple: the c ost of acquiring new
customers is higher than the c ost of retaining existing customers. A s w e s h a l l s e e , t h e r e
issuch a
thing asan unprofitable customer and, therefore, circumstanceswhen acquiring new
customers
isa better strategy than holding on to undesirable customers, but in general it isnow
a widely
accepted businesstheory that customer retention optimisesprofitability.
So, there isa fundamentally good reason for measuring customer satisfaction:
understanding
customer needsand delivering high levelsof customer satisfaction ensuresa high
levelsof
c u s t o m e r l o y a l t y , a n d t h i s i n t u r n en ha nc es p ro fi ta bi li ty .
For public sector organisationsalso, customer loyalty isa key measure of their
performance.
P u b l i c s e c t o r b o d i e s w h i c h p r o v i d e ex ce ll en t se rv ic e to t he ir “ cu st om er s” a re f ul fi ll in g a
k e y t e n e t o f c o n t e m p o r a r y p u b l i c se rv ic e ph ili os o ph y an d mo st g ov er nm ent
departmentsnow set rigorous requirementsfor meeting the h ighest customer service
standards