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Definition

Customer satisfaction measures customers' perceived satisfaction with their experience of a firm's offerings. It is generally based on survey data and expressed as a rating. This metric quantifies an important dynamic. When a brand has loyal customers, it gains positive word-of-mouth marketing, which is both free and highly effective. In a survey of nearly 200 senior marketing managers, 71 percent responded that they found the "customer satisfaction" metric very useful in managing and monitoring their businesses.[1]

Purpose

Customer satisfaction provides a leading indicator of consumer purchase intentions and loyalty. Customer satisfaction data are among the most frequently collected indicators of market perceptions. Their purpose is twofold.
  1. Within organizations, customer satisfaction ratings can have powerful effects. They focus employees on the importance of fulfilling customers' expectations; the collection, analysis, and dissemination of these data send a message about the importance of tending to customers and ensuring they have a positive experience with the company's goods and services. Furthermore, when these ratings dip, they warn of problems that can affect sales and profitability.
  2. Although sales or market share can indicate how well a firm is performing currently, satisfaction is perhaps the best indicator of how likely it is that the firm's customers will make further purchases in the future. Much research has focused on the relationship between customer satisfaction and retention.

Construction

Customer satisfaction: the number or percentage of customers whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals.

Customer satisfaction is measured at an individual level, but it is almost always reported at an aggregate level. Customer satisfaction is generally measured on a five-point scale, ranging from "very dissatisfied" to "very satisfied."

References

  1. ^ Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; and David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance (Second Edition). Upper Saddle River, New Jersey: Pearson Education, Inc. <http://www.amazon.com/Marketing-Metrics-Definitive-Measuring-Performance/dp/0137058292>

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