Handbook of Customer Satisfaction and Loyalty Measurement (2nd edition)

Citation

Narasimhan, K. (2001), "Handbook of Customer Satisfaction and Loyalty Measurement (2nd edition)", Managing Service Quality: An International Journal, Vol. 11 No. 1, pp. 67-68. https://doi.org/10.1108/msq.2001.11.1.67.1

Customer satisfaction has become an important issue not only for commercial organizations but also for public service and charitable organizations, in the present day when there is a significant shift in power from the producers and suppliers to consumers of goods and services. This book explains, in a simple but effective way, how to conduct professional customer satisfaction and loyalty surveys that can provide valid and reliable data for making decisions to effect improvements. This is an updated edition of the book previously published as Handbook of Customer Satisfaction, and contains four new chapters on loyalty measurement.

The authors are both practitioners and have over 30 years’ experience in this field between them. Both are directors of the Leadership Factor, based in Huddersfield, UK, formed in 1996 to specialize in this field.

The book comprises 16 chapters of varied lengths. Designing questionnaires is the topic of the longest chapter (43 pages). The next longest chapter deals with the topic of analysis and reporting the survey result (33 pages). They have also provided, in Appendix 1, comprehensive examples of customer surveys undertaken by the following three organizations: Peterborough Software (UK) Ltd, The Automobile Association, and Milliken Industrials Ltd.

As the authors emphasize in the introduction, which forms Chapter 1, this book “covers the whole process of customer satisfaction measurement, from designing a survey to drawing conclusions and determining action after the survey. It is not a book on how to implement that action” (page 2).

The aims of each chapter are set out at the outset in “bulleted” statements and conclusions are provided at the end of the chapter. Diagrams to illustrate the concepts, and tables and graphs to support the explanations, are included in every chapter.

In Chapter 2, they point out that customer dissatisfaction is one of the prime causes of customer turnover for businesses which lose between 10 and 30 per cent of their customers per year. This dissatisfaction is attributed to the existence of gaps in customers’ expectations and experience of the service provided. The authors have briefly described the five contributory gaps: the promotional gap; the understanding gap; the procedural gap; the behavioral gap; and the perception gap. Though the descriptions are based on the SERVQUAL concept there is no reference to the works of Parasuraman et al.; however, the SERVQUAL questionnaires are given in Appendix 2, along with a brief explanation of the instrument developed by these academics. The clarity of this section would improve with the inclusion of the model illustrating the five gaps.

The topic of Chapter 3 is customer loyalty, which has become the spearhead of strategy to retain customers. They point out that customer retention and customer loyalty are not the same thing and have clarified five different types of loyalty: monopoly loyalty; cost of change loyalty; incentivised loyalty; historical loyalty; and committed loyalty. They emphasize that organizations have to win and maintain customer commitment to succeed, and to do that organizations should become loyal to customers through total “devotion, duty, and allegiance” to meeting customers’ requirements.

In Chapter 4, they examine the satisfaction‐profit chain concept and conclude that investments in customer satisfaction do improve profitability. In the following chapter they deal with aspects of defining customers’ value package, their priorities and their tolerance band; differences between a customer perception survey and an organization’s market standing with reference to its peers survey; and the cost versus benefit of conducting a survey using internal sources or an agency.

Chapter 6 is devoted to explaining the differences between the buying behavior of consumers, and organizational buyers that may involve more than one decision maker from various functions. Exhibits are used to explain how the felt need for a product or service is converted into outcomes and how alternatives are evaluated, etc. Individual buying is considered under two scenarios: low‐involvement and high‐involvement purchases; and the organizational buying under “new task” purchases and “rebuys” modified or straight.

In concluding Chapter 7, they emphasize that it is crucial to conduct exploratory research in designing a meaningful customer survey and that it is arrogant, and almost always mistaken, to assume that the organization knows enough about what matters most to customers. They explain how to design and undertake depth interviews, how to use focus groups and projective techniques to explore customers’ hidden attitudes and perceptions.

Chapter 8 is concerned with the topic of sampling. The importance of sampling and the various methods of drawing a sample (random and non‐random), and the six steps involved in drawing a sample are dealt with by an industrial example. In the following chapter the pros and cons of different methods of surveying (personal interviews, telephone interviews, and self‐completion questionnaires), methods of maximizing response in the case of postal surveys are covered.

In Chapter 10, the basic principles and practices involved in questionnaire design are dealt with. The following four key questions that need to be answered in designing an effective questionnaire are examined in some depth:

1. 1.

   (1) Will the respondent have the information/knowledge to answer the questions?

2. 2.

   (2) Will the respondent understand the questions?

3. 3.

   (3) Is the respondent likely to give a true answer?

4. 4.

   (4) Will the question bias the response?

Some sample questionnaires – one for conducting personal interview, one for telephone interview, two for self‐completion: one for customer satisfaction and the other for continuous tracking – are included as examples.

Chapter 10 is a very short chapter of six pages on how to conduct personal and telephone interviews and how to encourage people to participate, particularly in telephone surveys.

In Chapter 12, another long chapter, the authors explain the advantages and disadvantages of manual and computerized analysis. Also explained are some of the methods of analyzing numerical and verbal scales that aid drawing accurate conclusions, methods of presenting information (for example, frequency distributions, performance profiles, and customer satisfaction indices), for both internal and external consumption and determining priorities for improvement, comparisons with competitors, etc.

The steps involved in introducing the survey to customers and to staff within an organization, and the importance of feeding back the survey results form the core of Chapter 13. Clear explanations are also given of how to provide feedback to customers to demonstrate that the exercise has been worthwhile.

In Chapter 14, they explore the concept of customer loyalty and customer segmentation based on ascending levels of customer commitment: non‐committed customers, customers with low commitment, habitually loyal customers, and totally committed customers. They suggest strategies for customer retention and customer attraction based on customer segmentation.

In the penultimate chapter, the authors explain how relationships in the customer satisfaction chain can be measured, analyzed and modeled.

How to maximize the benefits of customer surveys is the topic of the final chapter. Also explored are questions such as how often to survey? Should more than one type of survey be used? What other complementary techniques would be useful? A summary of the reasons for the growth in customer satisfaction measurement and the benefits of measuring customer satisfaction and loyalty are also outlined.

A glossary of terms forms Appendix 3, which is useful for clarifying some of the technical terms that are not common knowledge. Also included, as Appendix 4, are addresses of suppliers of software, database providers, and focus group studios.

The presentation and the structure of the chapters would improve with the inclusion of a brief introduction to the chapter, and a conclusion with a brief lead into what is covered in the following chapter. The text is well written and easy to read. The introduction of a paperback edition will motivate students to purchase this book.