Customer Satisfaction - Assessing Its Economic Value

Article

Burns, Roger; Smith, Walter   (1991, ASQC)   Harris Corporation, Melbourne, FL

Annual Quality Congress, Milwaukee WI    Vol. 45    No. 0
QICID: 9663    May 1991    pp. 316-321
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Article Abstract

The objective of Harris Corporation's formal quality program was to measure the level of customer satisfaction at its approximately 20 divisions. They considered three points as they looked for ways to take actions that would result in high customer satisfaction: (1) How "high" is high enough? (2) On what elements of a total offering should this high satisfaction be targeted? and (3) What specific actions will achieve this high customer satisfaction?

The method used involved assigning economic values to alternative actions and then linking the consequences of specific actions to customer satisfaction and customer loyalty. They used the Prognostics Methodology to set performance targets, make decisions, and measure the effect of decisions over time. Two measurement techniques were employed: (1) Users rated the importance of and their satisfaction with specific elements. such as product reliability, and then average responses were measured in terms of the gap between importance and satisfaction; and (2) To define loyalty, users completed a simple questionnaire indicating whether they would continue to purchase from the vendor.

The results indicated that satisfaction and loyalty had a direct relationship to sales efficiency and return on equity. Gap analysis proved to be an effective method for identifying problem areas and developing action programs.

Keywords

Customer loyalty,Customer satisfaction (CS),Gap analysis,Quality control methodology,Quality management (QM)


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