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Don't Measure Customer Satisfaction
  • Service, Retail/Wholesale
  • Open Access

Don't Measure Customer Satisfaction

Customer perceived value is a better alternative to traditional customer satisfaction measurements

Publication:
Quality Progress
Date:
May 2002
Issue:
Volume 35 Issue 5
Pages:
pp. 62-67
Author(s):
Swaddling, David C., Miller, Charles
Organization(s):
Insight MAS, Dublin, OH

Abstract

Evaluation criteria for major quality awards and certificates require businesses to gather customer satisfaction feedback, yet few managers find much use for this information. Many fail to see a correlation between customer satisfaction scores and the ability to defend and grow a business. While there are both good and bad aspects of customer satisfaction measurements, a better alternative is customer perceived value (CPV). Customer satisfaction measurements focus on past experience, excluding potential customers who can't relate to the questions asked. The most defining characteristic of these measurements is customer expectations, since the only reference point is the customer's own experience. While these metrics help managers better perceive product performance and service delivery issues from the customers viewpoint, high satisfaction ratings often don't translate into customer loyalty. Opinions as to what constitutes customer loyalty differ, but in the end it comes down to the absence of a better alternative. Customers make choices each time they purchase, and the final result determines customer loyalty. CPV is the prospective customer's evaluation of all the benefits and costs of an offering as compared to that customer's perceived alternatives. Asking about values and needs instead of product features and service experiences permits the surveyor to include the rest of the target market in the sample. The three components of measuring CPV are attributes, relative importance, and relative performance. Together, these make up the CPV construct, a tool that enables major strategy level decisions on market positioning, product development, pricing, and operations management. As a work in progress, it is important to view the CPV construct as a summary of a body of knowledge that will always be incomplete but always improving. Unlike customer satisfaction measurements, CVP measurements provide management with information to improve its ability to make timely decisions and reduce the uncertainty of business.

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