Structural Equations Structural Equations ModelsModels

Multivariate SolutionsMultivariate Solutions

Basics of Structural Equation ModelsBasics of Structural Equation Models• Structural equation modeling (SEM) is a statistical technique for

building and testing statistical models, which are often causal models. It is a hybrid technique that encompasses aspects of confirmatory factor analysis, path analysis and regression, which can be seen as special cases of SEM.

• Among its strengths is the ability to model constructs as latentvariables — variables which are not measured directly, but are estimated in the model from measured variables which are assumed to 'tap into' the latent variables.– For example, a latent variable can be ‘Overall Satisfaction’, which is a

composite of, say, three satisfaction variables.

• SEM is an extension of the general linear model that simultaneously estimates relationships between multiple independent, dependent and latent variables.

Basics of Structural Equation ModelsBasics of Structural Equation Models• Structural equation modeling (SEM) is a statistical technique for

building and testing statistical models, which are often causal models. It is a hybrid technique that encompasses aspects of confirmatory factor analysis, path analysis and regression, which can be seen as special cases of SEM.

• Among its strengths is the ability to model constructs as latentvariables — variables which are not measured directly, but are estimated in the model from measured variables which are assumedto 'tap into' the latent variables.

– For example, a latent variable can be ‘Overall Satisfaction’, which is a composite of, say, three satisfaction variables, such as ‘Purchase Intent’, ‘Likelihood to Purchase’, and ‘Likelihood to Recommend’.

• SEM is an extension of the general linear model that simultaneously estimates relationships between multiple independent, dependent and latent variables.

Service Initiationand Transfer

Customer Service

Meter Services

Emergency Response / Outage

Billing

Payment

Overall Satisfaction

With Company

Likelihood of Ongoing Selection

of Company

Company/Brand Image

Recommend Company

Quality Components Overall SatisfactionQuality Attributes Performance

• Timely response to service request• Service initiated as scheduled

Available/accessible when needed Timely response to requests Services performed as scheduled Professionalism of CSR Courtesy of CSR

Timely inspections Timely issuance of permits

Hypothetical Model Of Customer Satisfaction

Technical Services

• Bill layout• Ease of understanding bill• Timely arrival of bill each month• Time from bill issuance to payment• Services such as levelized billing

• Timely meter reading• Accurate meter reading• Accurate meter estimates

Prompt response to outage Power restored quickly after outage Emergency addressed quickly

• Choice of payment options• Flexibility of due date (Pick-a-Date)• Courtesy calls before power cut off