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THE MISMEASURE OF SATISFACTION:

A WHITE PAPER ON CUSTOMER SATISFACTION

MEASUREMENT IN THE AUTOMOTIVE INDUSTRY

by:

Murlildhar Rao

Paper presented to the ESOMAR International Automotive Marketing Conference

7-9 March 1994, Geneva (Switzerland)

Copyright © 1994 by Murlidhar Rao and ESOMAR European Society for Opinion and Marketing Research

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THE MISMEASURE OF SATISFACTION:

A WHITE PAPER ON CUSTOMER SATISFACTION

MEASUREMENT IN THE AUTOMOTIVE INDUSTRY

by: Murlidhar Rao

SUMMARY: Four areas of research pertinent to the measurement of Customer Satisfaction are examined. The four areas and the key findings from each are summarized below. 1. Theoretical Views Regarding Customer Satisfaction Satisfaction results from the confirmation of customers’ expectations. Satisfaction is similar to attitude in that it is both multi-dimensional and has an affective

component. Customer Satisfaction pertains to a transaction, such as a service experience, while attitude pertains to an entity, such as a vehicle or a marque. 2. Customer Satisfaction Measurement is Analogous to “Quality”

Measurement The “Confirmation of Expectations” paradigm of Customer Satisfaction is analogous to the “Quality Function Deployment” paradigm for products and to the “Gap Model” for services. While satisfaction with individual transactions does not lead to customers’ perceptions of high quality, Customer Satisfaction as a major ingredient of quality is explicitly recognized in the criteria for the Malcolm Baldrige National Quality Award. 3. Empirical Findings Regarding Customer Satisfaction

According to IBM, a “closed loop” is needed to overcome dissatisfaction. IBM claims to have quantified the revenue potential of one point of customer satisfaction, while AT&T has obtained weights for the components of customer satisfaction. According to AT&T, Satisfaction with Repair Quality is a direct function of “fixed right first time”. Burke Research bemoans the lack of

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actionability in Satisfaction Measurement and also maintains the need for a “closed loop” from measurement to action. 4. Problem Detection and Complaint Resolution Dissatisfied individuals tend not to complain, and retail and field systems filter and discourage complaints. By the mere fact of getting customers to articulate their problems to the company/provider, brand loyalty can be retained and the complaint ratio (multiplier) reduced. The propensity to complain is directly proportional to the perceived severity of the problem and the damage to the respondent. Complainers tend to be the heaviest users of the product/service. Problem experience for those consumers who remain unsatisfied results in substantial amounts of negative word-of-mouth. The author closes with ten (10) recommendations for the design of automotive Customer Satisfaction programs. I. TWO FALLACIES IN CUSTOMER SATISFACTION

MEASUREMENT The concept of Customer Satisfaction has received a great deal of attention in the Marketing literature in the last decade. Indeed, just one journal — the Journal of Marketing — published almost two dozen scholarly articles in the last four years alone. Conferences on the subject have multiplied, both in the United States and elsewhere. The American Marketing Association hosts several conferences each year. Dun and Bradstreet, the Institute for International Research, and the Association for Statistical Quality Control all offer more and different seminars and conferences on this subject. Yet, despite all this academic and serious professional attention, two key fallacies characterize our present view of Customer Satisfaction, or CS. These fallacies are exactly those described by Stephen Jay Gould in his book The Mismeasure of Man (1981). Gould discusses the construct of “Intelligence” and the ranking of human beings on that complex and illusive construct. To us, Gould’s views appear to be as relevant to the mismeasure of Customer Satisfaction as they are to the mismeasure of human intelligence. To (mis)quote Gould: “The first fallacy is that of reification, or our tendency to convert abstract concepts into entities. We recognize the importance of (satisfaction in the customer’s ownership experience) and wish to characterize it. We therefore give the acronym

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(CS) to this wondrously complex and multifaceted concept. This shorthand symbol is then reified, and (CS) achieves its dubious status as a unitary thing. “We now encounter the second fallacy -- ranking, or our propensity for ordering complex variation as a gradual ascending scale. Ranking requires a criterion for assigning all measured objects to their proper status in the single series. And what better criterion than an ostensibly objective number? Thus, the common style embodying both fallacies of thought has been quantification, or the measurement of (CS) as a single number for each (automobile). “This (paper), then, is about the abstraction of (Customer Satisfaction) as a single entity, its quantification as one number for each (automobile), and the use of these numbers to rank (automobiles) in a single series of worthiness, invariably to find that disadvantaged (automobiles) are innately inferior and deserve their status. In short, this (paper) is about the (Mismeasure of Satisfaction).”

II. PURPOSE Automakers on many continents spend millions of dollars each year to measure — and promote — the concept of Customer Satisfaction. Yet, many of these programs are designed with objectives that are unarticulated, or vaguely articulated. The purpose of this paper is to summarize the state of our knowledge regarding Customer Satisfaction. Automakers should find the conclusions of this paper helpful more clearly to define objectives for their CS programs, and to design programs that will better meet the defined objectives.

III. THEORETICAL VIEWS REGARDING CUSTOMER

SATISFACTION

a) Satisfaction results from the confirmation of expectations Churchill and Surprenant (1982) state: “The concept of consumer satisfaction occupies a central position in marketing thought and practice. Satisfaction is a major outcome of marketing activity and serves to link processes culminating in purchase and consumption with post-purchase phenomena such as attitude change, repeat purchase, and brand loyalty. The centrality of the concept is reflected by its inclusion in the marketing concept that profits are generated through the satisfaction of consumer-needs and wants.”

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These authors go on to state: “Since the early 1970s, the volume of consumer satisfaction research has been impressive. Numerous theoretical structures have been proposed to examine the antecedents of satisfaction and develop meaningful measures of the construct. The vast majority of these studies have used some variant of the discontinuation paradigm which holds that satisfaction is related to the size and direction of the discontinuation experience, where discontinuation is related to the person’s initial expectations. More specifically, an individual’s expectations are (1) confirmed when a product performs as expected, (2) negatively disconfirmed when the product performs more poorly than expected, and (3) positively disconfirmed when the product performs better than expected. Dissatisfaction results when a (customer’s) expectations arc negatively disconfirmed.” Most automotive CS programs attempt to measure the construct of “satisfaction”, They make no effort to assess the expectations of owners regarding their sales or service experiences. Therefore, while the goal of measurement is satisfied, these programs fail to establish standards for behavior at the dealership level, or for quality of the product.

b) Satisfaction is similar to attitude: it is both multi-dimensional and has an

affective component To quote from Churchill and Surprenant (1982) again, “Conceptually, satisfaction is an outcome of purchase and use resulting from the buyer’s comparison of the rewards and costs of the purchase in relation to the anticipated consequences. Operationally, satisfaction is similar to attitude in that it can be assessed as the sum of the satisfactions with the various attributes of the product or service. Pfaff (1917) suggests that both cognitive and affective models may be alternatives for describing satisfaction, whereas LaTour and Peat (l979) assert that the primary distinction between satisfaction and attitude derives from temporal positioning: attitude is positioned as a pre decision constructs and satisfaction is a post decision construct.” These concepts are highly relevant to automotive CS programs. First, most programs measure only the satisfaction with various components of the sales/service experience: the overall experience, the salesperson/service advisor, quality of work, etc. Rarely, a program will explicitly recognize that satisfaction with the sales and service experiences are derivable from specific actions on the

part of the selling/servicing dealership. In such cases, Corporate Standards and Procedures should clearly lay out the actions that dealers must undertake in dealing with new car buyers and service customers.

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Scales measuring the dimension of affect should be added to what would otherwise be a purely cognitive exercise. The affective aspects of overall attitude are rarely measured in Customer Satisfaction surveys. In particular, most mail-based surveys tend to focus on the specific “hard” aspects of mechanical quality and reliability, such as engines, transmissions, brakes, etc. c) Customer Satisfaction pertains to a transaction, while attitude pertains to

an entity “Oliver (1981) summarizes current thinking on satisfaction in the following definition: “[satisfaction is a] summary psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with the consumer’s prior feelings about the consumption experience”. This and other definitions (e.g., Howard and Sheth 1969; Hunt 1979) and most all measures of satisfaction relate to a specific transaction. Oliver (1981) summarized the transaction-specific nature of satisfaction, and differentiated it from attitude, as follows:

“Attitude is the consumer’s relatively enduring affective orientation for a product, store, or process (e.g., customer service) while satisfaction is the emotional reaction following a discontinuation experience which acts on the base attitude level and is consumption-specific. Attitude is therefore measured in terms more general to product or store and is less situationally oriented.” (Abstracted from Parasuraman, Zeithaml and Berry 1988.)

Thus, satisfaction with various “consumption events” may generalize to a favorable attitude. Furthermore, such positive attitudes may lead customers to do what automakers desire, viz., repurchase the marque, and recommend favorably to friends and relatives. In summary, we can make the following statements about Customer Satisfaction: 1. CS results from confirmation of expectations. 2. CS is a multi-dimensional construct. 3. CS pertains to a specific event. 4. CS with each of a series of specific events may gcncralizc into a favorable attitude. 5. Favorable attitudes may pre-dispose customers to repurchase. IV. CUSTOMER SATISFACTION MEASUREMENT vs. “QUALITY”

MEASUREMENT

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a) The “Confirmation of Expectations” paradigm of Customer Satisfaction is analogous to the “Quality Function Deployment” paradigm for products Efforts in defining and measuring quality have come largely from the “product” sides. The prevailing Japanese philosophy of “zero defects” defines quality as “conformance to requirements”. If we acknowledge that these requirements are, in fact, customers’ expectations, then the pursuit of “quality” is one that should result in higher levels of customer satisfaction. This view is well expressed by the following quotes from IBM:

“Quality is directly related to Customer Satisfaction.” “We have to read not just (customers’) requests, we have to read their minds.” “We must fulfill unexpressed wishes and needs.”

A somewhat different view is expressed by the Milliken Company. According to Miliken, “Quality is not the end, it is something that comes from the factory. The end is customer satisfaction. And the only sanitary data on customer satisfaction come from third parties (quoting IBM). if we don’t keep score, we are only practicing. We must delight and excite the customer.” The Japanese have systematized this approach, at least in manufacturing. “Quality Function Deployment (QFD)” is the name given to the mechanism for suffusing (as opposed to diffusing) customer needs both vertically and horizontally throughout the company. Furthermore, the specification for Company-Wide Quality Control has been standardized for over a dozen years under Japan Industrial Standard Z8101-1981. Hauser and Causing (1988) define Quality Function Deployment as a “set of planning and communication routines (that) focuses and coordinates skills within an organization, first to design, then to manufacture and market goods that customers want to purchase and will continue to purchase. The foundation of the

house of quality Li the belief that products should be designed to reflect

customers’ desires and tastes (emphasis added) -- so marketing people, design engineers, and manufacturing staff must work closely together from the time a product is first conceived.” It is clear from this discussion that the Japanese concept of QFD is essentially similar to the “Marketing Concept” in that it takes the satisfaction of consumer needs and wants as the core concept underlying the generation of corporate profits through purchase and repurchase.

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The QFD “house of quality’ is a kind of conceptual map that provides the means for interfunctional planning and communications. People with different problems and responsibilities can thrash out design priorities while referring to patterns of evidence on the house’s grid. The “house” helps to close the loop between customer expectations, the product or service offering, and the confirmation of customer expectations in the performance delivered by the product/service.

b) The “Confirmation of Expectations” paradigm of Customer Satisfaction

is analogous to the “Gap Model” for services To quote Parasuraman, Zeithaml and Berry (1988), the “term “expectations” as used in the service quality literature differs from the way it is used in the customer satisfaction literature. Specifically, in the satisfaction literature, expectations are viewed as predictions made by consumers about what is likely to happen during an impending transaction or exchange. For instance, according to Oliver (1981), “(it) is generally agreed that expectations are consumer - defined probabilities of the occurrence of positive and negative events if the consumer engages in some behavior.” In contrast, in the service quality literature, expectations are viewed as desires or wants of consumers, i.e., what they feel a service provider should offer rather than would (all emphases added) offer.” Perhaps the best known model that compares customers’ expectations for a service with their perceptions of performance is the SERVQUAL model developed at Texas A&M University (Parasuraman, Zeithaml and Berry, 1985 and 1988). This model begins with the premise that product quality may be more easily measured because of the presence of tangible cues. It then postulates the existence of five possible gaps in the delivery of high-quality service. Through qualitative research, the authors propose that service quality is measurable on a 10-dimensional scale. In later work the same team develop and quantify a scale, labeled SERVQUAL, with 22 items spread among five dimensions. The five dimensions of service quality are summarized below: 1. Tangibles: Physical facilities, equipment, and appearance of personnel 2. Reliability: Ability to perform the promised service dependably and accurately 3. Responsiveness: Willingness to help customers and provide prompt service 4. Assurance: Knowledge and courtesy of employees, ability to inspire trust and confidence

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5. Empathy: Caring, individualized attention the firm provides its customers The last two dimensions (assurance and empathy) contain items representing seven original dimensions (those proposed after the authors’ initial qualitative work)- communication, credibility, security, competence, courtesy, understanding/ knowing customers, and access - that did not remain distinct after two stages of scale purification. Therefore, while SERVQUAL has only five distinct dimensions, they capture facets of all 10 originally conceptualized dimensions. (Parasuraman, Zeithaml and Berry 1988.)

c) However, satisfaction with individual transactions does not guarantee

customers’ perceptions of high quality “Consistent with the distinction between attitude and satisfaction is a distinction between quality and satisfaction: perceived quality is a global judgment, or

attitude relating to the superiority of the service, whereas satisfaction is related to

a specific transaction (emphasis added). Indeed, in the twelve focus group interviews included in the exploratory research conducted by Parasuraman, Zeithaml, and Berry (1985), respondent: gave several illustrations of instances when they were satisfied with a specific service but did not feel the firm was of high quality. The two constructs are related, in that incidents of satisfaction may -- over time -- result in perceptions of service quality. In Oliver’s (1981) words, ‘satisfaction soon decays into one’s overall attitude toward purchasing products.” (Parasuraman, Zeithaml and Berry 1988) This finding suggests that customers do not uniformly associate the highest quality expectations with every product/service, but rather are looking for quality standards that are satisfactory to them. It becomes important, then, to understand exactly what quality standards are expected of automakers by their buyers and prospects.

d) This relationship between Customer Satisfaction and quality is explicitly

recognized in the criteria for the U.S.‘s Malcolm Baldrige National Quality

Award The Malcolm Baldrige Award specifies eight key concepts of quality to be used by their examiners: * Defined by Customer * Senior Leadership Must be in the Driver’s Seat * Built into Company Operations * Supported by Continuous Improvement

* Rapid Response Time

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* Supported by Facts and Data * Employee Training and Involvement * Supplier Involvement While probably all of these criteria are important to increased CS, two are highly relevant to a Customer Satisfaction program: that Quality be Customer-Defined, and that it be supported by Continuous Improvement. Further, of the 1,000 points used in scoring the companies in the Baldrige Award, fully 300 points are contributed by Customer Satisfaction -- a weight of 30% for this criterion. The Baidrige examiners evaluate these areas in awarding points toward the 300 total points for Customer Satisfaction:

• Knowledge of Customer Requirements and Expectations

• Customer Relationship Management

• Customer Service Standards

• Commitment to Customers

• Complaint Resolution

• Customer Satisfaction Determination

• Customer Satisfaction Results

• Customer Satisfaction Comparison

V. EMPIRICAL FINDINGS REGARDING CUSTOMER SATISFACTION Note: This section summarizes assorted findings from industry that pertain to the value, measurement and reporting of Customer Satisfaction. AU companies quoted are named, but since the source are unpublished (viz., conferences, tutorials and seminars), detailed references cannot be provided.

a) According to IBM, a “closed loop” is needed to overcome dissatisfaction To quote excerpts from a speech made at a conference by an IBM executive: “So 90 days after a customer receives an AS/400, we call that customer and we talk to them (by telephone). We’re filling out a form, but we also do it in a very conversational mode and we call every single customer. If they are not absolutely delighted, we tack them into our project office that we run. It’s made up of marketing, service, development and manufacturing people. (The Divisional VP) personally review(s) the status of every single customer that is not delighted every two weeks with the executive team, one by one by one. …In these meetings, there’s no room to hide. The whole process is iterative from start to finish with a

closed loop again back to the whole planning process.”

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This observation is consistent with automakers’ experience when dealers have been required to follow-up with customers who are dissatisfied with their sales/service experiences. During these periods, the “follow-up” rates (i.e., the incidence of customers threatening lawsuit against the automaker or otherwise accusing dealers of unlawful activity) have consistently declined. In a 6-month period in the early 1990s, follow-up rates in the Eastern Region of the U.S. for an unidentified automaker declined by a1most one-half from 4.0% to 2.2%, while national rates rose from 2.9% to 3.2%. This pattern has been observed several times when follow-up with dissatisfied customers has been required of dealers. b) IBM claims to have quantified the revenue potential of one point of

customer satisfaction “$257 million of revenue, over five years (for the AS/400 line of computers). That’s what a point of customer satisfaction is worth in additional revenues. And that’s what a point of dissatisfied customers means to us from a loss of revenue standpoint,” according to the IBM executive quoted above.

c) AT&T has obtained component weights for assessment of customer

satisfaction

“In AT&T’s General Business Systems division, the following weights are used:

Product Quality 30% Repair 15% Sales 30% Installation 10% Bill 15%”

d) According to AT&T, Satisfaction with Repair Quality is a direct function

of “fixed right first time” This observation is consistent with many automakers’ experience. In a recent test in the U.S., ratings of the Quality of Work (on a 100-point scale) were 92.2 among those who said the work was “fixed right first time”, and only 67.8 among those who said their vehicle was not “fixed right first time”. Overall Satisfaction ratings, too, were some 20 points higher for the “fixed right first time” group, while ratings of the Service Advisor were 10 points higher.

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e) Burke Marketing Research recommends simpler and easier-to-

understand reports

“Analyses and summaries of Customer Satisfaction Measurements are difficult for managers to read and interpret. “Key measures and analyses (should be) presented in a manner that does not require training users in marketing research methodology prior to interpretation of findings.” f) Burke Marketing Research bemoans the lack of actionability in Customer

Satisfaction Measurements “Surveys and other Customer Satisfaction Measurement (CSM) instruments are incapable of producing actionable information. “Lacking formal guidelines for using CSM-based information to focus and direct improvement efforts, attempts to be responsive to such information are misguided and/or lose momentum.”

g) Burke, like IBM, maintains the need for a “closed loop” from

measurement to action

“Translating measurement into action requires three things: (a) build actionability into measures; (b) focus on analysis that makes sense; and (c) develop pathways from measurement to action.”

VI. PROBLEM DETECTION AND COMPLAINT RESOLUTION A body of literature has built up around the area of “post-purchase behavior”. The paradigm is that customers compare their expectations to perceived reality, experience satisfaction or dissatisfaction, and then act in a way influenced by that (dis)satisfaction. “If the result of the expectations-performance comparison process is dissatisfaction, the customer may decide to complain, based on expectations about what the complaint will achieve (Kraft 1977, Landon 1977). The response of the organization to the complaint will then be evaluated in light of those expectations, resulting in a degree of satisfaction or dissatisfaction with the complaint response. Thus, the degree of satisfaction/dissatisfaction with the complaint response combines with previous satisfaction/dissatisfaction concerning the product to produce some final degree of customer satisfaction/dissatisfaction with the total purchase outcome. Since overall post-purchase feelings affect repurchase behavior (Engel, Blackwell and Kollat 1978), some relationship can be expected between

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feelings about complaint response and likelihood of repurchase (emphasis added).” (Gilly and Gelb 1982) Much of the work in attempting to quantify these concepts has come from the Technical Assistance Research Programs (TARP) organization. Therefore, much of this section draws heavily from work reported by TARP; other sources are referenced as appropriate. The most heavily-used document from TARP is their working paper of April 1985 entitled “Using Complaints for Quality Assurance Decisions” by John A. Goodman and Arlene P. Malech. Sources referenced in that working paper are not separately referenced in this section. a) Dissatisfied individual tend not to complain TARP claims that about 31% of individuals who encounter a “major problem”— defined as one that causes a significant monetary loss, which in their studies averaged $142 -- do not complain to the retailer/provider of the product/service. Further, for small problems with minor monetary loss or just inconvenience, TARP quotes an A.C. Nielsen study which found that fully 70% of customers would either do nothing or simply discard the product As a result, their problems remain unknown -. and unresolved. Automakers cannot rely solely on customers voluntarily complaining when they are dissatisfied. A mechanism to maximize the customers’ opportunities to complain is needed -- and should be provided by the CS measurement program. b) Retail and field systems filter and discourage complaints

TARP claims that less than half of those who complained to the retail level were satisfied. However, less than half of those who were dissatisfied bothered to escalate to the retailer’s headquarters or to the manufacturer. Again, a mechanism to carry complaints directly to the manufacturer is indicated. Automotive CS measurement programs should provide such a mechanism, perhaps via nightly transmission to national or regional headquarters of “critical follow-ups” uncovered in the CS measurement program.

c) By the mere fact of getting customers to articulate their problems, brand

loyalty can be retained

In a study claimed to be projectable to the U.S. population, among customers who experienced a problem with a potential financial loss of over $100, TARP found brand loyalty rates for key groups to be:

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Remained Loyal * Did not articulate problem 9% * Articulated problem / not satisfied 19% * Articulated problem / satisfied 54% TARP concluded that “brand loyalty can be retained by encouraging consumers to complain. Even if the complaint handling mechanism is not able to satisfy the consumer, incremental brand loyalty can be achieved. Of course, if the complainant is satisfied, substantial amounts of brand loyalty can be obtained.” “Closing the loop” from complaining in the CS measurement interview to attaining satisfactory resolution to the perceived problem(s) has great potential for increasing loyalty rates. In fact, simply the ability to articulate the problem may have beneficial effects on loyalty rates.

d) The complaint ratio (multiplier) can be reduced by increasing case of

access to the company/provider

In one study, TARP found that 70% of respondents who encountered a problem and did not articulate it would have done so if the company had maintained a toll-free telephone line. Using the brand loyalty numbers from the previous section, any form of access to the company would at least double loyalty rates; a satisfactory resolution to all complaints could multiply loyalty as much as 6 times. In another study, TARP found that establishing a toll-free number for customer contact led to a doubling of complaints to the manufacturer. Further, the mix of complaints was different, and many complaints were received that would otherwise have been filtered out by the retail level.

e) The propensity to complain is directly proportional to the perceived

severity of the problem and the damage to the respondent

TARP found that buyers of higher-priced equipment tended to articulate their problems more often than buyers of lower-priced equipment. In another study, 69% of customers encountering a “major” problem (with an average loss of $142) complained, while for low-priced package goods only 33% returned the item and only 2% wrote to headquarters. These findings are consistent with those reported by Bearden and Oliver (1985) in a two-phase longitudinal panel study. The study was based on 292 panel members who participated in both waves of the study and reported at least one complaint regarding a significant problem with either a durable good or service during the six months between the two mailed waves of the study. The authors concluded that

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“(a)nalysis of the antecedents showed that only the monetary cost associated with the problem was positively related to both public and private complaints”.

f) Complainers tend to be the heaviest users of the produce/service According to TARP, consumers who are heavy users of the product or service are those who have made a commitment to it. Thus, they have a vested interest in having the company improve its product or service, and complain about failures to meet their expectations. On the other hand, these are also the consumers who represent the potential for the most market damage if their loyalty is compromised. TARP has found that complainers are heavy users in at least four separate industries. These findings have been replicated in credit cards, banking, medical products and automobile rentals. g) Problem experience, especially in the case. of those consumers who

remain unsatisfied, results in substantial amounts of negative word-of-mouth Perhaps the most important of the TARP findings are those pertaining to the amount of word-of-mouth generated by satisfied versus dissatisfied customers. These findings are important because of their ability to multiply through repetition, and because of independent findings that negative word-of-mouth have twice the market damage as positive word-of-mouth have positive impact (Arndt 1967). TARP claims that, in the automotive industry, satisfied complainants told eight others about their experience, while dissatisfied complainants told 16 others. In a study for Coca-Cola, satisfied complainants told 4-5 others, while dissatisfied complainants told 9-10 others about their negative experience. In the arena of residential telecommunications, TARP claims that satisfied consumers had 1.5 positive word-of-mouth contacts while consumers with a problem that was not articulated to the service provider had 3.7 negative word-of-mouth contacts. TARP claims that this 2:1 ratio also holds for people who experience a problem but do not articulate it to the product/service provider, versus satisfied customers who do not experience a problem. Bearden and Oliver (1985) independently validated such findings in general terms. For example, they found that “the extent of private complaint behavior is inversely related to satisfaction with firm response”. Their “private complaint behavior” was equivalent to word-of-mouth.

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VII. RECOMMENDATIONS FOR AUTOMOTIVE CUSTOMER

SATISFACTION PROGRAMS 1. The author suggests that an on-going program measure customers’ expectations throughout vehicle ownership, as well as the manufacturer’s and your dealers’ delivery against those expectations. Measurement among both your new vehicle buyers as well as buyers of competitive marques should be made an integral part of the Customer Satisfaction program. 2. Most program arc focused on the measurement of Customer Satisfaction at the transactional level. Attitudinal questions, such as “Would you recommend this dealership to a friend?”, are rarely tested. Testing of such questions in a systematic fashion, particularly as precursors of repurchase, should be part of an on-going program. 3. An on-going method of tracking a sample of those who shopped your

marque but bought competitive marques must be put in place. The tracking study should measure the reasons why these people bought competitive marques, which marques were purchased, etc. 4. The author suggests that automakers develop action standards to be followed by their dealers. The evaluation of “Best Demonstrated Practices” that distinguish the actions of the best few from the worst few dealers will help in developing these action standards. 5. Methods of rewarding “Best Demonstrated Practice” behavior and punishing “Worst Demonstrated Practice” behavior at the dealership level must be developed. The Customer Satisfaction program should provide the ability to measure these behaviors. 6. Dealer personnel training programs to enable and enhance the “Best behaviors need to be developed. Refresher courses should be given periodically to ensure that the standards are understood by all employees. 7. The ability to conduct on-going evaluation using historical data should be built into Customer Satisfaction programs. (This step will require the development of analytical plans that will only have a payoff some years down the road.)

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8. The author suggests that ALL dissatisfied customers receive follow-up attention from the dissatisfying dealers. Complete detail on customer complaints should be fed back to the National and Regional organizations of the automaker, as well as to the dissatisfying dealers. A closure mechanism should be developed so that resolution is guaranteed, and no customer “falls through the cracks”. 9. Existing programs may need to be modified to elicit more -- rather than less -- complaining behavior via a series of “probes”. More room and freedom for interviewers to record “pre-coded” and free-form (verbatim) comments must be built into the design of Customer Satisfaction surveys. 10. Automakers and their research vendors must work to create reports that can be used easily and expeditiously by dealers in evaluating employees and following-up with dissatisfied customers.

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REFERENCES

Arndt, S. “Role of Product Related Conversation in the Diffusion of a New Product”, Journal of Marketing Research, Vol.4, August 1967, pp. 291-295. Bearden, W. 0. and R. L. Oliver “The Role of Public and Private Complaining in Satisfaction with Problem Resolution”, The Journal of Consumer Affairs, Vol. 19, No. 2, Winter 1985, pp. 222-240. Churchill, G. A., Jr. and C. Surprenant “An Investigation Into the Determinants of Customer Satisfaction”, Journal of Marketing Research, Vol. 19, November 1982, pp. 491-504. Churchill, G. A., Jr. “A Paradigm for Developing Better Measures of Marketing Constructs”. Journal of Marketing Research, Vol. 16, February 1979, pp. 64-73. Engel, J. F., R. D. Blackwell and D. T. Kollat, Consumer Behavior, Hinsdale, IL: Dryden, 1978. Garvin, D. A. “Quality on the Line”, Harvard Business Review, Vol. 61, September - October 1983, pp. 65-73. Gilly, M. C. and B. D. Gelb “Post-Purchase Consumer Processes and the Complaining Consumer”, Journal of Consumer Research, December 1982, pp. 323-328. Goodman, J. A. and A. R. Maleck “Using Complaints for Quality Assurance Decisions”, TARP Working Paper, April 1985. Gould, S. J., The Mismeasure of Man, New York: W. W. Norton & Company, 1981.

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Hauser, J. R. and D. Clausing “The House of Quality”, Harvard Business Review, Vol. 66, May-June 1988, pp. 63-88. Howard, J. and J. Sheth, The Theory of Buyer Behavior, New York: John Wiley and Sons, 1969. Hunt, K. Conceptualization and Measurement of Consumer Satisfaction and Dissatisfaction. Cambridge, MA: Marketing Science Institute, 1979. Kraft, F. B. “Characteristics of Consumer Complainers and Complaint and Repatronage Behavior”, in, R. L. Day (ed.), Consumer Satisfaction, Dissatisfaction and Complaining Behavior, Bloomington, IN: Indiana University School of Business, 1977, pp. 79-84. Landon, E. L. “A Model of Consumer Complaint Behavior”, in: R. L. Day (ed.), Consumer Satisfaction, Dissatisfaction and Complaining Behavior, Bloomington, IN: Indiana University School of Business, 1977, pp. 31-35. LaTour, S. A. and N. C. Peat “Conceptual and Methodological Issues in Consumer Satisfaction Research”, in: W. L. Wilkie (ed.), Advances in Consumer Research, Association for Consumer Research, 1979, pp. 432-437. Oliver, R. “Measurement and Evaluation of Satisfaction Process in Retail Settings”, Journal of Retailing, Vol. 57, Fall 1981, pp. 25-48. Olshavsky, R. W. “Perceived Quality in Consumer Decision Making: An Integrated Theoretical Perspective”, in: J. Jacoby and J. Olson (eds.), Perceived Quality, Lexington, MA: Lexington Books, 1985. Parasuraman. A., V. Zeithaml and L. berry “A Conceptual Model of Service Quality and its implications for Future Research”, Journal of Marketing, Fail 1985, pp. 41-50. Paiasuraman, A., V. Zeithami and L Berry “SERVQUAL: A Multiple-Item Scale for Measuring Consumer Perceptions of Service Quality”, Journal of Retailing, Spring 1988, pp. 12-40. Pfaff, M. “The Index of Consumer Satisfaction: Measurement Problems and Opportunities”, in: Fl. Keith Hunt (ed.), Conceptualization and Measurement of Customer Satisfaction and Dissatisfaction, Cambridge, MA: Marketing Science Institute, May 1977, pp. 36-71.

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Other Readings

Aiello, Albert, John A. Czepiel, and Laity 3. Rosenberg (1971). “Scaling the Heights of Consumer Satisfaction: An Evaluation of Alternative Measures”, in Consumer Satisfaction, Dissatisfaction and Complaining Behavior, Ralph Day, ed., Bloomington: Indiana University (April) 45-50. Anderson, Rolph E. (1973), “Consumer Dissatisfaction: The Effect of Disconfirmed Expectancy on Perceived Product Performance”, Journal of Marketing Research, 10 (February), 38-44. Czepiel, John A., Larry J. Rosenberg, and Carol F. Surprenant (1980), “The Development of Thought. Theory and Research in Consumer Satisfaction’, paper presented at the American Marketing Association. Special Educators’ Conference. Leavitt, Clark (1977), “Consumer Satisfaction and Dissatisfaction: Bipolar or Independent”, in Conceptualization and Measurement of Consumer Satisfaction and Dissatisfaction, H. Keith Hunt, ed Cambridge, MA: Marketing Science Institute (May), 132-52. Oliver. Richard (1977), “A Theoretical Reinterpretation of Expectation and Disconfirmation Effects on Posterior Product Evaluation: Experiences in the Field”, in Consumer Satisfaction, Dissatisfaction and Complaining Behavzor, Ralph Day. ed. Bloomington: Indiana University (April), 2-9. Oliver, Richard (1980), “Theoretical Bases of Consumer Satisfaction Research: Review, Critique, and Future Direction”, paper presented at the American Marketing Association Second Special Conference on Marketing Theory. Pfaff, Anita B. (1972). “An Index of Consumer Satisfaction”, Proceedings of the Third Annual Conference, Association for Consumer Research (November), 713-37.

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