Customer satisfaction, a term frequently used in marketing, isa measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals. In a survey of nearly 200 senior marketing managers, 71 percent responded that they found a customer satisfaction metric very useful in managing and monitoring their businesses. It is seen as a key performance indicator within business and is often part of a Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy. Within organizations, customer satisfaction ratings can have powerful effects. They focus employees on the importance of fulfilling customers’ expectations. Furthermore, when these ratings dip, they warn of problems that can affect sales and profitability. These metrics quantify an important dynamic. When a brand has loyal customers, it gains positive word-of-mouth marketing, which is both free and highly effective. Therefore, it is essential for businesses to effectively manage customer satisfaction. To be able do this, firms need reliable and representative measures of satisfaction. In researching satisfaction, firms generally ask customers whether their product or service has met or exceeded expectations. Thus, expectations are a key factor behind satisfaction. When customers have high expectations and the reality falls short, they will be disappointed and will likely rate their experience as less than satisfying. For this reason, a luxury resort, for example, might receive a lower satisfaction rating than a budget motel—even though its facilities and service would be deemed superior in “absolute” terms. The importance of customer satisfaction diminishes when a firm has increased bargaining power. For example, cell phone plan providers, such as AT&T and Verizon, participate in an industry that is an oligopoly, where only a few suppliers of a certain product or service exist. As such, many cell phone plan contracts have a lot of fine print with provisions that they would never get away if there were, say, a hundred cell phone plan providers, because customer satisfaction would be way too low, and customers would easily have the option of leaving for a better contract offer. There is a substantial body of empirical literature that establishes the benefits of customer satisfaction for firms. Their principal use is twofold 1. individuals who rate their satisfaction level as “5” are likely to become return customers and might even evangelize for the firm. Within organizations. analysis and dissemination of these data send a message about the importance of tending to customers and ensuring that they have a positive experience with the company’s goods and services 2." When a customer is satisfied with a product. the collection. he or she might recommend it to friends. relatives and colleagues. satisfaction is an indicator of how likely it is that the firm’s customers will make further purchases in the future. Further. Much research has focused on the relationship between customer satisfaction and retention. they can hurt the firm by making negative . This can be a powerful marketing advantage. Although sales or market share can indicate how well a firm is performing currently.[edit]Purpose A business ideally is continually seeking feedback to improve customer satisfaction. Customer satisfaction provides a leading indicator of consumer purchase intentions and loyalty. Customer satisfaction data are among the most frequently collected indicators of market perceptions. are unlikely to return.) Individuals who rate their satisfaction level as by contrast. (A second important metric related to satisfaction is willingness to recommend. Studies indicate that the ramifications of satisfaction are most strongly realized at the extremes. On a five-point scale. This metric is defined as "The percentage of surveyed customers who indicate that they would recommend a brand to friends. in a holistic sense. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The usual measures of customer satisfaction involve a survey[6] with a set of statements using a Likert Technique or scale. with the restaurants. and so on. Customer satisfaction is measured at the individual level. Work done by Cronin and Taylor propose the "confirmation/disconfirmation" theory of combining the "gap" described by Parasuraman. might ask customers to rate their experience with its front desk and check-in service. It can be. Willingness to recommend is a key metric relating to customer satisfaction. The customer is asked to evaluate each statement and in term of . Utilitarian benefits of a product are associated with the more instrumental and functional attributes of the product (Batra and Athola 1990) Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organization's products. Zeithaml and Berry (Leonard L) between 1985 and 1988 provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer's expectation of performance and their perceived experience of performance.Measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. but it is almost always reported at an aggregate level. evidence suggests that consumers purchase goods and services for a combination of two types of benefits: hedonic and utilitarian. A hotel. Hedonic benefits are associated with the sensory and experiential attributes of the product. Additionally. As research on consumption experiences grows. Work done by Parasuraman. with the room. and often is. the hotel might ask about overall satisfaction “with your stay.comments about it to prospective customers. for example. measured along various dimensions. Zeithaml and Berry as two different measures (perception and expectation of performance) into a single measurement of performance according to expectation. This provides the measurer with a satisfaction "gap" which is objective and quantitative in nature. Construction (Measuring customer satisfaction) Organizations need to retain existing customers while targeting non-customers. with the amenities in the room. Eroglu and Machleit 1990). “pleasant to unpleasant” and “I like it very much to I didn’t like it at all”.. good reliability. and low error variances. “very satisfied with tovery dissatisfied with”. and had by far the lowest error variance across both studies. Oliver and Swan 1983). It loaded most highly on satisfaction. along seven points within “delighted to terrible” It seems that dependent on a trade-off between length of the questionnaire and quality of satisfaction measure. In the study. It is essential for firms to effectively manage customer satisfaction. A semantic differential (4 items) scale (e. “did a good job for me to did a poor job for me”.g. a one-item 7-point bipolar scale (e. Good quality measures need to have high satisfaction loadings. the six items asked respondents’ evaluation of their most recent experience with ATM services and ice cream restaurant. which is a six-item 7-point bipolar scale. Again. these scales seem to be good options for measuring customer satisfaction in academic and applied studies research alike. “contented with to disgusted with”. Their satisfaction is generally measured on a five-point scale. along seven points within these six items: “please me to displeased me”. Customer satisfaction data can also be collected on a 10-point scale. was the second best performing measure. the objective is to measure customers’ perceived satisfaction with their experience of a firm’s offerings. The third best scale was single-item percentage measure. respondents were asked to evaluate their experience with both products. which was again consistent across both contexts.their perception and expectation of performance of the organization being measured. which is a four-item 7point bipolar scale. that consistently performed best across both hedonic and utilitarian services. had the highest item reliability. and/or their performance varied significantly across the two . we need accurate measurement of satisfaction.g. along seven points within these four items: “satisfied to dissatisfied”. “favorable to unfavorable”. Regardless of the scale used..g. In an empirical study comparing commonly used satisfaction measures it was found that two multi-item semantic differential scales performed best across both hedonic and utilitarian service consumption contexts. the respondents were asked to evaluate their experience on both ATM services and ice cream restaurants. In the study. To be able do this. “wise choice to poor choice” and “happy with to unhappy with”. Westbrook 1980).. All other measures tested consistently performed worse than the top three measures. According to studies by Wirtz & Lee (2003) they identified a sixitem 7-point semantic differentialscale (e. exceeded the requirements of the situation (or did not exceed). all measures captured both affective and cognitive aspects of satisfaction. independent of their scale anchors. These results suggest that more careful pretesting would be prudent should these measures be u Finally. fit the situation (or did not fit). was useful (or not useful).Affective measures capture a consumer’s attitude (liking/disliking) towards a product. On the other hand.service contexts in their study. which can result from any product information or experience. . cognitive element is defined as an appraisal or conclusion on how the product’s performance compared against expectations (or exceeded or fell short of expectations).