Consumer Satisfaction Index

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WHAT IS CUSTOMER SATISFACTION INDEX?

Consumer Satisfaction Index is a basic measure that is used by companies in order to define and understand the position of their organization in the minds of consumers. It also acts as an indicator in checking the quality level of the service that has been delivered to the consumers hence, helping the organization in taking effective and efficient management decisions.

• Customer satisfaction index is a final figure of customer satisfaction resulting from a series of appropriate and weighted measures of indicators.
• It may be expressed as a percentage (%) or other numerical number.
• The index can be calculated from measures or surveys of retention, service standards, perceived value, perceived quality, it may also include measures from other indexes. It is important to ensure that all measures included are linked to goals and strategies i.e. there must be an agreed reason to measure them.

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A strong link exists between customer satisfaction and customer retention. Customer's perception of Service and Quality of product will determine the success of the product or service in the market. With better understanding of customers' perceptions, company can determine the actions required to meet the customers' needs. It can identify its own strengths and weaknesses. Customer satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate improvements in the work practices and processes used within the company

DERIVATION

• Calculating the weighting factor
Importance scores or weightings given by customer are used to calculate the weighting factors. All the importance scores/ weightings are totaled and then express each as a percentage of total score.

• Calculating satisfaction index
Now multiplying each satisfaction score by its corresponding weighting factor
Illustration:
The following table shows the Weightings & Scores assigned on a scale of 1 - 10 by the Customer.
Parameter
P Weighting
A Score
B Weighting (avg. of 1)
C Weighting (avg. of 1) * Score
D = B *C
P1 7 8 1.17 9.24
P2 5 4 0.83 3.33
P3 9 8 1.50 12.00
P4 3 3 0.50 1.50
P5 6 4 1.00 4.00
Average = 6.00 Average = 5.40 CSI = 6.01
A = Average Weighting assigned by all respondents for each parameter
B = Average Score assigned by all respondents for each parameter
Avg. Weighting = (7 + 5 + 9 + 3 + 6) / 5 = 6

C = Weighting based on avg. of 1 = Individual Weighting / avg. Weighting

D = Weighted Score = Score * Average Weighting = B * C

Satisfaction Index CSI = Average of (Weighted Scores)

CSI = (9.24 + 3.33 + 12 + 1.5 + 4.0) / 5 = 6.01

Since the scale used was 1 - 10, CSI = 60.10%

WHY CSI IS REQUIRED?

A customer satisfaction index provide the overall customer satisfaction level, and also provide some other benefits such as
• Understanding the customers' preference and perception about the services.
• Helps in understanding companies performance relative to consumer priorities
• Brand image in customers mind.
• Helps in understanding the position of the company with regard to that of a competitor in a market.
• Helps in constructing strategies
• Scope of improvements
It sends a message to customers that firm is customer centric and creates a ‘sense of assurance' in the minds of the consumers.

METHODOLOGY TO FIND CSI

There are several steps which one needs to go through:
1. The attributes are identified first which affects the satisfaction level of the consumers.
Some of the major attributes of a customer satisfaction:
• Quality of the Product or Service
• After sale services
• Responsiveness
• Empathy
• Price
Seeing from the customer's point of view certain factors need to be considered. These factors or attributes will differ from company to company:

About the product • Quality of the product
• Length of life of the product
• Design of the product
• Consistency of quality
• Range of products
• Processibility of the product
About delivery • Delivery on time
• Speed of delivery
About staff and service • Courtesy from sales staff
• Representative's availability
• Representative's knowledge
• Reliability of returning calls
• Friendliness of the sales staff
• Complaint resolution
• Responsiveness to enquiries
• After sales service
• Technical service
About the company • Reputation of the company
• Ease of doing business
• Invoice clarity
• Invoices on time
About price • Market price
• Total cost of use
• Value for money
2. Compact the list of attributes by clubbing together the co-related attributes or eliminating the unrelated attributes.
3. Collect the data from the various sources.CSI does not have to be based solely on survey data. It take into account factors such as repeat buying, volume of purchase, complaints recorded and market share.
4. Correlation analysis or factor analysis of all attributes are believed to be related to customer satisfaction. This index can be brought about by using a variety of techniques like
• Periodic Contract Reviews
• Market research
• Telephonic Interviews
• Personal visits
• Informal discussions
• Satisfaction Surveys

WHY CUSTOMER SATISFACTION NEEDS TO BE MEASURED?

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Most businesses lose a certain proportion of their customers in every year they trade, and in many cases the customer is lost because they have defected to the competition. This is often referred to by marketers as ‘customer decay' or ‘customer attrition'. In some markets, the average attrition rate is between 10 and 30%! There are many reasons why a customer defects, but without a doubt the primary driver is dissatisfaction with the product or service being offered. Providing organizations can replace the lost customer with a new customer, ‘customer decay' is not necessarily perceived as an urgent problem. But ‘customer decay' should in fact be a problem for all organizations and ignoring it is both dangerous and inefficient.

The underlying logic for minimizing `customer decay' is simple; the cost of acquiring new customers is higher than the cost of retaining existing customers. As we shall see, there is such a thing as an unprofitable customer and, therefore, circumstances when acquiring new customers is a better strategy than holding on to undesirable customers, but in general it is now a widely accepted business theory that customer retention optimizes profitability. So, there is a fundamentally good reason for measuring customer satisfaction: understanding customer needs and delivering high levels of customer satisfaction ensures high levels of customer loyalty, and this in turn enhances profitability. For public sector organizations also, customer loyalty is a key measure of their performance. Public sector bodies which provide excellent service to their “customers” are fulfilling a key tenet of contemporary public service philosophy and most government departments now set rigorous requirements for meeting the highest customer service standards.
Satisfied customers usually return and buy more, they tell other people about their experiences, and they may well pay a premium for the privilege of doing business with a supplier they trust. Statistics are bandied around that suggest that the cost of keeping a customer is only one tenth of winning a new one. Therefore, when we win a customer, we should hang on to them.
Developing a customer satisfaction programme is not just about carrying out a survey. Surveys provide the reading that shows where attention is required but in many respects, this is the easy part. Very often, major long lasting improvements need a fundamental transformation in the company, probably involving training of the staff, possibly involving cultural change. The result should be financially beneficial with less customer churn, higher market shares, premium prices, stronger brands and reputation, and happier staff.

USE OF CSI

• One of the key benefits of the customer satisfaction index is that if a standard model is used to derive its value, it represents a uniform and comparable system of measurement. Values derived from standard models are frequently published in a number of popular magazines and journals. This facilitates systematic and meaningful benchmarking over time against other organizations by highlighting their success at what is a critical success factor common in almost every organization. Within the organization it very simply and clearly analyses strengths and weaknesses, supplementing conventional measures, such as productivity and price indices.
• Plotting this Satisfaction Index of the customer against a time scale shows exactly how well the supplier is accomplishing the task of customer satisfaction over a period of time.
• The CSI is an important indicator of economic performance, both for individual firms and for the macro economy. As such, the national ACSI score has been shown to be predictive of both consumer spending and stock market growth, among other important indicators of economic growth.
• The index isn't just used by marketers to measure and benchmark how their company's customers are feeling about their products, but it's used by financial types as a predictor too.
• Motivation and commitment of employees: carrying out a thorough customer measurement exercise, communicating the result internally and then updating the survey and monitoring progress will demonstrate the importance of customer satisfaction to all employees and thus in turn motivates staff to work for improved results
• Profits: Measuring customer satisfaction and acting on the results appropriately will increase profitability.

Cane-o-la
Questionnaire for Customer satisfaction Index

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Name………………………………. Area……………………………………
Gender: Male Female Date…………………………………..

1. Which place do you generally prefer for buying fruit juice?
a) Local fruit juice vendor
b) Cane-o-la
c) Make at Home
d) Packaged Juices
2. Out of the following rank the juices according to your preference (1 most preferable)
 Mango
 Apple
 Mausambi
 Sugarcane
 Grape
 lemonade
3. Average number of time you visit canola in a week?
a. 1-2 times a week
b. 2-5 times a week
c. More than 5 times a week
d. Rarely
4. Do following reasons influence your decision on consumption of cane-o-la?

Attributes Rate on scale of 1-10
(1=Minimum,10=Maximum)
Acts as Refreshment
Provides Enjoyment
Very Hygienic
Provides Energy
Satisfies Thirst
Relaxes mentally
Looks trendy
Reflects attitude

5. On a Scale of 1 to 10 rate the following parameters on the basis of your satisfaction.
(1= Minimum, 10= Maximum)
a) Hygiene
b) Ease Of ordering and delivery
c) Behavior of staff
d) Value for money
e) Flavors combination availability
f) Process transparency
g) Ambience

6) Rank the flavors according to your preference at cane-o-la?
 Plain juice
 ginger flavor
 lemon, mint
 Tulsi
 Chaat
 salt n pepper

7) How near is cane-o-la outlet?
 Very near
 Near
 Far
 Very far
 Don't know

10) Do you prefer eatables like with the juice?
Yes
No

11) If yes what would you like to eat? Rank in order of preference
 Burgers
 Sandwiches
 Popcorn
 Chips
 Bhelpuri chaat etc

12) Rate the following parameters in terms front end employees on a scale of 10?
 Behavior
 Communication
 Hygiene
 Dressing
 Responsiveness