BUSI 372 Week 8 Discussion Board Forum 5 Example

Discussion Board Forum 5: Measuring Customer Satisfaction

BUSI 372 Marketing and Sales, Discussion Board Forum 5 Thread and Replies

Thread by [Student Name]

The forum prompt and the classmates' threads are composites; the research cited is real.

Customer satisfaction is worth measuring, but the scores many manufacturers use to rate dealers capture it imperfectly, and tying those scores to bonuses changes what they measure; dealers should combine survey scores with measures of what customers actually do.

There is good evidence that satisfaction matters financially, not just as a matter of good manners. Anderson et al. (2004) linked a national index of customer satisfaction to the stock market values of the companies measured and found that firms with higher satisfaction tended to have higher shareholder value, after accounting for other influences. For a dealership, satisfied customers are more likely to return for service and their next vehicle, which is where much of the store's long-term profit lies. Satisfied customers also write the online reviews that shape the next buyer's first impression, so satisfaction pays twice: once through the customer's own return and again through the customers that customer sends.

The problem is how satisfaction is measured. Morgan and Rego (2006) compared several satisfaction and loyalty metrics and reported that average satisfaction and the proportion of highly satisfied customers forecast business results fairly well, while popular single-question measures such as the Net Promoter score had little predictive value. Keiningham et al. (2007) examined the claim that the Net Promoter score predicts revenue growth better than other measures and found no evidence that it did. A simple score is easy to report, but it is not always the score that predicts the business.

The bigger issue at many dealerships is what happens when scores determine money. When manufacturer bonuses and allocation depend on survey results, some salespeople coach customers on how to answer, ask them to give perfect scores or discourage unhappy customers from responding. The score rises while the customer experience may not. Managers then lose the very information the survey was meant to provide, because the stores and salespeople with real problems learn to hide them. Customers notice too; being asked to give a perfect score can make an ordinary experience feel transactional.

A better system would use several measures together: the manufacturer survey, the store's own short survey sent without coaching, the share of buyers who return for their first service visit, the share of service customers who return within a year and the share of sales that come from repeat or referred customers. Behavioral measures cannot be coached, and they show whether satisfaction turns into loyalty over months and years. A manager who watches all of them can see whether the experience is truly improving or only the numbers. Manufacturers could encourage this by weighting behavioral measures in their dealer programs, which would reward stores for keeping customers rather than for managing surveys.

Reply to Natalie

Natalie, your thread argued that satisfaction surveys are useful because they tell managers exactly what to fix, and I agree that comments from unhappy customers are valuable. Research on retention suggests that what drives customers to return goes beyond momentary satisfaction. Verhoef (2003) found that customers' emotional commitment to a company predicted both whether they stayed and how much of their business they gave it, more strongly than loyalty programs or mailings did. A customer can be satisfied with one visit without feeling committed to the store, and only commitment reliably brings the customer back.

That suggests surveys should ask about trust and the relationship, not only about the visit. Rust et al. (2004) contended that marketing's real test is what it does to the long-run value of a firm's customers, which means a survey score is useful only if it predicts whether customers stay and buy again. A store could check this by comparing each customer's survey answers with whether that customer returned within a year.

Your idea of having the service manager call every customer who gives a low score is a strong one, because how a complaint is handled can turn a dissatisfied customer into a loyal one. Would you also call customers who gave average scores, since they may be the ones quietly drifting away? Those customers rarely complain, but they also rarely come back, and a short call asking what would have made the visit better might be the cheapest retention tool a store has.

Reply to Ethan

Ethan, your thread proposed raising every customer's satisfaction score to the top of the scale, and the goal reflects good intentions toward customers and staff alike. Research on customer value suggests that dealers should also ask where improvements matter most, since time and money for improvement are limited. Gupta et al. (2004) showed that improving customer retention has a much larger effect on the value of a firm's customer base than many other improvements, which means satisfaction efforts that keep customers coming back are worth more than efforts that simply polish scores. Reinartz and Kumar (2000) found that not all long-time customers were equally profitable, which suggests that the value of raising satisfaction differs from customer to customer.

For a dealership, that might mean focusing effort on moments that decide retention, such as the first service visit and the handling of warranty problems, rather than on perfect scores at every step of the sales process. A customer who is very satisfied with the delivery but frustrated by the first oil change may not return, whatever the sales survey says.

This does not mean ignoring any customer or treating anyone poorly. It means using limited time and money where they keep the most customers for the longest time. Which moment in the ownership experience do you think has the greatest effect on whether a customer comes back? Your answer might also tell a manager where to place the most experienced staff, since the person a customer meets at that moment shapes the whole relationship.

References

Anderson, E. W., Fornell, C., & Mazvancheryl, S. K. (2004). Customer satisfaction and shareholder value. Journal of Marketing, 68(4), 172-185. https://doi.org/10.1509/jmkg.68.4.172.42723

Gupta, S., Lehmann, D. R., & Stuart, J. A. (2004). Valuing customers. Journal of Marketing Research, 41(1), 7-18. https://doi.org/10.1509/jmkr.41.1.7.25084

Keiningham, T. L., Cooil, B., Andreassen, T. W., & Aksoy, L. (2007). A longitudinal examination of net promoter and firm revenue growth. Journal of Marketing, 71(3), 39-51. https://doi.org/10.1509/jmkg.71.3.039

Morgan, N. A., & Rego, L. L. (2006). The value of different customer satisfaction and loyalty metrics in predicting business performance. Marketing Science, 25(5), 426-439. https://doi.org/10.1287/mksc.1050.0180

Reinartz, W. J., & Kumar, V. (2000). On the profitability of long-life customers in a noncontractual setting: An empirical investigation and implications for marketing. Journal of Marketing, 64(4), 17-35. https://doi.org/10.1509/jmkg.64.4.17.18077

Rust, R. T., Lemon, K. N., & Zeithaml, V. A. (2004). Return on marketing: Using customer equity to focus marketing strategy. Journal of Marketing, 68(1), 109-127. https://doi.org/10.1509/jmkg.68.1.109.24030

Verhoef, P. C. (2003). Understanding the effect of customer relationship management efforts on customer retention and customer share development. Journal of Marketing, 67(4), 30-45. https://doi.org/10.1509/jmkg.67.4.30.18685