Customer Satisfaction (Cust Sat)

By: EconomyWatch   Date: 30 June 2010

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Measuring Customer Satisfaction (or Cust Sat)

Satisfaction, Loyalty and Commitment are often used interchangeably

While there is no foolproof definition, experience shows the following subtle difference

Satisfaction is experiential.
Loyalty is behavioral.
Commitment is psychological/

 

Using Factor Analaysis & Regression to Measure Satisfaction

Factor analysis is one among various multivariate statistical data analysis techniques

Primary purpose is data reduction and summarization

Factor analysis is used for data reduction (using principal component analysis) – a group of variables that explain a certain phenomena lead to a factor

Regression analysis provides weights to understand the relative importance of factor and variables within these factors

Charles Spearman pioneered the use of factor analysis in psychology in the early 20th century & is sometimes credited with its invention

Metrics: Customer Satisfaction

The Question:

How satisfied are my customers? How do I compare?

Approach:

Survey customers in three areas, with answers in a range of 1-10

Commentary:

By using the standard American Customer Satisfaction Index (ACSI) methodology, organisations can compare themselves with industry/ geography benchmarks, and with historical trends

The Formula:

Customer Satisfaction Index (0-100) = ((Satisfaction-1)*.3885 + (Expectancy-1)*.3190 + (Performance-1)*.2925)/9*100

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