Theoretical Considerations In Measurement Of The Customer Satisfaction

Introduction:

Efforts to satisfy customers obviously cannot be allowed to wipe out a company's financial resources, but improving customer satisfaction can stili be the company's driving force. All results are obtained under the assumption that financial restrictions are without importance in the company. If costs are subject to a restriction this is easily incorporated in the results and it will not lead to dramatic changes.

THEORETICAL CONSIDERATIONS:

Assumptions:

• The company has a very simple delivery system in which the goods and services are delivered directly to the end user and where the company can obtain customer satisfaction information directly from the end user.
• The goods and services are evaluated by the customer on n different parameters concerning importance of and satisfaction with each parameter.
• The revenue from customer satisfaction can be described as some function of the CSI, Φ(CSI).
• Furthermore, we assume that the cost of obtaining customer satisfaction is quadratic with k as a cost parameter.

Let the rate of importance (weight) of the ith parameter be i and let ci be the individual satisfaction evaluations on an appropriate scale. We then define the customer satisfaction index (CSI) as follows:

From this it follows that the expected profit is given by

In order to balance the quality effort in the company the management problem is to maximize profit with respect to the mean value of the individual quality parameters. The first-order conditions of this maximization are equal to

These conditions may be rewritten in several ways, such as        

Practical application of the results will depend upon the available information in the company. Weight and satisfaction can be estimated by sampling the market while it will usually be more difficult to get information about individual cost factors. Sometimes a rough estimate of cost ratios will exist but in many cases it will be necessary to assume identical costs.

These reflections lead to the suggestion that the company should balance its quality effort according to the rule:

According to this simple rule which easily can be implemented in practice the degree of fulfillment should be equal for all quality parameters in the company.

This type of result will make it very easy to report the outcome of the customer satisfaction study in a graphical way as we shall see later.

All results have been obtained under the assumption that financial restrictions are without importance in the company. If costs are subject to a restriction this is easily incorporated in the results and it will not lead to dramatic changes.