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Analyst Previews Report Showing the View on Customer Satisfaction

30 June 1998

Analyst Previews Report Showing the Prevailing View on Customer Satisfaction Has Serious Flaws

Increasing Satisfaction Levels Won't Help Business, Unless We Expand Our View
      of Satisfaction.  Hundreds of Millions of Dollars are Being Wasted

    SANTA ANA, Calif., June 30 -- A new report looking at
customer satisfaction, sales, loyalty and brand, raises serious questions
concerning firmly held beliefs about customer satisfaction.
    According to Jeremy P. Anwyl, president of Marketec Systems, Inc., "The
assumption has been that surveys measure satisfaction, satisfaction leads to
loyalty and loyalty is the key to profitable business growth.  Therefore,
survey scores should be an indicator of future business health."
    "Based on this seemingly commonsense position, the industry has spent
hundreds of millions of dollars-with little to show for it," says Anwyl.  He
adds, "To make it easy to measure, we have simplified satisfaction to a point
where it has lost meaning.  We have drifted to a position  where we define
satisfaction differently from the customer
    To illustrate, consider the example of dealership satisfaction and
loyalty. According to Anwyl, all dealerships can be broken into one of four
categories:

    1. Dealerships with high survey scores and high loyalty

    2. Dealerships with low loyalty and low survey scores

    3. Dealerships with high survey scores and low loyalty

    4. Dealerships with low survey scores and high loyalty

    Understanding the first two categories is easy.  It is the last two that
require more thought.
    It is not too hard to understand how a dealership can score well, yet have
poor customer loyalty.  Perhaps the product disappoints customers.  (And it is
a stand-alone dealership.)  Or subvened leasing might have created an
unsustainable price point.  And there are always the 38% of customers who just
want to try something different.
    It is the fourth category that seems to make no sense.  Particularly when
we learn that dealerships in this category are some of the highest volume,
most profitable in the country!  One answer is that the product is "hot" and
the market only has one dealer.  But there are also lots of instances in
markets where there are plenty of dealers.  (Miami, for example.)
    With these cases, we are reduced to two choices:

    1. Just accept that customers are irrational.  (Why else would they
willingly return to relive an experience they disliked?)

    2. Redefine what we think of as "satisfaction."

    How Customers Define "Satisfaction"

    The surveys we use to quantify customer satisfaction focus on the
experience.  (Either what happened, or how a customer felt about what
happened.)  However, talk to customers and you will quickly see that their
view of dealership satisfaction is based on a broader set of attributes. The
experience, plus the "deal," vehicle availability, delivery condition and
convenience.  (Typically, convenience refers to a dealership's location.)
    While each customer may rank these attributes differently, a surprising
number rate "deal" number one.
    Surveys Should Be Tied To Business Results
    To have value, satisfaction surveys must be reliable indicators of future
business results.  For this to be the case, Anwyl says: "We need a new
generation of satisfaction surveys."  He continues,  "Surveys measuring
product satisfaction should include measures of attributes such as product
distinctiveness, product quality, and product features.  For retailers,
surveys should measure the experience, vehicle availability, perceived deal,
convenience and vehicle condition."
    Marketec Systems, Inc. is an international firm best known for its
consulting services in automotive retail and channel change.  Marketec
Systems, Inc. can be accessed through the World Wide Web at
http://www.marketecsystems.com.