Satisfaction, Loyalty or Customer Experience

by Sudhir H. Kale

Every so often I am invited into casino companies to help develop an instrument with which to assess how well the casino performs in fulfilling the needs and expectations of its target market. Some call this exercise measuring customer satisfaction, others view it as measuring service quality, while still others view it as gauging the quality of customer experience.
These monikers are viewed as substitutable if not synonymous, and several companies mix and match survey instruments to the point that they have no idea of what they are exactly measuring or what the results are going to be used for.
The fact of the matter is that marketing practice has undergone a series of large-scale transformations over the last three decades. The focus of offerings has shifted from selling brands to services marketing to developing customer relationships to offering compelling customer experiences. Market research, however, has not kept up with these transformations, and we now have a scenario where twentieth century instruments are used to measure 21st century phenomena to assess customer loyalty and customer centricity of an offering. What’s worse, findings from customer research are seldom linked to their impact on the bottom line. To navigate this chasm between measurement tools and the object of measurement amidst chaotic banter and troughs of ignorance, here are a ten key pointers:
1. If you are measuring customer satisfaction, then restrict your survey questions to customer satisfaction. Be clear as to whether you are using formative measures of satisfaction, or reflective measures, or both. NEVER mix formative measures with reflective measures to create an index of satisfaction.
2. Ideally, customer satisfaction scale should be a Likert-type scale ranging from 1 (not at all satisfied) to 7 (extremely satisfied). Scales with four points or less tend to have very poor reliability and validity.
3. Always assess the reliability and validity of your scale before you engage in large-scale data collection.
4. Do not mess with existing validated instruments unless you have a solid understanding of statistics and psychometrics.
5. If you are going to conduct further multivariate analysis of your customer satisfaction data, make sure that your data do not suffer from floor effects (which most satisfaction data do).
6. If you are measuring service quality, then use an adapted and reliable version of SERVQUAL. Make sure that the questions reflect the reality of your context (hotel, casino operations, food and beverage, etc.) Ensure that regular service audits of your operation are conducted so that a continuous improvement in quality can be achieved.
7. If you are measuring the customer experience, make sure that there exists consensus within your management team about the definition and components of customer experience. Develop subscales of each component and collect large-scale data only after the reliability and validity of each subscale have been ascertained.
8. If you are interested in a robust measure of customer responsiveness, then look for ways to combine the net promoter score, customer satisfaction score, and customer retention measure.
9. Regardless of what you are measuring, be precise about the construct being measured, and try to relate this construct to other lagging measures such as revenue and profitability.
10. It might cost you a bit of money or stunt your ego, but leave the design of your data collection instrument to professionals. Demand an explanation from them for every question in the instrument and for the statistical techniques they recommend for data analysis.
These ten pointers will go a long way in ascertaining the true worth of your product to the casino customer. And, one more pointer: When looking for people to design your survey instrument, stay away from self-appointed experts who write best-seller books crammed with cute acronyms. After all, you wouldn’t hire a Vogue model to conduct your blood tests, would you?
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Date Posted: 10-Aug-2011

Sudhir Kale, Ph.D. is Professor of Marketing at Bond University on the Gold Coast in Australia. He is also the Founder of GamePlan Consultants, a company that advises casino companies on ethical ways with which to develop customer relationships and maximize customer lifetime value. You can write to Sudhir at skale@gameplanconsultants.com, or visit his website: http://www.gameplanconsultants.com.