UNIT - I

Relationship Marketing
Relationship marketing refers to those marketing activities that are aimed at developing and managing long-
term relationships with the customers. The details about the customer, his buying patterns, contacts, etc. are
maintained in a sales database and an account executive is assigned to fulfill the needs of the customers and
maintain the relationships successfully. Relationship marketing recognizes the value of a customer and the
significance of keeping good relations with him. Improvement in communication technology has created newer
methods of maintaining interactive relations with the existing and potential customers. Nowadays, many firms
store the birthdays and anniversaries of the customers in their database and contact to wish them on those
days. Relationship marketing is attracting, maintaining and enhancing customer relationships. Servicing and
selling existing customers is viewed to be just as important to long-term marketing success as acquiring new
customers. Good service is necessary to retain the relationship. Good selling is necessary to enhance it.

Examples of relationship marketing

There are several types of activities brands can use to facilitate relationship marketing, including:

-Provide exceptional customer service, as customers who are consistently impressed by a brand’s customer
service are more likely to remain loyal to the brand.

-Thank customers through a social media post or with a surprise gift card.

-Solicit customer feedback through surveys, polls and phone calls, which can create a positive impression that
customer opinions are valued and help to create better products and services.

-Launch a loyalty program that rewards customers for their continued patronage.

-Hold customer events to connect with customers and build a community.

-Create customer advocacy or brand advocacy programs to reward customers who provide word-of-mouth
advertising on a brand’s behalf.

-Offer discounts or bonuses to long-time or repeat customers.

Relationship Marketing – Why Relationship Marketing?

1. The ability to replicate physical products at lower costs facilitated price undercutting by domestic and
international competitors. This encouraged many manufacturers to augment their physical products with
services in order to compete and even to survive. Many large firms have been transformed from predominantly
manufacturing organisations into predominantly service organisations by bundling services with products.

2. The need to keep existing customers became a priority in the face of intense competition and the higher
comparative marketing costs of acquiring new customers.

3. Increased competition and deregulation in many service-dominated industries resulted in concentration on

service quality as a means of achieving a competitive advantage.
What is CRM?
Customer relationship management (CRM) is a mixture of practices, strategies, and technologies that
businesses use to manage and analyze customer interactions and data all over the customer lifecycle. So, It
helps businesses to improve a relationship with their existing customers and creates customer loyalty and
retention. After all, customer loyalty and retention are qualities that affect a company’s income. Hence, It is a
management strategy that helps in increasing profit for a business. Meanwhile, It helps businesses improve
customer experience, satisfaction, retention, and service.

Customer relationship management (CRM) first gained prominence in the early 1990s. It refers to the holistic
approach that organizations can take to manage their relationships with their customers, including policies
related to contact with customers, collecting, storing, analyzing customer information, and the technology
needed to perform these tasks.

CRM Software
Hence, Nowadays, Customer relationship management is done by some software and applications, and it is the
biggest software market in the world. So, CRM software is a tool to bring your sales, marketing, and customer
support activities together, and simplify your process, policy, and people in one platform. It also helps you to
manage the relationship between team members, vendors, partners, and collaborators. So, Customer
relationship management software takes data from communication channels, the company’s website,
telephone, email, live chat, marketing materials, and social media. Hence, It enables businesses to learn more
about their target audience and develop the best product according to their customers’ needs and desires.
Also, Through the CRM system, companies stay connected to customers, processes, and improve profitability.

Need and Importance of CRM:

1. Better service to customers: CRM provides more avenues for customers to communicate and explain
their needs to the organization through numerous contact points. Customers get increased satisfaction and a
feeling of being special and important because of the increased personalization of services and customization
of goods offered to them. For example, ICICI Bank maintains a list of priority customers and provides them with
additional facilities and special offers such as free tickets to concerts, movies, and so on. Some banks, such as
Syrian Catholic Bank provide personalized services to their important customers.

2. Customization of market offerings: Companies can customize a product or service depending on the
data available with the firm. The firm can facilitate customer-company interaction through the company
contact centre and web site. Such interactions help develop customized products.

3. Reduction in the customer defection rate: CRM emphasizes on training and development of the
employees to become more customer oriented. Due to CRM training and development, employees show care
and concern towards the valuable customers; therefore, the customer defection rate may be reduced to a
great extent.
4. Increase and improvement in long-term relationships: Some firms treat their customers as
partners. Firms solicit the help of the customers to design new products or to improve their services. If the
customer gets involved with the firm, they are more likely to remain with the firm.

5. Increase in customer equity: CRM increases customer equity. Firms focus the marketing efforts more
on the most valuable customers (MVCs). The main aim of CRM is to produce high customer equity. Customer
equity is the sum of lifetime values of all customers. More focus on MVCs will enable a firm to increase the
customer equity.

6. Competitive advantage: The firms that adopt CRM get competitive advantage in the market. They can
face the competition with much ease. Competitive advantage helps in generating higher returns on investment .

7. Building and maintaining corporate image: The image of the firm also gets enhanced. Loyal
customers become evangelists. The evangelists spread a good word about the company and its products. This
enables a firm to get additional customers to its fold.

8. Higher return on investment: Due to CRM, a company gains a position to generate higher returns on
investment. This is because of the repeat purchases on the part of the loyal customers. The company also
makes money through cross selling. The higher return on investment increases the shareholders’ value.

What are the types of CRM?

While all those benefits apply on some level to just about any CRM, customer relationship management
includes a large category of tools. Different CRM products vary in terms of features and focus, and they can be
divided into three main categories.

1. Collaborative CRM systems

A top focus of collaborative CRM systems is breaking down silos. Often the marketing team, sales reps, and
customer support agents are all in different departments that feel disconnected. And for bigger organizations,
each of those departments is further separated based on factors like geographic locations, channels they serve,
products they focus on, or skill specialties. But in order to provide a seamless customer experience throughout
the customer’s journey, you need a way to share information across the full organization in real-time.

Collaborative CRMs ensure all teams have access to the same up-to-date customer data, no matter which
department or channel they work in. Not only does customer support have all the information marketing and
sales teams collected when working with a prospective customer, but agents in a call center have updated data
on customer interactions that happened over email.

That integration between departments and channels saves customers from the dreaded experience of
repeating themselves each time they talk to a new contact. Each employee they interact with can quickly and
easily pull up a record of all past interactions with the consumer to consult and learn all relevant details.

2. Operational CRM systems

Operational CRMs help streamline a company’s processes for customer relationships. They provide tools to
better visualize and more efficiently handle the full customer journey—even when it includes a high number of
touchpoints. That starts from their first interactions with your company’s website, through the whole lead
management process as they move through the sales pipeline, and continues with their behaviors once they’ve
become a customer.

Operational CRM systems typically provide automation features. Marketing automation, sales automation, and
service automation offload some of the work that your employees would otherwise have to handle. That opens
up their schedule for the more creative and personal aspects of their jobs—the stuff that needs a human touch.
And it makes it much easier for growing companies to continue to provide top-notch service to scale.

3. Analytical CRM systems

Analytical CRMs have the primary focus of helping you analyze the customer data you have to gain important
insights. Digital tools and platforms now make it easy to collect large quantities of data. But data analysis—the
step required to turn that data into something useful for your company—is a difficult feat. In fact, estimates
suggest that over half of the data collected by companies never gets used.

Your customer data is too valuable for that. An analytical CRM provides features that help you use the data you
have to see trends in how your customers behave. With that information, you can better understand what
steps lead most successfully to sales, which increase customer retention, and what the most common customer
problems are.

Factors responsible for the growth of CRM

1. Top Management Commitment and Support: Top management involvement in the CRM
implementation plan has been identified in almost all success factors studies as a crucial factor that ensure the
successful implementation of CRM. Considering the scope of CRM implementation as an enterprise-wide
strategy requires a full support by the top level of the organizational structure. The role of board level is
essential in backing the CRM implementation process and securing required amount of financing for putting
CRM projects into action.

2. Define and Communicate CRM Strategy: A clear definition of the CRM strategy and alignment of this
strategy to the company’s strategy would facilitate the transition of changing work structure and environment
toward customer-centric approach. The absence of a clear CRM strategy or the lack of developing such a plan
could cause the failure of CRM implementation. Additionally, publishing the strategy to the staff is required to
raise their awareness of the CRM objectives, implications, and benefits.

3. Culture Change: In order for CRM to succeed in realizing its objectives, organization should develop a
culture where all staff are encouraged to share and learn from new work structure and information that is
based on customers. Expected resistance of new ways of conducting work tasks within the organization’s
culture should be addressed and minimized.

4. Inter-Departmental Integration: From s strategic perspective CRM implementation has an

organization-wide influence. Different functions and departments of the organization should be integrated and
connected with a structure that support the flow of information. Although all aspects of the organization
should be integrated, a special consideration should be devoted to functions that have direct interaction with
customers such marketing, sales, and services. Such integration is required to deliver a unified view of the
organizations and its products to the customers.

5. Skillful Staff: Employees play a key role in the success of CRM projects. Issues of the nature of learning
new work systems, training programs, change resistance, willingness to share information, and motivating staff
should be taken to consideration.

6. Key Information on Customers: Acquiring and analyzing the right quantity and quality of information
on customers helps to meet customer’s needs. The right information is the base for designing customized
products and services.

7. Manage IT Structure: Considering CRM as only a technological solution is a vital misconception that
resulted in increasing failure of CRM projects. Nevertheless, IT is an enabler for acquiring and managing
valuable data on customers. Technological aspects such as data warehouse capabilities and software
configuration in addition to the influence of the internet are crucial for CRM successful implementation

8. Customer Involvement: Direct and indirect Involvement of customers in CRM designing is a tool for
strengthening practical CRM. Such an involvement helps the organization to analyze the customer relationship
life cycle and consequently find the areas of problems that can be managed by CRM. Furthermore, customers’
acceptance and interaction with CRM systems could be enhanced by involving those customers in building CRM
systems.

Customer Relationship Management accomplishes the complete set of activities ranging from customer
acquisition and retention to service. This cycle of customer-related activities is termed as CRM cycle, and
Deskera CRM comprehensively covers the entire set of it.

CRM Cycle
Customer Relationship Management accomplishes the complete set of activities ranging from customer
acquisition and retention to service. This cycle of customer-related activities is termed as CRM cycle, and
Deskera CRM comprehensively covers the entire set of it.

The CRM cycle basically consists of four stages – Marketing, Sales, Product, and Support.

•Marketing Stage – In this stage of CRM cycle, the basic focus is to identify customers by running various
marketing campaigns (such as emails, blogs, advertisements, and more), create the database for Account
(pertaining to Organization) and Contacts (pertaining to individuals), and finally generate leads by analyzing the
gathered customer data.

•Sales Stage –In the Sales stage, basic focus remains on leads. They are the individuals who have expressed
some kind of interest in your product offering. ‘Leads’ are further categorized into Open, Contacted, Qualified
and Un-qualified. Deskera CRM offers a functionality to convert ‘leads’ into ‘opportunity’ for carrying out
further sales activities.
•Product Stage – In this stage of CRM cycle, the basic focus is on delivery of product. Deskera CRM offers
Product Management functionality that captures details about the product price, vendor, and description,
among others.

•Support Stage – During Support Stage, the primary focus remains on resolving customer issues and providing
customer support. In CRM terminology, this function is known as Case Management.

To conclude, CRM cycle provides insight into various stages of Customer Relationship Management from
customer acquisition to retention and service. CRM cycle lays down the roadmap for how the business can
connect with their customers efficiently and serve them more effectively.

Building relationship with multiple stakeholders

A well-developed stakeholder communications plan is essential for building positive stakeholder relationships.
However, this leads to the question, what is an effective engagement strategy? The key is to find a balance and
ensure the right tactics suit the appropriate stakeholders. If you get the process right, then your stakeholders
will champion your project. They will help your project reach positive outcomes and people will be more
accepting of your decisions. Fail to create effective stakeholder management and your project may end up
costing your thousands, millions or even billions of dollars more. In this article, I’m going to outline several
factors to help you maintain strong relationships with stakeholders.

1. Group your stakeholders : More often than not, stakeholders will fall into two groups. Those who:
Have a vested interest in the project

Are affected by the project outcomes

These two groups can be further split into those:

Directly involved in the project

Who have influence over decisions

Who need to stay informed about the process and decisions

Grouping your stakeholders according to their level of decision-making will make it easier to develop a tailored
approach to engaging each group.

2. Clearly communicate your project scope: Tell your stakeholders the process you will use to
communicate information to them right from the start. Also, clearly explain how you will engage with them in
decisions. People are more willing to listen when you tell them their influence over the final outcome, the
decision-making process, what is negotiable and what is not.

3. Gain your stakeholders trust right from the start: Stakeholder relationship management includes
communicating with people early and often so they fully understand the benefits of your project. Having an
understanding of a situation means people are more likely to support you when necessary. It also means even
if stakeholders don’t agree with the final decision, they have the benefit of understanding the process, history
and the trade-offs made. Therefore, they will be less likely to aggressively object at the final stage. Social
Pinpoint’s article about taking the community along the journey outlines the different factors of why it’s
important to engage right from the start.

4. Stay consistent with your messaging: Confusing your stakeholders is incredibly dangerous.
Inconsistent messaging can lead to public outrage, loss in trust, and a negative reputation. Your stakeholders
value consistent messaging and want to know they can rely on you for the most current and up-to-date
information. If there is a hurdle to overcome, your stakeholder will be more willing to help overcome the
problem rather than blame the issue for coming up. For more information, have a look at a recent we wrote an
article about consistent messaging to your stakeholders.

5. Meet up with stakeholders who are resistant to change: Wouldn’t the world be a much nicer
place if we all agreed on everything? Unfortunately, if it were true, we would lose creativity, innovation, and
uniqueness. All projects will include people who love, hate or want to shape or want to mould the project idea.
It’s our job to find a way to balance these differing views. One of the worst things that can happen is you’ve
gone through your engagement process, made a final decision and then you receive angry phone calls and
emails about the project outcomes. To prevent this from happening, it’s important to regularly meet with key
stakeholders who are resistant to change. The meeting could be in person, by email or through a phone-call.
Involving stakeholders in decisions and listening to concerns re-emphasises the benefits of the potential
change.

In the instance where stakeholders are resistant to change, it’s important to discuss the project scope. Some
things aren’t negotiable and it’s important to show stakeholders what influence they do have to shape the
project. Social Pinpoint’s article “Four Ways to Help your Community Embrace Change,” is a helpful guide to
managing stakeholder conflict and building positive stakeholder relationships.

6. Use data management systems to summarise key information : It all comes down to the power
of reflection. If you have a meeting with a stakeholder then write a summary of the event. What was the
meeting about? What were the key findings? Are there any actions? When is the next meeting? Use your data
management system to its full potential. Here’s one of our recent CM articles about categories to consider
when creating a profile, which outlines what information you might want to include in your summary notes.

7. Keep surprises to a minimum: Some of us love surprises but placing your stakeholders off-guard can
result in a huge mistake and can cost you from building positive stakeholder relationships. Most stakeholders
like to be given an early view of risks and issues. However, this doesn’t mean you need to present every issue
as it occurs. Go into the meeting solutions-based rather than problem-focused. Create various options to
resolve the issue and then ask stakeholders to add their input to create an informed decision about the next
step.

UNIT – II
Customer Satisfaction
Meaning : Customer satisfaction indicates the fulfillment that customers derive from doing business with a
firm. In other words, it’s how happy the customers are with their transaction and overall experience with the
company. Customers derive satisfaction from a product or a service based on whether their need is met
effortlessly, in a convenient way that makes them loyal to the firm. Hence, customer satisfaction is an
important step to gain customer loyalty. Organizations calculate the customer satisfaction score (CSAT), which
is the average rating of a customer’s responses, the net promoter score (NPS), which indicates the probability
that a customer refers a brand to another person, and the customer effort score (CES), which indicates how
easy it is for a customer to do business with a firm. The customer satisfaction metrics are then used to estimate
consumer behavior.

Importance of Customer Satisfaction

1. Repeat customers: Satisfied customers are likely to purchase from you again. One easy way of knowing this
is through customer satisfaction surveys. Ask them to rate their satisfaction levels on a scale of 1 to 10 and see
who will be happy to purchase from you in the future. Customers that rated you 7 or more are satisfied and are
likely to engage with your business again. A score of 6 or below is cause for concern; these customers are
unhappy with you and are a huge attrition risk. Customers that rated 9 or 10 are your biggest advocates and
most loyal customers. You may use them to promote your brand and improve your CSAT scores.

2. Competition differentiator: Customer satisfaction is the key to making or breaking brands. In this
competitive world of a huge number of brands, customer satisfaction has to be focal to your customer strategy.
No amount of marketing campaigns and promotions will help you if your customers are not satisfied. Brands
that have low levels of customer satisfaction are likely to perish in the future. Brands that have advocates are
far likely to do better than brands that do not. You will have brand advocates when you have satisfied
customers. So, as you see, it all begins and ends with customer satisfaction.

3. Reduce customer churn: Contrary to popular belief, pricing is not the main reason for customer churn. Yup,
you guessed it right; it’s customer service. We know of several brands that have a huge customer base despite
high prices. You can use customer satisfaction scores and inputs from your CSAT surveys to improve upon your
customer service processes. Poor customer service quality will hurt you and cost you customers in the long
term. Seek continuous customer feedback to track your progress and routinely share it with your customer
service reps.

4. Decrease negative word of mouth: According to McKinsey’s research, an unhappy customer will tell about
their experience to anywhere between 9-15 people. Considering the number of dissatisfied customers you may
have, that’s a lot of negative press. This will directly impact your business revenue and brand reputation.
Repeat business rides on customer satisfaction, and unhappy customers are detrimental to your business.
There will always be customer churn, but you do not want to lose customers based on bad word of mouth.
Conducting regular CSAT surveys will help you measure customer satisfaction and identify factors that may be
hampering your CSAT scores.

5. Retaining customers is cost-effective: The cost to acquire new customers is 6-7 times more than retaining
your current customers. This puts into perspective how vital customer satisfaction is. Rather than spending
huge amounts of money on acquiring new customers, spend a fraction of it on improving your existing
processes and systems to retain customers. This will go a long way in saving costs and growing your business
revenue.

6. Customer loyalty: When your customers are satisfied, they believe in the brand and become loyal. These
loyal customers give brands repeat business and form a major part of the revenue. Losing customers takes a
huge toll on your business revenue and customer churn numbers. Adobe’s report said loyal customers spent
67% more than new ones via repeat orders, upsells, etc. Add to this the positive word of mouth to friends and
family from your loyal customers, and it really starts to add up. Satisfied existing customers feel they can
promote the brand to their loved ones for the great experiences they’ve had.

7. Support pillars: Satisfied customers are more likely to stand by in times of crisis; they care for the brand and
want to see it thrive. This has been observed in many cases for big brands such as McDonald’s, when there
rumors of caterpillars in their foods. They trust the brand and are understanding of any shortcomings or crisis
that may befall them.

8. Sales revenue: Brands focussing on customer satisfaction actively have healthy sales revenue. They do not
lose old customers and have a steady revenue stream from repeat business. Customer satisfaction and
increased revenue are directly correlated. Satisfied customers stay loyal to your brand, interact with it, buy
ofter, and make recommendations to their colleagues, friends, and family. Run online customer surveys to note
which areas are impacting customer satisfaction negatively and need improvement. This will help improve
customer satisfaction and reduce customer churn.

9. Boost brand reputation and popularity: Customer satisfaction impacts brand reputation and popularity. See
customer feedback and figure out which areas could be improved and improve satisfaction. Is it accounts or
customer service? Don’t be afraid to ask your customers; honest feedback will help manage expectations and
act accordingly. Famous brands have dedicated teams and initiatives for improving customer satisfaction,
which helps them achieve high sales figures.

10. Reduce marketing expenses: Satisfied customers are your biggest advocates. Their positive word-of-mouth
lends your brand credibility, popularity, and helps acquire new customers. This saves brands a lot of money
that they would spend on marketing and promotional campaigns to acquire new customers.

Components of Customer Satisfaction

In today’s global economy, it is the competition that decides the forces of buyers and sellers. However, the customer-
centric companies are measuring the level of customer satisfaction and factors that sharpen it. The marketing satisfaction
is known as to what is its image that a customer has.

This is possible only when the organisation gets a regular, reliable verifiable feedback from the customers. This calls for,
to repeat the correct measurement of consumer satisfaction and take up appropriate action plan to improve it further.
Any business needs quantitative or quantifiable measurements for what is not measurable is not authentic and verifiable.

Thus, no business house is able to run the business without actual quantitative sales turnover, profitability inventory
position and cash, flow position and the like. As customer is the biggest asset of a business, without him or her, there
cannot be any business.

It is measurement that provides specific information needed by the marketing organisation to steer the company through
uncertainties and troubled water.

Measurement of customer satisfaction provides multi-angled information or feedback, which helps the marketing unit
to en-cash upon. These are business related, customer-related, supplier- related, competitors-related, and
performance related and the like.
The Business Related Provides:
i. Judging effectiveness of its business plan and the extent to which it is customer-centric,

ii. Makes available quantified information on the number of customer lost, the amount of business lost and loss of
business volume and profit caused by customer decay.

iii. Satisfied customer is the extended marketing arm of the marketing organisation

iv. The customers hurt or dissatisfied will spread the facts which are having negative impact on company

v. A single unsatisfied customer can turn the table by poisoning the minds of at least five customers

vi. Only a portion of unsatisfied customers complain while the rest simply switch over to other competitors.

vii. Loss of customer is loss of an opportunity and profitability

viii. Customer satisfaction enhances the image of selling house where premium prices can be charged

ix. It channelizes the organizational resources to bridge the yawning gap in customer satisfaction.

The Customer Related:

i. The number of customers lost

ii. Which customers are lost

iii. Why and to whom they are lost

iv. The value that customer assigns to the product and service being supplied and rendered

v. Customer’s decision making factors and relative weight-age assigned by a customer

vi. Identifying customer needs and wants-and requirements

vii. It helps the marketing organisation to see through the eyes and minds of customers to become customer centric.

The Supplier Related:

i. His strengths and weaknesses and equally of his competitors.

ii. Identification of his core competencies as perceived by the market on which business strategies can be developed by
the organization

iii. Identification of weak areas needing top importance and attention to regain the ground

iv. Image of organisation in different markets

v. Customer’s perception about management organisation

vi. Comparative position of marketing organisation as compared to bench-marking

vii. Success rate of vending house in keeping the satisfied customers.

The Competitors Related:

i. The business lost to competitors with reasons.

ii. The measurement of strengths and weakness of various competitors and changing the strategy accordingly.

iii. The actual position in ascertaining the relative position of competitors to bench mark and to get ready to kill the
competition.

The Performance Related:

i. The opportunities for improving the existing programs, products and services.

ii. The actual cost of customer turnover.

iii. The way the company is performing from the angle of customer.

iv. Sharpness of company’s competitive edge and the ways to improve it.

The Methods to Measure Customer Satisfaction:

Experts have come out with variety of methods to measure customer satisfaction. Which are classed into two groups
as “direct” and “indirect”.

THE DIRECT METHODS are:

(1) Customer Feed-back Surveys

(2) Informal Chat/Interview Visits to market consumer sector.

THE INDIRECT METHODS are:

(1) Measurement of changes in complaints by using transient changes.

(2) Measuring the changes in loyalty by use of transient changes. That is, these relate consumer complaints and consumer
loyalty.

Measurement of Customer Satisfaction

1. Customer Feedback Through Surveys: Surveys are an essential method of measuring the quality of
customer service. It is better to ask your customers directly what they think of your service, rather than just self-
calculations. Initiate different types of surveys on various channels, mostly after the service is provided. Surveys can be
hosted in 3 different ways:

a) In-App Surveys: Customers often tend to ignore such surveys unless they are caught in the action. The best way to get
an honest feedback is while they are availing your services on your app. Initiate a post-purchase or post-service survey.
The response rate is definitely higher and the feedback is most likely to be honest.

However, these surveys should not hinder the customer experience when availing the service. The survey should be short
and precise and smoothly integrated with the application.

b) Post-Call Surveys: The best feedback is received as soon as the interaction gets over. CSAT surveys can be initiated as
soon as the call gets over. The caller can provide the feedback by just pressing a key, which is automatically rolled up to
the supervisor in the CSAT report.
c) Email Surveys: These surveys are for long-time customers who have made repeat purchases. Email them a form-based
study with insightful questions. Keep those questions relevant to the customer’s goal, for better engagement. The
answers are often lengthy; hence the response rate might be low. But let’s not get demotivated! Send out those surveys
Whatever feedback you get is bound to be valuable.

d) Voluntary Feedback: Sometimes customers tend to provide feedback without any nudge from your end. This can be
for various reasons. Either they had a bad experience or an extremely good experience and they want to let you know.
However, an automated response often repels them from further engagement.

Thus, ensure a personalized response or arrange a phone call to understand the customer’s expectation. Furthermore,
positive feedbacks can be recorded as success stories to encourage other customers.

2. Customer Satisfaction Score: The customer satisfaction score or the CSAT score is a universal metric used
to rate a customer's recent interaction with the customer service team. The parameter ranges from 1-5, where the
lowest number denotes highly unsatisfied, and the highest number indicates highly satisfied. The more positive feedback
results in a higher CSAT score.

The CSAT is an elementary method of understanding the quality of your service as it does not indicate any essential
factors from the interaction that took place. More than often, customers vaguely choose either of the options cause the
service was indifferent. However, CSAT should not be eliminated as it is still an essential indicator. Furthermore, other
methods must be employed for a detailed understanding of the customer's expectations.

3. Net Promoter Score: According to a study in 2020, 64% of customers are more likely to recommend a brand to
their friends or families if it offers simpler experiences and communications. The net promoter score or the NPS revolves
around this point.

NPS was introduced to fill in the gaps which CSAT couldn’t. NPS determines how likely a customer will recommend a
particular product/service to their friends. The scale ranges from 1-10 where 1 denotes ‘not at all likely’ and 10 denotes
‘extremely likely.’

NPS is determined upon the basis of an emotionally motivated question. Thus, the response rate is higher and often
unsatisfied customers never miss an opportunity to answer these surveys. Perhaps, utilize this opportunity to retain
certain customers and make an impact on them with unquestionable customer service.

4. Customer Effort Score: The customer effort score, or CES, is a customer-centric approach for understanding
the quality of customer service. Here the customer is asked about the amount of effort he or she had to put to avail the
customer service for getting an issue resolved. Alternatively, it is asked if the organization had made it easier for the
customer to interact with the customer support team. The scale ranges from 1 to 5, where 1 denotes fewer hardships,
and 5 denotes excessive hassle.

The CES is an appropriate parameter to segment customers in the future such that your team can shift their efforts more
towards unhappy customers. Most organizations also add a text box after the customer effort survey so that the
customers can elaborate on the issue, aiding the organization to improve specifically on those fronts.

However, it must be remembered that all of these surveys, alone do not provide any stagnant idea. All the surveys
together can converge into a bigger picture which is much clearer than any standalone factor.

5. Web-Analytics: Analytics is a data-driven metric that works without any direct involvement of the customer.
Web-analytics crawls your website traffic actively, reads the sales funnel, understands the customer behaviour, and
predicts future conversions. In-built attribution models give better insights of touchpoints, most frequently visited FAQs,
and more. These insights, if compiled and utilized smartly, can result in a successful customer service strategy that can be
a crucial differentiator in this economy.

6. Social Media Metrics: Customers are more vocal on the social media, today. They flaunt their purchases
online while dissing the brands who dissatisfy them. Social media is a two-way sword. Keeping that in mind, it can be
used to understand what the customers are saying about your product. Most social media platforms come with a
business account facility that provide an analytics dashboard. Observe your audience and focus on their comments, on
their recommendations. Customer support teams can gather these data and formulate strategies to improve the
satisfaction/engagement levels for better social media presence.

Conclusion: Customer service metrics are the fodder for every business. It is an imperative factor that enables the
process of improvement. Methods for measuring customer satisfaction might vary across industries; however, the above-
stated pointers are the most successful parameters that are used to guide a support team. You cannot improve what you
don't know. Thus, measuring customer satisfaction must be a prevalent practice at businesses of all sizes, irrespective of
industry.

MODELS OF CUSTOMER SATISFACTION

The customer satisfaction literature identifies four model types, which can be used to

determine levels of customer satisfaction. These alternative types are referred to as:

• The Disconfirmation of Expectation Model

• The Performance Model

• The Rational Expectations Model

• The Expectations Artefact Model

1.) The Disconfirmation of Expectations Model

The Disconfirmation Model demonstrates how customer satisfaction is affected by the

combination of the performance of the good/service and the customer’s level of

expectation. It posits that in cases where the performance that a customer perceives is

deemed to be greater than the expectations held, satisfaction will increase. This is

defined as positive disconfirmation. Similarly a perceived performance which is

lower than the customer’s level of expectation, will result in a decrease in satisfaction;

this is negative disconfirmation (Anderson et al. 1994, Oliver, 1993). Satisfaction is

therefore a function of the difference between performance and expectations; ie,

performance - expectations = satisfaction. The Disconfirmation Model indicates a

negative relationship between expectations and satisfaction; it predicts that as

expectations increase, satisfaction will decrease. These expectations held are

recognised as a standard against which performance information is evaluated.

Limitations of the Disconfirmation Model are illustrated by Cronin and Taylor (1992),

who argue that “little if any theoretical or empirical evidence supports the relevance of

the expectations - performance gap as the basis for measuring service”. Jayanti and

Jackson (1991) warn that the satisfaction processes with services may be different

from those of goods and so the Disconfirmation Model may not be appropriate for the

evaluation of a service. Spreng and Mackey (1996) state that “few things are as

fundamental to the marketing concept as the notion of satisfying the needs and desires

of the customer”. This fundamental idea is not sufficiently taken into account by the

disconfirmation paradigm, nor does it utilise it as a determinant of satisfaction.

The Model actually suggests that those involved in managing customer expectations

should try to lower expectations. It posits that this will allow them to offer a better

than expected service, which will then result in increased satisfaction (Davidrow and

Uttal, 1989). There is concern that the Model focuses on the negative aspects of

expectations, rather than on the positive as the performance paradigm does. A firm

which manages customer expectations in this way could also inadvertently lower

performance levels. The end result would then be lower levels of customer

satisfaction. Several authors have proposed models of customer satisfaction

assessment, to address these limitations.

Walker (1995) proposes that the model should incorporate three stages of service

evaluation; namely Pre-consumption, Consumption, Post Consumption. This

addresses the difficulty of the Disconfirmation Model conceptualising satisfaction at a

point in time after consumption. By incorporating these factors the model no longer

recognises the evaluation process as a simple post-usage judgement. These three

separate stages of disconfirmation give a better understanding of the satisfaction

process, and the management of satisfaction. However despite the recognised

inadequacies of the Disconfirmation Model, it remains popular within the literature

and its principal form has provided the basis for other paradigms including the

ServQual model; this paradigm is used to measure service quality, not customer
satisfaction.

2.)The Performance Model

The Performance Model conceptualises the theory that a customer’s perception of a

product or service performance, and their expectations of that performance have a

positive effect on customer satisfaction (Spreng and Mackey, 1996). Performance is

defined as the level of quality of the product, or service, as perceived by the customer,

relative to the price paid. This perceived performance is described as value i.e.

Research instruments in construction management

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benefits received for costs incurred. The greater the ability of the product, or service,

relative to the cost, the more satisfied the customer will be (Parasuraman et al., 1988),

in keeping with the ideal of a value-precept disparity.

Theoretical and empirical support for the inclusion of the direct effect of perceived

performance on satisfaction is provided by Tse and Wilton (1988). They even suggest

that perceived performance may have a stronger effect on customer satisfaction than

expectations. Important information customer expectations are re-evaluated as a

result of more recent performance information. The assessment of satisfaction is then

closely related to expectations. The Performance Model shows expectations having a

direct and positive effect on satisfaction as a result of the part they play as an anchor

in the satisfaction evaluation process. The stronger a customer’s expectation, relative

to performance information, the greater the impact of expectations as an anchor on

satisfaction. Should performance information be the stronger construct, the greater

the relative positive effect will be on customer satisfaction.

The Performance Model also demonstrates a positive effect of expectations on

perceived performance, that is the ability of customer expectations to predict

performance. This is felt to be greatest when customers have a lot of experience with

a performer who is either predictable or has low variance. The extent of the effect

will vary from products to services. Construction Project Management is a complex

and heterogeneous service, with which customers often have a lack of experience. As
a direct result the expectations held by the client of the construction project team will

not be as strongly related to performance as with other services. For this reason this

type of model is not appropriate for application to the construction client - project

manager type of relationship.

3.)The Rational Expectations Model

The Rational Expectations theory proposes that the mean expectations of agents in a

market will be equal to the output of that market. Applying this hypothesis to the

construction client - project manager relationship it can be seen that the expectations

of the construction client would then be equivalent to the project manager’s actual

performance when providing his service (Johnson et al., 1996). The client of the

construction project team will often have expectations which are inaccurate, weak or

non-existent. However it is argued that the expectations of the market as a whole can

be greater than the sum of each individual client’s expectations. The total

expectations of the market are believed to be more rational and accurate. The

Rational Expectations theory then leads to the conclusion that perceived performance

and expectations are no longer needed, that in fact they equal each other (i.e.

performance = expectations), and have a single positive effect on satisfaction.

The first identifiable shortfall of this model can also be seen in the previous two

paradigms. They all assume the customers will have well informed expectations of

performance. In doing so each model fails as a suitable description of customer

satisfaction in terms of the more complex, heterogeneous and infrequently purchased

services such as construction project management. Therefore the Rational

Expectations Model, as with the previous models, cannot be applied as an appropriate

model for the measurement of customer satisfaction in the construction client - project

manager type of relationship.

Construction project management has been equated with the description of an

infrequently purchased service which is characterised by its inexperienced clients who

may have weak, inaccurate or non-existent expectations (Masterman, 1991). This

unique situation has led to the development of a model appropriate to such

circumstances. Fornell (1992) and Johnson et al (1996) put forward such a model,

which describes customer satisfaction in terms of perceived performance and argue

that performance expectations are an artefact of performance and have no effect on

satisfaction. This model is called the Expectations-Artefact Model – and assumes that

the customer has well informed expectations of the service/product.

4.) The Expectations-Artefact Model

Johnson et al. (1996) argue that expectations should not have either a positive or a

negative effect on satisfaction, in a unique service like construction project

management. This is because in this context expectations do not act as an anchor, as

in the Performance Model, or as a standard of comparison, as with the

Disconfirmation Model, in the evaluation of satisfaction. Performance will give rise

to the expectations reported by customers. The Expectations-Artefact Model shows

the direct positive effect of perceived performance on satisfaction, and a positive

relationship between performance and expectations. Expectations are not linked to

satisfaction; this illustrates the fact that this construct does not have an effect upon

satisfaction.

The implications of this Model are simply that to focus on the expectations construct,

as encouraged by the Disconfirmation Model, would be counterproductive to the

improvement of customer satisfaction. The argument that expectations are only a byproduct of the service production
process, and have no effect on customer service,

would make any efforts to meet or exceed customer expectations pointless. Instead

this Model posits that to improve customer service, service personnel should focus on

the improvement of performance.

Gable’s multi-dimensional model

Gable’s Multidimensional Model of Client Success When Engaging External Consultants has been identified as the Model
most appropriate for application to the construction client - project manager relationship. This Model was developed by
Gable (1996) to assess client satisfaction when engaging an external consultant to help with the selection of a computer
based information system. Gable (1996) measured engagement success empirically through a series of case studies
followed by a survey of clients and consultants.

On the basis of his literature review and the case studies, Gable (1996) developed his descriptive measurement model.
This model predicted six important dimensions of engagement success; it also makes a primary distinction between
results, success and performance. Results are based on the improvement in client understanding and the consultant’s
recommendations; these combined with the performance of the consultant provide the three main areas of assessing
engagement success i.e. recommendations, understanding and performance.

Gable (1996) proposes that these areas of assessment be measured by usage/acceptance of the consultant’s
recommendations, change in client understanding and the resource requirements compared with that estimated. These
are objective measures; a subjective measure is also applied to each of the three areas in the form of the client’s level of
satisfaction.

Customer loyalty indicates the extent to which customers are devoted to a company’s products or services and how
strong is their tendency to select one brand over the competition.

Customer Loyalty
Meaning: Customer loyalty is positively related to customer satisfaction as happy customers consistently favor the
brands that meet their needs. Loyal customers are purchasing a firm’s products or services exclusively, and they are not
willing to switch their preferences over a competitive firm.

Brand loyalty stems out of a firm’s consistent effort to deliver the same product, every time, at the same rate of success.
Organizations give special attention to customer service, seeking to retain their existing current base by increasing
customer loyalty. Often, they offer loyalty programs and customer rewards to the most loyal customers as an expression
of appreciation for doing repeat business with them.

Example: A typical example of customer loyalty is Starbucks. The company has managed not only to retain its customers
but also to expand its customer base through exemplary loyalty programs. Capitalizing on the fact that it has created a
successful, recognizable brand worldwide, Starbucks seeks to enhance the customer experience every time, every time,
at the same rate of success. On top of that, the company offers the My Starbucks Rewards customer loyalty program.

Starbucks’ loyalty program features a mobile app that allows customers to pay their coffee with built-in payments. In that
way, customers can pay for their coffee easily and swiftly while reducing the use of credit cards. In turn, Starbucks
compensates them with loyalty points and discounts.

In fact, customer loyalty is built from the company to the customer. The more satisfied the customer, the more like to do
repeat business with a firm. Then, customer loyalty encourages customers to shop particular brands regularly, to spend
more money, to advertise the brand with a mouth-to-mouth advertising and to have a positive shopping experience.

Importance of Customer Loyalty

1.) Customer Acquisition And Retention
2.) Repeat Business
 3.) Cross/Up Selling Opportunities
4.) Reduce Marketing Cost
5.) Minimize Service Cost
6.) Forecast Accuracy
7.) Improve Brand Image
8.) Stand Tall Among Competitors
9.) Honest And Quality Feedback

Factors Affecting Customer Loyalty

There’s no question that the product itself has to be competitive, priced right and deliver superior value. But, beyond the
product itself, several factors can make the difference in, a much sought after, loyal customer.

1. CONVENIENCE: When buying consumer products, many loyal customers stray simply because the store where
they regularly buy your product ran out or doesn’t carry it anymore. They may still prefer your product, but after all,
there are other brands in stock and they don’t have time to chase your product down.

2. EXPECTATIONS: Your product must continue to live up to their expectations in every way. It not only has to
continue to deliver on its brand promise and remain relevant, but its price, value, and availability must continue to be
dependable.

3. CUSTOMER SERVICE: The way your company stands behind its products can be as valuable as the product itself.
A good warranty and swift resolution of issues keep customers, who may have had a disappointing experience, buying
your product.

4. PERSONAL RELATIONSHIPS: The way customers are treated by third parties, such as salespersons, store clerks,
or your own representatives can make or break customer loyalty. Many don’t buy your product so much as they “buy”
the person who sold it to them.

5. REWARDS: Customers want some consideration for continuing to do business with you, especially when they have
other options. Offering savings, bonuses, and other forms of special attention to your loyal customers can not only keep
them from going elsewhere but may be the reason they recommend you to their friends.

6. REPUTATION: How your product plays in the media, both commercial and social, can influence long-term
relationships. Your companies financial, labor, and sourcing practices are now subject to the scrutiny of an increasingly
transparent world where consumers realize that they vote with their purchases.

7. COMMUNITY OUTREACH: When you stand for something beyond your product, when you support the causes
important to your customers, and when you participate in their community, you build a bond of loyalty that is hard to
break. This gives them a social reason to become and remain loyal.

Customer loyalty is a choice every consumer makes daily. The good news is that most customers don’t want to shop. It’s
time-consuming and fraught with anxiety. It’s so much easier and much more comfortable to just stay put – with a brand
they know and trust.