Thursday, July 17, 2008

Multi-dimensional Customer Satisfaction - part 6

As this series of blogs has progressed, I have discussed the differences in perception from different organizations within a customer company. A further discussion was given which showed that these differences could be viewed individually within a company or from a more macro perspective by combining satisfaction scores from similar organizations to indicate differences by type of organization. For example, there may be a consistent difference between the satisfaction level indicated from operations and the satisfaction level indicated from purchasing among all the companies in a customer base. Several ways were discussed for combining the scores from the different organizations. After considering the use of an arithmetic average or a weighted arithmetic average, the use of a customer contact model was discussed.

I have concluded that the most rational way to combine satisfaction scores from various organizations is to use the customer contact model. The logic used to conclude that the customer contact model was the best way to combine satisfaction scores is based on the validity of the research performed to validate the model and an intuitive sense that this seemed to be the “best” way of those examined. (I continue to review the literature for better methodology but have not yet discovered one). This blog will take the values of the customer contact model and discuss various ways of combining the three components of customer contact; namely, time, information quality and information quantity.

The Scenario

In my last blog there were three different customer contacts evaluated. The sales contact was made by a salesperson and was presumably with the engineering department. The service contact made by a field service engineer and was presumably with the operations department and the accounts receivable contact was made by a person from the accounting department and was presumably with the purchasing department or the accounting department. In each case the customer contact was evaluated using the scoring system developed in the blog. The scores are shown in the following table.

Contact time information quality information quantity
Engineering 60 3 3
Operations 45 4 2
Purchasing 10 5 4
*Note - see preceding blog for a definition of each of the contact components.

The scores in the table can either represent average values from multiple contacts with each department or from values of a single contact each from sales, service and accounting. For example, the 60 minutes of time that sales spent with Engineering department personnel shown in the table above may be the average time spent for 5 different sales calls. Likewise, the scores of 3 for quality of information and 3 for quantity of information may be the average value for each of these two components from the same 5 sales calls. Since most companies have on-going contacts with their customers, it is most likely that the scores in the table will represent average values resulting from multiple contacts with the customers. It is important to note that since these values may be averages or even individual contact values, they will change with time.

Each of the customer contact component scores for time, quality of information, and quantity of information are the result of applying the scale for each component to each customer contact by the employee making the contact. Thus, following each customer contact the employee needs to score the contact for the three components. From the data base of customer contact scores, the table shown above can then be created.

Step 1 - Combining the Three Components

The first step to combining the scores for the three departments (Engineering, Operations, and Purchasing) into a single score is to combine the component scores for each department. There are many ways to combine the three component scores of time, quality of information and quantity of information. The key is to develop a method which is both easy to use and which will dramatically differentiate high levels of satisfaction from lower levels of satisfaction. In other words, the method should highlight differences in satisfaction levels rather than diminish the differences. While there may be a “best’ method, the method should be chosen that works “best” for you.

I suggest using the method of multiplication. This method simply multiplies the three scores together to get the combined score. The score for sales in their contact with Engineering would be 60 x 3 x 3 or 540. Similarly, the score for the service contact would be 45 x 4 x 2 or 360 and the score for the contact with Purchasing would be 10 x 5 x 4 or 90. Thus, the three customer contacts would yield contact scores of 540 for the sales contact, 360 for the service contact and 90 for the accounts receivable contact.

Notice that this method puts a much greater emphasis on sales and service when compared to the accounts receivable organization. This difference tracks my own personal experience which is why I favor this method of combining scores. Another simple method is to add the scores for each organization rather than multiply them together. If this method had been used the scores would have been 69, 51 and 19 respectively for sales, service and accounts receivable.

It is clear that both of these methods are sensitive to the values of the numbers used in the scales. In particular, time has a much broader scale than the other two components and hence can drive the results. If this is satisfactory, then you can proceed to the next step. If you have a further concern that the time measure should not have that much influence, the time scale can be adjusted to a Likert scale in the same manner as the other two components. Thus, the time component would have the same 1 to 5 scale as quality of information and quantity of information. Using this method of equal scales for each component, all three components would have equal weight.

Step 2 - Combining the Three Department Measures

Now that each department has a single score, the next step is to develop a weight. The weight will be used to determine the combined satisfaction level from the three separate satisfaction measurements taken (Engineering, Operations, and Purchasing). The method of choice for me is a weighted average. Each satisfaction score will be weighted according to the proportion of customer contact value computed in the previous step. To demonstrate this calculation use the customer contact scores noted in the previous paragraph for each person within the customer company; namely 540 for the sales contact in Engineering, 360 for the service contact in Operations and 90 for the accounts receivable contact in Purchasing. The combined scores for the three contacts is 990 (540 + 360 + 90). From these numbers the weight given to the customer contact in Engineering is 540/990 or 0.545. Similarly, the weights for Operations and Purchasing are 0.364 and 0.091, respectively.

Step 3 - Computing the Customer Satisfaction Score

With the weights calculated in the previous step, the satisfaction calculation can be made. In an earlier blog in this series, I noted the satisfaction levels for Engineering, Operations and Purchasing as 9.2, 8.3 and 8.8, respectively. When the weights noted above are applied to these individual satisfaction scores, the combined score is calculated as
Satisfaction = (0.545 x 9.2) + (0.364 x 8.3) + (0.091 x 8.8) = 8.84
Thus, the satisfaction measured from three different perspectives within the customer organization can be combined to yield a composite score for the customer.
Next blog, I will address how to interpret this composite measurement of satisfaction and how to use it.

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