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Customer Needs and Customer Satisfaction

Chapter · April 2016

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Ramees Rahman. M Safeena p k

Central Marine Fisheries Research Institute Central Marine Fisheries Research Institute
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Customer Needs and Customer Satisfaction
Ramees Rahman M.* and Safeena P.K.
Senior Research Fellow, SEETTD, CMFRI 43
Email*: [email protected]

Introduction

Customer needs and customer satisfaction can be considered as something that is at

the centre of every successful business. Every business needs a reason for their
customers to buy from them and not their competitors. This is called a Unique Sales
Proposition (USP). Your USP can be identified by completing the phrase "Customers
will buy from me because my business is the only...". Your USP can change as your
business or your market changes, and you can have different USPs for different types
of customer. Any USPs is important because they are driven by what the customer
looks for when making a buying decision. It’s very important to review our USP as
well as the competitor’s USP to win the market.

Customer

A customer can be defined as the person/organization who buys goods & services. He
is the most important asset of any organization. Customers will expect to be given
accurate and reliable information about products and services. Customer service is
an organization’s ability to identify and supply their customers’ wants and needs.
How important a customer is to a business can be well identified with help of some
famous quoting.
‘’There is only one boss. The customer and he can fire everybody in the company
from the chairman on down simply by spending his money somewhere else’’- Sam
Walton (founder of wal-mart).
‘’ The purpose of a business is to create and keep a customer’’ – Peter Ducker (an
Austrian-born American management consultant, educator, and author)

Customer Needs

Customer needs can be defined as the problems that customers intend to solve with
the purchase of a good or service2. Steve Jobs, CEO of Apple Inc., once said, ’’Get
closer than ever to your customers. So close that you tell them what they need well
before they realize it themselves’’. Knowing the customer and his needs is most
important for a successful business. The more you know about your customers, the
more effective your sales and marketing efforts will be. Customer needs can be
assessed by analysing the factor such as who they are, what they buy, and why they
buy it. The major heads that a business firm has to be aware about its customers can
briefly pointed as follows1:

1. Who they are: A firm must be aware of the gender, age, marital status and
occupation of the customers, if it is the firm should be aware of the selling its
product directly to individuals. The firm should be aware of the size and kind of
business, If it is selling to other businesses
2. What they do: It's worth knowing the occupations and interests of the
customers as well as the aim of the businesses, to which the product is sold.
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 Ramees Rahman M. and Safeena P.K.

3. Why they buy: If you know why customers buy a product or service, it's easier
to match their needs to the benefits your business can offer.
4. When they buy: A business can massively increase its chances of success if it
approaches a customer just at the time they want to buy.
5. How they buy: For example, some people prefer to buy from a website, while
others prefer a face-to-face meeting.
6. How much money they have: A business can be more successful if it can
match its offering to what it know its customer can afford.
7. What makes them feel good about buying: If you know what makes them
tick, you can serve them in the way they prefer.
8. What they expect of you: For example, if your customers expect reliable
delivery and you don't disappoint them, you stand to gain repeat business.
9. What they think about you: If your customers enjoy dealing with you, they're
likely to buy more. And you can only tackle problems that customers have if you
know what they are.
10. What they think about your competitors: If you know how your customers
view your competition, you stand a much better chance of staying ahead of your
rivals.

The requirements of a customer can be further categorised in to three;

 Normal Requirements – requirements typically what one gets by just

asking customers what they want.

 Expected Requirements – these are the obvious / compulsory

requirements. For example, if meal is served hot, customers barely notice it. If
it's cold or too hot, dissatisfaction occurs. Expected requirements must be
fulfilled.

 Exciting Requirements– These are beyond the customer's expectations. If

provided, customer would be excited. If not ,they would hardly complain

Customer satisfaction

Customer satisfaction can be defined as a marketing term that measures how

products or services supplied by a company meet or surpass a customer’s
expectation.According to J. Willard Marriott, the founder of Marriott corporation,
‘’Customer needs may vary, but their bias for quality never does’’.
Customer satisfaction can be used as a metric to manage and improve the businesses
and hence it is very important for the marketers and business3. It can also be defined
as "the number of customers, or percentage of total customers, whose reported
experience with a firm, its products, or its services (ratings) exceeds
specified satisfaction goals"4.
The top six reasons which makes customer satisfaction much important can be
briefly explained as follows3.

1. It’s a leading indicator of consumer repurchase intentions and

loyalty: Customer satisfaction is the best indicator of how likely a customer will
make a purchase in the future. Asking customers to rate their satisfaction on a scale
of 1-10 is a good way to see if they will become repeat customers or even advocates.

Analysing the customers perception is your reality

260
 Customer Needs and Customer Satisfaction

Any customers that give you a rating of 7 and above, can be considered satisfied, and
you can safely expect them to come back and make repeat purchases. Customers who
give you a rating of 9 or 10 are your potential customer advocates who you can
leverage to become evangelists for your company. Scores of 6 and below are warning
signs that a customer is unhappy and at risk of leaving. These customers need to be
put on a customer watch list and followed up so you can determine why their
satisfaction is low. Hence, satisfaction is one of the leading metrics businesses use to
measure consumer repurchase and customer loyalty.

2. It’s a point of differentiation: Businesses who succeed in the cut-throat

environments of a competitive market are the ones that make customer satisfaction a
key element of their business strategy. Companies who offer amazing customer
experiences create environments where satisfaction is high and customer advocates
are plenty.

3. It reduces customer churn: An Accenture global customer satisfaction report

(2008) found that price is not the main reason for customer churn; it is actually due
to the overall poor quality of customer service. By measuring and tracking customer
satisfaction you can put new processes in place to increase the overall quality of your
customer service.

4. It increases customer lifetime value: A study by Info Quest found that a

‘totally satisfied customer’ contributes 2.6 times more revenue than a ‘somewhat
satisfied customer’. Furthermore, a ‘totally satisfied customer’ contributes 14 times
more revenue than a ‘somewhat dissatisfied customer’. Satisfaction plays a
significant role in how much revenue a customer generates for your business.
Successful businesses understand the importance of customer lifetime value (CLV).
If you increase CLV, you increase the returns on your marketing dollar.

5. It reduces negative word of mouth: Customer satisfaction is tightly linked to

revenue and repeat purchases. What often gets forgotten is how customer
satisfaction negatively impacts your business. It’s one thing to lose a customer
because they were unhappy. It’s another thing completely to lose many other
customers because of some bad word of mouth. To eliminate bad word of mouth you
need to measure customer satisfaction on an ongoing basis.

6. It’s cheaper to retain customers than acquire new ones: This is probably
the most publicized customer satisfaction statistic out there. It costs six to seven
times more to acquire new customers than it does to retain existing customers. Some
major customer retention strategies such as blogs (to educate customers), email (to
send special promotions), customer satisfaction surveys, Delight customers by
offering personalized experiences, etc can be carried out.

How to increase customer satisfaction?

In a business world where customer acquisition costs are sky-rocketing, small and
medium businesses must focus on building a customer experience to increase
customer satisfaction. Some of the ideas are pointed below:

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 Ramees Rahman M. and Safeena P.K.

a. Treat your customers like they are your boss:

 Thank all your customers for their business

 Go out your way to help customers
 Try to impress your customers as if you want a pay raise
 Think about your paycheck every time you talk to a customer
 Keep your promises and integrity
 Focus on measuring customer satisfaction

b. Build customer loyalty to increase customer satisfaction: According to

Jeffrey Gitomer, the eminent American author and business trainer, ’’Customer
satisfaction is worthless whereas Customer loyalty is priceless5. Businesses should
focus their efforts on creating loyal customers that are sticky and not easily
influenced by competitors.

c. Avoid making these customer retention mistakes: No business is

immune to unhappy customers. In fact, even companies with the best customer
service in the world will still lose up to 9% of their customers to competitors by
ignoring customer feedback, taking customer feedback to personally, or using long,
boring customer feedback surveys.

d. Set customer expectations early: Setting expectations too high, making

ridiculous promises to push a deal over the line, etc are the common mistakes that
kills the customer satisfaction. There’s no better feeling than as a customer to have
your expectations exceeded.

e. Learn how to survey your customers the right way: A customer feedback
survey is the best way to find out how satisfied your customers are, find ways to
improve your product or service, and identify customer advocates who really love
your product. A quick and relevant survey will help increase survey response rates.

f. Tap into social media to track and monitor customer satisfaction so

you can keep your customers happy: Social media provides a great opportunity
to increase customer satisfaction. Use social media monitoring tools to keep track of
positive and negative feedback, and resolve them accordingly. It can also be used to
monitor brand mentions and sentiment, as a customer support channel, and to hold
Q&A sessions with customers.

Conclusion

Understanding the customer’s situation and need together with the right offering of
products leads to high customer satisfaction and in turn a better running business.
Bridging the gap between a firm's internal quality improvements and external
measures of customer needs and satisfaction is an important aspect for the success of
a business. In view of these facts, it is not surprising that there is much importance in
understanding the link between customer needs and customer satisfaction which
affects the profitability of a business.

Analysing the customers perception is your reality

262

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