Customer Satisfaction — Interpretation and Recommendation

Stated versus Derived Importance

Customer Satisfaction - Stated versus Derived Importance. Example - air travel.

Exhibit 6.10   Air travel: stated importance vs. derived importance.

One might question why we go to the trouble of deriving importance by statistical means. Could we not simply ask respondents to tell us what attributes they consider important? Is there a difference between what respondents claim to be important to them versus what actually drives brand choice?

To appreciate the difference between stated and derived importance, consider the fictitious example in Exhibit 6.10 which pertains to air travel.  In this example, almost all respondents (97%) stated that “safety” was important or very important to them. In contrast the derived importance for “safety” is far lower than that for other attributes. In statistics lingo “safety” does not covary with “overall satisfaction”.

This suggests that while safety is important to respondents, it is not a key driver for customer satisfaction. Customers do not perceive significant differences in the performance of the airlines chosen for this analysis, on the attribute “safety”. It does not differentiate one of these airlines from another.

Features that in our example are high on derived importance include “cabin staff”, “in-flight entertainment” and “competitive fares”. These are the features that differentiate the airlines from one another. Knowing this empowers top management to align their organization to better serve the needs of their customers.


“Firms buy from you for what you are good at (strengths), and despite what you are bad at (weaknesses); for firms that do not buy from you, it is exactly the reverse” — Irwin Gross.

“I will know when our businesses are doing a good job when they can articulate who we should not sell to” — Chuck Lillis, Co-Founder and Managing Partner of LoneTree Capital Partners.

Customer Satisfaction matrix - performance versus derived importance

Exhibit 6.11   Joka Airlines: performance and derived importance matrix.

The chart in Exhibit 6.11 plots the satisfaction rating of Joka Airlines versus the derived importance of the attributes. This visual summary is useful for drawing conclusions, and for making recommendations: What action should Joka’s management take? Which areas should the company prioritize?

It is evident from the exhibit that “competitive fares” is the area of primary weakness for Joka Airlines, and “cabin staff”, “food & beverage” and “check-in efficiency” are its primary strengths.

Recommendations, however, need to be based not only on the knowledge gleaned from the research programme but also on the airline’s market strategy, and the dynamics of the airline business.

In the context of market strategy, we need to know: What segments is Joka Airlines targeting? How does it differentiate from competitors? How is it positioned in the minds of its target customers?

If for instance, Joka’s strategy is to offer a premium service with superior in-flight facilities; in that case the results suggest the airline’s image is fairly well aligned, though there is scope to improve on in-flight entertainment.

The quotes by Irwin Gross and Chuck Lillis emphasise the importance of knowing your strategy and staying true to it. If Joka Airlines chose to drop fares in light of its weakness on “competitive fares”, its margins will become leaner, and the airline may find it difficult to support superior in-flight facilities. The airline could thus lose its points of differentiation.

Joka Airlines does however need to maintain a competitive point of parity on air fares. It may consider adjusting fares if it feels it is unable to negate the competitor’s point of difference on “competitive fares”.

Changing Customer Expectations

Customer Satisfaction - Changing Customer Expectations. Example - convenience stores

Exhibit 6.12   Changing customer expectations and needs in convenience stores.

It is observed that parameters such as overall measures of satisfaction and loyalty index are difficult to move. This is because customer expectations are not static. Their expectations tend to grow, and their needs and preferences too are continually changing.

The convenience stores example in Exhibit 6.12 underscores the dynamic nature of key drivers. As their reliance on the channel grows, c-store shoppers in Singapore are driven more by features pertaining to quality, variety and availability of produce as opposed to basic needs such as comfort, cleanliness and hygiene.

From the standpoint of target setting, it is important to appreciate that maintaining a relatively high loyalty index is a fairly good achievement and that despite well-conceived initiatives, overall measures and indices such as loyalty index are hard to move.

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