The circle of satisfaction
After completing this module students should be able to demonstrate that they can discuss how satisfaction is estimated, assessed, and evaluated and how episodes of satisfaction may lead to cumulative satisfaction and collective satisfaction and how this may lead to a competitive advantage and ultimately organisational satisfaction
[click on the image to download the module handouts]
In this module, we discuss the third of our mega-marketing concepts – the circle of satisfaction. The circle of satisfaction has its origins in the 1st time zone when the consumer is searching and estimating quality and value [and selecting a product on quality and value expectations], then during the 2nd time zone comes back into play when the customer is experiencing and assessing the total product, however, the circle of satisfaction lives primarily in the 3rd time zone when the customer is reflecting and evaluating the exchange and then forms attitudes that influence future behaviour. At the end of this module readers should recognise how the buyer decision process, the total product, and the circle of satisfaction come together.
This slide identifies 4 types of satisfaction. Often I am asked which is the most important? The reality is they are all important – but in different ways. Take episodic satisfaction if the first episode or encounter with a organisation results in an evaluation of dissatisfaction it is likely that the customer will never return and a cumulative evaluation of satisfaction will never occur. For organisations cumulative satisfaction helps to identify the lifetime value of each customer.
Background to the circle of satisfaction
Once when I was explaining the relationship with satisfaction and organisational success a student asked if I could draw on the whiteboard how I saw it all come together. Up to this point I had always outlined the various academic authors and their contribution – I could see it but clearly the students could not. As I drew what was in my mind’s eye the student stated that it now made sense. That evening at home, whilst watching TV with my family [The Lion King] I formalised it on a PowerPoint slide and Called it the Circle of Satisfaction – in the years since many students and academics have commented how this provides clarity.
Exploding the circle of satisfaction diagram
This diagram brings the interactions of the consumer and the organisation together in the third time zone of the buyer decision process. The starting point is the quality [the sum of the qualities] that the customer receives in an exchange. This becomes and value when quality is evaluated against costs [money, time, and effort]. Value is then evaluated against the expectations that the customer formed in the first time-zone to determine satisfaction. One episode or encounter is termed ‘episodic satisfaction’ [aka transactional satisfaction]. When a customer has more than one episode then they naturally accumulate their evaluations and this is referred to as ‘cumulative satisfaction’. Cumulative satisfaction enables the customer to predict likely organisational behaviour and to feel comfortable with the organisation – we know this as trust [cont. on next slide].
Exploding the circle of satisfaction diagram
[from previous slide]. Trust is interesting as customers who trust an organisation behave differently to the organisations the trust [discussed in a later slide]. However, loyal behavior is directly related to achieving the 3 financial objective of revenue, costs and business value [brand equity]. The loyal behaviour of customers could be thought of as a service the organisation provides to the organisation and it is this service that may lead to a competitive advantage, increased profitability and organisational satisfaction. Just so there is no confusinion the circle of satisfaction is the exploded view of the marketing concept diagram.
5 times more likely
There is some research on satisfaction and organisational success, however, our understanding of the COMP factors reveals that every organisation will vary in the degree to satisfaction will impact the particular business.
One thing is certain
Dissatisfied customers will not return unless there is no other option.
A calculative process
The circle of satisfaction highlights that satisfaction is a calculative process. It will vary from customer to customer, however, there are patterns that need to be considered by marketing practitioners.
The circle of satisfaction explores the outcomes of the interactions between the customer and the organisation. These outcomes may be of a positive or a negative nature. The circle of satisfaction could be described as the bridge that links the buyer decision process and the total product.
The circle of satisfaction describes how consumers enter the buyer decision process with expectations of what the will get and give in an exchange and how they behave according to their evaluation. The circle of satisfaction also looks at the cumulative behaviour of a customer and the collective behavior of all customers. The collective satisfaction of all customers could lead to a compettive advantage [or disadvantage] in the marketplace.
The following is a brief overview of how the 3 mega-marketing theories complement each other:
- The buyer decision process is 80% focussed on the customer and 20% focussed on the organisation
- The total product concept is 80% focussed on the organisation and 20% focussed on the customer
- The circle of satisfaction is 50% focussed on the organisation and 50% focussed on the customer
Episodes may become cumulative
This slide outlines how multiple episodes become cumulative satisfaction. It Is important to realise that if early episodes results in dissatisfaction – then further episodes are unlikely to take place.
The third time zone
In this slide we explode how pre-purchase expectations of quality and value are evaluated against expectations and then negative, and positive consumer behaviours are performed – it is important to highlight that when a customer has a neutral evaluation they are ambivalent and unlikely to consider the episode further.
Manage collective satisfaction to build brand value
Rarely does an organisation have just one customer; therefore the cumulative satisfaction of all customers is the key we know that as ‘collective satisfaction’. Collective satisfaction is important consideration for mareting practitioners as it is linked to brand equity.
Evaluation of satsfaction is the third-time zone
Keep in mind that the first time-zone is about searching, estimating, and selecting; the second time-zone is about experiencing and assessing, and the third time-zone is about reflecting & evaluating then it is clear that the circle of satisfaction belongs in the third time zone. In this slide we take a different look at the circle of satisfaction and consider the actions of negative and positive outcomes and the resultant behaviours.
Satisfaction and the buyer decision process
In the first time-zone product expectations are formed and then evaluated in the third time-zone.
In this slide we have an overview of the three time-zones of the buyer decision process.
The first time-zone
This slide reinforce the message that 100% of customers enter the second time-zone with expectations of satisfaction – no one would enter an exchange if the forecast a negative outcome.
The theatre of business
In the second time zone the customer is experiencing the product delivery, now this will vary according to COMP factors, nevertheless marketing practitioners must blueprint and manage the customer journey and ensure that back-stage and front-stage activities are choreographed – it is often said that business is theatre [we discuss this in the next chapter].
Exemplar - Doyle's in Watson's Bay
An example of episodic satisfaction transforming into cumulative satisfaction is Doyle’s Restaurant in Watson’s Bay Sydney. I was invited there by a friend and had a lovely experience. Then on another visit to Sydney I had to choose a restaurant to visit and then on yet another visit I had to choose a restaurant. On each occasion the ferry ride from the CBD, the waterfront location with views across Sydney Harbour and to the city created an exceptional experience. Then one day someone asked if I could recommend what to do in Sydney and I found myself recommending Doyle’s and it dawned on me that here was an example of cumulative satisfaction.
Different expectations and evaluations
KEEP IN MIND: When we consider quality, value and satisfaction we begin to realise that when the core product is similar across different price points the expectations vary with price and therefore marketing practitioners must ensure that the augmented product increases relative to costs.
Activity: Expectations influence evaluations
In this activity we look at a London hotel that has to manage the needs and wants of business and leisure customers. [click on the image to access the activity]
Activity: the quality dilemma
In this activity we explore the experience of a couple who purchase a large screen TV and not everything goes to plan for either the customer or the organisation. [click on the image to access the activity]
Synthesising what we have discussed
When we synthesise the research and our discussions so far we can see that when a consumer recognises a need the are receptive to communication from the organisation and other customers in the first time-zone they with positive expectations and begin to assess the value in the second time-zone. In the third time-zone the evaluate the exchange and this results in one of three outcomes. 1] the customer is dissatisfied, the customer is neutral, or the customer is satisfied. This has three outcomes Dissatisfaction the customer is likely to defect and in some cases punish the organisation [they will achieve satisfaction another way], with a neutral outcome the wii have indifference and be ambivalent and likely soon forget the experience, with satisfaction they will have affection for the organisation and reward the organisation with an appropriate level of service.
Likely consumer behaviours
With dissatisfaction neutral and satisfaction come a range of consumer behaviours. These are outlined in this slide.
In this slide we bring the outcomes and the likely actions actions together. And make the conclusions that customer evaluations can lead to negative or positive consumer behaviours.
The service profit chain
Earlier I mentioned that the topic of satisfaction has received some academic attention. One of the most popular articles is ‘the service profit chain’. The general premise is that internal quality is the starting point and how employees who deliver quality internal service are generally more satisfied in their job and this leads to employee retention. Happy and experienced employees tend to create quality external service and this leads to customer satisfaction and loyal customer behavior which reduces customer churn – i.e., customer retention is increased.
The financial objectives
Collective cumulative satisfaction tends to increase positive word of mouth, repeat purchasing behaviou, reduce communication mix costs, increase retention, produce more tollerant customers and through a commitment to quality lower the costs associated with recovering from episodes of satisfaction.
If we consider the previous slides and further research [see the e-book] we can see the effect when collective satisfaction is considered. Whilst one customer will have some impact on the organisation collective satisfaction will have an impact [positive or negative] on the financial objectives of the organisation and furthermore will see an impact on marketshare.
4 key slides
An exploration of the key slides in this module is quite revealing – please study and read the e-book.
The outer circle explains the customer actions and then the impact on the organisation. The starting point is a consumer who has recognised a need with such strength that they are motivated to undertake the first time-zone of the buyer decision process, selected a product, transformed from consumer to customer with a series of expectations about what they would get [qualities] and give [costs of money time and effort] from the exchange. The customer would calculate the get and give as value and the compare it against expectations for an evaluation of satisfaction. If there is satisfaction or if there is more than one episode then the customer will establish cumulative satisfaction, this, providing it is a satisfactory outcome, will lead to a positive attitude and motivate loyal behaviour. This will contribute to a competitive advantage and increased profitability. Now this is only the effect of one consumer a competitive advantage transfers into market share an as we have just seen [2 slides previous] when loyal behaviour happens on a collective scale. This leads to improved profitability and then organisational satisfaction.
Strategic intent to create brand equity
In this slide we see how collective satisfaction, leads to collective trust, collective loyalty and how this builds a competitive advantage and brand equity. Also previously we stated how this requires constant and continuous management for this position of product leadership to be maintained – this is often referred to as strategic intent.
Brand image and brand identity
The circle of satisfaction reveals the difference between brand image and brand identity. Brand image is the message the consumer receives from an organisation, whereas brand identity is the message received by consumers and customers.
Loyalty without value is rare
When we holistically consider the circle of satisfaction – we may conclude that customers are only loyal when an organisation provides best satisfying product – for marketing practitioners they should reconsider loyalty programs as reward programs.
Video: the circle of satisfaction
In this video we will explore how satisfaction is estimated, assessed, and evaluated and how episodes of satisfaction may lead to cumulative satisfaction, aggregate satisfaction and collective satisfaction and how this may lead to trust, loyal behaviour, a competitive advantage, increased profitability, and ultimately organisational satisfaction.
The 4th type of customer satisfaction
When we started our discussion we stated that there were 4 types of satisfaction. The one we have not discussed is aggregate satisfaction – a quick read of aggregate satisfaction in the e-book will be worthwhile and a study of the exemplar Brand Singapore will provide clarity. Although, previously this is an overlooked topic, a survey suggest that it is simple and easy to understand.
The aggregate product
The next type of satisfaction is aggregate satisfaction; a topic that has received less attention in the marketing literature, and relates to aggregate products. An aggregate product is where there are multiple total products that are mentally bundled as one customer experience [e.g., a visit to Singapore would have many different total products]. Although tourism is an obvious aggregate product there are many examples [e.g., shopping malls are an aggregate of retailers]. Measuring the collective satisfaction of all customers is also important for aggregate products.
Managing an aggregate product
Strangely, there is little attention given to managing an aggregate product, however, it is clear that we should pay particular attention in these situations.
Exemplar: Galleria Milano
Explore this exemplar and consider the importance of having the right mix of retailers and whether for the management of the Galleria Shopping Mall are managing an aggregate product and managing aggregate satisfaction. [click on the image to access this exemplar]
A full circle
It may appear as if we have done a full circle – it should now be apparent that the circle of satisfaction is an exploded view of this key slide and central to the marketing concept.
KEEP IN MIND MARKETING IS ABOUT BEST SATISFYING 2
the metaphor of theatre and branding to create a unique product value proposition in the mind of the consumer.
In this chapter of the circle of satisfaction we employ the metaphor of theatre to describe how business is like theatre with a front-stage a back-stage and how success is dependent on the support of customers. The metaphor is ideal to employ as a professional development seminar to highlight the importance of collaboration and customer satisfaction.
In this chapter of the circle of satisfaction we bring together a series of slides that bring ideas from our discussions on brand, unique product value propositions, internal communications, and external communications. Branding and brand equity is the goal of most organisations.