[27 October 2009]
SMU releases results for third national customer satisfaction study

Findings from CSISG 2009 support a re-alignment of the definition of service excellence that is not about exceeding customers' expectations.

Singapore, 27 October 2009 (Tuesday) – The Institute of Service Excellence at the Singapore Management University (ISES) (????????) releases today the findings for the third Customer Satisfaction Index of Singapore (CSISG) for the first three quarters of 2009 covering six of the eight economic sectors: (i) Retail, (ii) Food & Beverage, (iii) Info-Communications, (iv) Education, (v) Transportation & Logistics, and (vi) Tourism, Hotels & Accommodation Services.

Recent academic research and literature have proposed a more up-to-date and evidence-based approach to defining service excellence in the light of the present business climate, which is aligned and consistent with the findings of CSISG 2009. Service excellence should encompass, sequentially, (1) understanding your target customers, (2) setting clear expectations of the needs you are addressing as well as the value you are offering for your target customers (your promise), (3) consistently delivering the level of quality you promise, and (4) effectively addressing customers' feedback and complaints. This is a new re-alignment of the traditional definition of service excellence understood to be exceeding customer expectations by delivering exceptional service.

Findings from CSISG 2009 found that, in essence, service excellence is about “making it easy for your customers to do business with you”, and thereby “making your customers smile”. Consequently, excellent service begets satisfied customers. As illustrated in the CSISG structural model (please refer to Figure 1 in Annex A), customer satisfaction is driven by customer expectations, perceived overall quality, and perceived value. Customer satisfaction in turn drives customer loyalty and retention. Hence, it is important for companies to understand the drivers of satisfaction for their customers, for durable competitive advantage.

CSISG 2009 finding: Three types of customers

CSISG 2009 findings also reveal three types of customers in Singapore. ‘Type One Customer' demonstrates satisfaction levels strongly driven by the three drivers of customer satisfaction, with customer expectations having the biggest impact. They dominate the customer base for the Education, and Transportation & Logistics sectors. ‘Type Two Customer' demonstrates satisfaction levels moderately influenced by the three drivers, with perceived overall quality slightly dominating. They dominate the customer base for Info-Communications sector, and Hotels sub-sector. ‘Type Three Customer' demonstrates satisfaction levels highly impacted by perceived product and service quality but minimally driven by perceived value. They dominate the customer base for Food & Beverage, and Retail sectors. Please refer to Figure 1 in the Executive Summary for details on the three types of customers. By recognising the motivation and behaviour of their target customers, companies are better able to formulate strategies to optimise customer satisfaction and engage in cross-industry sharing with other organisations with similar type of customers.

CSISG 2009 finding: Increasing importance of service quality

From the first CSISG study in 2007 to the present one in 2009, findings have shown a shift in emphasis by customers from perceived product quality to perceived service quality within the Retail, and Food & Beverage sectors. The current study observes that eight out of 12 sub-sectors under Retail and F&B sectors show service quality as a dominant contributor to overall quality, an increase from only four sub-sectors in the 2007 study. Retail and F&B companies should be mindful to work towards improving their service quality.

CSISG 2009 finding: Managing negative word of mouth

Findings reveal interesting observations on managing complaints. Customers who are more satisfied with the company are more likely to complain directly to the company. On the other hand, less satisfied customers are more inclined to complain to friends and family. Overall satisfaction levels for customers who complained directly to companies are eight points higher than customers who complained to friends and family. Direct complaints to companies are an indication of the strength of the relationship and the willingness to offer the company a chance to repair the relationship. On the other hand, over 80% of dissatisfied customers choose to complain to their family and friends. Such negative word-of-mouth is detrimental to business as it affects take-up rate on products and services.

More satisfied customers are also more likely to become repeat customers and recommend the company to other consumers. It is observed that the most satisfied quartile of customers are about 31% more willing to recommend the company than the least satisfied quartile. Companies should channel resources towards handling complaints, damage control and reducing customer dissatisfaction instead of striving to eradicate complaints.

CSISG 2009 finding: Customers have a role to play

On tipping behaviour, findings show that 40% of tourists compared to 23% of locals practise tipping in Singapore. Respondents who declared that they never tip were about four points less satisfied than those who tip. We believe that the mere act of tipping is not responsible for this difference in satisfaction. Instead, those who tip have a different mindset from the outset compared to those who do not tip. They are likely to be more forgiving and exhibit greater empathy, contributing to greater levels of satisfaction and therefore the inclination to tip.

CSISG 2009: Results of the First Three Quarters

Only three of the six economic sectors of Singapore covered in CSISG 2009 experienced significant dips in their satisfaction scores. Retail Retail (-2.3) displayed the largest drop in score, followed by Tourism, Hotels & Accommodation Services (-1.4) and Education (-1.4). The detailed breakdown can be seen at Annex B.

Said Assistant Professor Marcus Lee (???), Academic Director, ISES: “The latest results underscore the importance of customers in the satisfaction equation. Companies will be able to efficiently and effectively satisfy their customers only if they first understand them. The findings from the CSISG are a good starting point for many companies in the services sector towards achieving this.”

Said Ms Caroline Lim (???), Director, ISES: “There are useful insights for companies in our latest CSISG results. We will continue to share them with the business community as these findings are relevant to help companies optimise customer satisfaction levels.”

The remaining two sectors for CSISG 2009 – (a) Healthcare, and (b) Finance & Insurance – will be released in January 2010 together with the overall national score. Subsequently, CSISG scores will be released quarterly (two sectors per quarter) and the national score released in January of the following year. It will continue to serve as a consistent benchmark for our key economic sectors to track our performance over time and a barometer on how Singapore fares globally. Companies can tap on CSISG – through corporate subscription and custom research – as a strategic business tool to gain valuable insights about customer satisfaction, benchmark against competitors and make better business decisions.

About the Institute of Service Excellence at SMU

The Institute of Service Excellence at the Singapore Management University (ISES) is the cornerstone of an initiative to raise Singapore's service standards and promote a culture of service excellence. Working in close collaboration with government agencies and business leaders, ISES champions service excellence through an integrated approach that encompasses benchmarking and analysis, research and thought leadership, and industry engagement. www.smu.edu.sg/centres/ises