Chapter 13
Managing customer satisfaction

Define customer satisfaction

Understand the importance of satisfying customers

Evaluate customer satisfaction guarantees in hospitality

Describe tools for measuring customer satisfaction in the
hospitality industry

Satisfying customers’ central component in the philosophy of
marketing

Delivering customer satisfaction is critical to business
performance

Customers have choice; if not satisfied they can choose a
competitor
We discuss:
 understanding drivers of customer satisfaction are important
 customer satisfaction guarantees in hospitality
 measures for capturing customer satisfaction data and
customer complaint processes
Satisfaction is a complex phenomenon

Consumer expectations are important comparison standards that help
consumers evaluate perceived performance of hospitality offer during
and at the end of the service encounter

At the simplest level, customers are satisfied if the experience matches
or exceeds their expectations and dissatisfied if the service performance
fails to match their expectations

Customer satisfaction can be defined as a ‘positive attitude towards a
supplier that is achieved when the customer’s expectations are met’

Different types of satisfaction include:
 contentment: routine hospitality service delivered satisfactorily
 pleasure: hospitality experience makes the consumer feel happy
 delight: experience surprises the consumer and exceeds
expectations
 relief: service overcomes potentially difficult situation and delivers
satisfaction
Figure 13.1 Customer satisfaction
Common sense tells us satisfied customers must be good for
business
Research confirms satisfaction important due to:

cost of acquiring new customers

benefits of repeat purchases by satisfied customers

impact of positive word-of-mouth recommendations
Also, dissatisfied customers are likely to defect to competitors
and generate negative word-of-mouth comments

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Know where and how to book, what to expect and how to
find the premises
Their expectations can be met – they already know what
the hospitality offer represents, and were relatively
satisfied
Customer-contact employees greeting regular customers
provides reassurance to first-time visitors regarding
product quality and customer satisfaction
Regular customers are less costly to look after because
they know how the service operation works
Repeat customers are powerful advocates, encouraging
others to patronize the establishment and generating
positive word-of-mouth recommendation
1.
Identify which customers you are trying to satisfy
(segment the market); not all customers or prospects are
equally important
2.
Identify what is important to those chosen customers;
not all customers want same components of hospitality
offer, and not all are equally important
3.
‘Get it right first time’ – customers’ expectations should
be satisfied at the first opportunity; try to eliminate
causes of customer dissatisfaction
4.
Provide excellent recovery policies and systems to
manage customer dissatisfaction

When consumers buy manufactured products, the
manufacturer provides guarantees and will repair/replace
product if customer not satisfied; consumers and
manufacturers understand concept of satisfaction
guarantees

Most hospitality managers are opposed to the idea of
customer satisfaction guarantees – believing too many
guests are dishonest and make bogus complaints

BUT most hospitality companies do compensate
customers when they have a genuine complaint

Customers assume satisfactory service, even though
hospitality outlet has no guarantee (formal contract)

Experience, education and consumer protection
legislation, encourage hospitality companies to
compensate customers for genuine complaints

Most hospitality companies do compensate customers
who complain

Problem with informal customer satisfaction guarantees is
that no guidelines set out what the company offers and
how customers will be compensated if something goes
wrong

Explicit satisfaction guarantee based on specific, measurable
performance

Time-based promises, such as a maximum of 30-min wait for a
room service delivery, good example

Length of time to deliver the service can be explicitly
incorporated into the guarantee, and it is then simple to
establish whether the service has been delivered as guaranteed
– on time or not

These guarantees have been used with varying degrees of
success

Before companies introduce an explicit satisfaction guarantee,
the operation must be able to deliver the promise within the
time agreed and at an acceptable performance level
Unconditional satisfaction guarantee promises customers complete satisfaction or their
money back
Makes powerful statement about hospitality service provider to deliver customer
satisfaction
Gives consumers confidence to purchase (by reducing risk) and reassurance
Before hospitality company introduce unconditional guarantee:
 target market must be clearly defined
 company must understand the drivers of customer satisfaction for the
product/service
 product/service quality standards must be set to deliver customer satisfaction
 service delivery processes and enabling technology must enable the promise to
be delivered
 employees must be aware of the 100% satisfaction guarantee and capable of
delivering
 company must invest significantly in research to evaluate drivers of customer
satisfaction, competitive standards and consumer’s perceptions of price and
value; in product quality and training, and effective quality audit processes
 very few hospitality companies offer unconditional service guarantees
[Hampton Inns (USA), and Premier Inn (UK)]

Hospitality companies use a combination of direct and
indirect methods to measure customer satisfaction

Indirect methods include tracking sales/profit figures and
monitoring them against forecast or previous period
performances

Direct methods include customer research and analysis of
complaints and compliments

Hotels and restaurants use customer comment
cards/questionnaires completed by customers on the
premises – industry does not have a standard approach to
measure customer satisfaction, and companies use a
variety of different methods

Post-encounter customer surveys – customers, frequent guests and members
of loyalty club emailed/texted questionnaires for comments understand the
level of consistency across a hotel brand

Employee surveys – employees are acutely aware of service problems and often
know the reasons why performance underperforms customer expectations

Focus groups of customers and employees allow the group moderator to
explore customer satisfaction issues in depth

Mystery shopping is a key tool in auditing the service performance of hotels

Analysing customer complaints (from questionnaires, letters, emails) to identify
root causes of customer dissatisfaction

Internal brand audits – hospitality chains carry out brand conformance audits on
each property to ensure that the unit is delivering performance standards and
customer satisfaction

Quantitative and qualitative research methods used to collect data from
customers

Important to identify which elements of the hospitality
experience contribute most to customer satisfaction

Companies conduct qualitative research to establish the
most important elements of the experience

These elements are then embedded into questionnaires
which measure satisfaction

Questionnaires assess customer expectations of key
elements and perceptions of actual performance

Analysis identifies where company is not meeting customer
expectations
Figure 13.2 Importance/performance matrix
Figure 13.3 Importance/performance matrix, hotel example

In hospitality, completely satisfied customers may never return to the unit
or to the destination for a variety of reasons:
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leisure travellers (variety-seeking customers) want to explore the
world rather than returning to same tourist destination
price-responsive consumers can choose competitors offer
customers attending unique events, such as wedding receptions,
sports matches and exhibitions, will stay at or near the venue and may
never return
This does not mean customer satisfaction is unimportant; these customers
still need to be satisfied to obtain W-o-M recommendation (especially Trip
Advisor)

Customer satisfaction is essential to generate repeat sales,
word-of-mouth recommendation and enhancing profitability

Most hospitality companies have difficulty in offering 100%
unconditional guarantees of customer satisfaction, many
provide implicit service guarantees

Customer satisfaction foundation of successful hospitality
business, but satisfied customers may never return



Parasuraman, A., Zeithaml, V. A. and Berry, L. L. (1988).
‘SERVQUAL: a multiple item scale for measuring consumer
perceptions of service quality’. Journal of Retailing, 64 (1), pp. 5–
7.
Reichheld, F. F. (1996). The Loyalty Effect: The Hidden Force
Behind Growth, Profits and Lasting Value. Baie and Company.
Zeithaml, V. A. and Bitner, M. J. (2003). Services Marketing.
McGraw-Hill.