By Uma Shankari

TO DELIVER what customers want, a company has to understand what kind of customers it has. The findings of the latest Customer Satisfaction Index of Singapore (CSISG) revealed that there are three types of customers in Singapore.

In the CSISG model, three drivers influence customer satisfaction: customer expectations, perceived quality of products and services and perceived value - that is, value-for-money. A fall or rise in the customer satisfaction score of a company can be traced back to one of the three factors.

So a company that has seen its customer satisfaction score rise or fall year-on-year, for example, can check which of the three drivers had a lot of impact on its customers. It will then be able to tweak the driver that has the most impact to better satisfy its customers.

Three types of customers

'Type one' customers have their satisfaction levels strongly driven by all 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' customers, on the other hand, have their satisfaction levels only moderately influenced by the three drivers, with perceived overall quality slightly dominating. They dominate the customer base for the info- communications sector, and hotels sub-sector.

And finally, 'type three' customers demonstrate satisfaction levels highly impacted by perceived product and service quality but only minimally driven by perceived value. They dominate the customer base for the retail and food & beverage sectors.

By recognising the motivation and behaviour of their target customers, companies are better able to formulate strategies to optimise customer satisfaction. They can also engage in cross-industry sharing with other organisations with similar type of customers, said the Institute of Service Excellence at the Singapore Management University (ISES), which conducts the CSISG survey.

'Companies will be able to efficiently and effectively satisfy their customers only if they first understand them,' said ISES academic director Marcus Lee.

'The findings from the CSISG are a good starting point for many companies in the services sector towards achieving this.'

Managing negative word of mouth

The findings from the survey also reveal interesting observations on managing complaints, noted Dr Lee.

Customers who are more satisfied with the company are more likely to complain directly to the company while less satisfied customers are more inclined to complain to family and friends.

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, said Dr Lee.

On the other hand, more than 80 per cent 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, he said.

More satisfied customers are also more likely to become repeat customers and recommend the company to other consumers.

ISES' survey showed that the most satisfied quartile of customers are about 31 per cent 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,' Dr Lee said.

This article was first published in The Business Times.