British Food Journal

Emerald Article: Understanding customer satisfaction - a UK food industry case study Dotun Adebanjo

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To cite this document: Dotun Adebanjo, (2001),"Understanding customer satisfaction - a UK food industry case study", British Food Journal, Vol. 103 Iss: 1 pp. 36 - 45 Permanent link to this document: http://dx.doi.org/10.1108/00070700110382984 Downloaded on: 05-04-2012 References: This document contains references to 17 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 4250 times.

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Understanding customer satisfaction a UK food industry case study

Senior Research Scientist/Consultant, Leatherhead Food RA, Leatherhead, UK
Keywords Customer satisfaction, Food industry, Benchmarking, United Kingdom Abstract The importance of customer satisfaction to the commercial success of businesses is widely acknowledged. However, many companies, including those in the UK food sector, struggle to satisfy their customers. Responsibility lies partly with a failure to fully understand the basic building-blocks of customer satisfaction as a concept. Presents the results of a study by a group of UK food industry managers, led by Leatherhead Food RA. Identifies and describes six key drivers of customer satisfaction, which may be applied to all types of organisation, including those outside the food industry.

Dotun Adebanjo

Introduction In terms of a company's success, customer satisfaction is one of the most widely covered topics in the literature. This significant interest is justified by the increasing appreciation of the importance of customers to any business. Research has shown that managers have long recognised a strong, direct link between financial performance and customer care programmes (Industrial Society, 1995). However, only a third of the managers interviewed said that their organisations had launched a specific customer care initiative. More recent research has shed more light on how much customer satisfaction impacts on the financial success of an organisation. Galbreath and Rogers (1999) found that 98 per cent of dissatisfied customers switch to a competitor without complaining, while ``totally satisfied'' customers are six times more likely to repurchase a company's products than merely satisfied customers. Furthermore, a 5 per cent reduction in customer defection can result in profit increases from 30 to 85 per cent. In an almost predictable reaction to the appreciation of the impact of customer satisfaction, many organisations and management practitioners have attempted to identify the important factors that impact on customer satisfaction. The more prominent themes include: . Customer satisfaction measurement. Many organisations have sought ways of measuring the satisfaction levels of customers. Methods used can be either direct (e.g. customer satisfaction surveys) or indirect (e.g. examination of customer re-purchase profile). Some of these
British Food Journal, Vol. 103 No. 1, 2001, pp. 36-45. # MCB University Press, 0007-070X

Leatherhead Food RA would like to acknowledge the contributions of members of the Customer Satisfaction Workgroup and the financial assistance of MAFF.

measurement methods recognise that satisfaction is a relative and not an absolute issue. Customers are satisfied when their expectations are met; otherwise, they are dissatisfied (Hill, 1999). Customer service experience modelling. Bateson (1995) suggested that customers not only purchase a service but also an experience created by the service organisation. In adopting this approach, companies attempt to understand, recreate and improve the service experience of the customer. Factors considered include customer-employee interactions, physical environment, responsiveness and processes (Tseng et al., 1999). Customer care programmes. Training is the most commonly used method for promoting and communicating customer care (Industrial Society, 1995). Such training may be given to all employees or just to customer contact employees. It is not uncommon for companies to issue customer service guidelines for their employees. Some companies, such as Sears, have gone further and developed employee-customer-profit models (Devereux, 1999). Customer relationship management (CRM). CRM is based on the theory that organisations that use information on customers most intelligently will serve customers' needs best and, consequently, gain competitive advantage (Wilford, 2000). In practice, CRM will involve a range of issues, including customer profiling, applications software for backoffice customer-account management, front-office customer record access and customisation of customer marketing (Hoare, 2000). Customer loyalty programmes. In a further effort to maintain customer loyalty in an increasingly competitive marketplace, many organisations are introducing customer loyalty programmes. It is estimated that the European retail industry will spend in excess of US$3.6 billion on investment in customer loyalty in 2001 (Pozzi, 1999). In the UK, customers registered with loyalty schemes represent over 29 per cent of the European total. Customer complaints handling. Customer complaints identify weaknesses in customer service and thus clarify areas for improvement. Customers who have their complaints resolved are more likely to remain loyal and inform others of their experience (Smith, 1997). An effective customer complaints-handling process can also provide information useful for service and process improvement.

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Although customer focus is increasingly seen as essential to business success (Charlesworth et al., 1999), many organisations continue to lose customers as a result of dissatisfaction. It is estimated that, on average, CEOs of US corporations lose half their customers every five years (Reichheld, 1996). Possible reasons for this include increased competition and more demanding customer requirements (Jonson, 1999). Furthermore, research has shown that less than a third of all companies have a well-developed and coherent customer satisfaction process that is linked to operating strategies and plans (Bluestein et al., 2000).

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This paper presents the results of collaborative work, on customer satisfaction, carried out by leading organisations in the UK food sector. The key objective of the project was to identify and understand the key drivers of customer satisfaction. The findings, which are discussed in this paper, provide a reminder for companies to re-focus their efforts on the satisfaction of their customers. UK food industry perspective Leatherhead Food RA (LFRA) is one of the world's leading international research, consultancy, information and training centres for the food and drinks industry. A membership-based organisation with over 950 members worldwide, the organisation provides a range of services essential to companies dealing with value-added products in the food and drinks sector. Since 1996, LFRA, with the support of the Department of Trade and Industry (DTI) and the Ministry of Agriculture, Fisheries and Food (MAFF) has been promoting continuous learning and the adoption of ``world class'' practices in the food industry (Mann et al., 1998). Of the range of activities launched by LFRA, two have a significant bearing on the contents of this article: (1) A self-assessment programme that enabled food companies to assess their management systems against the criteria included in the EFQM excellence model (Figure 1). One of these criteria was ``customer satisfaction'' (now renamed ``customer results''). To date, more than 200 food companies have joined the programme, with over 50 completing an assessment. (2) A benchmarking club for the food and drinks industry. With a membership of leading food companies, the club aims to share best

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Figure 1. Self-assessment programme for the EFQM excellence model

practice in all aspects of the EFQM excellence model, and thereby become a flagship club for the industry. The EFQM excellence model is a practical tool to assist organisations to establish an appropriate management system by measuring where they are on the path to excellence and understanding the gaps. The model, a nonprescriptive framework based on nine criteria, is based on the premiss that:
Excellent results with respect to performance, customers, people and society are achieved through leadership driving policy and strategy, people, partnerships and resources, and processes (EFQM).

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Self-assessment programme The full results of the self-assessment programme are presented in Mann and Adebanjo (1997). Of particular interest are the results of the customer satisfaction criterion. While this criterion accounted for 20 per cent of the overall 1,000 points score of the EFQM excellence model, it ranked only seventh of the nine criteria, with an average performance of 16 per cent. This suggested that food companies were still not achieving high levels of customer satisfaction, even though its importance was well recognised. In particular, the self-assessment analysis showed that: . 57 per cent of the companies based their measurement of customer satisfaction on what their sales department thought rather than on the use of ad hoc or regular customer surveys; . 31 per cent of the companies made negligible or no use of customer satisfaction data; . 62 per cent of the companies never or only spasmodically set customer satisfaction targets; . customer satisfaction results had either declined or did not exist in 43 per cent of the companies; . 83 per cent had never or only occasionally compared customer satisfaction results with data outside their company; and . 74 per cent of the companies did not have a customer care programme (the implication was that employees, including customer contact personnel, were not trained in ``care'' techniques). The results clearly indicated that there needed to be an improvement in the food industry's approach to customer satisfaction. Benchmarking Club The Benchmarking Club was set up in 1997 as a common interest group to enable its members to share best practice and improve continuously. In common with the rest of the industry, members of the Club recognised that customer satisfaction needed to be improved. Consequently, the Club set up the customer satisfaction workgroup in 1999 to examine the issue and report on

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ways in which members of the Club could improve their understanding and practice of customer satisfaction. The focus of the workgroup was the manufacturer-to-retailer customer satisfaction dynamics and not the retailer-to-consumer dynamics. The primary reason for this focus was natural ownership, as most of the companies that participated in the workgroup were manufacturers whose key objective was to satisfy the retailers. Customer satisfaction workgroup of the Benchmarking Club The customer satisfaction workgroup was led and managed by LFRA. It consisted of customer service managers from four prominent food companies Campbell's Soup Company, J. Sainsbury Supermarket, Kraft Jacobs Suchard, and McKey Food Service Ltd. It was felt that this was an appropriate group to examine the issue for the following reasons: . all members of the group were involved in day-to-day contact with customers; . there was a larger resource pool with members having contact with other customer-facing colleagues both within and outside their individual organisations; . there was a natural ownership of the customer satisfaction issue; . between them, members of the group had more than 30 years of customer service experience; and . the involvement of Sainsbury supermarket within the group meant that there would be a supplier-customer perspective within the group since Campbell's Soup Company and Kraft Jacobs Suchard were suppliers of the supermarket. The overall objective of the customer satisfaction workgroup was to identify and understand best practice in customer satisfaction. In order to achieve this, the group met over a period of six months, under the direction of LFRA, to research and share views on best practice customer satisfaction. The meetings were conducted in focus group-style workshops supported by individual approaches to seeking and sharing information. These approaches were: . Each company gave a presentation on its approach to customer satisfaction. . Members of the workgroup gave an account of their personal experiences of good and poor customer satisfaction. . Each member of the workgroup carried out a case study of a ``best in class'' organisation. These organisations were selected from those that had won business excellence awards. Findings from the case studies were presented back to the group.

Information from all these activities formed the basis of the discussion and brainstorming that went on within the workgroup. After a period of six months, members of the workgroup felt that they had a better understanding of the factors involved in customer satisfaction and had already started applying some of the findings in their organisations. Findings of the workgroup The main findings from the workgroup's discussions were identified as follows: . It is not possible to define a comprehensive list of customer satisfaction measures. The measures to be used for a particular customer or company will depend on a number of issues, including type of product, type of customer, the expectations of the customer or the agreed contract with the customer. . Satisfaction will be unique to any given customer at any given point in time. This, in addition to the first finding, identifies that a satisfied customer may feel less satisfaction at some other time, even if the level of service or quality of product remains the same. Reasons for this may include the situation where the customer has been offered or has received a better competing service or product and consequently has higher expectations. . The customer is the ultimate judge of satisfaction. It is necessary to seek customers' views directly in order to determine whether they are satisfied with the service they receive. Without some form of customer input, data collected on customer satisfaction may be misleading or provide secondary information. . It is possible to identify certain key drivers of satisfaction. These key drivers are presented below as specific findings and were seen to be applicable to all types of organisations. The workgroup identified six key drivers of customer satisfaction, described as follows: (1) Define and understand the customer. Fundamental to satisfaction is understanding who the customer is and what his/her specific needs are. It was recognised that this might be easier for companies that serviced other companies rather than those that serviced the general public. This is because they were likely to have a smaller customer base and would be readily able to identify who their key customers were and therefore provide a tailored service. (2) People. Most customer contact is with the people within the organisation. Satisfying the customer will, therefore, depend largely on having a customer-focused culture that will make people effective and competent representatives of the organisation. Ways in which this may be achieved include:

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(3)

(4)

(5)

(6)

having a total organisational commitment to customer care; ongoing staff training; . customer focus measures being included in individual objectives/ targets; . empowering people, especially frontline people, to take decisions that ensure that customers are satisfied; and . promoting a culture of continuous improvement. Organisation. The organisational structure and business focus of the supplier must be centred on delivering the needs of the customer. Ways in which this may be achieved include: . the company mission should include a focus on customers; . the supplier strategies should be aligned to deliver the mission; . processes should be compatible with customer needs and expectations; . there should be ongoing self-assessment to ensure that the processes and strategies are still relevant and effective; . there should be flexibility and a readiness to change when required by relevant forces, such as changing customer needs; and . as much as possible, suppliers should try to work in partnership with their customers. Communication. Effective communication is essential to ensure clarity of direction and to monitor progress towards jointly agreed objectives/ expectations. Communication should be both internal and external, with internal communication focusing on ensuring that all relevant departments and individuals are aware of their input and also highlight any problems they face. The offering. The offering refers in part to the actual product or service that is the subject of the transaction between supplier and customer. The workgroup, however, identified that the offering is a total package, of which the product is part. In addition to the product issues (i.e. availability, quality, presentation, functionality), other factors to be considered in the offering include the environment (e.g. premium customers will expect an environment different from that of a discount store) and service level (e.g. physical accessibility of product, length of checkout queues, refund policies and helpfulness of staff). Agents of dissatisfaction. These are factors that may not in themselves drive satisfaction, but which, if not present, or executed, may cause dissatisfaction. The food industry, in particular, is susceptible to such concerns, which include:
. .

Poor labelling or non-identification of genetically modified foods. Dissatisfaction may also be caused by a lack of organically grown alternatives. Non-identification of products containing nuts could have serious consequences where there are consumers who are allergic to nuts and their by-products. Customers and the public in general are becoming increasingly environmentally aware and friendly. A perception that an organisation is not environment-friendly could lead to dissatisfaction, even if other satisfaction drivers are present. A similar reasoning applies where customers have ethical concerns. This applies to a whole range of sectors including the food industry, and may include issues concerning how organisations develop, test, source, manufacture or market their products or even the economies in which they operate. It was noted that some retailers, such as The Body Shop, would source only products that had not been tested on animals.

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Discussion of findings The findings of the workgroup highlighted a number of significant implications for the companies involved in the deliberations and for other customer service practitioners. The individuals involved have already applied many of the lessons within their own organisations. Specific examples include re-examination of roles of certain departments in order to improve focus on customers and greater emphasis on staff training and empowerment. The need for understanding the differences between customer satisfaction and customer service was noted. Some of the companies conceded that they had previously measured only customer service, with effort being mainly concentrated on issues related to ``the offering''. These were mainly related to the measurement of ``tangibles'' and ``hard'' service attributes, such as delivery performance, order capture, order fill and invoicing. This lack of complete focus was due, in part, to a failure to understand the ``softer'' issues that go beyond customer service and drive customer satisfaction. Some of these issues, such as the ``people'' issue, were identified from the project. It is worth remembering that there has been recent identification of the interdependence between customer and employee satisfaction and this is encouraged in practice by philosophies such as TQM and the adoption of frameworks such as the EFQM excellence model and the balanced scorecard (Stone and Maria Banks, 1997). Although the nature of the workgroup's activities implied that most of the findings were pitched at a strategic level, it is easily conceivable that some well established customer-related models (e.g. SERVQUAL) would be useful in improving some aspects of customer satisfaction. SERVQUAL is a widely used system for measuring service quality. It consists of ten key attributes that

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should be measured as part of servicing customers. These attributes include communication, responsiveness, empathy, assurance and reliability. While SERVQUAL promotes an established and ready way to measure aspects of customer service, it may not be sufficient when considering all drivers of customer satisfaction as identified during the project, and should be used as part of a wider customer satisfaction process. Although the study was carried out within the food industry, most or all of the main issues identified are applicable to a lot of organisations in other sectors. The findings not only give an opportunity for such organisations to understand and apply the key learning but also provide a platform from which other practitioners and researchers can facilitate continuous improvement in customer satisfaction. For individual members of the workgroup, the project provided a unique opportunity to share ideas and understand approaches used by other organisations, both within and outside the workgroup. Finally, although the projects focused mainly on the relationship between manufacturers and retailers, any improvement in performance is likely to have some impact on how retailers react to consumer demands and the application of initiatives such as efficient consumer response (ECR). Conclusions The achievement of customer satisfaction and the associated loyalty and business success have for a long time been identified as vital to the future of organisations. Although a lot of attention and resources have been directed at the issue, the levels of satisfaction of customers, in general, have not had a comparable rise. This is due, in part, to a changing society and, in part, to a lack of understanding of the nature of customer satisfaction and the issues surrounding it. It is hoped that the work of the customer satisfaction workgroup, led by LFRA, will present a unique and practical perspective of the challenges and opportunities facing the industry in general.
References Bateson, J. (1995), Managing Services Marketing, Dryden Press, Forth Worth, TX. Bluestein, A., Moriarty, M. and Sanderson, R. (2000), The Customer Satisfaction Audit, Pearson Education Ltd, Edinburgh. Charlesworth, K., Ferguson, N., Macdonald and Mann, S. (1999), ``UK plc needs to learn value of speaking customers' language'', Professional Manager, Vol. 8 No. 5, pp. 20-21. Devereux, G. (1999), ``Sears makes the service-profit link'', Customer Service Management, CSM Group, Banbury, pp. 25-9. Galbreath, J. and Rogers, T. (1999), ``Customer relationship leadership: a leadership and motivation model for the twenty-first century business'', The TQM Magazine, Vol. 11 No. 3, pp. 161-71. Hill, N. (1999), ``The seven stages of finding out what matters most to customers'', Measuring Business Excellence, Vol. 3 No. 1, pp. 31-5. Hoare, S. (2000), ``Winning our hearts, minds, loyalty and hard-earned income'', Customer Relationship Management, The Times Newspaper, 25 April.

Industrial Society (1995), Customer Care, Managing Best Practice Series, The Industrial Society, London. Jonson, K. (1999), ``New ways of organizing the realization of customer value a new challenge for the twenty-first century'', The TQM Magazine, Vol. 11 No. 6, pp. 445-9. Mann, R. and Adebanjo, O. (1997), Business Excellence in the Food and Drink Industry Practical Ways to Improve Performance, Financial Times Retail & Consumer Publishing, London. Mann, R., Adebanjo, O. and Kehoe, D. (1998), ``Best practices in the food and drinks industry'', Benchmarking for Quality Management & Technology, Vol. 5 No. 3, pp. 184-99. Pozzi, M. (1999), ``Il costo della fedelta'' (``European investment in customer loyalty''), Largo Consumo, Vol. 52 No. 6, p. 89. Reichheld, F. (1996), ``Learning from customer defections'', Harvard Business Review, March/ April, pp. 57-69. Smith, I. (1997), Meeting Customer Needs, Butterworth-Heinemann, Oxford. Stone, C.S. and Banks, J.M. (1997), ``The use of customer- and employee-based performance measures in The Times top 500 companies'', The TQM Magazine, Vol. 9 No. 2, pp. 152-8. Tseng, M., Qinhai, M. and Su, C. (1999), ``Mapping customers' service experience for operations improvement'', Business Process Management Journal, Vol. 5 No. 1, pp. 50-64. Wilford, D. (2000), ``What is CRM?'', Customer Relationship Management, The Times Newspaper, 25 April. Further information Leatherhead Food RA, Randalls Road, Leatherhead, Surrey KT22 7RY, UK. Tel: +44 (0)1372 376761; Fax: +44 (0)1372 386228. EFQM excellence model: contact the European Foundation for Quality Management, Avenue des Pleiades 19c, B-1200 Brussels, Belgium (Tel: +32 2 775 3511; Fax: +32 2 779 1237) or the British Quality Foundation, 32-34 Great Peter Street, London SW1P 2QX, UK (Tel: +44 (0)20 7654 5000).

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