Customer Satisfaction and Brand Equity

In many large organizations, one team handles customer satisfaction while another manages brand equity. When these teams don’t collaborate or even communicate with one another, opportunities to increase brand value can be lost. This is an especially important issue in developed countries, where the proportion of information-based products and services continues to increase.

To evaluate the relationship between service and brand equity for one mobile phone provider, we calculated a Customer Satisfaction index based on an amalgam of customer satisfaction questions. Three groups of customers were created based on their level of service satisfaction. The higher their customer satisfaction, the more likely they were to endorse key brand health statements such as “are brands you want to be seen with” and “are trustworthy and reliable.”

Higher customer satisfaction relates to stronger image

 For another analysis, we added questions to BrandZ, our global brand equity study, asking respondents if they would be extremely likely to recommend a brand to friends or colleagues, or if they would be unlikely to recommend it. By subtracting the “unlikely” score from the “extremely likely,” we created a “net” recommendation score for the brand.

We looked at these scores for different brand “typologies” (an independent classification of brands based on their size and strength). We found that the strongest brands, the “Olympics,” had an average recommendation score of 56. A much weaker group of established brands called “Fading Stars” had scores of 37, while the most vulnerable brands, those classified as “Weak,” averaged 29.

As these examples suggest, effective management of the customer experience is key to building customer commitment, brand equity, and hence sustained financial success. However, to consistently deliver a quality customer experience in any kind of extended business operation is easier said than done. Senior management may be unwilling to buy in to the expense — in terms of both time and money — of reorganization and training.

The Value of a Satisfied Customer

We have been able to quantify the financial rewards of some of these investments and have found them to be substantial. For one bank, we took a sample of customers and compared their responses to a survey with their behavior over the ensuing 12 months. We considered using a number of metrics: satisfaction, advocacy, retention, warmth. As it turned out, they were all highly related to each other, so we chose satisfaction, since it linked in with the client’s other customer satisfaction metrics.

Our research measured the number of products held prior to the start of the study, and then, using information on products that were open or closed in the subsequent year, we were able to calculate the average number of products opened or closed for each point on the satisfaction scale. Likewise, by subtracting the number of products closed from products opened, we arrived at the net product uptake for each point on the satisfaction scale.