Modelling customer satisafaction in service industries.

This research considers a Customer Satisfaction Index approach and its relative benefits to the UK community. It is focussed on the service industries in both the public and private sectors. It looks at, and develops the measuring and modelling processes involved and employs a Structural Equation Modelling (SEM) methodology. The research critiques two of the leading methodologies currently available (Maximum Likelihood and Fixed Point Estimation) before selecting one from which to model the whole process. Throughout the research, three different structural models are considered. These vary in how the different latent variables are connected together, but are based around a core of specific latent variables, which together make up a customer's total buying experience. Two of the models considered were by other authors, while the third (Sheffield Model) was a direct development of this research. The data has been collected by the means of a questionnaire. Over the life of the research a generic questionnaire has been developed to produce a tool that is focused on the specific issues that the model requires for it to operate. The final part of the research contemplates how a company can use the results of the index to pin point where improvements in their customer service provision would have the largest impact on their overall customer satisfaction index score. The research considers the different aspects of customer satisfaction and their place within a Total Quality Management approach. However, the index is a completely self-contained product, which allows any company to measure how well it is satisfying its customers. The index calculates an index score between one and one hundred. The ultimate aim of the index is for a company's score to be compared over time, against other companies within the same industry, against other companies from other industries, against the national average and even against company's throughout Europe and the World, as National Indices operate overseas. In fact, it is envisaged that the index will act as a way for individual companies to benchmark themselves against the best customer service companies in the world.It is hoped that over time the customer satisfaction index can become a key indicator as to the state of the UK economy. After all, satisfied customers are very often loyal customers, they tend to buy more, more often, and satisfied customers are often willing to pay premium prices for a company's products (Kristensen & Martensen, 1996).