A model for efficiency analysis of the customer satisfaction process

It has been acknowledged that customer satisfaction is an important component of a firm’s marketing strategies and tactics and has also been shown to be associated with improved outcomes for the firm like greater market share, higher profitability and increased shareholder value. Current research in customer satisfaction, while useful in determining the effectiveness of customer satisfaction creation and its consequences, does not help managers measure the efficiency of their customer satisfaction efforts. This paper presents a model for measuring the efficiency of the customer satisfaction process. It uses a Network Data Envelopment Analysis (Network DEA) model, an extension of the basic DEA approach, as it is consistent with the literature on firm level customer satisfaction formation and its consequences. The authors apply the Network DEA methodology to the American Customer Satisfaction Index framework. They estimate this model on 22 firms in the automobile industry using the American Customer Satisfaction Index (ACSI). Our results indicate that at least for certain firms there is room for improvement in efficiency of the customer satisfaction process. We further find that our DEA model is not just correctly identifying which firms are efficient in the customer satisfaction process, but also which firms in their competitive set are using their resources more efficiently than others and whom they could likely imitate.