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CUSTOMER SATISFACTION MEASUREMENT MODELS: GENERALISED MAXIMUM ENTROPY APPROACH

Much has been written in the past few years on Customer Satisfaction measurement models in order to study the relationship between satisfaction and market share, and the impact of customer switching barriers (Fornell 1992) in terms of customer satisfaction Index (CSI). A Customer Satisfaction Index quantifies the level of profitable satisfaction of a particular customer base and specifies the impact of that satisfaction on the chosen measure(s) of economic performance. Index can be generated for specific businesses or market segments or "rolled-up" into corporate or divisional measures of performance. The index is used to monitor performance improvement and | Pak J. Statist. 2003 Vol. 19(2) pp 213 – 226 CUSTOMER SATISFACTION MEASUREMENT MODELS: GENERALISED MAXIMUM ENTROPY APPROACH AMJAD. D. AL-NASSER Department of Statistics, Faculty of Science Yarmouk University, Irbid Jordan amjadn@yu.edu.jo ABSTRACT This paper presents the methodology of the Generalised Maximum Entropy (GME) approach for estimating linear models that contain latent variables such as customer satisfaction measurement models. The GME approach is a distribution free method and it provides better alternatives to the conventional method; Namely, Partial Least Squares (PLS), which used in the context of costumer satisfaction measurement. A simplified model that is used for the Swedish customer satis faction index (CSI) have been used to generate simulated data in order to study the performance of the GME and PLS. The results showed that the GME outperforms PLS in terms of mean square errors (MSE). A simulated data also used to compute the CSI using the GME approach. KEYWORDS Generalised Maximum Entropy, Partial Least Squares, Costumer Satisfaction Models. 1. INTRODUCTION Much has been written in the past few years on Customer Satisfaction measurement models in order to study the relationship between satisfaction and market share, and the impact of customer switching barriers (Fornell 1992) in terms of customer satisfaction Index (CSI). A Customer Satisfaction Index quantifies the level of profitable satisfaction of a particular customer base and specifies the impact of that satisfaction on the chosen measure(s) of economic performance. Index can be generated for specific businesses or market segments or "rolled-up" into corporate or divisional measures of performance. The index is used to monitor performance improvement and to identify differences between markets or businesses. The CSI score provides a baseline for determining whether the marketplace is becoming more or less satisfied with the quality of products or services provided by individual industry