Department of Health and Human 
Services

OFFICE OF

INSPECTOR GENERAL

HOW THE PRIVATE SECTOR 
MONITORS 
CUSTOMER SATISFACTION: 
BENCHMARKING REPORT 
SERVICIS. 
JU 
GIBBS BROWN 
Inspector General 
. 0 
APRIL 1994 
jll  OEI-02-94-00060  Background: 
Presidential Executive Order 12862 
, issued on September 11 , 1993 , calls for all 
governent 
agencies to be customer-driven. It 
sets the standard of quality for services 
provided to the public as being equal to "
the highest quality of service delivered to 
customers by private organizations providing a comparable or analogous service 
" in other 
words the "best in business. " It also establishes a multi-step plan for agencies to meet this 
definition of quality service and then to measure their performance. 
Because of its experience in conducting client satisfaction surveys and its belief in the 
value of client-based performance indicators, the Offce of Inspector General (OIG) has
undertken this study. We identified 10 "customer-driven" companies whose services or
client relationships are comparable to those of the Social Security Adminstration 
(SSA)
and the Health Care Financing Administration (HCFA). 
We interviewed representatives
of these companies to ascertain their standards and methods for measuring client 
satisfaction. 
Findings:

Seeking Client Input is Seen as Necessary and Important.

All 10 companies report using input from client groups to assess customer 
satisfaction and

organizational performance.

Companies ' Surveys Are as Variable and Multifaceted as Their Client 
Groups.

Since client groups vary widely, companies tailor survey instruments and 
methods to the

needs of each client group. While mail surveys are most prevalent, the 
telephone is often

used for smaller client groups. Frequent contact with client groups is vital.

Companies Emphasize the Need to Report Survey Findings.

All companies stress the need to write up the 
findings in reports , as opposed to sharing
them more informally. Internal distribution is wide.  . . . ..  ..  ..  ..  ..  ..  ...   '. ..  ..  ..  ..  ..  ..  . ..  ..  . . ..  ...   ...  ...   ...   ...   ....    ....    ....    .....     ....    .....     ......      ......      .......       .......       ........        ........        .......       .....     ...   ..  . 
. . . . ..  ..  ..  ..  . .....     ....    ....    ....    ....    ....    ....    .....     ....    ....    .....     .....     ....    ...   ...   ...   ...   ...   ..  ..  ..  ..  ... .   .. . .  . . ..  . 
TABLE OF 
CONTENTS

PAGE 
EXECUTIV SUMARY 
INTRODUCTION 
. . . . . . 1

FININGS 
. . . 3

. Client Input is Seen as Necessary and Importnt. . . . . . 
. . . . . . . 3

. Companies' Surveys Are as Variable and Multifaceted 
as Their Client Groups 
. . . . . . 3

. Companies Emphasize the Need to Report Survey Findings 
. . 5

CONCLUSION 
. . . . . 5

APPENDIX  . . . A
A: Bibliography. . . . . . . 
. . A INTRODUCTION

Background: 
Presidential Executive Order 12862
, issued on September 11 , 1993, calls for all
governent 
agencies to be customer-driven. It 
sets the standard of quality for services 
provided to the public as being equal to "
the highest quality of service delivered to 
customers by private organizations providing a comparable or analogous service. 
" The

Executive Order calls for providing the quality of service that large
, successful private
businesses provide to their customers, called the " " It 
best in business.  also establishes a 
multi-step plan for agencies to use to meet this definition of quality service and then to 
measure their performance. 
In recent years the private sector has become 
increasingly attentive to customers
, clients 
and stakeholders. Companies have consulted with clients to help measure their 
performance and to establish standards of service. 
This practice of developing "customer
driven" organizations has helped companies provide the quality service their clients 
expect. 
Because of its experience in conducting client satisfaction surveys and its belief in the 
value of client-based performance indicators, the Offce of Inspector General (DIG) has
undertken this 
study to identify these "customer-driven" companies, their standards and
methods for measuring client satisfaction. With this information
, we plan to redesign our
annual Social Security and Medicare Client Satisfaction Surveys
, to the extent necessary, 
so they wil compare more closely to the approaches of these top companies. 
In conducting this assessment, we first researched the subject of benchmarking by
conducting a literature review. 
Specifically, we reviewed books on the subject of 
measuring quality of service. (A bibliography can be found in Appendix A. 
We identified 10 companies noted for 
outstanding customer service and whose services or 
client relationships are comparable to those of the Social Security Administration (SSA) 
and the Health Care Financing Administration (HCFA). These 
companies include two
worldwide hotel chains, one electronics manufacturer
, a producer of various manufactured 
goods and services, a major credit card company, a large insurance company, an express 
delivery service, a nationwide child care franchise, a leading manufacturer of offce
equipment , and a fast-food service. Four of these companies have received the Malcolm
Baldrige National Quality Award 
, the highest level of national recognition for quality that 
a U. S. company can receive. This public award promotes an understanding of quality and
a greater awareness of quality as a crucial 
competitive element. Up to six awards per
year may be given. The remaining 
six companies were recognized in  The Service Edge , a
book which identifies. by area of business 
, companies that are " top notch" in service
quality.  We interviewed representatives from each company by telephone and asked 
questions such
as: Do they collect data from clients? How and how often do they survey 
clients? How 
are clients and the sample selected? What is done with the information once it has been 
analyzed?  , "
FINDINGS

Seeking Client Input is Seen As 
Necessary and Important. 
All 10 companies report using input from client groups to assess customer 
satisfaction and 
organizational performance. Two report keeping track of all complaints and 
negative
customer reports as a means of staying in tune with client needs. 
The remaining eight use
some form of client satisfaction survey instrument to gather data on their performance. 
The rest of this report wil focus on these eight companies. 
Forecasting and improving service are the two main uses for the data
, according to 
respondents. They repeatedly stress that the survey results are a big part of goal 
setting.
One reports, "We use it (the survey) to help establish future goals and maintain a good 
customer relationship. " Another states  We use it to make recommendations for 
improvements. " 
The methods used to design and develop these client satisfaction survey instruments differ 
from company to company. Each has its own reasons for doing client satisfaction surveys
and, likewise , each arrived at its survey 
instruments differently. One company keeps a
log of all customer telephone calls for one year and uses the subject of these calls to 
identify issues considered importnt by their customers. The survey instruments then 
focus on these issues. Another company had a team of employees establish a list of 
factors that contribute to success and design a survey instrument to find out the company 
rating on each of these factors. Two other 
companies first established their need to 
measure the satisfaction of their customers 
, and then adapted a widely-used survey 
instrument prototype to meet their needs. 
Companies' Surveys Are as Variable and Multifaceted as Their Client Groups. 
Companies realize that client groups vary widely. 
A consensus exists among our companies that clients are not one 
homogeneous group, but
are groups with different needs, expectations and characteristics. Accordingly, the
companies believe the first step in developing a client satisfaction survey is 
identifying all
unique client groups. This parallels the Executive Order which asks agencies to 
identify
clients as a first step. Companies report that while they annually draw samples from their 
entire customer pool , they do more frequent surveys for special client groups like high
volume users , repeat customers , or recent customers. The needs and experiences of these
groups differ from the needs of the overall client pool and must
. therefore , be addressed
in a unique fashion. This includes using different survey instruments as well as using 
different approaches to contacting these clients. 
Tailoring survey instruments to the needs of special client groups is 
advised. 
The type of survey instrument used for special client groups varies. Generally. when 
the
overall client base is being surveyed, the survey 
instrument contains mainly closed-ended  , "
questions relying heavily on scales. These scales range anywhere from four-
point to ten-
point intervals. Closed-ended questions are chosen because they facilitate data analysis 
making for easier and faster tabulations. This allows for the use of larger 
samples. 
However, for special client groups, such as high-volume users, repeat customers , or
recent customers, the survey instruments tend to contain far more 
opportnity for the
client to elaborate on his/her 
experiences. They contain, for the most part, a mix of
closed-ended or multiple choice questions and as well as several open-ended 
questions
usually relating to a specific incident or recent transaction. Most 
companies report asking
some of the same questions to both their special client groups and their overall customer 
pool for comparison purposes. However
, they stress that these special client groups are
questioned in more detail concernng their recent or frequent contact with the 
company
because that is where they obtain the most helpful information. 
While mail surveys are most prevalent, the telephone is often used for smaller client 
groups.

The method used to contact client groups also varies. Overall 
, we found mail surveys to

be the most prevalent method, with all of the companies using them in one form or 
another. Generally, the companies find mail surveys the most effective and 
inexpensive
way to reach large numbers of clients. 
For example, one company with nearly 100 000
clients sends out a short" opinion card" to each of them annually. 
Half the companies report utilizing telephone surveys to get more 
imediate responses
from certin special client groups. One company does telephone surveys of meeting
planners imediately 
following the event. This ensures fresh information on courtesy and
efficiency of staff and cleanliness of rooms. 
It also allows the company to correct errors
so it wil not repeat them for future customers. In addition to 
reaching recent customers 
by telephone, companies report using telephone surveys for repeat customers because both 
the population and sample size is much smaller and therefore more 
manageable.
Companies advise that it is easier to contract out to survey specialists large jobs 
especially those that require a tremendous number of telephone interviews. 
Frequent contact with client groups is vital. 
Frequency of contact is another variable to consider when addressing special client 
groups. Overall, constant contact with customers is seen as an important tool in 
monitoring satisfaction. All eight companies perform some type of client 
satisfaction
survey at least once a year. 
Generally. they attempt to reach the entire client base at least 
once in a twelve month period , but more frequent contact with the unique client groups is 
considered crucial. 
One company does surveys of recent customers as often as every day, while five others 
report surveying this population at least quarterly. One stresses the need for such frequent 
contact  We solicit problems and complaints in these surveys. 
We look forward to being
able to address them promptly. before too many other clients are affected.  O' . 
Interestingly, the major credit card company has a one-page survey it sends out daily to a
sample of 20 or so of its 
customers. These sample customers would have completed a 
transaction with the credit card on that day. This technque ensures fresh data on 
satisfaction with that transaction. It asks if the purchase cleared promptly, how the 
customer knew the card was accepted at that particular store 
, why the customer chose to
use that card as opposed to any others 
, etc. 
Companies Emphasize the Need to Report Survey Findings. 
All eight companies stress the need to write up the findings from these surveys in report 
form, as opposed to sharing them more 
informally. Most often, the information is 
aggregated and an overall report written. Many times, regional breakdowns or 
departmental breakdowns also are provided. The information, while not shared externally
because of the competitive nature of business, is freely shared with employees at all 
levels. The information is considered a vital tool for forecasting future needs , as well as
for establishing realistic goals. 
Conclusion: 
Client satisfaction surveys are seen by 
outstanding service providers as an importnt tool
in monitoring organizational performance. Many different 
methodologies exist to provide
this vital information; there is no one correct way. Each 
company we contacted reports
using more than one type of survey and more than one 
methodology to ascertin its 
customers ' needs. Individual decision makers determine which methodologies would best 
provide the information sought. 
Despite the wide variety of 
methodological approaches, there are some clear messages for 
Federal managers: 
Know your different client groups and tailor your survey to each. 
Frequently check the pulse of client satisfaction; some groups may require 
surveys 
more frequent contact than others. 
with closed-ended questions to facilitate reaching a wide 
Use mail

client base because of their effciency. Telephone surveys and/or open-
ended questions may be reserved for special client groups due to the smaller 
sample sizes and the need for more specific data. 
Widely distribute reports on findings to assure that staff are aware of the 
agencies' commitment to cliems, and that service weaknesses are identified 
and addressed. Furter, share rcports with the public and oversight 
agcncies in the spirit of the 
Executive Order.  t. 

APPENDIX A

Bibliography 
Camp, Robert C.  Benchmarking - The Search For Industry Best Practices That Lead to 
Superior Performance. ASQC Quality Press, WI 1989. 
DeVellis  Scale Development - Theory and Applications 
, Robert;  , Sage Publications, Inc.
CA 
1991. 
LoSardo, Mary and Rossi , Norma;  At the Service Quality Frontier, ASQC Quality Press
WI 
1993. 
Zeithaml , Valarie Delivering Quality Service. The Free Press (A Division of 
, et al; 
Macmilan,Inc.), NY 1990. 
Zemke , Ron and Schaaf, Dick;  The Service Edge, Penquin Publishing, USA 1990. 
American Management Association; 
 Blueprints for Service Quality , AMA Membership
Publications Division
, N. Y. 1991. 
Gregory Watson Xerox Quality Solutions 
Process Benchmarking