Saturday, June 13, 2009

Predictive Versus Reflective Measures

Many companies seem to think that customer satisfaction measures are predictive. Other companies see customer satisfaction measures are reflective. I believe that once the terms predicative and reflective are carefully examined, it will become clear which term is more appropriate for customer satisfaction.

The dictionary gives a brief definition of predictive as: "being able to tell in advance usually based on facts." The synonyms of predictive are "forecast" and "prophesy". When we ask customers to report their satisfaction with a product or service, we are gaining perceived knowledge about a specific event, in most cases. Of course, customers are also asked strategic questions that are not event specific. In either case we have a measure of the customer's perception of past experiences.

On the other hand, the dictionary defines reflective as: "Something which reflects, or redirects back to the source; e.g.Mirrors are reflective. Thinking back on the past; e.g. He always becomes reflective in preparation for the new year. Thus customer satisfaction is more nearly related to be reflective than predictive.

So, if customer satisfaction is more reflective than predictive, what value does it bring to a company. There are a number of ways that a customer satisfaction measurement provides value. The following list provides some of the value components:
1. It is a measure of how the organization has performed in the past.
2. It may indicate organizational problems that are present and may impact future performance in a negative way.
3. When it is positive it can become an internal motivator.
4. It provides an on-going interest in the customer at all levels of management.
5. It can guide be used as a component of resource allocation.

One of the major misuses or customer satisfaction is using the measure as a predictor of future performance of the organization. Customer satisfaction is often referred to, correctly in my opinion, as a rear view mirror perspective of the organization's performance. Some would ask whether or not it is appropriate to use customer satisfaction measurements for predictive purposes. The obvious answer is no.

The bottom line is that customer satisfaction is a valuable measure of an organization's performance with respect to the customer. It is an historic measure since it is only capable of measuring past events. As the investor's guide usually states "past performance is no guarantee of future performance." When used properly, a valid measure of customer satisfaction is an excellent diagnostic tool for the organization and can be used to optimize the use of limited resources. It can also breed loyalty in both customers and employees.

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