Wednesday, September 23, 2009

Rethinking Customer Satisfaction

This past spring I read a short article by Xavier Quenaudon of the CFI Group and thought he made some sense when he described some of the myths we live with in the world of customer satisfaction. I believe that once you see these myths described you might want to rethink what you have believed about customer satisfaction and how you might want to change your perspective.

The first myth says that loyalty is more important than customer satisfaction. Since it takes a while to get a measure of customer loyalty, loyalty can be considered a look through the rear view mirror. Loyalty comes with building a relationship which takes time. Although this is worthwhile, it is a lagging indicator. Customer satisfaction, on the other hand, is instant and can quickly identify the short term direction of customers. Loyalty is a strategic variable whereas customer satisfaction is tactical. If the tactics are not right, the strategy will fail.

The second myth says you should maximize customer satisfaction. It doesn't take a brain surgeon to realize that not all customers are profitable and you can't afford to keep them. The better approach should be to optimize customer satisfaction. That means you want to spend enough on customers to keep them profitably satisfied but you may not be able to afford to keep them completely satisfied.

The third myth is that you should exceed customer expectations (Wow them). I think we would all agree that customer expectations should be met - but not necessarily exceeded. It may not be profitable to reduce waiting time for service and so long as the real waiting time is within reason, the customers will often not notice the difference (such as waiting 30 seconds instead of 20 seconds when calling customer service).

The fourth myth says that customer dissatisfaction should be avoided. Thee are some customers that are not profitable and companies would be better off if those customers went to the competition (I have suggested this approach to some of my clients). While a company must be careful to take care of the profitable customers, the unprofitable customers can become a cash drain as well as a resource drain. It may not be profitable to eliminate dissatisfaction and it also may not be possible.

The fifth myth says the customer complaints should be minimized. One of my golden rules is that a customer complaint is the cheapest consulting you can get. Your customers know your company, your products and your services. When they complain they are, in fact, telling you the result of their analysis of your operation and have found a problem which they are usually suggesting that you fix. What a wonderful way to get first-hand analysis of your operation. The best thing you can do is make it as easy as possible to submit a complaint and then PAY ATTENTION to what the customer is telling you.

The sixth myth says that customer satisfaction should be expressed as a percentage. As I continue to blog about customer satisfaction the one message that continues is that customer satisfaction is a complex bundle of thoughts and emotions. I continue to write about the various methods academics and consultants devise to measure customer satisfaction. Almost all of them end up using more than a single measure. When customer satisfaction is reduced to a simple percentage it increases the likelihood that management will focus on the percentage and see it only as a simple number rather than seeing it as a major component of their corporate strategy.

The bottom line is that we often hear platitudes such as "we must get from our customers a "WOW" if we are to be successful." Too often we forget these myths and why they are important to remember.

1 comment:

Steve Bernstein said...

As always I appreciate your blog and I am sure you've done your 'homework' on this post. Much of this I can agree with and the research I've seen and done and support them. But I have 2 areas I will question here:
* Myth 3: when you say we shouldn't "wow" our customers, I'm sure you've seen the evidence to the contrary. It's the "wow" experiences that delight customers and create the word-of-mouth that both generates new customers and also creates "customers for life" (or at least long-time). Take a look at Zappos as just one good example. Nobody talks about ordinary service and products anymore. So I would just suggest keeping your objectives in mind when thinking about this area.
* Myth 4: Be careful here -- just as in your myth 3, the opposite is true with unhappy customers and negative word-of-mouth. When you read products reviews, how many good reviews does it take to overcome one negative one?

I am sure we could have a productive series of discussions around all 6 of these. Please consider and note that optimizing for satisfaction is just a different objective than optimizing for loyalty.


web visitor stats
OptiPlex 755 Desktops