Some Thoughts about Average Satisfaction Scores

The Customer Institute was recently at a conference regarding customer satisfaction and loyalty. The topic of average satisfaction came up. As it turns out many of the companies represented at the conference use measurements of customer satisfaction and specifically they use measures of average satisfaction without considering the fact that customers exist in many states. This blog will examine one way to provide granularity to the customer base.

This is a partial discussion of the presentation made at the conference by the Customer Institute. The focus of the presentation was to provide an analogy between inventory and customers. The major point of the presentation was to show inventory has different values depending on its state and the same holds true for customers.

Inventory can be described as having the following characteristics:
1. Raw material
2. Work in process
3. Need to repair
4. Scrap
5. Finished goods.
The analogies between these states of inventory and customer states are described in the following paragraph.

The customer analogy to raw material inventory is a potential customer base. Similarly, the customer analogy to work in process inventory is a new customer in which value is being added with each encounter. The customer who has a problem with either the product or the service would be analogous to a inventory that is in need of repair. There are some customers that no longer offer a good fit between the customer demands in the product or service the company is providing. These customers have the same characteristic is scrap material. The fifth category, finished goods, is equivalent to the loyal customer.

The preceding paragraph gives an indication that old inventory and customers have multiple states. When a customer satisfaction measurement is taken is often an average of the satisfaction for customers in all the states combined. While in averages and indication of something it certainly is not a metric that provides management direction other than "feel-good" or "feel-bad."

The bottom line is that the customer satisfaction metric when used as an average for all customers measured, confounds the satisfaction metric for each state. It is only when the satisfaction level is measured for each customer state can management optimize them properly allocate resources.

I'll expand this discussion in future blogs to point out some of the ways in which customer metrics can be tuned to a different customer states as they relate to inventory.