The Customer Satisfaction Trap
The Customer Satisfaction Trap
Most companies that use satisfaction surveys to learn how happy their customers are with their products and services often mislead themselves. What matters is not what customers say about the level of satisfaction, but whether they feel the value they received will keep them loyal. Loyalty or repurchase behaviour is the only true measure of customer satisfaction. As tools for measuring the value a company delivers to it’s customers, satisfaction surveys are not very useful because, amongst other reasons, they focus primarily on transactional issues, such as product quality, deliveries, technical knowledge, hygiene factors, product specs etc. These items are simply the minimum requirements for entry into the market. As tools for predicting whether customers will purchase more of the company’s products and services, they have proved to be all but useless.
Many executives feel that “good” scores (e.g. an average of 4 out of 5) are an indication that the company/customer relationship is strong. In other words, a level of satisfaction below complete (5) is acceptable. After all, this is the real world, where products and services are rarely perfect and customers are hard to please.
However, research has shown that there is no direct (straight line) correlation between customer satisfaction and customer loyalty and only customers showing “top box” scores close to 100% are likely to remain loyal.
This may lead to dangerous – perhaps fatal – responses from management. For example, if your company focuses it’s improvement efforts on dissatisfied customers with low scores, assuming that customers with higher scores are happy and will remain loyal, it could have some major shocks in store when apparently satisfied customers defect.
Satisfaction surveys are a far less accurate test of satisfaction than actual buyer behaviour. In business after business, research has shown that 60 to 80% of customers who defected had said on a survey just before defecting that they were satisfied or very satisfied. Most motor manufacturers have followed the customer satisfaction survey route and invest heavily in the approach. The result? Ninety percent of their customers claim to be satisfied, but only 40 percent come back for another purchase!
So , even though the results of customer satisfaction surveys are a useful indicator of the health of the business, relying solely on them can be fatal. They can generate valuable information that enables a company to compare one region or business unit with another. They can provide leading indicators of market shifts and can provide some sense of product or service attributes that customers’ desire. However, they cannot provide the breadth and depth of information about customers needed to guide your company’s strategy or product innovation process. Surveys alone will not enable any company to fend off competitors or keep products and services attuned to customers’ changing needs. For this reason we recommend that any market oriented company use a variety of tools and methods to listen to customers, potential customers and former customers in building relationships and forming strategies for creating and delivering value.
The Customer Satisfaction Trap - To learn more about this author, visit Peter Gilbert's Website.
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Many companies use customer satisfaction surveys of various types and such surveys certainly have a place in any customer sensing strategy. However, it is also important to understand their limitations.
Most companies that use satisfaction surveys to learn how happy their customers are with their products and services often mislead themselves. What matters is not what customers say about the level of satisfaction, but whether they feel the value they received will keep them loyal. Loyalty or repurchase behaviour is the only true measure of customer satisfaction. As tools for measuring the value a company delivers to it’s customers, satisfaction surveys are not very useful because, amongst other reasons, they focus primarily on transactional issues, such as product quality, deliveries, technical knowledge, hygiene factors, product specs etc. These items are simply the minimum requirements for entry into the market. As tools for predicting whether customers will purchase more of the company’s products and services, they have proved to be all but useless.
Many executives feel that “good” scores (e.g. an average of 4 out of 5) are an indication that the company/customer relationship is strong. In other words, a level of satisfaction below complete (5) is acceptable. After all, this is the real world, where products and services are rarely perfect and customers are hard to please.
However, research has shown that there is no direct (straight line) correlation between customer satisfaction and customer loyalty and only customers showing “top box” scores close to 100% are likely to remain loyal.
This may lead to dangerous – perhaps fatal – responses from management. For example, if your company focuses it’s improvement efforts on dissatisfied customers with low scores, assuming that customers with higher scores are happy and will remain loyal, it could have some major shocks in store when apparently satisfied customers defect.
Satisfaction surveys are a far less accurate test of satisfaction than actual buyer behaviour. In business after business, research has shown that 60 to 80% of customers who defected had said on a survey just before defecting that they were satisfied or very satisfied. Most motor manufacturers have followed the customer satisfaction survey route and invest heavily in the approach. The result? Ninety percent of their customers claim to be satisfied, but only 40 percent come back for another purchase!
So , even though the results of customer satisfaction surveys are a useful indicator of the health of the business, relying solely on them can be fatal. They can generate valuable information that enables a company to compare one region or business unit with another. They can provide leading indicators of market shifts and can provide some sense of product or service attributes that customers’ desire. However, they cannot provide the breadth and depth of information about customers needed to guide your company’s strategy or product innovation process. Surveys alone will not enable any company to fend off competitors or keep products and services attuned to customers’ changing needs. For this reason we recommend that any market oriented company use a variety of tools and methods to listen to customers, potential customers and former customers in building relationships and forming strategies for creating and delivering value.
The Customer Satisfaction Trap - To learn more about this author, visit Peter Gilbert's Website.
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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