Link Satisfaction to Profits

Measuring customer satisfaction using elaborate questionnaires and experienced research agencies is a big bucks expense in most companies today. The research agency will apply the instrument to qualified customers based on set criteria, analyse the findings and compare it with industry standards.

Frequently heard amongst managers is the question, “Is the amount spent on customer satisfaction and loyalty measurement programmes really worth it?”

My simple answer is “No”– unless these programmes deliver the insights you need to attract, retain and increase business with your existing customers.

Six Sigma and other programmes that rely heavily on satisfaction metrics will not help unless they focus on driving desirable customer behaviour.

There are many different ways to look at this issue and arrive at a measurable system.

First, listen to the voice of the customer. Go beyond a single, all-purpose survey. To get the customer knowledge you need, you must use multiple listening posts that gauge satisfaction and loyalty at multiple levels – that take the pulse of the overall relationship, as well as the day-to-day transactions.

The best listeners, moreover, include all stakeholders, from customer decision-makers, to customer end-users, to channel partners, to employees.

The listening process must capture and evaluate appropriate product, service, cost and image factors that may affect customer behaviour. While many company executives and managers believe that they know and can articulate these factors, it is easy to get off track with this inside-out view. You need to hear directly from customers in their own words, and not rely on internal jargon that may be meaningless to them. Only customers can tell you what drives their satisfaction, loyalty and value perceptions.

Next, focus on core requirements to establish priorities for change. The goal of loyalty and satisfaction measurement programmes is to get them to be loyal, to buy more, to become an advocate and so on. To accomplish this, you need to change the way you serve your customers. Set priorities and focus on those key product and service elements that have the greatest effect on satisfaction and loyalty. Research has shown different items have different effects on satisfaction and loyalty. Certain elements are key dissatisfiers, where not meeting expectations will cause overall dissatisfaction but exceeding expectations will not necessarily lead to customer delight. Other items are key enhancers, where exceeding expectations will improve customer satisfaction, but not delivering on them has little effect on dissatisfaction.

Next, link customer feedback to internal processes. Management teams must examine customer survey results in light of any existing operational or transaction metrics available. You must define the specific internal processes that touch areas that deliver value to your customers. Analytical models can validate and link these internal process measures to your satisfaction survey results; then you can frequently track and act on the few critical internal metrics that are leading indicators of customer satisfaction and loyalty. Make change happen. The best measurement programmes are useless unless they trigger appropriate operational and policy changes. Satisfaction and loyalty measurement programmes must include processes for prioritising changes, developing action plans and metrics, and ensuring that improvements are visible made. Deployment and action-planning workshops with key business stakeholders are good tools to use to clarify findings and help the learning process throughout the organisation.

Use all the information available. Satisfaction data cannot stand-alone; it must be integrated with other information you have in your customer and operational databases. For example, analytic models can calibrate survey loyalty measures with actual retention and attrition data, providing a great payoff: Showing how an improvement in survey results reduces churn is a great motivational tool. You can use these models to predict which types of customers are at risk of leaving and to direct your customer acquisition and retention efforts.

Incorporate ROI. Because top management is concerned most about bottomline results, you must link improvements in survey results to profits. A good way to do this is to use advanced analytic techniques to model how customer lifetime value varies with satisfaction and loyalty measures. This way, you can determine the return, in hard currency terms, on programmes that improve customer relationships.

If you are investing in customer satisfaction and loyalty measurement programmes, you need to evaluate your programmes on each of the above six principles, which help transform measurement programmes from just another cost of doing business to drivers of growth and profit. The bottom line is that measurement programmes must demonstrate they pay off with improved financial results by creating more satisfied and more loyal customers.

(The author spearheads execution and innovation for clients @CustomerLab)

M Muneer