Customer Satisfaction: Putting it simply!

The simple research-driven case for making the customer satisfied.

With so many organisations looking for efficiencies, you too may find yourself part of a discussion about “why to bother with customer satisfaction”.

Some are saying that it’s good enough to just do the minimum for their customers.? Others say their work is pressured-enough without worrying if the customer’s OK with it. Despite decades of research findings, case studies and even general common-sense suggesting otherwise, some organisations appear to behave, and make decisions, as though customer experience doesn’t really matter anymore.

The truth is that when times get tough, delivering a good customer experience can make the biggest contribution to an organisation’s success, and make it stand out in a world where everyone else is not.

So I thought it might be helpful to re-visit this topic with a simple, research-driven overview of why it’s not good enough to do the minimum, and why the customer must be OK with it.

From customer experience research we’ve conducted over many years, in multiple industries, an understanding of the value derived from satisfied customers, and the costs associated with dissatisfied customers, are possibly the two most critical success factors for businesses and the public sector – especially when times are tight.

The value of satisfaction for business

For a business, their “top box” very satisfied customers can be three times more likely to repurchase or recommend their products or services, and more likely to consider other products or services they supply.

Once customer satisfaction begins to drop, customers tend not to value the supplier or its products and services as much and are more likely to make their next purchasing decision based on “price”.? Competing in a marketplace on price can undermine profitability, scope for innovation and investment, and reduce shareholder value.

Amongst dissatisfied customers, customer retention becomes even more at risk, along with an increasing risk of reputational damage arising from customers who are keen to share their bad experiences with friends, colleagues, family members and social media. Our research shows that dissatisfied customers often tell between six and ten other people about their bad experiences and as many as one in five will make reference to it on social media.

The bottom line for a business: Satisfied customers tend to be more profitable and cost less to serve, and poor customer experiences can place as much as 25% of a businesses’ revenue at-risk

The value of satisfaction for the public sector

There are some in the public sector who argue that they don’t actually have “customers”. ?They sometimes take solace from the observation that their “customers” don’t have anywhere else to go for the services they provide.

But from the customer experience research we’ve done for public sector bodies we know that it’s not their customers’ choice of another supplier that undermines the organisation’s success, it’s the many other customer choices and behaviours that are influenced by their experiences that impact their cooperation, support and compliance with processes and regulations.

For a public sector organisation, their “top box” very satisfied customers are typically three times more likely to engage positively with the organisation, comply with their processes and regulations, and support their goals.

Once public sector customer satisfaction begins to drop, customers are less likely to value the organisation or the services it provides, and tend to engage with and support them less.? This reduced level of engagement, co-operation and support can increase costs and result in resistance to increased funding.

Amongst dissatisfied customers, co-operation and compliance becomes even more at risk, along with the increasing risk of reputational damage arising from customers who are keen to share their bad experiences and opinions of the organisation with friends, colleagues, family members, social media and the press. Our public sector research also confirms that dissatisfied customers often tell as many as ten other people about their bad experiences and also share their experiences on social media.

The bottom line for public services: Poor customer experiences can significantly increase operating costs and undermine public outcomes.

Why do so many organisations seem to ignore this?

With such certainty of the benefits and risks dependent on the satisfaction of customers, why are do so many organisations seem to ignore this?

For many, the preferred approach to measuring customer experience is in terms of a simple percentage, index or score.? Although helpful for establishing and monitoring performance trends, this approach tends to mask potential failure, mystify effective management, absolve accountability, and does little to drive improvement.

Where to start

Let’s consider what needs to be done to reduce the risks of having dissatisfied customers, and benefit from the opportunities of having satisfied customers.

A good place to begin is by accepting accountability.

• Customer Experience isn’t the responsibility of our customers, or something they just happen to “have”.? It’s the result of something we do, or fail to do, for our customers.
• Customer loyalty, advocacy and support is what they do to reward us if we do it right and they are satisfied.

Give “customer experience” strategic relevance to the leadership team

The next thing is to give “customer experience” strategic relevance to the leadership team by adopting customer experience “metrics that matter” to your organisation’s success, not just a contrived “index” or “score”.? In our leadership workshops, we help leadership teams identify how to express customer experience in terms of the impact it has on the organisation in financial terms, and the impact it has on the organisation’s strategic outcome objectives.

Establish an actionable customer experience baseline

Then, adopt an actionable approach to measuring customer experience, beginning by establishing a customer experience baseline that reports performance in terms of these core “metrics that matter”.? Our customer experience baseline studies identify the sources of customer dissatisfaction and the specific problems they experience, calibrated in terms of the potential risk those problems present to the organisation’s success.? This approach helps to set priorities for improvement and makes it clear what actions need to be taken to improve it.

Then of course, take the actions needed to turn that success into a reality!

As a client of mine once said:

“When the ship is taking on water, it’s not enough to bail it out faster. Fix the leaks and save the ship!”

So, that’s “why to bother with customer satisfaction”, and that’s also why so much of the work we do with clients is to help them give customer experience a strategic relevance with the leadership team, identify and prioritise sources of dissatisfaction, estimate the cost of poor customer experiences, and turn their approach to measuring customer experience into actionable customer-driven continuous improvement, innovation and value creation.

Any questions? Please feel free to get in touch. :-)