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Measuring customers
Posted by Becky Carroll on June 12, 2007
In my post on the coffee house case study yesterday, I steered ABC Coffee Company towards its existing customers. But which of its existing customers are loyal? How do they know?
There are quite a few different metrics being discussed for customer loyalty. Each consulting firm seems to have their favorite. I would like to open up the conversation and discuss what is being used in today’s successful businesses to measure the health of the customer base. This post is the first in a series that I will sprinkle over the next few weeks to address this subject. I invite you to be part of the discussion!
Today’s topic: Customer Satisfaction
When I worked for HP, we used to look at an index of three scores: customer satisfaction, willingness to repurchase, and willingness to recommend. While this index isn’t perfect, it does give executives a good understanding of the health of the customer base. (HP is now using the NetPromoter score.)
Customer satisfaction is the entry point. Unless we can understand and address customer dissatisfiers, we can’t even begin to think about asking a customer to purchase again. What does satisfaction really mean to a customer?
For some, it might mean they got everything they purchased, the way they want it, and they can go about their business. For others, they may not be satisfied until they feel that the company has gone “above and beyond” for them. Some companies even push their customers to state that they are “completely satisfied” (those companies are obviously measuring their personnel on the scores in the “top two boxes”!).
I was in and out of Enterprise Rent-A-Car several times last summer as my car’s air conditioning was being repaired. I found my answer to “completely satisfied” varying depending on which car they had put me in for that visit, how clean the car was, and how long I had to wait. The one time they upgraded my car, I definitely felt completely satisfied!
Satisfaction has many drivers. Rather than just asking a customer if they are satisfied, it is more valuable to try and understand what makes them feel that way (or not). This could be a simple as asking them to share what they liked or didn’t like about that transaction or experience. When doing the asking, companies have to be prepared for the ranting of dissatisfied customers – not only to take in the information, but to actually take action on it. Action should be both immediate (fix this issue) as well as long-term (can we avoid this problem in the future?).
What about a customer who is “hostage” to a company? In other words, what about a customer who has no other options for that service (ex: the only cable company that serves a remote area)? Does this customer’s satisfaction lead to their loyalty, or will they jump ship when someone else finally enters the marketplace?
When looking at customer satisfaction, it should be used as only one measure of customer loyalty. The context, as well as the drivers, need to be reviewed during the assessment. As I stated up front, customer satisfaction levels are a baseline. Building loyal customers that will repurchase from you and recommend your business requires attention be paid to customers beyond their satisfaction level.
Let’s open up the dialogue. Is satisfaction enough? How do you measure it? I look forward to the discussion!
Customers Rock! 
Paul Schwartz said
I agree with Becky that you need to first understand the drivers of satisfaction and then go from there. I have never been a big fan of a single measure of customer satisfaction. Many customers will say they are satisfied just before they switch to a competitor. There are very few companies who can correlate a single measure of satisfaction with financial performance. To test if any satisfaction metric is any good, ask yourself “does the result tell me what I should change to improve my performance?” If it doesn’t, then that metric is not very helpful.
I have been using NPS recently, but I’m not sure it is “the Ultimate Question.” You need to add the follow-up to it, by asking why they would or would not recommend to get richer informaton. I think you need to dive deeper and have the ability to connect an attitude (such as satisfaction, or referral) to a behavior (what did they actually purchase, how much, how often, do they really refer …)
Lewis Green said
I love this: “What about a customer who is “hostage” to a company? In other words, what about a customer who has no other options for that service (ex: the only cable company that serves a remote area)? Does this customer’s satisfaction lead to their loyalty, or will they jump ship when someone else finally enters the marketplace?”
The same question can be asked about customers who purchase price. Neither lack of choice or price develop loyal customers.
Becky Carroll said
Paul, thank you for sharing the metric you are using with your clients, NPS (or NetPromoter Score). I agree with you that any metric taken by itself does not tell the whole story. Understanding the drivers behind the behaviors, as well as the customer needs met (or not) by the product or service goes a lot farther towards being able to predict future business success!
Lewis, good addition on the price-centered customers. When another offer comes along at a cheaper price, they are gone. They may come back and forth, but they won’t stick. We need to take the relationship beyond price in order to truly develop loyalty.
Professor Bill Bleuel said
this is a very complex topic. I have been working in this area for about 25 years. My first point is that satisfaction is a passive state and has a very small loyalty component. My second point is that dissatisfiers are not the negative of a satisfier. Most people do not detect the dissatisfiers. Dissatisfiers are more critical than satisfiers because when a dissatisfier occurs the customer usually defects.Satisfiers may not build loyalty but dissatisfiers cause defections.
One concern that I have was documented in the Pepperdine GBR (business magazine) in a brief note titled the measurement trap.
I hope you will continue to write – this topic is probalby one of the most mis-understood aspects of understanding customers.
sylvia martinez said
I take my car to an Acura dealership for service, and dread getting the same stupid phone call survey afterwards. They ask inane canned questions and you can only answer on their numeric scale even when the question doesn’t make sense. If you duck the call, they keep calling back. I always think, “I just spent x hundred dollars I didn’t want to and all you do is bug me?”
It’s obvious that they are trying to keep quality up, but my time is valuable. I just answer “excellent” to everything because it gets me off the phone faster and I like the dealership. So most likely they aren’t measuring what they think they are measuring.
Now the service people start to prep you for the call as you leave, probably because they get rewarded for good ratings and punished for bad ones. More time wasted. Maybe they should actually talk to me instead.
Last month I had to take my car to an independent service center, and the owner sent a handwritten note thanking me for my business. OK, maybe I’m a sucker, but contrasted to a stupid impersonal phone call, it was nice. I’ll probably go back.
Becky Carroll said
Dr. Bleuel (customerinstitute.blogspot.com), thank you very much for your insight! I especially like this statement: “Satisfiers may not build loyalty but dissatisfiers cause defections.” So many companies forget that just having satisfied customers doesn’t mean much (even if they are ‘completely satisfied’. There are just too many other factors that impact true loyalty. Taking away the main dissatisfiers is critical, and to me, this is a major reason why it is so important to look at the customer experience.
Becky Carroll said
Sylvia, you are looking at this from a customer perspective, and this is what companies need to consider as they put their “incentives” together for sales and service. Behaviors that are only geared to getting a “top 2 box” score on satisfaction don’t look or sound very sincere to customers, and as you point out, they can be downright irritating!
Interesting how the personal touch made such a difference for you with the independent service center. You are not a sucker at all; you just want someone to let you know they care (I am guessing here)!
Thanks so much for joining in the conversation!
Deliver Magazine said
Measurement – It’s Easier than You Think
Put down that spreadsheet. Throw away that calculator. Demonstrating ROI for your marketing efforts could be a calculation so simple you can just as easily do it in your head.
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