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!