The focus on customer service and satisfaction as the ticket to loyalty, growth and profits has been growing since the 1990s with numerous studies providing hard evidence of the connection between customer satisfaction scores (CSAT) and profitability.
But there have been some quite prominent dissenting voices. Research from MIT Sloan, concluded that although companies believe higher customer satisfaction scores equate to a bigger share of wallet, the ‘unfortunate reality’ is that the relationship between satisfaction and spending is very weak.
In the MIT Sloan Management Review article titled, The High Price of Customer Satisfaction, the authors illustrate the point: “A study of the banking industry by McKinsey found that, on average, only 5% of bank customers actually close their accounts each year and that the corresponding loss represents just 3% of total deposits. On the other hand, 35% of customers reduce their share of deposits, and that corresponding loss represents 24% of total bank deposits.”
How satisfaction is measured varies from one industry or business to another. For some, it may be based on retention or repeat customers, for others it’s a numerical score based on feedback. There is no ideal metric and it may be useful to combine the satisfaction survey with some other source of customer data. CSAT scores may not be the last word in profitability projections, but it’s worthwhile looking at some of the main benefits and limitations.
Check reality. Customer satisfaction is the result of delivering a product, service, and overall experience that meets customer requirements. A customer satisfaction survey tells you if your company is falling short, meeting or exceeding expectations. In other words, it helps close the gap between your perception and the reality of what your customers want. Which can be alarmingly wide.
In a recent survey by HubSpot, “80% of surveyed CEOs said they deliver an exceptional customer experience, but only 8% (!) of customers agreed.” Correcting that kind of disconnect is probably the best reason to get clarity on what’s really important to your customers.
Walk your talk. It’s easy to talk about how customer-centric your company is. But if your customers aren’t feeling like the centre of your universe, the words ring hollow. Surveys are an opportunity for people to tell you exactly how well, or not, your product, price and service meet their expectations. And bear in mind that you need to present your survey to them as a sincere invitation for feedback.
The fact is, people are bombarded with survey requests, so make sure you clearly communicate how their feedback will help improve their experience. Then, let them know they’ve been heard by taking action. Recall the old adage, ‘actions speak louder than words’? In an age where talk is cheap and exceptionally loud, actions still speak louder.
Stay relevant. Customers’ requirements and expectations are constantly changing, and you need to keep pace to stay competitive. Survey feedback is one important source for those insights and the market’s response to the current global pandemic is an extreme case in point.
As the South African economy slowly reopens from COVID-19 lockdown, restoring consumer optimism is a key priority for businesses. It will take time and deliberate attention to renew customer relationships and rebuild the trust and confidence that loyalty is built on.
Customer surveys provide the information and the insight you need to understand and respond to customer expectations and concerns in this environment of constant change and uncertainty. Asking the right questions, listening to feedback and responding accordingly is the only way to remake a customer experience that’s relevant, satisfying and sustainable.
Clarify the meaning. CSAT scores are not a reflection of the quality or value of a business and its products overall. They are the customer’s perception of the value that was expected compared to the value that was delivered. The scores only partially address the wider scope of factors that need to be considered, such as loyalty, customer profitability or reputation.
Be realistic about scores. Consider that your high scores are not a reflection of high customer satisfaction, but low expectations. Your existing customers have come to expect a certain kind of experience in doing business with you, so are naturally quick to notice improvements or decline in any aspect of your offering.
Over time, they’ll adjust their expectations to the value being consistently delivered. The result is that survey scores may suggest customers are ‘just satisfied’ when in fact, this ‘average’ rating is due to lowered expectations based on the new normal of their experience. This situation means that maintaining high satisfaction scores over an extended period costly and difficult.
Keep a holistic perspective. There is plenty of evidence to support the connection between customer satisfaction and profitability, but it’s a nuanced argument. A recent article by EY executive Ken Dickman questions at what point relentless customer focus leads to diminishing returns.
An EY survey of high performing companies found a clear correlation between strong financial results and happy customers, reporting, “50% of survey respondents with increasing customer satisfaction report average annual revenue growth between 5% and 15% over the past three years.” However, high satisfaction scores are not the ticket to growth and Dickman advises that organisations need to consider “the value of a customer, the level of customer centricity that will unlock that value and the profitability of the value.”
Is now the time to measure customer satisfaction?
Considering the country is still in the early stages of reopening for business, it may seem premature, or even insensitive, to be querying customer satisfaction. But COVID-19 will likely be with us for a long time and require businesses to create new ways of operating under rules of social distancing, temporary closures and other risk mitigation practices. In these circumstances, delivering a satisfying customer experience involves meeting previously unimagined challenges to physical and emotional security.
There’s no question that your customers are looking at your business through very different lenses than they did even 6 months ago and customer satisfaction surveys can be a valuable channel for feedback and insights to inform the way forward.
We can help you ask the right questions and interpret the data to find the most effective, economical solutions to customer satisfaction.
Get in touch and let’s talk.