Customer Satisfaction: How sophisticated is your approach?

Businesses exist with one purpose: to get and keep customers who enjoy the benefits the business provides to them. Achieving that requires businesses to have a good understanding of what customers value as well as an ability to meet customer expectations consistently and effectively. A failure to meet expectations can result in, at minimum, complaints, or in extreme cases the failure of the business. The stakes for business owners are thus high and it is reasonable to expect that successful businesses routinely incorporate customer feedback into their decision-making, planning and investing.

Businesses exhibit different levels of sophistication when it comes to measuring and managing customer satisfaction, from rudimentary to highly sophisticated. These different approaches can be generally classified into four states of maturity as described below. As you read these descriptions, answer this question for yourself: where does my business fit?

Reactive approach: Customer complaints arrive, unsolicited, and are dealt with as one-off’s. Operations improvements, if implemented, address the concerns of a specific customer. Most complaints are “resolved” via givebacks: discounts or rebates. Sales growth, customer referrals, and re-sales are used as analogs for measuring customer satisfaction.

Basic system: Complaints, whether solicited or unsolicited, are categorized and tracked. Improvements are determined based on analysis of data and business impact, rather than who yells the loudest. Customer feedback is solicited proactively through satisfaction surveys. A rudimentary continuous improvement process is established to track progress in eliminating the root causes of customer dissatisfaction.

Robust system: Multiple survey tools are used to solicit feedback at the transaction level and the long-term relationship level. Surveys are well-designed, free of bias, and results are statistically valid. Net Promoter Score (NPS) and Customer Effort Score (CES) are measured. The business has quantified the relationship between service delivery attributes and customer satisfaction. Key business processes are evaluated for improvement opportunities. Customer satisfaction management is an executive-level responsibility, and results, as well as trends, are monitored and communicated company-wide.

Advanced system: The business embraces “Voice of the Customer” methodologies to constantly refresh its understanding of changing customer expectations. Survey data from transaction and relationship surveys is augmented with tools designed to learn where the market is going, creating a deep understanding of how the business creates value and how to measure its success in doing so. The business evaluates its performance relative to industry competitors. All business processes are evaluated for improvement opportunities. Investments in improvement opportunities or new capabilities are correlated with increased customer satisfaction and customer loyalty. Transparency in the management of customer satisfaction allows employee compensation to be tied to customer satisfaction results.

At a minimum, small business owners should strive for a Basic system. This can be accomplished without spending a lot of money, but still requires premeditated structure and discipline. For example, in order to “track” complaints, two things are required: one, planning to determine how to organize complaints into categories that provide useful management information; and two, an easy-to-use method for logging complaints by anyone in the business. The most significant innovation at the Basic Stage is the use of surveys to solicit specific feedback from all customers, not just the ones who are most vocal. Survey design and administration is a highly technical skill (made easier these days by the abundance of on-line survey apps and support), but done correctly it can provide objective, balanced feedback that supports informed decision-making by management.

As a business coach, I want my clients to be able to describe the ideal service experience for their customers (in both hard, quantitative terms as well as soft attributes) and have a system in place for evaluating how successfully they deliver the ideal experience. A regular flow of customer satisfaction data will focus them on bridging the gap between expectations and reality.

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