If we measure customer satisfaction on a scale of 1 (completely dissatisfied) to 5 (completely satisfied) why does a company need to do better than a 4? After all this is the real world and some people will never be happy, products are not perfect and the service customers receive depends on people……..defiantly not perfect.
In competitive markets customer satisfaction is important. In highly competitive markets research has shown that this is true to a surprising degree. Customer loyalty in such an environment drops off sharply after the point at which they cease to be completely satisfied. Research by Xerox for example showed that its completely satisfied customers were six times more likely to repurchase over the next 18 months.
It is generally agreed that the replacement window market is no longer expanding and that competition is likely to increase. Arguably changing customer attitudes even in the retail market will make customer satisfaction an issue that determines who is successful and who is not and whilst many (but not all!) retailers still have the attitude that customer satisfaction is unimportant (you only have to look at the recent Which? Survey) streetwise and sophisticated customers are beginning to view even straightforward propositions with suspicion. In markets where repeat business is the life blood, customer satisfaction will in the final analysis determine which companies flourish and which fall by the wayside.
Customer satisfaction indices are therefore more important than mere vanity but we do not see a concentration by managers on what they can tell you or how to react. Often this is because managers are ‘doing’ and not ‘managing’ (a whole other article!) but also because there is a general acceptance that if its ‘not broke don’t fix it’. If you accept however that customer satisfaction is a key differentiator then research has shown that in a competitive environment keeping them merely satisfied will not stop them becoming ‘defectors’. At worst they are a breeding ground for ‘terrorists (see Fenestration News last issue). Professor W Sasser conducted research in the US into a number of industries and at the extreme were local telephone companies where it is very difficult if not impossible to switch supplier and the car industry where it is easy to move to another brand or dealer.
If we were to plot say a Trade window company’s customer satisfaction against loyalty it would be most likely to be like the car industry There is little product differentiation, it’s easy to change supplier and price competition is common, unless a customer is highly satisfied the decision to defect is easy.
In order to plot your own curve you need to survey customers and analyse the defections. How many of each satisfaction category leave? The key to gathering this information is taking an unbiased and consistent sounding over time of the customer base. Managers should not be able to distort the figures (for example if bonuses depend on the results!) and the process must be consistent so that changes over time are visible, then strategies to improve satisfaction and loyalty can be evaluated.
And that’s the most important part, how do you listen to customers and what do you do with the information? Part three of this short series will look at strategies for taking these soundings and what successful companies do with the information.
Chris Ball is a Director of MBA and a member of the institute of management consultants, MBA Associates Ltd is a specialist consultancy that partners clients to Recruit, Retain and Develop Top Performing Teams. MBA can be contacted on 01242 821 432 , firstname.lastname@example.org or through the website at www.mba-associates.co.uk>