Customer Satisfaction Measurement - The Leadership Factor

Customer Retention at Netflix

There's a great article on the Wired website about the effort that Netflix (an online movie rental company in the US) has put into improving its Cinematch algorithm. This is the bit of their website that says "if you liked this movie we suggest these movies as well". A tiny percentage increase in this algorithm's accuracy means fewer angry customers (because they haven't had what they perceive as 'stupid' suggestion) and that in turns means improved customer retention and loyalty. Read the full article here.

Mystery Shopping can be bad for company health

In their book “Loyalty Myths”, Keiningham et al use the experience of Safeway in America to illustrate the dangers of mystery shopping1. They explain how Safeway based its strategy in the 1990s on delivering superior customer service and invested in an extensive mystery shopping programme to monitor employees’ performance in delivering it. Employees were expected to do things like thank customers by name, offer to carry their groceries to the car, smile and make eye contact: all very desirable customer service behaviours which should lead to customer satisfaction. And they did. Throughout the 1990s Safeway’s customer satisfaction levels and financial returns were very high. However, in stark contrast to the teachings of the Service-Profit Chain2, customer satisfaction and employee satisfaction were moving in opposite directions. This was because employees who failed to achieve a target mystery shopping score were sent for remedial training (called Smile School by the employees!!), and could be dismissed if their performance failed to improve. Moreover, female employees’ feeling that the smiling and eye contact could send the wrong signals to some male shoppers was confirmed by an increase in the number of sexual harassment incidents committed by customers. This led to a number of charges filed against Safeway by the employees’ union and some individual female employees. In the end, the Service-Profit Chain wasn’t wrong. Poor employee morale adversely affected customer satisfaction and Safeway’s financial performance. According to the American Customer Satisfaction Index3, Safeway’s customer satisfaction levels rose substantially from 70% to a high of 78% by 2000 as a result of its focus on customer service. However, as problems with employees intensified, the customer satisfaction gains were virtually all lost, Safeway’s score falling back to 71% by 2003.

References
1. Keiningham, Vavra, Aksoy and Wallard ( 2005) “Loyalty Myths”, John Wiley & Sons, Hoboken, New Jersey
2. Heskett, Sasser and Schlesinger (1997) “The Service-Profit Chain”, Free Press, New York
3. www.theacsi.org

Does mystery shopping tell you anything about customer satisfaction?

Some organisations view mystery shoppers as customer substitutes. True, they have to go through a typical customer journey. If they’re mystery shopping a hotel, they will stay overnight, eat dinner and breakfast and use any other facilities such as a health club. But are they the same as real customers? Of course they’re not. Professional mystery shoppers are exactly that. They are highly trained to observe and record many detailed aspects of the service delivery process and consequently provide highly detailed information that is very useful to operational managers. Examples might include whether the hotel receptionist was wearing a name badge, addressed the customer by name and provided clear directions to the room. They can record waiting times at check-in and check-out as well as in the restaurant. They can also make judgements on levels of cleanliness or staff friendliness and helpfulness. Technology even permits surreptitious video recording of staff, though companies need to think carefully about the implications of this for organisational culture and values. So mystery shopping provides many practical benefits for operational managers for use in staff training, evaluation and recognition, but can’t provide understanding of how customers feel about the customer experience and the attitudes they are forming about the company.

Since mystery shoppers’ profession is to make observations on companies’ customer service performance, they cease to be normal customers, becoming highly aware and often much more critical than typical customers. Whilst this is good for their role, it doesn’t provide an accurate reflection of how normal customers feel. Morrison et al reported other inconsistencies with mystery shopping such as males and older people producing less accurate reports than females or younger ones.

Reference: Morrison, Colman and Preston (1997) “Mystery customer research: cognitive processes affecting accuracy”, Journal of the Market Research Society, 46 (4)

Free wifi

I'm posting this from the National Express train from Wakefield to London. Like many people I was a bit sad when GNER lost their franchise, and worried about what would happen when National Express took over.

One of the changes I have noticed is that the wifi connections available in the carriages are now free, which is a massive step forward. It's time the rest of the world realised that providing wifi and then charging the earth for it is far more likely to irritate customers than to satisfy them, and certainly won't earn you enough money to justify the aggravation.

Making it free, on the other hand, is a genuine benefit for customers, and has the advantage that it doesn't cost you much at all. You get a double benefit at the moment because so many companies are too stupid to see that they should offer it for free if they're going to offer it at all.

It may seem like a little thing, but National Express have just exceeded my expectations at minimal cost to themselves—good move.

Contagious emotions

In our conference presentation, Greg and I discussed the role emotions play in customers' decisions. One interesting titbit from the psychological literature, that I didn't have time for on the day, is that emotions are known to be very contagious.

In other words we tend to feel sad when there we're talking to someone sad, and to feel happy when we're talking to someone happy. This has obvious implications for the "employee-customer satisfaction mirror"—satisfied employees help to make customers more satisfied and vice versa.

We also know that people are very adept at telling false smiles from real smiles (we have a whole region of the brain specialised for processing information about faces). The answer is not to plaster a fake grin and a "have a nice day" onto your customer service; but to recruit nice people, then motivate and empower them. Easy enough, you would think!

Reputation management

As many of you know, we held our annual client conferences this week, and I thought there was lots of interesting ideas from both the TLF talks and from the floor. Some of your stories about companies you like and dislike were fascinating!

Martin's piece on social media and its role in spreading news (good and bad) about companies made me think of the growing trend to perform "reputation management" online. As Martin said, there are numerous tools to help you do this, including automated alerts when a blog post is made that mentions certain keywords.

There was an excellent example of this in action on our blog a while ago. When I made this post mentioning Fred Reichheld someone from his company was very quick to follow up with a link to his blog (hi Net Promoter people!). How long would it have taken your organisation?