Customer Satisfaction Measurement - The Leadership Factor

How do customer emotions impact your business?

Customer emotions are often overlooked when organisations think about the customer satisfaction levels they are getting, or how to improve customer loyalty. But, the evidence is that customer emotions play a key role in this area.

When the concept of customer emotion is addressed by a business, more often than not it seems that it is of the 'wow - delight the customer' variety, but is this really the emotional engagement that customers are looking for?

Well, you can find the answers to the above points and read an article that goes into much more depth in the most recent Stakeholder magazine (see my previous post for the link).

There's also a half-day briefing that's being led by two of my colleagues in London later this month. You can see full details of the customer emotions briefing and book your place by following this link.

Stakeholder Satisfaction Magazine

If you haven't seen it, I recommend that you get hold of Stakeholder Satisfaction magazine, the most recent issue came out a couple of weeks ago. It deals with all aspects of customer & employee satisfaction. It has some great case studies as well.

If you are in the UK and qualify, you can sign up for a free print copy here.

Alternatively, read the articles online (including back issues) here.

Let us know what you think.

Why do satisfied customers defect?

I was interviewed recently by a journalist who asked me what I thought about the classic "flaw" in customer satisfaction measurement—satisfied customers sometimes defect. I find it bizarre that anyone thinks this is strange.

Humans are very unpredictable. They also, in most markets, have a range of good options to choose from. To cap it off, many suppliers are so focused on acquisition that they offer special rates or other incentives for new customers. No wonder customers defect, even when they're fairly happy.

More interesting is the fact that customers can, with effort, be made loyal. Anyone unsure of the benefits of customer satisfaction could spend a valuable 5 minutes pondering how that might happen! But that's a post for another day.

What I want to talk about today is the distinction between attitudes and behaviours. Hidden behind the buzzword of the day (commitment, engagement etc.) is the basic idea that customers have feelings about you, feelings which may be positive or negative, strong or weak. The reason we care is that these feelings have a strong influence over their behaviour, and some behaviours (retention, recommending, buying other products) are good for business.

The misconception that I started this post with is based on expecting these attitudes and behaviours to tally perfectly—they don't, and we shouldn't expect them to. Nonetheless, having a customer base which has positive attitudes about you will lead to greater sales across the whole customer base, even if the odd customer acts unexpectedly.

So, why do satisfied customers defect? Not because satisfaction is a poor predictor of loyalty, but because:

• People are innately unpredictable AT THE INDIVIDUAL LEVEL. The average behaviour of groups IS predictable.
• Passive satisfaction is not enough to guarantee loyalty—there are a lot of good options in the market.
• Companies often spend more effort on acquisition than retention, encouraging disloyalty.

 

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)

Public sector customers?

I received an interesting email today from the Head of Customer Development at a large local authority. He asked whether the different relationship that public sector suppliers have with "customers" should dictate any differences in approach.

My answer was that, although the different relationship entails some surface changes to approach, the core remains very much the same. It means, for example, that there is little point in asking conventional loyalty questions like "will you still be a customer" or even the ubiquitous "would you recommend", but customer satisfaction is still very relevant.

The starting point, whatever your organisation, should be to think about what your desired outcomes are. In the private sector, the company may want increased customer retention, higher sales, larger market share, higher profits and so on.

What are the equivalent desired outcomes for the public sector? Once those have been pinned down it will be much easier to see how to approach both service delivery and customer research. For instance you might set goals based on reducing complaints, or increasing satisfaction as an end in itself, rather than as a step on the road to greater profits.

What do you think—are public sector "customers" fundamentally different from private sector customers? Should public sector organisations manage their customer relationships differently?

Designing Questionnaires - Art or Science?

I've just received yet another badly thought out questionnaire today and it makes me wonder why. Why are so many questionnaires poorly constructed with bad layouts, poor choice of scaling and my main irritation - badly worded questions?

Perhaps part of the problem is the ease with which you can construct online questionnaires now, with a profusion of services that make it easy (too easy?) to ask the wrong kind of question. It's like having a powerful car but no sense of direction or map - you aren't going to get where you want to be! Of course, it isn't just online questionnaires that are poorly designed, there are lots of print examples out there too. I suspect that many of the people that issue printed questionnaires have never tried to complete their own survey. It isn't just the design elements that I've mentioned above, they'd realise that there isn't actually enough space to write a response in or that printing of that type of paper makes the inks smear and so on.

So, given that a well designed questionnaire can boost response rates and provide a whole level of more detailed insight, what things should you consider when designing one: Start with:

• Sampling - who are you sending it to, how many responses do you need?
• Appearance - instructions and question design
• Questions - open, closed, scale etc.
• Layout - what route will they follow through the questionnaire etc.

If you're looking for more ideas and advice, you might want to look at this course or visit the website and pose us a questionnaire question!

Employee Satisfaction - A Key Part of Customer Satisfaction

The BBC News website carried a fascinating article yesterday "Staff appraisals 'waste of time'". Apparently appraisals are viewed rather dimly by many UK workers. 29% of people said their appraisal was a complete waste of time and 44% believed their appraiser had been dishonest.

The article goes on, but the bottom line is that appraisals don't have a great reputation for many workers.

So what's this got to do with Customer Satisfaction? Well, quite a lot actually.

Concepts like the Value Profit Chain show that employee and customer satisfaction are inextricably linked. Now of course, employee satisfaction doesn't just revolve around appraisals, but they do form part of the mix that determines overall employee satisfaction.

The work of Harvard has labelled this "the customer-employee satisfaction mirror". They've demonstrated that employee satisfaction produces higher levels of customer satisfaction. Plus, it's been shown that higher customer satisfaction produces higher employee satisfaction (wouldn't you want to work in a place where the customers are happy and don't keep having a go at staff!). More satisfied employees stay longer, by doing this they retain expertise and customer relationships within the organisation.

So, satisfied employees help to make highly satisfied customers which is good for profits.

If you're working on boosting your customers' satisfaction remember to consider your employees' satisfaction levels as well. This course might give you some ideas.

Another paradox?

Sean posted an interesting comment in response to my post about Simpson's paradox. His question was

How about another research paradox.You improve in all requirements that are important to customers, significantly in the priorities for improvement, and as expected the satisfaction index increases.However when we look at how the customer rates their overall experience this has not changed.

So the conundrum is: how can satisfaction scores go up for a list of factors that customers say are important to them, but stay the same for an overall satisfaction question?

The first thing to say is that this is very, very, unusual. If you look at the relationship between overall satisfaction and Satisfaction Index there is typically a very high correlation between the two (in the region of .8-.9).

Let'€™s put together a list of potential explanations, and see which ones look most likely.

The way overall perceptions are reported

Overall questions are often reported differently to individual satisfaction scores and the Satisfaction Index. If this question is reported as a percentage "top box" score (and/or bottom box) then it will behave differently to an average, making it more volatile but also less sensitive to some types of change (a top box score would be blind to the elimination of poor performance, for example). It's measuring different things.

As an experiment I looked at the average overall satisfaction score, average Satisfaction Index and % top box on overall satisfaction by month for one client with a very large set of tracking data (42 months). The correlations were:

• Average overall satisfaction with average Satisfaction Index: .86
• Top Box overall satisfaction with average Satisfaction Index: .07

In other words average overall satisfaction is very strongly correlated with Satisfaction Index, but % Top Box is very poorly correlated.

Try looking at the average overall satisfaction score as well as a top box figure to make sure you're getting a fully rounded view.

Sampling error

If you're talking about the change between one survey and another, rather than a consistent trend over time, the issue may be sampling error. Whenever you conduct a survey there is a certain amount of sampling error reflecting the fact that you only talk to a subset of the people whose views you're interested in. This gives every piece of data a margin of error, which will be relatively larger for a single question like overall satisfaction than it is for a composite score like the Satisfaction Index.

Sampling error may be hiding real gains in overall satisfaction by making the score look higher than it should in the first survey and lower than it should in the second.The Satisfaction Index is more resistant to sampling error.

Asymmetric impact

Nigel talks about this quite a lot in his new book. If improvement has mainly been in areas that are "satisfaction maintainers" then you wouldn't expect to see much change in average overall satisfaction, since the shape of the relationship between a given and overall satisfaction is a bit like this:

What you would expect to see is a reduction in the number of customers who are very dissatisfied overall, as the key with givens is to keep performance above a threshold "tipping point".

So is this the answer? Perhaps partially, but it's unlikely that all the priorities for improvement are givens. (It'd be nice to know the impact correlations!)

Improvements to satisfaction maintainers may not result in big changes in average overall satisfaction.

The nature of overall satisfaction

Another possibility is that customers have noticed improvements in specific areas, but this has not yet had time to feed through to their overall feelings about the organisation. If so, we'd expect to see overall satisfaction start to trend up (along with loyalty) after enough time has elapsed. This could be confirmed with statistical models given enough data.

A related explanation is that overall satisfaction is a tricky beast. One of the reasons that the Satisfaction Index is often preferable to a single overall satisfaction question is that it is rooted in specific attributes. Overall satisfaction is a much more nebulous measure, and is bound to incorporate many other influences such as brand image and reputation.

This helps explain why there may be a time lag between improvement in individual attributes and changes to overall satisfaction. It takes much longer for customers to feel generally warmer about an organisation than it does for them to notice specific improvements.

Conclusions

So what is the most likely explanation for Sean's paradox? My guess is that it is probably down to looking at improvements in average scores against a relatively static % top box on overall satisfaction.

If I'm wrong, and Sean's talking about an average overall satisfaction score, then my guess would be a mixture of some of the other issues I've outlined in this post. With a bit more digging around in the data we might be able to eliminate some of them and narrow down the search!

It gets measured therefore it's still getting done

Enterprise is widening the gap from its competitors in satisfaction
Nov 2007

Back in October 2004, Stakeholder Satisfaction featured an article on how customer satisfaction was treated at Enterprise Rent-a-Car. The article was entitled "What gets measured gets done" and it explained Enterprise's internal measure of satisfaction "ESQi" or "Enterprise Service Quality Index".

The Enterprise way is apparently still bringing in results, as a recent survey quoted in American Business Travel News shows. To quote:

For the fourth year in a row, Enterprise Rent-A-Car was the highest-rated car brand in the study.

A key point in Enterprise's success has been using the right measures to effectively manage employee's behaviour and organisational performance. Hill et al even cite Enterprise as a prime example of why you should measure satisfaction (see page 35 of Customer Satisfaction).