Measuring Customer Satisfaction

As I talk to organizations about their performance management journey, one of the most common questions I hear is “What’s the best way to measure customer satisfaction?” I often reply with a question of my own “Why do you want satisfied customers?” My question is usually unexpected and even jarring but I am encouraging them to think about the reason they want their customers to be happy. I change the conversation from one about measurement to one about objectives.

In my experience, the reason to focus on customer satisfaction usually fits into one or more of the following categories:

  • Highly satisfied customers are more likely to repurchase the same product/service without considering switching to a competitor.
  • Highly satisfied customers are more likely to recommend the product/service to their friends, family, and co-workers.
  • Highly satisfied customers are more likely to pay a premium price as compared to equivalent products/services.

I intentionally used the phrase ‘highly satisfied customers’. Research by Xerox found that very satisfied customers were six times more likely to repurchase within the next 18 months than customers who were simply satisfied. When you survey your customers, ask them how satisfied they are, not just if they are satisfied.

It’s important to remember customer satisfaction is from the external customer point of view, not the internal organization’s point of view. Your organization’s performance may be outstanding but if your customers feel that it is poor – or even no better than the competition – they may report their satisfaction is low. Also, an organization cannot be great on all things. Focus on those things that bring value to your customers.

Recently I spent some time with an operations manager for a federal agency. He complained that employee satisfaction with the on-site cafeteria was low, even though he had already changed the outsourced vendor twice. Since the employees were his customers, he was quite worried.

After reviewing the survey questions they had used, I suggested they stop using abstract questions such as “Are you happy with the quality/variety of food?” and instead focus on comparing the cafeteria with other options available to employees. We settled on questions such as “How satisfied are you with the quality/variety/value as compared to those in nearby restaurants?” and “How satisfied are you with quality/variety/value as compared to other federal cafeterias that you have visited?” Since the agency isn’t really in the business of serving food, these questions do a better job of benchmarking the cafeteria against expectations and the competition.

With that in mind, I would encourage you to avoid simple questions of satisfaction and instead think about which of the three goals above you are trying to achieve. For example, if your objective is to up-sell or cross-sell more products to your existing customers, you may want to ask them how likely they are to do so in the next 12 months. That question is probably a better gauge of their happiness.

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6 Responses to Measuring Customer Satisfaction

  1. Tim K. December 12, 2006 at 12:48 am #

    Great post- I was involved in a lot of sat. projects at my previous job, and it always seemed like the folks driving various surveys were pointing the gun at the wrong target, or maybe using the wrong weapon.

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