No progress without linking customer satisfaction to profits

While many businesses believe that they know and can articulate these factors, it is easy to get off track with an “inside-out” viewpoint. [Image: Shutterstock]

Business executives often ask: "Is the money spent on customer satisfaction and loyalty measurement really worth it?" The answer is "No" – unless these programmes deliver the knowledge you need to attract, retain and increase business with your customers. Sigma and other quality programmes that rely heavily on satisfaction metrics won't help unless they focus on driving desirable customer behaviour. Here are some pointers that will help you succeed at this:

> Hear the voice of the customer. Plan to go beyond a single, all-purpose survey. To get the customer information you need, you must use multiple listening posts that gauge satisfaction and loyalty at multiple levels – that provide the pulse of the overall relationship as well as the day-to-day transactions. The best listeners include all stakeholders, from customer decision-makers to customer end-users, to channel partners, to employees.

The listening process must capture and evaluate appropriate product, service, cost and brand image factors that may affect customer behaviour. While many businesses believe that they know and can articulate these factors, it is easy to get off track with an “inside-out” viewpoint. Try to hear directly from the customers in their own words, and not rely on internal reports that may not capture essential insights. Only customers can tell you what drives their satisfaction, loyalty and value perceptions.

> Focus on core requirements to establish changes in priorities. The goal of loyalty and satisfaction measurement programmes is to help get loyal customers, who will buy more and eventually become advocates for your brand. To accomplish this, you need to modify the process of serving your customers. Set priorities and focus on those key product or service elements that have the greatest impact on satisfaction and loyalty.

Research has shown that different items have different effects on satisfaction and loyalty. Certain elements are the so-called key dissatisfiers, where not meeting expectations will cause overall dissatisfaction, but exceeding expectations will not necessarily lead to customer delight. Other items are key enhancers, where exceeding expectations will improve customer satisfaction, but not delivering on them has little effect on dissatisfaction.

> Align customer feedback to internal processes. The business teams must evaluate customer survey results in light of any existing operational or transaction metrics available. Try to define the specific internal processes that touch value delivery to your customers. Analytical models can validate and link these internal process metrics to your satisfaction survey results. Then you can frequently track and act on the few critical internal metrics that are leading indicators of customer satisfaction and loyalty.

> Execute the desired change. Even the best measurement programmes are useless unless they trigger appropriate operational and policy changes. Satisfaction and loyalty measurement programmes must include processes for prioritising changes, developing action plans and targets, and ensuring that incremental improvements are made. Deployment and action-planning workshops with key business stakeholders are good tools to use in order to clarify findings and help the learning process throughout the business.

> Make the connections between dots. Satisfaction data cannot stand on its own; it must be integrated with other information you have in your customer and operational databases. For example, analytical models can calibrate survey loyalty measures with actual retention and attrition data that will lead to a great payoff: Showing how an improvement in ratings reduces customer churn is a great way to align stakeholders. You can use these models to predict which types of customers are at risk of leaving, and to plan your customer acquisition and retention efforts.

> Connect to return on investment. The executive team cares most about bottom line and so you must link improvements in survey results to profits. A good way to accomplish this is to use advanced analytic techniques to model how customer lifetime value varies with satisfaction and loyalty measures. This will help determine the return on programmes that improve customer loyalty.

If you are investing in customer satisfaction and loyalty measurement programmes, you need to evaluate the same on each of these six principles, which help transform measurement programmes from just another cost of doing business to drivers of growth and profit. The bottom line is that measurement programmes must demonstrate that they pay off with improved financial results by creating more satisfied and loyal customers.