Overview
Accepting the cost of retaining a customer is less than the cost of acquiring a new one or that the opportunity to upsell and cross-sell to existing customers adds value then it follows that making sure customers are satisfied is important. However, the odds are stacked against the supplier purely by the virtue of human nature. So, satisfying a customer is not enough, we must delight our customers rather than just make sure they got what they paid for.
Customer Satisfaction is the measure of how well we are doing as suppliers. Delight a customer and they will possibly recommend you to someone else. But underperform and customers, whether individual or corporate, will be much more likely to complain.
Simply being a provider that gives the customer what they want, timely, efficiently, and at a decent price may get some positive endorsements but that is no guarantee. That does not mean you should not measure, however. Measuring Customer Satisfaction is not about enticing an endorsement out of them, it is about understanding today where we are valued and for tomorrow to make the changes and improvements needed.
Customer Satisfaction is now so important that companies specialize in helping our customer score and measure and putting into place actions to improve. Some companies may even list their Customer-Sat score on their website as a badge of honor for how well they are doing.
There are, in effect, three ways to measure Customer Satisfaction. All provide a different perspective of the customer experience and the relationship they have with their supplier.
The Customer Needs to Be Satisfied
Whether the job title is Customer Champion or Head of Customer Excellence matter nought, it is the attitude and belief in getting everything right for the customer that matters. But there is a narrow line between being a champion of the customer and going into bat on behalf of the customer.
In the same way that everyone is in sales, but we may not all be salespeople, it is true to say that everyone in an organization has some responsibility for ensuring customers are happy, or at the very least, content.
Customer Satisfaction is a measure of how satisfied a customer is with the products and services you offer and the support and advice they receive from you. It is not Customer Service though that does play a part in the race to satisfy your customers.
In a paper entitled “A Theory of Human Behaviour” in 1943, Abraham Maslow delivered his Hierarchy of Needs, see Figure 5.1 below. Today this is one of the most widely recognizable charts. However, applying it to business is something rarely done but is something that should be done to understand the customer.
We think of the Hierarchy of Needs in personal terms in general life terms. We need a place to live, food, shelter, warmth, and so on. We need social interaction. The very fact that sits firmly in the middle of our needs pyramid is demonstrated best by what happened in 2020 and 2021.
Figure 5.1 Maslow’s Hierarchy of Needs in the business environment
Starting in late 2019, a virus spread around the world causing a huge upheaval to society. The pandemic that followed wrapped itself around the globe had a huge impact on rich and poor alike, countries and people. Drastic measures were introduced in many advanced economies where the complex interaction of society was driving infection rates ever higher.
The full fallout of working from home and homes-schooling has yet to be seen but most people have suffered in isolation to a greater or lesser degree. But it is not the family group isolation that is the issue, it is the lack of “what else.”
I have worked from home since 1994. I remember explaining it many times to my friends how it worked, and how many of them did not truly get the concept. Indeed, my partner would telephone me throughout the day to ask if I had done all manner of chores and tasks; I think she understood the “home” bit better than the “working” bit. Today, however, working from home is not so uncommon.
The isolationism is not the working from home, it is the lack of socializing, whether with colleagues in an office or friends over dinner. It is the lack of belonging; window shopping, listening to other people’s conversations on the train or in the coffee shop, the noise and hubbub of social society, of being able to socially integrate with others.
Maslow’s Hierarchy of Needs can, and should, be applied in business as well as to us all individually. In truth, there are two ways the Hierarchy of Needs can be applied in a business, the first for the customer and the second for the business itself.
Physiological Needs. We need the product to work, we need it to do what it is designed to do. We need it to fulfill a purpose for us. If we are buying vitamins, we need to know what the pill will give us in pure numbers form. Very few of us will know enough about our body’s needs to fully understand all this stuff so we take it as read and we hear advice from respected people—doctors, dieticians, and so on. We then simply apply what we have been told to what it says on the packet.
Other products may have a more directly involved process for deciding if it fits our basic needs. We are thirsty and walk into a shop. Do we buy a bottle of water or do we buy a packet of crisps (chips for my American friends and colleagues). The answer is simple of course but one of these will satisfy the physiological need, the other not. Even if we are hungry as well.
Customer Satisfaction is making sure every bottle of water tastes good, the supply chain delivers enough to the shop and customers get what they want. In the packet of crisps, the “chips” are fresh and not crushed down to a pulp.
Safety Needs reflect the impact the supplier or product has on us in other ways. Vegetarians baulk at eating meat of course, and in the Hierarchy of Needs this sits in their Safety Needs requirement. Beyond lifestyle choices, we can consider our environmental leanings perhaps. However, most of our decision-buying criteria is simpler; in B2C, it would be the price or value for money and B2B perhaps also the Return on Investment (RoI).
Where Customer Satisfaction is most prominent in a business is in the space marked Social Interaction. The ease of doing business, the process for handling complaints, the ability to correct mistakes.
Modern society requires Social Interaction to take place across multiple platforms, indeed often in a nonsocial way! Whether it is social media, chatbots, messaging, e-mails, or call centers; how we interact with our customers matters. It matters how many channels and how well. It is simply not enough to show up online, have a portal, and think that is enough.
I was at the checkout of a shop, buying some hardware. The young woman at the till clearly did not want to be there and her manner with the people in front was obvious. If she could have thrown everything harder and farther down the conveyor belt she would. No eye contact, nothing but the merest of grunts in between the occasional begrudging word.
Not to be defeated, I tried to lift her mood. Every item that she picked, scanned, and tossed items in my general direction it was met with a cheery “thank you” from me. Nothing. No change, no reaction at all from the young woman serving. I persisted and, after paying, in cash, and accepting my change I reached for my final attempt in customer relationship management.
“Excuse me, I have been very polite. It would be nice if you said thank you.”
The checkout assistant responded, “Don’t have to, it says so on the receipt.”
Social Needs are not just about the customer, they apply equally to the staff, the team, the workers. In the aforementioned example they clearly impact the customer experience, although I do begrudgingly admire the fact that in this particular social sword-fight she won.
How you look after your employees and fellow workers directly impacts the relationship you have with your customers. The adage that “the Customer is always right” needs to sit shoulder to shoulder with:
Employees come first. If you take care of your employees, they will take care of the clients.
—Richard Branson
In the world of business, Social Needs are really all about how easy it is to do business, how enjoyable the experience is and how likely you are, as a result, to return.
If you have ever bought a low-cost airline ticket then tried to get a refund or make a change you will know that it is not an easy task. The buying experience up front is super slick and efficient. For most customers this, and the price, is all that matters. So, if the complaints process is tortuous then perhaps, they do not want you as a customer and they will stick with the 90 percent that do not make a fuss.
Ease of doing business does not apply to everyone and does not apply at every stage, where it matters most is determined by the type of customer you want and how much effort you wish to make to the outliers in your target market.
Thanks to the Fourth Industrial Revolution, ease of doing business has improved significantly. Known also as Industry 4.0, it is the automation of industry, using machine-to-machine communication, and the Internet of Things (IoT). Integrated for increased automation, improved communication, and self-monitoring, to analyze and manage without the need for human intervention.
Take something we consider today as simple as opening a bank account. Install the App, upload some information, scan a few documents, and all you must wait for now is a piece of plastic to arrive in the post. In fact, you may not even want the card. Today opening a business bank account should take less than 10 minutes.
Compare that with how people opened my first bank account even as recently as 10 years ago. Customers had to make an appointment with the bank and come armed with all manner of identification information, proof of address, income statements, and so on. Lots of form filling, multiple versions of my signature to be stored on different systems.
If we now apply the technology alone to the original process, it would not make it any quicker or easier. Accepted background checks would be quicker and making an appointment and the signature may now be on a tablet not paper. What has changed is the processes have been optimized using the technology to make the experience better. Technology alone will not improve the ease of doing business.
Some people have greater Esteem Needs than others. In the world of business, it follows that some companies, and some industries, have a greater degree of trustworthiness. You perhaps trust your dentist more than you do your dry cleaner!
For Customer Satisfaction, Esteem manifests itself in quite a different way. As customer loyalty increases so customers look for some recognition, they look to be rewarded. In many cases additional discounts, invitation to special events, part of an “inner circle,” early notice of new product lines. These are all good marketing tools and will build desire in those not at that level and improve loyalty for those that reach it. But it is also about Esteem.
Social Media has heightened the need for many people in society to want greater recognition. As somebody once put it, social media is about “buying things you don’t need, with money you don’t have, to impress people you don’t know.”
We are all guilty of showcasing our own, special experience. Whether it is to build self-esteem, or to “show off” to others matters naught to the company selling, if the word gets out there.
As people want greater recognition, companies can turn this to their advantage, not just for loyalty purposes, but also for social media marketing through their own customers.
Customers see they are valued more highly. Customers become even more loyal. Customer shares the success reward with his peer group and on social media. Customer becomes an advocate for your brand/product. More customers arrive.
Customer Satisfaction can be delivered through attention to Customer Needs.
The trouble with Maslow’s Hierarchy of Needs is twofold. First, it is not a hierarchy. Accepted there is some logic behind the way the layers are built up, but it does not follow that one leads to another or that one should be completed/achieved before moving onto the next.
But are they all needed? In the world generally perhaps not. In the world of business certainly not. We may aspire to high esteem, but I doubt it is an actual need.
In Maslow’s Hierarchy of Needs, Self-Actualization is simply that you have achieved the very pinnacle of what you can be. In the world of Customer Satisfaction perhaps we should rename this Supercustomer Actualization.
Maslow’s Hierarchy of Needs does not apply to a modern world. For example, Ozan Dağdeviren in his book Ait states:
Perhaps, Maslow, who set up this model, would not realize the selfrealization of the pyramid if it had grown up in a collective society such as India, rather than in a society like America, which adopted a strongly Accurate style ……. It is time to leave behind Maslow’s flat, hierarchical and life-simplistic system: with a dynamic system based on interaction, giving space to complexity, in which needs are not parallel and can be met independently
The best example of Supercustomer Actualization is a well-known department store. Their top customers, through spend and loyalty, get personal shoppers, have a dedicated suite of rooms to use when they visit where clothes and other items are brought to them. Food and drinks are laid on, everything is packed, wrapped, and delivered to the customer’s home the same day. The store will even arrange this out of hours and has a dedicated private entrance to the room at the top of the building for the experience. The same department store will also send you birthday cards, occasional gifts, invitations to super-VIP events, and exclusive offers. This may be as close to Self-Actualization that we can get for a customer.
Measuring Customer Satisfaction
It is wrong to suppose that if you can’t measure it, you can’t manage it—a costly myth
—W. Edwards Deming
There are several ways to generate a score from customers and several ways you can score Customer Satisfaction. The length of time you have a customer and the number of products they buy will impact the score they give you as will their peers and even people they do not know. What is clear, however, is that Customer Satisfaction matters for long-term relationships and in a B2B environment it is the personal score of individuals as much as the collective score of the company that matters.
Survey tools, be that online or directly by phone or face to face, can be used to collect customer feedback. Asking a single question or multiple questions will get you the data but too many questions or too complex questions and you may not get the answer you want or the number of completed surveys may not be the number you need. Keep it simple and keep it short.
We are today swamped with online surveys. That poses a problem. The customer is not as engaged as you would like, and you now must “earn the right” to ask the questions. Companies sometimes resort to incentives to get surveys completed but how engaged the responder is when they are there because of the carrot not because of their experience remains open for debate.
Web-forms are often used as survey questionnaires and are a short-form version perhaps focused on one element. Through 2020, we were all constantly being asked by multiple video-conferencing companies about our experience as we left a web-call. In truth, the question was completely irrelevant to what they were doing but it made us feel our feedback mattered! If there was ever likely to be an issue with the call it would be bandwidth not application related, something they had no control over.
Some industry sectors have taken to mobile messaging surveys. Several online banks and multiple delivery companies that do this. The assumption from these companies is that you transact through an App. So, therefore, you will be willing to complete a survey the same way. None of these, widely or generally publish statistics on the number of fully completed surveys. It is, therefore, likely to be an extremely low response rate.
Live chat online may be a good tool to capture feedback from customers. If done through the course of helping them with an issue it feels less invasive. If done at the end when the attendant asks if you would not mind completing a survey based on your experience, then the drop off is, not surprisingly, extremely high.
Live chat may take more time than surveys which can be fully automated but for large organizations investment in Artificial Intelligence (AI) can help reduce some of the manual work. Many Live-chat attendants are fully AI today, complete with shorthand response and intentional spelling errors, to make you believe you are in fact text messaging a real person.
Direct communication with customers, by telephone or in person, and by e-mail can also capture feedback. Simply asking a customer on a call what they thought of a product or, for bigger clients, what they would like to see changed about the products or how you support them can be a good way to measure not just satisfaction but their long-term needs and just how well you are doing today versus their expectations for the future.
Do be careful when asking clients what they want from the future relationship or product. You might get set targets you cannot achieve. What began as a casual conversation may later become a stick to beat you with or a product want becomes a product need and you find yourself falling short. That is not to say, do not have the conversation, but use this with caution and not with every client.
Where Channel Partners are involved, it may be difficult to get direct customer feedback. It may also not be in the Channel Partner’s best interest to pass on all the feedback either because it reflects badly on them or because it gives data to their competitors.
Online, analysis of customer shopping and browsing patterns, web-page visits and downloads as well as other data can help provide information about your clients. Your website may have data analytics tools built in to help generate insights and reports.
In the direct retail world, best practice is the one last question approach. It may seem a little blunt instrument but that does not make it less valuable. Just asking the right question at the end of the buying process to get a soft metric can be useful. Done well, just asking the question can leave a positive impression with the customer.
Not every company cares for face-to-face feedback. “Do you want fries with that” cares nothing for customer satisfaction and all for cross/ upselling. Followed by “Have a nice day” again no interest in the customer’s experience more an instruction to go away.
Asking the one question in face-to-face retail it also matters that tone, intent, and body language are all correct.
Think about the last restaurant you went to. At some point the waiter will ask something like “Everything okay with your meal?” How many times have you been mid-conversation or have a mouth full of food when asked? Has the waiter stopped to wait for you to respond or, better still, waited until you are ready for a short conversation?
Often it may be done as a walk-by on the way to another table. If there was a problem with the meal, the diner should have already made it known to the waiter rather than carry-on regardless. Yet we all put up with this and it does nothing to improve customer satisfaction, potentially it is just annoying.
The prestigious Royal Automobile Club in London’s Pall Mall houses one of my favourite restaurants. The RAC provides great food and a relaxed atmosphere in a wonderful building, but it is perhaps the way they treat customers that makes it different. How they attend to Customer Satisfaction is through good Customer Service.
A waiter will always make sure the water is topped up, without asking, and wine glasses filled. All without the slightest hint of fuss or interruption. Only when he or she notices I have stopped eating and there is a lull in the conversation will he or she ask. The question is often thoughtful and informative and shows care for the customer. Rather than the typical how is your lunch? without the waiter so much as breaking stride that you get from most restaurants, the waiter here is more likely to be I’m glad you went for the Sea Bass. The sauce is something new from the Chef, it would be good to tell him what you think.
This is not an invasive question. It takes little time to respond but requires me to think and therefore engage in the conversation and give useful feedback as well as the impression that my views count.
In the example above, yes, there is a lot of blurring between Customer Service and Customer satisfaction. However, the question is done to get feedback but also to get a response from me that lets them know how well they are doing and how satisfied I am by the overall experience. Even if the food was great and there was an issue with something else it is an open question and allows me to raise another matter should I wish to.
Scoring Customer Satisfaction
Customer Satisfaction can be scored in several ways, such as CES, CSAT, and NPS. Collectively, we may often refer to these as Customer Experience (CX).
The Customer Effort Score (CES) is a measure of how easy, or difficult, it is to do business. It can be applied online or in person and can be a question you put to the customer at various times, such as point of order, dealing with returns, handling complaints, and so on.
There are two statistics that explain what CES is important. In a report published by Harvard Business Review in 2010: 94% of consumers who report their interactions with a brand being ‘low effort’ will repurchase. And, according to an article by Hubspot: 91% of customers reporting high effort saying they would speak negatively about the company to others.
CES should be done immediately after the interaction. The customer is more likely to respond at that time and the accuracy of their response will be better. But, as with any survey, keeping it short and simple and not asking the customer to spend too much time on this is key. Often, just one question is enough.
Unlike CES which scores the ease of doing business the Customer Satisfaction Score (CSAT) is a more general measure, used to measure how positive, or negative, a customer’s experience has been. CSAT is calculated from customer responses to a simple grading question or set of simple questions, very often online.
We see CSAT surveys today at places of high consumer traffic where touch buttons are installed for immediate customer reaction, such as an airport arrivals hall, or public lavatories. The obvious questions: who touched the button before?
In most instances, it is a simple one-rating system ranging between very good/positive to very poor/unsatisfactory. Online there is the opportunity to have several simple rating scores that people are asked to do, but you should always begin with a general statement on the overall experience.
Combining the scores from a CSAT survey is a matter of seeing how many rated their experience at each of the levels. Multichannel companies can compare one channel with another to learn about the customer experience and make changes. Different regions and territories may even react differently with different expectations.
CSAT can be done multiple times through the process. In long and complex sales and ongoing customer relationships, this may help you spot trends in customer loyalty and where you need to make improvements in the process.
CSAT is also an effective way of measuring the success of a change to a product or the buying process with your customers.
CSAT does have some disadvantages. Studies have shown that we tend to vote more toward the extremes in these kinds of surveys. The preference is either very positive or very negative rather than mildly so or neutral. It also brings with it consumer prejudices. There may be nothing wrong with the queue at the airport security check-in but if the person in front of you was totally disorganized, had to go multiple times through the metal detector, and had unacceptable items in their baggage you may score the process down, regardless of the fact the issue was not within the control of Border Control.
CSATs are best done immediately after purchase or, if it is a long process, at key stages in the buying process. But too much and the CSAT scoring process will facilitate lower scores.
Customers who must renew a product or services, perhaps annually, are also worth surveying. How often and how detailed is up to you but perhaps no more than every six months for something like an annual membership subscription. Not only does this let you know whether the customer is still using, and still valuing, your service, but it also gives you the opportunity to inform the customer you care about what they think. Often it can be a prompt for a follow-up call or for them to call you.
CSATs can be undertaken seasonally, to fit in with customer buying cycles or other products, competitors and complimentary, or to engage with them outside of the normal buying cycle or process.
For companies with large numbers of customers deploying CSAT gives a rolling review of the company’s performance and the value of its services and products. Making a change and watching the scores change, or not, can give early insight to things you have changed for the better or things that customers do not like.
Big companies and small alike can make costly mistakes but thinking they know better and not testing first. In 1985, Coca Cola introduced “New Coke” changing the formula that had been for 100 years. The arguments made sense; it was sweeter than before using corn syrup. What can go wrong with making a sweet drink even sweeter?
Coca Cola knew from the start it was a bold move and set up a way for customers to give feedback. It blew up in spectacular fashion; at one point, only 18 percent of consumers rated the new coke better than the old. Pepsi, their biggest rival, went to town on an advertising campaign and in some U.S. states, there were helplines for people to call and complain. In one U.S. state, there was a petition to the company to change the recipe back.
New Coke lasted 77 days before the company faced the press and confessed to having made a mistake. The irony of all this is it generated a lot of post event publicity and saw a surge in sales and improved their leader over rival Pepsi Cola.
If you think Pepsi always gets it right; in 1989, Pepsi introduced a high-caffeine version of its drink called Pepsi A.M. It was only piloted in some U.S. states and failed to catch on so was quickly pulled.
In both cases, Coca Cola and Pepsi Cola, customer feedback was vital in the decisions the company made. For Coke, however, they thought they knew better whereas Pepsi experimented first. Using CSAT will give you the information you need but there are perhaps better ways of experimenting with your products or services than a Hail Mary Pass approach.
CSAT has the advantage that it is short to do and offers a simple rating scale. Therefore, it typically gets a high response rate. However, it is open to cultural bias which vary not just from country to country but even region and other cultural differences. Differences in how women and men score and even the time of day that a score is taken can all have an impact.
Customers completing CSAT surveys tend to score in the extremes. Those who feel very passionate for or against their experience are more likely to give a score than those in the middle ranges. That it is a snapshot in time does not always reflect well in ongoing Customer Satisfaction.
The survey term “satisfied” is about as vanilla as one can get. It is a relatively neutral word, rather than perhaps something like excited, delighted, or even delicious. To understand how a customer feels about your product or service, or company, instead of ranking their assessment it may be better to ask them a more engaging set of questions.
Net Promotor Scores (NPS) helps measure customer satisfaction by asking them if they are likely to recommend your product or service to a friend. In fact, you can begin a survey with a CSAT question first and then continue with NPS-based questions.
NPS was developed by Fred Reichheld of Bain and Company in 2003 and is universally used by companies around the world. However, for most companies using NPS they tend to use the scoring methodology and not the other elements of NPS which involve a process of learning and improvement. In short, companies use the scoring method as a start but do not always follow the full methodology.
Customer referrals begin from within. If you cannot get the people who work for a company to recommend it first, then asking customers to do so will be a greater challenge. According to Fred Reichheld:
Many executives …, want the economic advantages of customer loyalty but ignore the inspirational side of NPS. They forget that it’s impossible to create loyal customers without first inspiring a team of employees, so they become promoters themselves.
Like all good Customer Satisfaction measures, NPS is easy to use and, therefore, gets a lot of customer feedback. Unlike CES and CPS, however, it is an indicator of future growth as well as current performance, the other two only focusing on the current only.
The methodology is simple. You ask the customer how likely they are to recommend the product or service, or your company, to a friend on a rating 1 to 10 (or 1 to 100), see Figures 5.2 and 5.3 below.
Figure 5.2 The Net Promotor Score
The responses deliver three groups:
• Promoters: Loyal customers who may make repeat purchases and refer your brand to friends and family.
• Passives: Customers who are likely to move to a competitor if they find better price, product, or features.
• Detractors: Customers who are unsatisfied and likely to leave a negative review.
One may be given for thinking the groups are split evenly across the scoring range. However, 80 percent of negative comments will come from the bottom 60 percent (in score terms) of your customers. Therefore, we must put all those scoring 6 and below (60 and below) as Detractors. The remaining scores are split evenly between Passives and Promoters.
If you think the deck is stacked against you that would be true. However, how often do we go out of our way to complain about something or how often do we mention to friends, colleagues, and associates about a bad experience? By comparison how often do we do the same for a good experience?
Calculating NPS is a simple formula:
Figure 5.3 Calculating NPS
Any NPS score >0 should be considered good. It means that you have more positively biased customers than negatively. An NPS score of >2 is “favorable.” However, all scores vary by industry sector, and, as we have mentioned previously, social, and cultural effects. A score of >5 should be considered an excellent score and anything >8 exceptionally good.
NPS as well as providing feedback now and an indication of future potential can be a marketing tool. Companies that regularly score above 8 on their NPS may well promote this on their social media, websites, and in customer literature. Telling potential customers that you have a lot of customers already that really rate and value your service can only be a positive thing.
Improving a company’s NPS can involve many things. The products and services for one thing need to be what the customer wants but it needs to be matched by the customer service and the relationship you have with your customers. Such is the importance of a high NPS score that there are now consultancy businesses built around just this one element of sales and marketing.
Whether you choose to use scoring or not depends on how many customers you have, how often you interact with them, and what you intend to do with the data. What kind of score is also down to your needs for the data and the relationship you have with your customer. Simply saying thank you and asking if everything is up to standard in a shop may be far more productive than asking shoppers to complete questionnaires before they leave with their bag of groceries.
Key Takeaways
It is all too easy for customers to complain about their suppliers. With the explosion of the Internet and of social media often, the first resort is not the supplier to affect improvements but to other potential customers to gain leverage in future discussions and negotiations. This may seem an unfair advantage to the customer, but it just means salespeople and the companies they represent must work harder to retain their edge.
A good CES will tell you how the sales experience went, how the sale and delivery went and the all-important first impressions of doing business. Where salespeople are concerned this is the most critical as it tells the Sales Manager about the sale itself and immediately after.
Even though CES is the first score in the series of scores we can apply. It is a specific measure unlike CSAT which is a more general measure, and perhaps also more subjective. Whether scores are determined through online questionnaires, phone calls, or face to face perhaps reflect the nature of the product or service and the type of business. It also matters whom one asks to complete such a questionnaire, and for that, we may want an independent group within the business, rather than the salesperson picking only those that will give the best scores.
Customer Satisfaction is important in understanding how customers feel today about the product or service and how that is likely to change over time. It provides an effective feedback loop for the salesperson on their own performance and that of their team and their product or service.
All companies should measure their CSAT, whether they publish and promote the findings or not. It should also be a regular and ongoing exercise to ensure constant improvements are made and the company continues to move forward. Where it is recorded, perhaps a CRM system. It can also be used as a measure to reward salespeople and Account Managements and form part of their bonus.