Training Industry Magazine - July/August 2018 - 46
I M P A C T
WHY CUSTOMER SATISFACTION
BY DUANE SPARKS
Companies invest a lot of time and
money measuring customer satisfaction.
These measures usually assume the
form of a survey that is supposed to
take the customer's current temperature
following a conversation or transaction
with the company. For a number of
reasons, I think these measures are a
waste of time.
We've all participated in these surveys.
Maybe it's just one question that
amounts to, "Would you hire the person
you just spoke to?" Or, maybe it's,
"Rank your satisfaction with (product
or service): a) Beyond My Expectations;
b) Met My Expectations; c) Below My
Expectations; d) I HATE Your Company."
These surveys basically just tell us
whether the customer has a current
complaint. Either the person is upset
about something or they point a finger
at a rep who had to give them some
bad news (i.e., "I'm sorry, but it will cost
$3,500 to repair your equipment"). It's
not surprising that many customers want
to "shoot the messenger," even though
the messenger may have delivered the
Customer satisfaction measurements
show us a moment in time. They do not
tell us if we have a committed customer
who will resist the lure of a competitor's
promise of a better deal.
Another reason why I think customer
satisfaction isn't enough is because
satisfied customers defect at an
alarming rate. And, companies that rely
on satisfaction measures seem deeply
confused about why they leave. Here's
some of the research we've compiled:
* 75 percent of customers who leave a
company were satisfied or even "very
satisfied" when they left.
* Only 25 percent of customers leave
due to price - but most company
executives think price is the most
common reason why they defect.
* In truth, 80 percent of customers leave
a supplier due to the lack of a solid
business relationship - but only 20
percent tell you that's why they left.
Customer Satisfaction (CSAT) surveys,
no matter how well-designed, measure
a short-term condition that doesn't
appear to have much to do with
customer retention. Yet, companies see
CSAT as a key performance indicator and
continue to measure the heck out of it.
Why is that? Well...
* Statistics tell us that it costs five
to seven times more to generate
business from new customers than
business from current customers.
* There is a five-fold payback for
retention (a 1 percent improvement in
retention equals a 5 percent increase
So, we know the enormous value of
customer retention. But, here's the
blunder I think we are making: We
mistakenly think that if we monitor
CSAT and respond to issues that crop up,
somehow it will translate to our bottom
line. The research doesn't correlate with
I think that what every company really
wants from customers is loyalty. In my
view, loyalty and customer satisfaction
aren't the same. CSAT measures a
moment in time and doesn't prevent
defections. What we want are customers
who will resist the onslaught of our
What is loyalty anyhow? I'm told there
are few words harder to explain. But,
when it comes to loyal customers, my
definition is simple: Loyal customers are
ones who have stopped shopping. They
are deaf to your competitors' appeals.
Their business relationship with you
is so valuable to them that it would
Table of Contents for the Digital Edition of Training Industry Magazine - July/August 2018