Training Industry Magazine - July/August 2018 - 46

MEASURING
I M P A C T

WHY CUSTOMER SATISFACTION
ISN'T ENOUGH
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.

WHAT EVERY
COMPANY REALLY
WANTS FROM
CUSTOMERS IS
LOYALTY.

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

| 46

not surprising that many customers want
to "shoot the messenger," even though
the messenger may have delivered the
news properly.
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
in profit).
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
this assumption.
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
competitors' offers.
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

http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20190708
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20190506
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20190304
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20190102
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20181112
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20180910
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20180708
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20180506
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20180304
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20180102
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20171112
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20170910
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20170708
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20170506
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20170304
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20171112_se
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_20161112
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2016fall
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2016summer
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2016sales
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2016spring
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2016winter
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2015outsourcing
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2015fall
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2015summer
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2015leadership
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2015spring
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2015winter
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2014fall
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2014summer
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2014spring
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2014winter
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2013fall
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2013summer
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2013spring
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2013winter
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2012fall
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2012summer
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2012spring
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2012winter
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2011fall
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2011summer
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2011spring
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2011winter
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2010fall
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2010summer
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2010spring
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2010winter
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2009fall
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2009summer
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2009spring
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2009winter
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2008fall
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2008summer
http://www.nxtbook.com/nxtbooks/trainingindustry/tiq_2008spring
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