Guidelines for Improving Customer Satisfaction and Loyalty

Everybody talks about their desire to improve levels of customer satisfaction and loyalty, but far fewer actually have a plan for doing so. Most experts would argue that you first have to have a plan – and a process – in place before you can even think about the prospects for any meaningful improvement. In fact, most agree that it is the implementation of a well-defined and managed process that will ultimately drive the organization’s ability to achieve its customer satisfaction and loyalty goals moving forward.

Rallying the troops and incentivizing your customer service reps is a key ingredient for getting things started; but you will still need to have a formal process in place to actually make it happen! Read on to see how you can most effectively get your customer satisfaction and loyalty improvement act together.

In launching a customer satisfaction and loyalty improvement program, you will need to start with the creation and implementation of a sound research process. This process should be designed to create a formal pipeline that allows management to “hear” the articulated (and interpreted) voice of the customer in terms of:

  • Identifying, defining and clarifying specific customer needs, requirements, preferences and expectations for service and support;
  • Identifying the key drivers that impact customer satisfaction;
  • Benchmarking company performance against both customer needs and competitive performance;
  • Determining organization strengths and weaknesses vis a vis the competition;
  • Gaining additional insight into the root causes of customer dissatisfaction, and identifying specific areas requiring improvement;
  • Providing the basis for a dynamic system that can alert management of problems or situations requiring immediate attention; and
  • Identifying priorities, and setting targets for overall quality improvement.

One of the cornerstones of any customer satisfaction and loyalty improvement program is to first benchmark, or baseline, customer needs and requirements and corresponding levels of satisfaction. In order to accomplish this, both the overall survey design and the specific choice of measurement scales to be used are critical. The survey design must address specific issues, including:

  • Who is to be interviewed? (e.g., complete universe of customers; stratified-random sample; new vs. older accounts; users of specific models/services, etc.);
  • How are they to be interviewed? (e.g., in-person/on-site, by telephone, by mail, via e-mail or Internet, leave-behind card, focus group, etc.);
  • Who will conduct the interviews? (e.g., in-house vs. an outside third-party consulting firm);
  • What areas need to be addressed? (e.g., overall company performance, performance for specific product and/or service lines, by geographical service territories, etc.);
  • What question set must be developed? (e.g., current needs & requirements/current levels of satisfaction, future product/service usage plans, likelihood to switch, likelihood to recommend, value-in-use price points/thresholds, problem areas/areas of concern, etc.);
  • How will the results be tabulated? (e.g., in the aggregate, by geography, by vertical segment, by size/type of customer, by length of time as a customer, by specific product/service lines used, etc.);
  • How will the results be reported? (e.g., to whom, in what format/venue, in what level of detail, etc.);
  • How often is the survey to be conducted/tracked? (e.g., quarterly, annually, bi-annually, other); and
  • Other considerations, specific to the unique goals and objectives of your organization.

Regardless of which survey design is ultimately selected, the measurement scales that are used to analyze and report the results back to management must also be carefully chosen to allow for:

  • The creation of an “easy-to-understand, follow and answer” survey questionnaire, from the customer’s perspective;
  • The ability to identify key patterns of responses, and discriminate between small (but statistically important) differences in needs, requirements and levels of satisfaction;
  • The generation of statistically valid, meaningful and actionable survey results;
  • The ease of administration, management and control (from design, through analysis and reporting);
  • The ability to collect data and information for a specified set of areas/issues, and generate a commensurate set of prioritized, action-oriented recommendations; and
  • The flexibility to “go outside the box” to gain specific data and information that will lead to “real” improvement in the future.

Obviously, there is no perfect scale that is best suited for all situations. However, over the past several years, there has been a seemingly wholesale shift to the use of more “demonstrative” measurement scales that first ask customers to assess the importance of each facet of service and support in terms such as “Absolutely Essential (to business operations)”, “Very Important”, “Somewhat Important”, “Somewhat Unimportant” or “Not Important at All” (rather than the “traditional” usage of “Extremely Important”, “Very Important”, “Neither Important nor Unimportant”, “Not Very Important” and “Not Important at All”). While appearing to be only a small nuance in wording of the measurement scales, the newer scales are significantly more demonstrative, as required for a significantly more demanding segment (i.e., the services segment).

Similarly, the newer conventions also ask customers to evaluate the performance of their service and support providers relative to the specific levels of importance they place on each individual factor. For example, the newer measurement scales generally follow a sequence such as “Much Better than Desired”, “Better than Desired ”, “Just as Desired”, “Worse than Desired” and “Much Worse than Desired”. These types of scales typically yield much more realistic patterns of response than the “traditional” variety of scales that simply assessed levels of satisfaction through the use of either nominal satisfaction-related anchors (e.g., “Very Dissatisfied” to “Very Satisfied”); performance-related anchors (e.g., “Excellent” to “Poor”); or no anchors at all (e.g., a “1 to 5” scale).

However, customer loyalty is very different than customer satisfaction. Customer loyalty is generally measured by asking customers whether they are likely to repurchase (or renew); how likely they would be to consider switching (and for what potential reasons); and whether they would be likely to recommend the vendor to another organization that may also be making a purchase decision in the future.

For example, a shipping company’s customers may be asked whether or not they request multiple bids for a particular job, and what factor(s) are ultimately used to make the final vendor decision. Fast-food customers may be asked, assuming that all of the fast food restaurants are conveniently located, whether they would still eat at a particular chain if another chain began to offer a similar line of fast food choices at a lower price. A customer of a regulated utility might be asked whether it would continue to do business with the utility, even if it had other options in the area to consider. An IT manager might be asked if he or she would choose another services vendor if there were no costs associated with switching. And so on, and so on …

It is also important to recognize that in many circumstances, customer satisfaction/dissatisfaction may actually not be a true indicator of either customer loyalty or future purchase (or renewal) patterns. This is because loyalty is generally based on longer-term behavioral and attitudinal aspects of the customer-vendor relationship and, as such, must be measured and analyzed separately in order to accurately identify a customer’s (or group of customers’) “real” level of commitment to a particular company, product or brand.

In any event, we strongly believe that measuring customer satisfaction and assessing customer loyalty are necessities for all businesses, and particularly those that are highly customer-interactive, such as the services and support industry. However, simply because an organization’s customers appear to be satisfied with its products and services today, does not ensure that they will remain satisfied forever. The easiest way to identify customer dissatisfaction is to count the number of customers that have already switched from your organization to another vendor – but the most effective way to address dissatisfaction is to prevent it from happening in the first place!

Designing and implementing an effective customer satisfaction and loyalty improvement program can only be accomplished if the organization makes a total commitment to design, implement, track, monitor and manage its performance and corresponding levels of customer satisfaction through a formal process, and on an ongoing and targeted basis. Through this total effort, the prospects for developing a stronger base of customer loyalty can be greatly enhanced; but the first steps must always start with a commitment to, and the development of, the appropriate processes to get it all done.