Customer satisfaction has become one of the hallmarks of the quality revolution. We all believe that improving customer satisfaction leads to higher sales, improved market share and even the possibility of premium prices. But is there any real evidence that this is so?
Why have so many customer-satisfaction efforts failed to produce measurable results? Let's explore a few:
Poor measurement schemes- Some companies have "wired for failure" their measurement plans from the beginning. Amateurish groupings of "very satisfied and satisfied" customers tracked over time give almost no indication of what is happening. Even worse, they give little indication of whether we should take some action, much less what action. When we see statements such as, "The percentage of very satisfied and satisfied customers has improved from 77 percent to 83 percent the last three months," we know the company is in serious trouble with respect to customer focus.
Other problems abound. Responses are often overpopulated with satisfied customers; many of the dissatisfied just didn"t respond. Respondents are often different from the decision makers. The questions are vague or too numerous; the answers are not to the questions we thought we asked.
Failure to identify the correct dimensions of quality- Anytime we see measurements lumped into one catchall indicator, we should be wary. Far too often our companies have created measurement systems to capture those things we think are important, not the things that custom ers hold important. Owen Hatari studied a service as simple as coffee breaks at conferences in hotels. The hotels "top 10 list of customer-satisfaction features had only one item in common with the customers" top 10 list- hot coffee!
Failure to weight the dimensions correctly- Even if companies measure the right things, are they all equal in importance? Are the important things getting worse and the less important things getting better? Are all critical areas of the value chain covered? Many companies are so eager to create an "easy-to-understand" measurement system that they forget that if it is useless, it doesn"t matter who understands it.
Without properly weighting the dimensions, we are inclined to work on those dimensions with the lowest scores. Our new customer-satisfaction system actually leads us in the wrong direction by forcing us to deploy valuable resources on things that really don't matter.
Lack of comparison with leading competitors- This is one of the most obvious, but also most common flaws. We build a customer-satisfaction measurement system that just tracks us. We forget- somehow- that quality is relative. What matters is how well we are doing compared to others offering similar products or services. We may actually be getting better. But if our competitors are getting better faster, they are either widening the gap or gaining quickly.
Failure to measure noncustomers- Most customer-satisfaction schemes fail to measure the reasons why noncustomers don't buy from the company, or even more important, why former customers are no longer customers. Information of this type may be more important than traditional measurements.
Customer loyalty vs. customer satisfaction- What it all boils down to is that we really don't care about customer satisfaction. We care about customer retention and customer loyalty. Therefore, we need to develop our customer-measurement systems from the ground up. What is truly important to the customers? What percent of their purchases are from us?
For example, I fly frequently from New York to Chicago. If I always fly the same airline, I am 100-percent loyal. If I fly them 33 percent of the time, I'm a random purchaser. If I never fly them, I'm disloyal. Finding out why I only fly 33 percent of the time or never may be far more important than surveying loyal passengers.
We need to start with the most important measurements- what percentage of available market are we getting from existing customers and what is possible from noncustomers. Next, we must determine what dimens ions of quality drive their decisions. Then, we should find out how we are doing on each dimension compared to our major competitors.
Then, if practical, we should estimate how much it will cost to change each dimension and the return we can expect on these investments. Only now will we have a plan for managing customer loyalty that will drive bottom-line results.
Send comments or questions either to the editor or directly to Godfrey at Juran Institute, 11 River Road, Wilton, CT 06897, by fax (203) 834-9891 or on the Internet at http://www. juran.com.
Copyright 1995 by QCI International. It is unlawful to reprint, retransmit, or otherwise reproduce this article, except for personal use, without the written permission of QCI International (which gladly grants permission when asked). Call (800) 527-8875 or fax (916) 527-6983.