Customer satisfaction is one of those corporate initiatives more honored in the breach than the observance: Clients fume over interminable phone waits, no response to e-mailed questions, slowpoke proposal turnarounds and incomprehensible service calls to halfway around the world.
Some companies, though, increasingly take customer feedback seriously, with relatively new techniques that measure degrees of satisfaction, and initiatives to improve loyalty, advocacy and profits.
"Our new approach doesn't ask customers to buy our stuff because they like us but rather because we're an innovative global leader who listens and understands their needs," said Damian A. Thomas, general manager, corporate sales leader, at tech conglomerate General Electric Co.
Last year marked a milestone for GE. The metrics-happy multinational—it's long been committed to Six Sigma quality control, as well as "quick market intelligence" analysis of customer behavior, among numerous other business enhancement methodologies—embraced customer satisfaction techniques companywide.
"We are still in our infancy from what we expect from the program," said Thomas, "but I can tell you we've already noticed significant improvement in several customer-facing processes." He cited in particular a new-found nimbleness in producing customer proposals, reducing the process from weeks to days.
GE is one of the newest advocates of the "net promoter score," or NPS, a calculation based on the answer to the question "Would you recommend us?" This enables companies to identify their "promoters," as well as neutral or negatively inclined customers. NPS is calculated by subtracting the percentage of detractors from the percentage of promoters: P-D=NPS.
To drive its NPS higher, GE managers place follow-up calls to all GE's customer-satisfaction survey-takers to further analyze responses. The company then imposes Six Sigma rigor—a process that traditionally focuses on reducing manufacturing errors—to customer responsiveness.
The ultimate question
NPS has been championed most notably by Fred Reichheld, head of the loyalty program at consultancy Bain & Co., in such books as "The Ultimate Question" (i.e., Would you recommend us?) and "The Loyalty Effect." Reichheld has said top NPS companies—with a 50% to 80% bulge of promoters over detractors, more than twice as high as average companies—experience dramatic, long-term profitability.
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While customer advocacy as measured by NPS enjoys a current vogue, satisfied customers can be tracked across numerous metrics, experts agree. In addition to their value in referring new business, they tend to defect at much lower rates, are less price-sensitive, are prone to up- and cross-selling, and burn up fewer customer service resources by complaining.
"We support NPS, but argue that it's not the only metric and not even the best metric," said Joan Gurasich, VP-marketing at CustomerSat, a provider of a client-feedback solutions. Gurasich said overall customer satisfaction is more central to strong company performance, in particular with b-to-b companies.
This is reinforced by a study, published in September by the Kelley School of Business at Indiana University, identifying overall customer satisfaction as the best driver of annual sales growth, shareholder return, market share, cash flow and gross margins. A customer's likelihood to repurchase and the number of complaints also had some influence, according to the study.
CustomerSat's clients lump customer satisfaction into four categories: the "apostle," who loves your company and would recommend you to others; the "hostage," who is neither thrilled nor unhappy, but is stuck with your company; the "defector," who has left in disgust; and the "mercenary," currently satisfied but fickle. Its programs entail continuous customer contact to head off or resolve issues.
Technology is helping drive the adoption of customer satisfaction action plans. The use of computer dashboards, which graphically represent client feedback, helps management pinpoint problem areas, and customer relationship management (CRM) technology provides real-time client histories at a glance.
"We use dashboards to quickly analyze trends," said Jim Glueck, VP-global support operations for technical services at Cisco Systems. Cisco's surveys use a 1 to 5 scale to measure customer loyalty, as well as satisfaction with technical troubleshooting.
While the company's current program is only about two years old, Glueck said customer satisfaction scores have risen one-half to one point on that 1 to 5 scale over the past year. The improvement is most dramatic in customers' ability to find quick technical solutions on Cisco's Web site: The company enjoys an 80% satisfaction rating here, compared with a 50% norm in the industry, Glueck said.
Cisco also uses customer feedback as part of employee training; further, every employee's pay, regardless of position, is based partly on the company's overall ratings. Thus, customer satisfaction results help drive employee goal-setting and recognition programs, among numerous business performance metrics.
"And this makes sense," said Gina Pingitore, chief research officer at J.D. Power & Associates, the consumer ratings and research company. "If you want somebody to give you more share of wallet, stay with you, and advocate for you, you need to delight them."