Customer satisfaction: the key to innovation and sustainable profitability
March 17, 2016
How to best measure customer satisfaction remains a hot topic in the field of client management. To help decision-makers better understand their options, TELUS International, a global BPO provider supporting multilingual contact centers, has reviewed four ways to approach this topic: Customer Satisfaction (CSAT), Net Promoter Score (NPS), Customer Effort Score (CES), and the Wow Effect.
The importance of assessing the customer relationship
Once considered complex and volatile, customer satisfaction assessment has become a priority for successful companies worldwide. More than ever, brands need to stand out from their competition by staying one step ahead of customers’ expectations. By measuring customer satisfaction, businesses can ensure their products and services are not only meeting, but exceeding the needs of their consumers.
Customer satisfaction is perhaps even more critical in the era of social networks. An influential online voice can make or break the image of a company or brand. As a result, low customer satisfaction can be dangerous, since alienating any one customer can present major risks to even multinational companies. Conversely, effective management of customer satisfaction is synonymous with increased flexibility, better informed strategy and, above all, excellence.
Customer Satisfaction Score (CSAT)
CSAT is the pioneer customer satisfaction measurement. The principle is simple: customers are asked questions, usually by phone, to assess a product or service on a 1 (“not at all satisfied”) to 5 (“very satisfied”) scale. This simple measurement is beneficial to companies in terms of customer understanding and ease of participation, receiving return rates as high as 70%.
CSAT does have limits, including the difficulty in establishing a link between customer satisfaction, customer loyalty, and financial results. For example, from 2005 to 2010, General Motors had positive results on customer satisfaction surveys despite its financial struggles. Another limit is the distortion created when companies constantly try to exceed the customers’ expectations. Blindly pursuing an artificial increase in satisfaction levels, for their own sake, can be counter-productive. CSAT is also generated from basic questions, with little room for detail. On the whole however, CSAT is still well suited to most industries, in B2B as well as in B2C.
Net Promoter Score (NPS)
NPS (a similar measurement to Likelihood to Recommend) first appeared in the famous 2003 Harvard Business Review article, The One Number You Need to Grow, by Fred Reichheld. This customer satisfaction measurement has grown to complement CSAT, offering similar advantages in the field of outsourcing. These include information in real time, customizable measurements, fast feedback, installation of score-related bonuses and short questionnaires.
NPS can be used to gauge customer loyalty through the likelihood of recommending a brand. In practice, the question posed to the customer is simple: on a scale of one to 10 “would you recommend us to someone you know”? The results identify promoters, passive customers, and detractors, with a positive score indicating more promoters then detractors. NPS is especially useful for comparing the performances of different companies in a given market and geographic zone.
The Advocacy Drives Growth report from the London School of Economics, demonstrated that an average increase of 7% in NPS amounted to an average increase of 1% in sales. Oriented towards B2C, NPS serves to associate customer service metrics with a company’s financial performance.
Customer Effort Score (CES)
Some companies have adopted a new approach to customer satisfaction that aims to reduce customer effort. According to Dixon’s research, the Customer Effort Score (CES) is the best indicator for increasing customer loyalty without cutting back on margins. Using a scale from 1 to 10, CES assesses customer interaction with a support agent. It ultimately measures the effort needed for the customer to solve a product problem, and is especially important in terms of technical support.
Dixon found that 94% of customers who classified themselves as using low effort when contacting customer service expressed an intention to repurchase, while 88% said they would increase their spending. Conversely, 81% of customers who identified as using high effort had intended to share their negative experience. Long wait times tend to result in high “effort” ratings and have a devastating effect on satisfaction.
Consumers expect to have transparency and ease of access when contacting customer support. However, despite multiple contact channels, customers do not necessarily know the best and most productive method to contact a company when facing a problem. Informing customers which channel (telephone, in person, online, etc.) will most effectively solve their problem is vital for customer satisfaction.
Although more complex to deploy compared to others, CES is a comprehensive and effective means of customer satisfaction measurement. It applies well to both B2C and B2B industries, and it is the best indication of whether or not a customer intends to come back and repurchase.
The Wow Effect
Although not considered a measurement, the Wow effect is often assumed to achieve high customer satisfaction ratings. It first appeared at the end of the 1990s when businesses learned that satisfaction was not enough, you also need to dazzle customers. The Wow Effect refers to a strong, and innovative product, service or ad campaign that triggers customer surprise and admiration. Achieving the Wow Effect enables a brand to attract new customers by standing out from the competition and to renew old customer interest. It relies on the consumer’s attachment to a brand and increases likelihood to recommend.
The Wow Effect does have its drawbacks. First, there is the cost, as it usually involves a substantial investment. A company can certainly profit from a successful ‘wow’, but it is a prime example of having to spend money to make money. Further, research conducted by Matthew Dixon revealed that in only 16% of cases do customers prioritize being dazzled by a brand. The effect can actually serve to distract companies from customers’ primary concerns, which are more linked to quality of service than showmanship. Finally, The Wow Effect is useful for B2C, but is not very well-suited to B2B
Social media and increased connectivity have brought buyers and sellers closer together. Customers are accessible in real time: ready to give their opinion on anything and everything, and ready to purchase anywhere and everywhere. But the key to success is measuring the satisfaction of those customers, and keeping them, once you have them.
While no one measurement is considered perfect, CSAT, NPS and CES, are important tools to monitor and improve the consumer relationship. Strategic customer satisfaction management is necessary for businesses to survive and thrive in today’s globalized, competitive, and interconnected marketplace.
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