July 14, 2005 | Issue 38

Editor's Note

	MR Perspectives is a twice-monthly newsletter that provides perspectives on market research topics of interest, best practices tips, emerging trends, quick case studies, and other useful information. Subscribe View Past Issues

Events

	July 21-22, 2005 New York City International Research Conference: Spotlight on Europe The Council of American Survey Research Organizations (CASRO) will host an International Research Conference entitled Spotlight on Europe at the Millennium UN Plaza in New York City.

	July 28-29, 2005 New York City Business Writing Workshop The Council of American Survey Research Organizations (CASRO) will host a Business Writing Workshop at the Roosevelt Hotel in New York City.

More Events

	July 28-29, 2005 Minneapolis, MN Measuring and Managing Customer Satisfaction and Loyalty The American Society for Quality will host a two-day course for corporate customer service managers and research managers on “Measuring and Managing Customer Satisfaction and Loyalty” at the Crowne Plaza Minneapolis-Northstar Downtown in Minneapolis, Minnesota.

	July 29-Aug. 1, 2005 San Francisco AMA Summer Marketing Educators’ Conference The American Marketing Association will host its annual Summer Marketing Educators’ Conference at the Marriott Hotel in San Francisco, California.

Managing Customer Satisfaction

Customer satisfaction has long been considered a standard measure of business performance alongside other measures such as financials and market share. Including customer feedback into performance measurement provides a much more complete picture of the health of the business.

Many companies, however, focus solely on the measurement aspect of customer satisfaction and not enough on what can be done to improve customers’ experiences. Any company committed to a customer satisfaction strategy needs to shift focus from simply measuring to managing customer satisfaction. Doing so requires using customer feedback to drive process improvement and innovation.

In the face of increasing competition in the form of products, organizations, and distribution outlets, customer satisfaction has become a viable strategy to maintaining market share against the competition. Even if customers are loyal, they all have a point at which they will switch for superior product performance or service, especially as these performance levels continually heighten, and customer expectations increase. Satisfying these ever-evolving needs of existing customers is key to any retention or customer loyalty strategy.

Any successful customer satisfaction initiative fundamentally must seek to answer three questions:

How satisfied are the company’s customers relative to their expectations?
What can be done with existing products and services to better align delivery with customers’ expectations and thereby increase customer satisfaction?
What new products or services might be needed to meet customers’ current or future needs in order to maintain or increase customer satisfaction?

Too many firms design customer satisfaction programs solely around the first question, and the result is an effective measurement tool but an ineffective management tool that fails to address opportunities for improvement. A program designed to answer all three questions will not only serve as an effective measurement, but will provide managers the necessary feedback to drive future initiatives.

Common Pitfalls to Avoid in Managing Customer Satisfaction

The first major pitfall in managing customer satisfaction is attempting to manage the measure as opposed to managing the experience that drives the measure.

Consider the classic example of an automobile dealership. Upon completion of a sale, the salesperson informs the buyer that they will be surveyed about their experience and asks “if you cannot rate me as excellent, please tell me what I can do to get you to rate me as excellent.” Sometimes the salesperson will even plead with the buyer to give him/her an “excellent” rating. Rather than being focused on delivering an outstanding experience from introduction through closing, the dealership is focused on incentives it may receive based on its satisfaction results.

The second major pitfall is that of over-measurement.

Often firms will ask their customers for feedback on aspects of the experience that the firm has no control over. Consider the automobile dealership again as an example. It would make absolutely no sense for the dealership to ask the buyer for their opinion on the auto manufacturer’s logo. Such over-measurement does two things. First, it provides feedback that has no value to the marketer in terms of being able to improve the customer experience. Secondly, it sets up an expectation on the customers’ part that the marketer can do something about this aspect of the experience and that it may change as a result of their feedback. Either way, over-measurement provides no value at best, and at worst may in fact create dissatisfaction in the form of false expectations.