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Customer satisfaction is one of the most important indicators to watch if you’re in charge of marketing for an organization. This post outlines some of what I’ve learned about how to assess customer satisfaction and bring the voice of your customer into your organization. I’ll start with an overview of what a customer service assessment program looks like, then I’ll talk about how it relates to consumer generated media, why marketers are well positioned to do this work, some key assessment metrics, how to make research actionable, and finally how to put together a customer satisfaction strategy. If you’re already familiar with the background, I suggest jumping down to the strategy section.
Before I start in, It’s important to remember that keeping existing customers usually offers a greater return than trying to acquire new ones. Plus, it turns out that satisfying existing customers is often the best way to acquire new ones because of the effectiveness of word-of-mouth marketing. In order to improve customer satisfaction, you have to develop a strong practice for listening to customers.
A Continuous Practice
As the section head suggests, listening to customers is not something that you can budget for in the first quarter of the year and then cross off your list. This is an ongoing practice that must be supported accordingly. Recent studies that show that “customer experience” is increasingly becoming the most important driver of competitive advantage (National Retail Federation, Customer Experience Maturity Monitor) so this is an essential investment core to the marketing function.
One of the challenges associated with developing a continuous practice is that there are usually existing customer satisfaction assessment programs in place within each organizational silo. This means that customers may be asked the same, or similar, questions from different groups within your organization. Plus, research results may not be shared or available as a resource. This erodes an organization’s credibility by making it appear disorganized, frustrates customers by repeating questions, and ultimately reduces response rates.
The best way to tackle this is to integrate your customer satisfaction practices with your customer relationship management tool (CRM). I talk about CRMs in detail in my earlier post here. This makes doing research easier because you can approach research subjects with a 360º view of their experience with your company (i.e. you’ll know if they participated in past research, what products/services they use, if they receive your newsletter, etc). When you demonstrate that you know something about a research subjects before asking them a question, you appear smarter. This, in turn, leads to better engagement.
Consumer Generated Media (CGM)
CGM is an important channel for understanding customers satisfaction and sentiment with regard to your organization. This is one area, however, that it is harder to manage with a CRM. Instead, it’s important to use CGM as a parallel input into your assessment program.
There are excellent third party tools available for doing this, such as Get Satisfaction, and FixYa. Alternatively, you can offer these services through your own site. Either way, it’s important to keep your eye on consumer generated media because it can be the most cost effective way to listen to your community and manage satisfaction issues. Many issues simply bubble up from the community and don’t require formal research. Most importantly, it’s a dialogue, which means you have to share your research outcomes and intervention plans with the community. By doing so, you return value and increase the likelihood of ongoing participation. I’ve written about The Value of User Generated Content here.
Marketing Amplifies The Voice Of The Customer
It is my belief that the marketing staff is best positioned to serve as the voice of the customer within an organization. This is partially because marketers are often the most objective stakeholders when it comes to customer experience. While marketers may have helped develop the product/service, they don’t have the biases of the development team. And, while they may have helped sell the product by supporting the sales team, they are not compensated directly on sales as the sales team is.
Marketing teams are also well positioned to coordinate the needs of different organizational silos. Marketing supports sales, so they understand what the sales team would like to know from/about customers. Marketers also work with development teams and often help facilitate the research they conduct. Plus, marketing should run knowledge management through organizational CRM tools, so marketers are set up to transform research into a resource for everyone else. In many cases, they also have the most experience doing such research and can ensure that relevant questions are being asked in the right way. This is essential to tying research back to a customer satisfaction strategy and the actionable interventions that support it.
Three Customer Satisfaction Assessment Metrics
There are a variety of metrics that are used to get a handle on customer satisfaction; I’ll present three of the most common here and briefly explain how they work. I’ve organized them from simplest to most complex. Which method, if any, you should use is really dependent on your specific business.
NET PROMOTER SCORE – This metric was developed by Satmetrix, Bain & Company, and Fred Reichheld, the concept was first popularized through Reichheld’s book The Ultimate Question. You simply ask “How likely are you to recommend to a colleague or friend?” and ask them to provide a number between zero and ten.
Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
APOSTLE MODEL – Developed in the mid-1990s at Harvard Business School (HBS), this model adds an additional dimension by recognizing that customer satisfaction does not imply loyalty. Thus, one question for loyalty and one for satisfaction. Note that this model has been used with a variety of scales. I prefer the three tier scale because it reflects that fact that the smallest quadrant population consists of apostles. Here’s a great article for HBS on why customers defect.
AMERICAN CUSTOMER SATISFACTION INDEX (ACSI) – ACSI was developed by the National Quality Research Center (NQRC) at the Stephen M. Ross Business School at the University of Michigan. It is a set of causal equations that link customer expectations, perceived quality, and perceived value to customer satisfaction (ACSI). Satisfaction, in turn, is linked to key outcomes, defined as customer complaints and customer loyalty. This methodology is significantly more involved than the above options and is often used to analyze economic/industry trends. The ACSI interviews about 80,000 Americans annually and asks about their satisfaction with the goods and services they have consumed. Respondents are screened to cover a wide range of business-to-consumer products and services. Quarterly reports are issued by the NQRC through their bookstore. The ASCI score is derived from three questions, each rated on a different 1-10 scale:
Manifest Variable
1
10
Overall satisfaction
Very dissatisfied
Very satisfied
Expectancy disconfirmation
Falls short of your expectations
Exceeds your expectations
Performance vs. the ideal
Not very close to the ideal
Very close to the ideal
Customer Expectations – Customer expectations is a measure of the customer’s anticipation of the quality of a company’s products or services. Expectations represent both prior consumption experience, which includes some nonexperiential information like advertising and word-of-mouth, and a forecast of the company’s ability to deliver quality in the future.
Perceived Quality – Perceived quality is a measure of the customer’s evaluation via recent consumption experience of the quality of a company’s products or services. Quality is measured in terms of both customization, which is the degree to which a product or service meets the customer’s individual needs, and reliability, which is the frequency with which things go wrong with the product or service.
Perceived Value – Perceived value is a measure of quality relative to price paid. Although price (value for money) is often very important to the customer’s first purchase, it usually has a somewhat smaller impact on satisfaction for repeat purchases.
Customer Complaints – Customer complaints are measured as a percentage of respondents who indicate they have complained to a company directly about a product or service within a specified time frame. Satisfaction has a negative relationship with customer complaints, as the more satisfied the customers, the less likely they are to complain.
Customer Loyalty – Customer loyalty is a combination of the customer’s professed likelihood to repurchase from the same supplier in the future, and the likelihood to purchase a company’s products or services at various price points (price tolerance). Customer loyalty is the critical component of the model as it stands as a proxy for profitability.
It might help to think of assessment in terms of human vital signs. Measuring heart-rate/pulse gives you an immediate sense of stress, temperature might point to longer-term issues, and respiration rate may indicate some additional dimension. Don’t rely on one method alone, but take a holistic approach to the process. For example. try pairing one of the above metrics with ethnographic research.
Starting With Strategy
Before you build a continuous practice that is tailored to the needs of your organization, it’s important to establish a customer satisfaction strategy. The above information is really a backdrop to set the stage for developing this strategy. From there, you can implement the tactical research initiatives to support your plan. Here’s an exercise to get started:
Start by identifying the opportunity space for improving customer satisfaction and list out all the projects that might improve it. To make sure your list is thorough you can reach out to your customers, look at the competitive landscape, and do some generative ideation exercises with your team. The best ideas arise when you produce lots of ideas, so don’t be afraid throw your crazy ideas into the mix.
Once you have a strong list, create a table so that you can assign each idea a feasibility and importance ranking. Give yourself a budget of points to assign each column. In the example below, I’ve given each idea an average allotment of 5 points. I have seven ideas, so that gives me a total of 35 points to distribute in each column. Using a point budget is essential to the prioritization process and represents underlying financial constraints.
In reality you may only be able to afford to pursue on or two of the ideas so it’s important to select the best ones. Once your chart is complete, graph your results to visually represent which ideas offer the greatest potential. This exercise can be conducted with research participants, internal teams, or individually. If you are handy with Excel it may be helpful to compare sample sets of data to understand internal vs. internal perceptions of customer satisfaction.
The Intervention
So now you have a strategy in place, you’ve got systems in place to communicate with your customers, and you’ve got a handle on where they sit with respect to satisfaction. As you pursue the tactical implementation of your strategy, you may have to conduct additional research. Based on what you already know about your customers’ experience with your company (through your CRM) you can make sure that your research questions tie directly to specific implementation challenges. The first intervention opportunity occurs as soon as you interact with a customer who is not satisfied.
You should have a plan about how to respond to these customers immediately. They’ve just gone out of their way to help your company improve your products and services, so make sure to start by thanking them. From there, set clear expectations about how their input will be factored into future product/service development. Provide them with resources where they can learn more and/or participate. Finally, consider doing something to show your commitment to their patronage. If you haven’t offered some form of compensation for participating in the research study you might offer these participants some sort of discount. It’s best to set up some sort of matrix of offerings based on their answers (i.e. it doesn’t make much sense to compensate Defectors on the Apostle metric). You might even ask them an additional question about what they would view as fair compensation in exchange for continued support. Get creative, and take this as an opportunity to reconnect.
Bringing It All Back Home
This is a good time to return to the topic of consumer generated media because this is the place where customers can express themselves openly about your company. Of course, this is also the place where you can express what’s working and what’s not working on behalf of your company.
This is also a great way to celebrate individuals and teams at your organization who are doing a great job. And, there is an opportunity to highlight specific customers who have made significant contributions to your company. Again, this shows customers that your are listening and returning value. Doing this well will earn respect, establish credibility, and ultimately support loyalty.
Thanks for reading and I look forward to hearing about what’s worked for you!
Zumbox is a service that allows you to take traditional mail and send it to someone’s street address digitally. I was initially confused about how this would work because the messaging on their home page is limited to a statement about being “the alternative postal system”. Here’s what I’ve figured out after doing some digging and speaking with someone from their PR agency.
What is it and how it works
Individuals go to Zumbox and register on the site, which includes letting them know your street address. Zumbox then assigns you a mailbox online where you can check the mail tied to your postal address. Just like a postal-mailbox, companies and individuals can now send mail to your address even if they don’t know who you are.
So now you’re now you’re going to get your postal-junk-mail online? Not exactly, Zumbox allows you to block senders and is also building a service to stop paper-mail (you can watch their FAQ here.) At present you can only stop paper-mail from companies that are registered and working with Zumbox, which means that the value of the service is dependent on a critical mass of sender-registrants.
A balancing act of value
I’m personally excited about the prospect of stopping junk-mail even though I understand that it’s not the focus of the beta release. In the past, I’ve made calls, sent letters, and even signed up for Green Dimes to stop junk-mail. Regrettably, none of these efforts seems to have worked. I think balancing customers’ desire to stop junk-mail against a company’s desire to send unsolicited materials will be a real challenge for Zumbox. On the one hand, customers are inundated with direct-mail that they mostly don’t want and which is bad for the environment … but which they sometimes read. On the other hand, companies still get a solid return on their direct-mail investments, which is why they keep doing it. It’s hard to say how this balance will be affected in a non-physical context where you can easily stop the message from arriving on your doorstep.
That said, there are clearly financial benefits to using Zumbox if companies can achieve worthwhile response rates with significantly reduced costs (no printing, no mailing). Obviously, companies would require less conversion if their costs are lower, which should also mean that they can adjust their materials to provide a more relevant and targeted message (i.e. relevant information I actually want). Even if this transition were to start today, most companies would be using a hybrid approach for some time to come.
There is a clever lead generation opportunity built into Zumbox because users will be requesting that Zumbox get in touch with specific companies that they’d prefer to receive digital-mail from (or, which they’d prefer not to hear from). Zumbox will presumably be able to turn to these companies with potential customers in hand (or, customers that they are wasting money on). Considering that direct-mail is a massive industry, there seems to be plenty of space for a service like this today. Though, the biggest question I have is why consumers would choose this channel over something like a newsletter, and rss feed, or a twitter feed? The short answer is that Zumbox offers geographical targeting, but I’m not sure that’ll hold up as location-based mobile services become more prominent.
Marketers should be paying attention
“Zumbox believes that over time, more and more traditional postal mail will transition to a digital platform. The cost savings, revenue opportunities, and environmental benefits are overwhelming.”
In general, I agree with the above statement. What I don’t understand is why we should try and emulate an old system, whose only real benefit is geo-location? The fact is that consumers don’t want cluttering and irrelevant messages delivered to their postal-mailbox or their digital-mailbox. Plus, geo-location offers more potential that just supplying information about where I live. If I did choose to receive unsolicited information, I’d also probably be willing to share my current location in exchange for better information (not just where I live).
If Zoombox can help stem the tide of postal-junk-mail while moving companies away from costly printed campaigns, which are bad for the envioirment, then I say kudos to them! My only concern is that I don’t see the long-term value once companies transition to more appropriate marketing techniques.
Here’s an interesting interview with Chris Anderson, the Editor-in-Chief at WIRED. His book, FREE, will be published in 2009 by Hyperion. In the video Chris discusses where the “freevolution” will fit in the future of business, the video was made at POP! Tech. Many of his comments resonate with the impulse to turn products into services, which I spoke about in this post. There are also some interesting bits about “free” as a marketing tactic. This reminded me of the second video below from Dan Ariely the author of Predictably Irrational. In this video Dan talks about the psychological impact of free.
Managing user experience across touchpoints can have a profound effect on your business. There is a “1+1=3” effect that takes place when you align touchpoints, such that the whole becomes greater than the sum of it’s parts. This idea has been championed by the artist Joseph Albers who explored chromatic interactions with flat colored squares arranged concentrically on the canvas. It’s also been promoted by Edward Tufte, who comments on information design:
“Visual activation of negative areas of white space in these exhibits illustrates the endlessly contextual and interactive nature of visual elements. This idea is captured in a fundamental principle of information design: 1 + 1 = 3 or more. In the simplest case, when we draw two black lines, a third visual activity results, a bright white path between the lines … Most of the time, that surplus visual activity is non-information, noise, and clutter.” – Envisioning Information
While Tufte states that the extra information is often clutter, this does not have to be the case. In fact, we can use this effect to construct powerful experiences, thus amplifying the effect of our designs. Here are some playful examples of the Gestalt Theory of Visaul Perception.
How does the theory work in the real world?
In an earlier post, I spoke about the research that Dan Ariely conducted for his book Predictably Irrational; he demonstrated how the way we set up experiences can have a profound effect on how we respond to them. In one study, Ariely placed the same quantity of food on two plates, one large and one small. He then gave 50% of his research participants the large plate and the other 50% the small plate. After eating from their respective plates, the subjects were asked about how full they were. The participants who received the smaller plates stated that they were more satiated, though they were given the same amount of food. Thus, the visual experience of gestalt connects with the real world experience of the research subjects.
In the above image, which of the dots at the center is larger?
As you’ve probably guessed by now, they are the same size.
So, how does this work in a marketing context?
The experiences we have with products and services across touchpoints are also effected by the above phenomena. Creating a consistent experience across touchpoints creates an over-arching experience that is greater than sum of its parts. For this reason, marketers can deliver significant value simply by aligning experience across touchpoints. Here’s a diagram that I created to explain the benefits of integrating the experience across six touchpoints. Click on it for a larger image:
Of course, this may be easier said than done. One reason that touchpoints become fragmented is because they are often managed by different silos within an organization. In order to align these silos, marketers must construct connections. This means opening windows between them, working collaboratively, and establishing standards. For marketers, these standards are often presented in the form of style guides and communication guides, though they are adopted more readily when positioned as knowledge resources. I talk more about the importance of marketing as knowledge management here. One key to success is to create resources that are as light weight as possible, which supports adoption, but robust enough to keep the touchpoints aligned.
The challenging part is assimilating the intelligence that bubbles up from each silo, integrating the sum of learning, and re-articulating it such that each silo understands the compromises and opportunities associated with the effort. When it comes down to it, the marketer must often play the role of negotiator. This can be a thankless job, because the negotiator rarely gets the credit, or the benefit of social capital, for a successful agreement. There are ways to manage this, but that’s a topic for a future blog post.
All this effort is made because experience isn’t just about how we interact with a product or service, it’s about the experience a customer has with a brand across touchpoints. Consider this thought, If a customer has a great experience at one touchpoint, but a poor experience at another, the net result may be less than the average of the two. How so?
The Peak-end Rule
The above argument is supported by a concept called The Peak-end Rule, that was developed by the Nobel Prize winning economist and psychologist, Daniel Kahneman, to explain how people judge past experiences. You can imagine how this would be relevant to consider when managing the different touchpoints a customer might experience.
“According to the peak-end rule, we judge our past experiences almost entirely on how they were at their peak (pleasant or unpleasant) and how they ended. Other information is not lost, but it is not used. This includes net pleasantness or unpleasantness and how long the experience lasted.” – Wikipedia
The diagram above shows two scenarios, one in which the peak experience is pleasant and one in which it is unpleasant. Though the average experience (total shaded area) is the same for all but two periods, the perceived experience is much greater in the top example. Even if you were to adjust the baseline of the bottom graph upwards to accommodate for the shaded area lost in the unpleasant peak, the top graph would still come out way ahead. Here’s another example:
In this case, two positive peaks are contrasted. All points are the same except from the peak, which is higher for the bottom chart. Simply increasing the value of this one experience has a significant and lasting effect on the overall experience.
What does this mean for managing you experience across touchpoints?
Based on this research, you can offer an average, or even slightly below average, experience so long as you offer your customers one truly great experience. If however, you allow even one unpleasant peak experience to take place across your touchpoints, it’ll cost your dearly. This brings us back to the idea of aligning touchpoints and creating consistency. Integrating experience across touchpoints is an effective means of ensuring that you don’t have an unpleasant peak. It’s also an excellent means of identifying the touchpoints that represent opportunities where you can really shine by creating a pleasant peak experience. My former colleague, Brandon Schaeur, refers to these as “moments of wow” in his Long Wow presentation.
If you found the ideas in this post interesting, you’ll probably enjoy Brandon’s presentation below. It speaks to the issues I’ve addressed here, but more broadly explores how to do product/service development that strings together moments of wow over time. He also provides some great examples of companies that have gotten it right. His presentation also touches on some of the issues I discuss in my earler post Where Marketers Art Today. Enjoy!
The Agile MarketerTuning Customer Experience Into Your competitive advantage
"Roland is a student of the game and his book hits on all the right notes.Practical,witty The Agile Marketer should be on your shelf if you aspire to be a modern marketer."-JASCHA KAYKAS WOLFF,CMO at Mozilla
APOSTLE MODEL – Developed in the mid-1990s at Harvard Business School (HBS), this model adds an additional dimension by recognizing that customer satisfaction does not imply loyalty. Thus, one question for loyalty and one for satisfaction. Note that this model has been used with a variety of scales. I prefer the three tier scale because it reflects that fact that the smallest quadrant population consists of apostles. Here’s a great article for HBS on 
Zumbox
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