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Beyond customer satisfaction: Know your customers intimately

Managing Knock Your Socks Off Service, Second Edition

 

Printed with permission from AMACOM Books/American Management Association. Copyright 2007. "Managing Knock Your Socks Off Service, Second Edition " by Chip R. Bell, Ron Zemke.

"Emotionalizing" the Yardstick: Why Customer Satisfaction Isn't Enough

For as long as we can remember the promised land of service-focused organizations—the accomplishment that, once achieved, suggested they'd arrived among the ranks of customer service exemplars—has been represented by two sought-after words: customer satisfaction.

When customers report being "very satisfied" or "satisfied" on our surveys, we take it as a sign of their continued loyalty, believing they'll continue to spend their dollars with us and recommend us to others. Yet the truth is that while satisfying customers beats the alternative, it is rarely enough to produce the kind of devoted clientele that will stay committed to your company in the face of new price-slashing competitors, the periodic hiccup in product or service quality, or other threats to their continued patronage. Consider what the word satisfaction really connotes. Webster's defines it as "good enough to fulfill a need or requirement," and common synonyms are "sufficient" and "adequate." Hardly the stuff of inspiration.

As service quality researchers have discovered in recent years, measures of satisfaction are often poor predictors of the most important yardstick of any service effort: Will customers not only come back for more, but go out of their way to recommend you to others?

Love That Customer

Consider the perspective of Robert A. "Bob" Peterson, who holds the John T. Stuart III Centennial Chair in Business Administration at the University of Texas, Austin. His opinion, based on his own research, is that "love that customer" is pretty powerful stuff.

For years, Peterson was troubled that so many people were talking about the joys of customer satisfaction, but his research wasn't showing a very strong connection between satisfaction and retention—repeat business. He found that in most surveys of customer satisfaction, something around 85 percent of an organization's customers claimed to be "satisfied" with the service they received but still showed a willingness to wander away to other providers if the mood, or the price, or the color of the advertising banner were right.

Peterson believes that we have undervalued the emotional aspects of customer service; that there is a highly personal, subjective agenda that we fail to ask about in customer research and fail to deal with in service delivery. Only by adding words like love and hate to our surveys, and having the audacity to stand up to the need to incorporate much stronger feelings than like and satisfaction in our objectives, can we get a handle on this crucial component of customer loyalty. And the only way to get to the heart of the matter is by getting our information straight from customers: from their own selfish (and sometimes flawed) perspectives, based on their own experiences, expressed in their own words.

The payoff is the kind of in-depth understanding that can help nurture a truly productive relationship—or save one from going bad. Peterson believes that customers with strong feelings about the organization are the most predictable customers. "Customers who feel strongly about your organization— positively or negatively—are the customers most likely and least likely to do business with you again," he says.

Recent research by the Gallup Organization corroborates and builds on many of Peterson's findings. In a Harvard Business Review article titled, "Managing Your Human Sigma" John H. Fleming, Curt Coffman, and James K. Harter of Gallup examined the nature of employee interactions with customers and found that emotions had a significantly larger effect on parties' judgments and behavior than rational thinking did.

The Gallup team found that customers who rate themselves as "extremely satisfied" on surveys fall into two distinct categories: those who have a strong emotional connection to the company and those who do not. In a multiyear study of hundreds of companies and millions of customers and employees, Gallup found that:

 

  • "Emotionally satisfied" customers contribute far more to the bottom line than "rationally satisfied" customers do, even though the latter rate themselves as equally "satisfied" on customer surveys.

     

  • Surprisingly, the behavior of rationally satisfied customers looked no different from that of dissatisfied customers. In a large U.S. bank in the study, the attrition rate of dissatisfied customers was on par with that of rationally satisfied customers, or those who described themselves as extremely satisfied but scored low on an "emotional attachment" metric. The attrition rate of bank customers who were emotionally satisfied, however, was on average 37 percent lower.

    Read the rest of this excerpt and download Chapter 4: "Emotionalizing" the Yardstick: Why Customer Satisfaction Isn't Enough

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This was first published in January 2008

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