Why is customer satisfaction important? Because it is cheaper to retain existing customers than to gain new ones. And when our customers are happy, we know there is a greater chance of them coming back for our products and services. If the customer satisfaction levels go down, it’s a sign of a problem that could affect our future. As a business owner, how do you know if your customers are happy? One of the most common tools used to measure customer satisfaction is customer satisfaction surveys.
As common as they are, customer satisfaction surveys often lead nowhere. That was pretty much the majority of surveys that I have conducted in my years in Quality Management so far. They didn’t seem that effective in gathering the relevant data that could be used to make the needed quality improvements. Here are three main reasons why in my experience customer satisfaction surveys do not work:
Low Response Rate
From paper-based to electronic, from long and comprehensive to short and sweet – I have done them all. Adjusting the survey length, changing the nature and order of the questions, or even offering incentives for participation, did not make much difference. The response rate was still low. Once the deliverables were received and accepted, customer seemed to move on to the next projects and stopped having any time or interest in talking about the past.
Many people are already bombarded with too many requests and other attention grabbers, so, rarely anyone is looking forward to filling out another survey. Especially if they feel their voice will simply drown in all the noise. As a result, we get a response rate too low to make for a representative sample that carries any statistical significance. One study showed that the typical response rate for online surveys across the web is not even close to 10%. This implies that over 90% or the vast majority of customers are not sharing their opinion via surveys. In a different study, those numbers were 1-2% and 98-99% correspondingly.
Good News is No News
A commonly known old English saying tells us that “No News is Good News”. I feel that in the world of customer satisfaction surveys, Good News is rather No News. In my experience, people are much more likely to share their opinion if they are seriously unhappy with a service or a product. If they found the quality to be satisfactory, that’s exactly what they expected to begin with, so what’s to comment about?! Can we blame them for that? As customers, we all tend to be quick to complain when things go wrong. We are significantly less likely to go out of our way to express our gratitude or share any positive feedback when we are impressed with the quality of whatever we paid for. As a result, customer satisfaction surveys end up gathering more negative feedback. This can seriously skew our data, create bias, and thus lead to poor decisions and business outcomes.
Limitations of Survey Responses
Another limitation of those surveys is that, often times, our customers are not the end users of our products. They can be distributors, who don’t possess all the information we need on the usage of our products. Distributors’ responses will only cover their perception of doing business with us, which is only one sliver of what we need to know. Even with high response rate, the data we gather from these surveys is limited; and the effectiveness is questionable because of a major disconnect between us and the actual product users. As a result, we are missing out on the opportunities to improve in all areas of our business that matter for our future success.
What Can We Do?
The good news is, customer satisfaction surveys are not the only way to monitor how satisfied our customers are. There are other methods such as setting up customer listening posts, tracking the repeat and lost business, following up on quotes that never turned into orders, proactively asking specific questions at any point of contact, or capturing any customer feedback given in person, via phones or electronically. All of these methods have their advantages and their drawbacks, so it’s up to you to choose what works best for your business.
I would like to talk about Net Promoter Score (NPS), originally introduced by Harvard Business Review. Instead of asking too many questions of arguable relevance and value, this system only asks customers one question – how likely they are to recommend your business to others. The customer is to rate your business on the scale from 0 to 10. This allows to find out which customers are in fact your promoters. Promoters are loyal customers who love your services so much that they easily and eagerly promote your business to others in their networks. They are the ones who score you the highest on the scale – 9 to 10.
Customers who scored you at 7-8 are called Passives, and they can either stay with you or go with your competitor. And finally, we have Detractors, who rate you at 6 or below – they the seriously dissatisfied customers that you could be losing any time.
To calculate the Net Promoter Score you have to subtract the percentage of customers who are Detractors from the percentage of customers who are Promoters. The Passives, are playing their passive role in the calculation process. They are counted as a part of the total population which brings down the percentages of Promoters and Detractors, thus lowering the NPS. Some of the well-known brands with particularly high NPS are Costco at 77% and Apple at 72%. According to Kissmetrics Blog, an average company’s NPS is from 5 to 10%.
While NPS clearly provides benefits in gaging where we stand in terms of our customer satisfaction, one criticism it’s facing is the lack of the information it provides on the reasons why Detractors are in fact detracting from your business. One thing you could do about that is to ask follow-up questions and/or do further research into the potential reasons behind the low score from certain customers.
Since the system will identify the customers with low scores that need the follow-up – this saves us from sending cumbersome blanket surveys to our entire customer base. Instead, it allows focussing the efforts where the follow up is required, which in its turn can be a more effective and efficient method for gathering customer satisfaction information as opposed to traditional surveys.
How do you know if your customers are happy with the products or services you provide? Do you have preferred methods of monitoring your customers’ feedback? Please share what has worked for you and what you have learned through the process.