Conor Wilcock
7 Tips
Most researchers and those involved in research circles are by now extremely familiar with the term “Customer Journey”. It entered the insight mainstream in 2012-2013 and has since become the all-encompassing descriptor of studies which explore the interactions between a supplier and its market.
The challenge with “Customer Journey” research is it tends to be restrictive in two key facets. First, it usually focuses on customers only (excluding prospective customers). Secondly, it usually starts at the point at which the customer actually becomes a customer. It excludes what researchers are now calling the “buyer journey”, or the “path-to-purchase”.
Example path-to-purchase/buyer journey map
The idea of exploring buyer habits and behaviours has of course been around for a while, but it is only in the last 18 months that it has begun to gain momentum as a piece of research in its own right.
Here are 7 tips for maximising the value of path-to-purchase research:
1. Start at the very beginning
All too often, path-to-purchase studies only go back as far as the first direct interaction between the buyer and the seller; the customer and the client. There has been a shift in buying habits, driven by the desire on the part of buyers to be more independent and well-informed. The resulting pre-shopping stage – often conducted online – was coined The Zero Moment Of Truth (ZMOT) by Google. Investing in the ZMOT helps companies to “get in the door” earlier than the competition and to build a competitive edge.
The importance of digital in the early stages of b2b purchasing is not to be underestimated. Research by BCG suggests that 89% of b2b researchers use online sources during the research process, with an average of 12 searches being performed prior to engaging on a specific brand’s site. In fact 41% of b2b revenues are generated from purchase journeys which start with online research and are following by human interaction.
Companies should seek to identify and understand the ZMOT in their market’s path-to-purchase. Doing this is difficult because they are often more difficult for buyers to pinpoint. The study should seek to tease out these details by exploring purchase triggers and ongoing buyer research not necessarily linked to a specific purchase.
2. Mix qual and quant
There is often an insatiable appetite for quantitative data on the path-to-purchase. Companies want to make decisions with confidence and statistically robust research provides it. There is however, only so far that quantitative measurements can go in informing buyer behaviours, and crucially, their mindset throughout the journey.
Qualitative insights – however they are captured – can enable companies to truly get under the skin of the buyer. There is real value in the detail and in data which brings the path-to-purchase to life; often, it is the juicy quotes and talking heads which truly engage internal stakeholders, enabling them to contextualise the insights and link them to see the people behind the numbers.
3. Explore any and all components of the DMU
It is not in the least bit groundbreaking to say that the decision making unit in b2b markets is a complex beast. And yet, many companies assume that the DMU is homogenous, with a linear process driven and dominated by one primary decision maker. To understand this person’s path-to-purchase is to understand the full picture. Not quite.
Any piece of buyer journey research worth its salt will answer the following questions:
· Who are the key stakeholders and what are their specific roles?
· How do these stakeholders interact with one another?
· When does each stakeholder enter and exit the path-to-purchase?
Most companies will find that various individuals, teams and even functions, drop in and out of the buyer journey and will not be involved from start to finish. The puzzle is therefore rendered incomplete without establishing the entire DMU and the linkages which form within it. That usually means working “horizontally” within target organisations: gathering insights from one individual and then fanning out to uncover (and subsequently cover) the whole decision-making web.
4. Get the view of the channel
In business-to-business markets, the channel is often “king”. Distributors, resellers, dealers: whatever the term(s) used, these “middlemen” are a critical part of the path-to-purchase and often the eyes and ears of the market for the supplier of goods/services.
While end user insights will undoubtedly cast light on the relationship with the channel and their involvement in the buyer journey, soliciting the perspective of the channel partners themselves will enable a more holistic view. Depending on how engaged channel partners are, companies may find that it’s possible to conduct ethnographic research at the actual point-of-sale (e.g. through site visits or joint sales calls) to bring fresh insights on the purchasing interactions.
5. Track behaviour in real-time
Respondents can find it difficult to recall specific details of their buying experiences. Imagine being asked about a purchase you made last week: how many websites you visited, and specifically what you searched for, and how long you spent on each website, and how many people you called, and what questions you asked. Now imagine that you are asked those same questions about a purchase you made six months ago. Now imagine that since that purchase, you’ve made dozens of other purchases of other products/services for your business. Therein lies the trouble.
For path-to-purchase research, the devil is in the detail. Unfortunately for researchers, the detail is devilishly difficult to capture, at least accurately and reliably. Wherever possible (and this is much tougher of course for b2b buyer journeys than for consumer), companies should extract real-time insights from an ongoing path-to-purchase, to mitigate against memory bias. This could include aforementioned ethnographic research, or diary exercises in which the buyer records interactions immediately after the fact. In consumer circles, passive metering is becoming more feasible: this is when consumer digital behaviour is monitored in the background (subject of course, to the respondent’s prior consent). This is far more difficult for b2b markets where the path-to-purchase may be much longer, but as the technology is developed, it may have some equity for b2b researchers.
6. Think strategically but don’t forget about tactics
Market research of any kind is most effective when it leads to strategic decisions, while also informing tactical actions. The same is true of path-to-purchase research.
I have seen first-hand the difficulties of being too strategic when looking at the buyer journey. The risk here is that company stakeholders feel underwhelmed by the results, seeing them as “too high-level” and “simply confirming what we already knew”. These strategic insights obviously have value. They can stimulate a critical examination of the Customer Value Proposition (CVP). They can help companies to identify segments to prioritise, and/or segments to ignore. They can provide direction on marketing budgets and allocation of sales resources. The problem though is that additional insights are needed to inform the specifics, leaving empty value propositions, underserved segments and unspent marketing dollars.
The tactics – in the case of path-to-purchase research – are the minute details which may seem benign, but when combined create a powerful set of insights which can lead immediately to action. For example, when researching website behaviour, it is not enough to say that SEO strategy is the name of the game. Companies need to know which search terms buyers use. How many websites do they visit? What’s the first page they are likely to land on and how long might they spend looking for what they need? Path-to-purchase studies cannot be truly empowering with strategy but not tactics, or vice versa.
7. Understand the fundamentals of a winning content strategy: who, what, where, when, and how?
It is one of the true bugbears of research sponsors to have a study which answers one question but fails to answer four others. It is probably more frustrating than having a piece of research which doesn’t answer anything, because it provides at least the illusion of insight, and then pulls it away by not filling in the gaps.
A key objective of path-to-purchase research should be to enable the development of a winning content strategy. Marketers will tell you that figuring out what content to generate is not even half the battle. Buyer journey studies should be measured very closely against its ability to answer the following questions:
· Who within the buyer organisation requires/desires content?
· What types of content resonate most strongly with each influencer? What information are they looking for specifically?
· Where should the content be placed in order to reach them and to have the best chance of “landing” (seller website, channel website, independent website, trade press, events/conferences, sales rep relationship, POS materials, direct marketing, etc.)?
· When during the path-to-purchase do they need the content, what is their mindset at this stage and what are their aims?
· How should the content be presented to the influencer; what is their preferred media (video, case studies, reviews, white papers, infographics, ROI calculator, etc.)?
A piece of research which focuses and refuses to deviate from these questions is one which stands an excellent chance of being successful. Once concluded, the resulting insights should be able to clearly inform recommendations on how to deliver content at the right time, in the right format, through the right channel/source, to the right people, with the right message.
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The Customer Journey and How Businesses Buy
Written by Conor Wilcoc
Two questions are at the heart of business to business marketing – how do people make choices in favour of one supplier rather than another, and how can we push aside an incumbent supplier and break into a new account. This paper addresses these two questions and relates it to the customer journey.
How do people choose a supplier of business products or services?
The effect of fast and slow thinking on supplier choice
A Nobel prize was awarded to Daniel Kahneman, the psychologist who argued that we make decision in two ways. The first he called system 1 thinking. This is fast, emotional, instinctive and subconscious. The second he called system 2 thinking. This is slower, more calculating and apparently more logical. Much of our decision making is system 1. It is automatic. We make hundreds of small decisions every day, many of them routine and we are in auto-pilot when they happen. Our interest in this paper is the decision making that takes place in businesses, particularly those decisions involving the choice of suppliers of products and services. You would imagine these business decisions are mainly system 2. But, are they?
System 1 and system 2 thinking is different. One is fast and the other is slow. However, the speed of the decision making may be the only difference. For example, if we are in the jungle and confronted by a tiger, we wouldn’t open a spreadsheet and consider our options. We would act quickly and instinctively. Our brain would be in overdrive, processing all that we know about such situations. What we appear to do intuitively may indeed be based on everything we know and hold in our brains on this subject. Our actions may not appear to be well considered because they are taken so fast, but this is because there is no time for deliberation. It is possible that fast thinking applies the same processes as slow thinking, it is just that it doesn’t involve agonising for hours.
This slow and fast thinking affects business to business decision-making. Occasionally there are tigers in the business jungle in the sense that we sometimes are confronted by situations that need an immediate decision. However, most business decisions are not made in a panic. There is a customer journey that begins with an unfolding awareness and knowledge of a supplier. That is not to say that all business decisions are made in the same way along this journey. We can recognise fast and slow thinking at different points and it does appear to be used in different situations and with different types of products or services.
Fast & Slow Thinking In Business Decisions
This seems to make sense. Small purchases, those that are low risk and relatively inconsequential within a business, are made quickly and easily. The customer journey is short. Something which is expensive and critical to the future of the business has a much longer journey. This fits with other paradigms about decision-making in businesses. If we map the annual spend on certain products against their strategic importance to a company, the results are as follows:
Decision-Making According To Spend and Strategic Importance
This discussion leads us to believe that there is no single or simple way that decisions are made in business. However, we can identify some themes. Where there is a high level of spend and where the products are of great strategic importance, it is likely that the customer journey will be much longer than choosing a brand of paperclips.
The importance of “brand” in influencing supplier choice
This is not to suggest that logic is more important when buying a new production line compared to paperclips. It could be argued that the more difficult the decision (and this would imply an expensive product) the stronger will be the emotional influence. Complex decisions are likely to involve a considerable amount of detail, so much so they become difficult to process. When decisions are unduly complex, the brand becomes a crutch we lean on. It synthesises everything we know about a product or company and provides us with a promise we can trust. Rather than analyse every nitty gritty part of the offer, why not take it in the round? Why not simply trust a brand? Malcolm Gladwell, in his book Blink, argues that the lengthy procrastination that often takes place in decision-making is a “post self-justification” because actually we make our mind up in a blink. Brands help us do this.
Brands are important in most business to business decisions. They are enablers that help us decide which suppliers should be considered at every stage of the journey. In the first instance they enable us to quickly decide which suppliers should be in our “consideration set”. As we move through the journey and get into detail and compare the pros and cons of the supplier we will undoubtedly wear tinted spectacles, the degree of hue influenced by our perceptions of the brands. And finally, when everything has been scoped, and we need to choose between two suppliers who look very similar (this is often the case), the brand kicks in yet again. It guides us towards what we know, what we trust and that which we marginally prefer. This tells us that emotions are an important part of the decision making process and they are enacted through brands. Brands play a role at the beginning, middle and the end of the decision-making process.
The Role Of Brands In The Decision Making Part Of The Customer Journey
Stage 1: Which suppliers to consider?
The mother brand influences the small assemblage of companies in the consideration set.
Stage 2: Comparison of features and benefits
Rational thinking and logic begin to play an important role as the decision makers consider the pros and cons of the suppliers in the consideration set. Brands influence the perceptions on all attributes that are on offer by the suppliers.
Stage 3: The final choice
When there is little to choose between suppliers in terms of their performance, their price and availability, the brand kicks in again and influences the final decision.
The importance of understanding the decision making unit
We should not assume that this decision making is the responsibility of one person. In most organizations there are a number of people who have a say and these can differ on the customer journey. Many business buying decisions are made by small committees of 2, 3 or 4 people. There is likely to be a key decision maker and this person will take the lead in the specification. For example the purchase of a new production line will inevitably involve the head of production. There will be additional influences from the technical team, procurement staff and members of The Board. You can imagine how complicated and protracted such decisions can be. The personalities of the individuals have just as much influence as their functional roles. Again we can reasonably postulate that the more important the decision, the more senior will be the decision-making team and the longer the procrastination.
How can we push aside an incumbent supplier and break into a new account?
In the above discussion we have assumed that a company is looking for a new supplier and is proactive in their search. Now we turn to occasions where a supplier takes the initiative and tries to persuade a company to switch in its favour.
The influence of inertia on supplier choice
We have already mentioned the bias that brands impart on decision making. People have predilections (or otherwise) for brands which are based on a host of factors. We can imagine the biases that are built up about a supplier that has been used for many years. This is usually to that supplier’s advantage. We know this because the surveys we carry out tell us that an incumbent supplier can hold on to a customer’s business for many years despite the key decision makers appearing open minded about a change. It is not unusual in a business to business interview for the conversation to go something like this:
Q. What do you look for when choosing a new supplier?
A. Quality is really important. Of course, the product must also be available and at a very competitive price.
Q. How easy or difficult would it be for you to switch suppliers?
A. We would have to do some tests of the new product but in principle, it wouldn’t be too difficult.
Q. How often have you changed or introduced a new supplier in the last five years?
A. We haven’t.
It is astonishing that companies claim to choose suppliers on the basis of logical comparisons of price, quality and availability, and yet they seldom switch. This is despite a wide choice of other companies capable of offering cheaper products, better products or better availability.
Two factors could be at play here. Firstly businesses are risk averse. Once a supplier is well installed with a company and it has moved on through the customer journey, it enters the zone of comfort. This tallies with one of Daniel Kahneman’s findings which states that people are more worried about a decision creating a loss rather than a gain. A new supplier is a gamble. Promises made by the would-be supplier may come to naught. The incumbent brand is known and trusted. At least it is the devil that is known. The new brand, at this stage, is simply a promise.
Secondly, businesses don’t like unnecessary effort. Changing suppliers requires effort as well as possible risks. Why make a change and go to lots of effort when the chances are the new supplier will regress to the norm; in the end being little different to the incumbent? The incumbent supplier is protected by the comfortable position it occupies and can be ousted only with difficulty or if they do something wrong and create a zone of pain.
Conclusion – understanding decision making and the customer journey
Winning new business requires us to understand where the customer sits in the life-cycle with the supplier. We must also understand what is driving the potential supplier change. At the beginning of the customer journey a junior member of staff may be charged with finding out a number of suppliers that could be of interest. As we have discussed earlier in this paper, many companies are very comfortable with their existing suppliers and will only seriously consider a change if there is a pain point – for example, poor delivery, poor quality, a difficult relationship and the like.
Prompted by moments of truth that cause pain with their current suppliers, there is an appetite for a customer to change. As knowledge is acquired on the potential suppliers, different people at the customer become involved. Certainly operational people such as those on the production line or in technical functions will want to be assured that the new supplier has products and services that will fit. The procurement staff will undoubtedly want to check on prices.
B2B Decision Making And The Customer Journey
Eventually a decision to use a new supplier will (hopefully) be made and trial orders will be placed. After a settling down period we can anticipate that a strong and comfortable relationship will be developed which will give the new supplier a high level of security as long as they keep delivering pleasure rather than pain. This understanding of the life-cycle and customer journey is at the heart of how businesses buy and it is the key for business to business marketers.
Six Steps To B2B Customer Experience Excellence
The last few years have seen an appreciable increase in the attention paid to the discipline of customer experience – However, much of this focus has been in b2c markets. Unfortunately, the same cannot yet be claimed consistently for business-to-business firms: B2B customer experience performance still lags other markets and can often struggle for attention against myriad other corporate priorities. In this white paper, we examine the drivers of b2b customer experience success, based on our analysis and research of hundreds of top b2b brands.
The business value of taking b2b customer experience seriously
High satisfaction scores do not equate to high loyalty. A customer could be highly satisfied with a company’s products and services, but that doesn’t mean they are also loyal. A competitor could lure them away with a more attractive customer value proposition. Conversely, a customer may not be satisfied with a company’s offering but could display loyalty simply due to the barriers of inertia or the difficulties in switching brands.
Integral to both satisfaction and loyalty is the customer experience. We have entered the age of the experience economy where customers expect more than ever before. Brands are at battle to outperform on experience such as making the customer journey easier and delivering faster. The more powerful brands connect more on an emotional level with their customers by invoking feelings such as pride and accomplishment, thus challenging the value paradigm in that customers are often seeking more than functional and rational benefits.
A positive customer experience encourages customers to spend more. By way of example, Amazon – a leader in experience innovation with the likes of Amazon Prime and Amazon Dash – enjoys an industry-leading position on its Net Promoter Score (NPS), and attributes more than one third of its revenue to cross-selling.
However, many companies fail in delivering an excellent customer experience as customers are four times more likely to leave a service interaction disloyal than loyal. Poor customer experience drives brand switching and the majority of customers who suffer a bad customer experience spread negative word of mouth. Research by McKinsey showed that improving a customer experience from average to exceptional (where the customer is “wowed” in some way) can lead to a 30 to 50 percent increase in KPIs such as likelihood to renew or to purchase another product.
How customer-centric are b2b brands?
According to research by B2B International, only 14% of large b2b companies are truly customer centric: That is to say, where the customer experience is deeply ingrained in the company culture. This indicates that b2b organizations have significant work to do to become more customer-focused, but it also highlights an opportunity for b2b firms to differentiate their brands and improve profitability by delivering a superior customer experience.
More positively, 31% of b2b firms are engaged with customer centricity in that the customer experience is a core component of their organization’s strategy. This suggests that almost a third of b2b brands have a structured vision for the execution of strong customer experience, although it is not yet ingrained in the company culture.
What are the secrets of b2b customer experience excellence?
With this in mind, how can b2b brands become more customer-centric to the point that the customer experience is embedded into the company culture? In examining the customer experience of over 500 b2b brands, we identified a step-by-step process to achieving b2b customer experience excellence that applies to virtually all b2b brands, as shown in the graphic below. We then tested how well large b2b brands perform on each of these factors of customer experience excellence, on a 10 point scale where 1 means poor and 10 means excellent. The far right column of the table indicates the top 3 box score, i.e. those rating their organization an 8, 9 or 10 out of 10.
At least a quarter of b2b firms perform well on each step of the process towards customer experience excellence. The highest performance is on the first step, commitment, yet only around a half of b2b firms are committed, i.e. enthusiastic about satisfying customers and making them feel valued. This is alarming given that commitment is the foundation to success. In other words, without being committed to delighting customers, it is very difficult to deliver an excellent customer experience.
Knowledge-based companies (such as those in IT, financial and professional services, healthcare and education) rate their customer experience performance higher than companies in trade and services (such as wholesale, telecoms and utilities) and companies in manufacturing and construction. Knowledge-based companies typically entail more customer interaction with people and so there is arguably more opportunity to build strong customer relationships.
How can b2b brands improve the customer experience?
1. Commitment: Being enthusiastic about satisfying customers and making them feel valued
The first step in customer experience excellence is to be committed to satisfying – and where feasible, delighting – customers. Employees have to share a common goal of customer centricity for 100% commitment to the customer experience across the organization. Cintas, the facilities management company, refers to its employees as “Partners” as a means of engaging their cooperation towards the shared purpose. Southwest Airlines takes this a step further by capitalizing all those who engage with its brand in some way. Southwest’s purpose includes “Connecting People” and its mission includes “dedication to the highest quality of Customer Service”.
Companies committed to customer experience excellence should be passionate about their customers to the point that customers recognize the brand’s efforts in going the extra mile. These extras drive differentiation yet are usually small actions and have a low cost to implement. The founder of the Ritz-Carlton hotel said recession isn’t an excuse to eliminate distinguishing features such as bouquets of fresh flowers, as this would bleach the customer experience clean of what makes the hotel distinct. Ritz-Carlton guests are not after a bed and four walls for the night; they are seeking an exceptional experience where every touchpoint with the brand makes the customer feel special.
The more sophisticated companies boast customer experience-dedicated teams. These typically comprise a head of customer experience who is supported by someone in a research role (to collect and analyze the voice of the customer), someone in a process implementation role (to ensure the customer experience is ingrained across all processes), and someone in a culture role (typically part of the HR function). The most successful companies are those with cross-functional teams, i.e. various integrated functions across the organization focused not only on improving the customer experience but on reinventing it. McKinsey claims that less than 30% of companies have a highly collaborative culture, indicating that most have work to do in achieving a shared commitment to customer centricity.
According to the Service Profit chain, customer service improvements are linked to employee satisfaction. The more successful companies at delivering an excellent customer experience are those who also understand what satisfies and motivates employees. And they are companies that typically reward employees for exceptional contributions to customer experiences.
Case study: Safelite AutoGlass has a “Wall of Fame” displaying employees. Up to 75 employees (typically spanning numerous roles across the company) are recognized annually at Safelite, all of whom were nominated by their leader or peers. Such displays of employee accomplishments towards the shared goal of delivering exceptional customer experiences ensure that customer centricity is always a focus across the whole company.
2. Fulfilment: Understanding and delivering on customer needs
Understanding and delivering on customer needs is vital to customer loyalty, but is easier said than done. Customer demands are frequently diverse and increasingly demanding – more customized, cost effective, quicker, etc. In spite of this, up to half of b2b suppliers believe that quality and price are all that matter. This oversimplification is perpetuated by sales teams driven by short-term sales targets and obsessed with selling on price (as opposed to on value). Sales teams are often poor listeners fixated on selling products and services they have to sell, which can be very different from what the customer really wants and values.
The requirements of customers transcend functional needs like quality and value for money. Customers are individuals and have emotions and attitudes. It is therefore important that companies not only understand their customers’ needs and behaviors, but display empathy, especially when customers report issues. This is where segmentation can help.
Case study: A UK mortgage company trains its representatives to identify and allocate a customer into one of its personality segments. This enables the rep to quickly determine whether they are interacting with a “controller,” a “thinker,” a “feeler,” or an “entertainer,” and to tailor their responses accordingly. The segmentation strategy improved the customer experience and decreased costs by reducing repeat calls by an impressive 40%.
Successful fulfilment also requires an understanding of unmet needs and what keeps customers awake at night. This enables suppliers to differentiate their offering and in some cases, exceed customer expectations. For example, an insurer serving livestock farmers challenged by climate change developed a digital solution specifically tailored to farmers’ needs. This offering provides time-stretched farmers with valuable information such as historical and predicted weather data, in addition to the ability to buy policies online at times when the farmers aren’t occupied by their job (such as late evenings).
B2b audiences increasingly value suppliers that help them differentiate and better serve their customers. Innovation and partnership are key to delivering against the needs of customers’ customers, but these requirements are often insufficiently met. Most b2b companies have a parochial view of the customer being the direct consumer of their product or service, and so the best-in-class b2b companies are those who understand the full value chain and positively impact their customers’ customers.
3. Seamlessness: Making life easier for the customer
Across virtually all b2b markets, a top driver of overall loyalty is ease of doing business with the supplier. Regardless of whom the customer is buying from – be it a manufacturing company, a reseller, a SaaS provider, a consultant – seamlessness is central to a smooth customer experience. In most cases, seamlessness is synonymous with simple, convenient and hassle-free.
Case study: HP identified a gap in the market for a more seamless ink replenishment solution and launched its Instant Ink offering. This consumables replacement service automatically delivers ink to the customer just before the ink cartridge runs out. It also provides attractive cost savings of up to 70% through the subscription program with its high yield cartridges. The subscription model makes the customer experience simple, the delivery to the door makes it convenient, and the proactive automatic replenishment makes it hassle-free.
Customer surveys often assess the amount of effort the customer has to put into the relationship with the provider through the Customer Effort Score. Feedback on poor performance on this metric indicates how improvements to seamlessness can be made. By way of example, customers resent providers that consume more time than they deem necessary as their time is precious and bears a cost. Complaints on this issue include time spent on hold on a phone call, wasted time repeating the same information, and lost time in having to deal with incompetent systems, people and processes. It is clear that reducing customer effort is pivotal to delivering a more seamless and therefore more superior customer experience.
4. Responsiveness: Timely response, delivery and resolution
As consumers in the digital era, we are accustomed to intelligence at our fingertips and receiving answers in a matter of seconds. Business professionals are also consumers and have the same expectations in the workplace. Timely response, speedy delivery and fast problem resolution have become the standard. Companies that excel on providing responsiveness that is quicker than competitors and in a timeframe that exceeds customer expectations are likely to deliver a superior and memorable customer experience. For example, financial-technology start-up Kabbage requires just 7 minutes to approve a small-business loan – nearly 5,000 times faster than the 20 days it takes a typical bank.
Responsiveness spans numerous touchpoints across the customer journey including communications, deliveries and issue resolution. Failing on this important requirement can increase customer defection.
B2b customer experience research programs can assist companies in becoming more responsive, not just in identifying where improvements need to be made, but also by providing a platform through which remedial actions can be taken shortly after a problem has occurred. For example, real time detractor alerts enable problem resolution to be taken quickly.
5. Proactivity: Resolving issues before the customer feels the pain
Proactive companies are those capable of anticipating customer needs and desires and that strive to resolve issues before the customer feels pain. It is easier for companies to be proactive if they are good at fulfilling customer needs and can foresee potential customer needs and pain points – such as in the case of Amazon Dash and HP Instant Ink which prevent the problem of “running out” before it happens, while making life easier for the customer.
Proactivity needn’t require new product or service offerings. For example, the lighting company Osram Sylvania identified that a simple change in language could make a big difference to the customer. Words like “can’t,” “won’t,” and “don’t” naturally invoke feelings of disappointment and dissatisfaction as they imply an inability to deliver against customer needs. The company therefore trained its reps on alternative phrasing with a positive spin, such as indicating when an item would be in stock, as opposed to the disappointing alternative of stating that the item is currently unavailable. Examining root cause can provide insights on where proactive measures need taking:
Case study: Bell Canada recognized that a high percentage of customers were calling back requesting usage instructions relating to a particular feature. As a forward resolution to the issue, reps now provide a quick tutorial on the feature over the phone, resulting in fewer call-backs and a drop in customer churn by 6%. For more complex issues, the company sends follow-up e-mails which are easier than lengthy instructions via telephone. This proactive approach means less effort for the customer and a more seamless and hassle-free customer journey.
Fidelity uses a similar proactive support process on its website by providing “suggested next steps” to customers completing certain transactions. For instance, customers who change their address online are also asked about their interest in ordering new checks and taking out new insurance. Such proactive measures have resulted in a reduction of customer calls by 5%.
6. Evolution: Continually seeking to improve the b2b customer experience
Customer needs, behaviors and attitudes can change any time, as can competitive threats and influences such as technology and legislation. Thus companies that already perform well on delivering an excellent customer experience cannot be complacent. The totally customer centric firm acknowledges that improvements must be made on an ongoing basis.
The more receptive companies to evolution are those that are agile and open to applying design thinking to the customer experience. This entails reinventing how customers interact with the company to reengineer and transform the customer journey.
Case study: The Netherlands-based bank ING created a solution for its retail and corporate clients that enables them to access real-time account overviews and customized reporting, along with the ability to process various transactions from any location. This required the bank to conduct a major overhaul of its systems and processes involving omnichannel automatic integration of customer data. After just one year, ING had grown profits by 23% and increased its share price by 15%.
So what does this all mean?
Business-to-business audiences look for solutions to problems, or offerings that better meet their needs, such as more customized products, better integrated systems, increased responsiveness, lower cost-in-use, or higher productivity. Influenced by the consumer world, many b2b audiences are also seeking an improved experience in using a b2b product or service – a customer journey that is seamless, more convenient, and hassle-free. Savvy b2b suppliers sell an experience and outcomes, not products. We operate in an experience economy where brands embody more meaning through experience.
Customer surveys and loyalty research tends to assess company performance in silos. B2B customer experience research, however, assesses the whole customer journey in terms of interconnected touchpoints, and current and anticipated pain points. Even in value chains with numerous channel partners and routes to market, it is possible to identify opportunities for enhancing the customer experience, such as in the case of HP with its Instant Ink offering.
Customer journeys are more complex than ever before as the average b2b customer uses six different channels (such as in-person reps and ecommerce sites) over the course of their decision-making journey. This can make it challenging to deliver a seamless experience, yet b2b buyers who interact with multiple channels spend more than those who only purchase from a single channel. The more profitable customer experiences, therefore, are those that comprise omnichannel marketing and sales strategies. They are also typically delivered by companies that are more agile.
Customer experience excellence recognizes that the customer isn’t a mere transaction. In b2b markets, the customer often comprises numerous decision-makers and influencers within the same company, often with different needs. The more sophisticated suppliers know how to sell on value to these different audiences. They also understand the broader impact of their offering in terms of the benefit to their customers’ customers.
The foundation of b2b customer experience excellence is a commitment to putting the customer at the core of what the company does, how it does it, and ultimately why it does it. Less than a half of b2b firms are enthusiastic about satisfying customers and making them feel valued, and without a commitment to delighting customers, it is impossible to deliver an excellent customer experience. The starting point, therefore, is to obtain board-level buy-in on ingraining customer centricity into the fabric of the company. Although cultural alignment doesn’t happen overnight and customer experience management needs to continually evolve, the financial returns of customer experience excellence can be immediate and deliver a sustainable competitive advantage.
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Putting the Customer at the Heart of the Business
In this white paper, we look at how putting the customer at the heart of your business can deliver an exceptional customer experience, and ultimately boost profits, along with some of the typical approaches for conducting customer experience research.
“Delighting customers inevitably adds costs” is suggested as one of three key barriers to some companies making a push for delighting their customers, by Steve Denning in his “Is Delighting The Customer Profitable?” article for Forbes earlier this year.
The perception of delighting customers being a cost burden as outlined above would of course depend heavily upon a particular company’s culture (and would undoubtedly be engrained throughout the company). Said company would, as an example, be fairly successful, and be content to deliver a good service. Delivering ‘good service’, we would argue, is not a long-term strategy. A ‘good service’ is expected by customers – it is a hygiene factor that does not drive satisfaction higher, but it will drive it lower if it is not fulfilled. From the years of customer research that our team has conducted, we know that if customers are delivered a service that is merely ‘acceptable’, their heads will be easily turned if a better provider comes along.
There are other types of companies that put the customer right at the heart of their business, and make it part of their goal to deliver customer excellence. Rather than being focussed on the cost of ‘going the extra mile’, these companies will have a motto something along the lines of “delighting customers is what we do, it helps our profits thrive” – such an idiom would be engrained in the company culture (see Apple, Google, Amazon, Zappos, etc). It is very pleasing to see more and more companies switching to this way of thinking.
The first type of company, the one focussed on the cost implications of change, has (in very rough terms) an ‘outside-in’ approach to the business. Every decision, choice and action is accountable back to the central finance department and/or shareholders, and therefore must be justified. Obviously this is common in all businesses to some extent; however, in extreme examples these would be the companies where the chance for creativity and empowerment amongst employees is confined to rather lengthy and carefully worded company guidelines.
The second type of company could be referred to as inside-out companies – these companies have their customers at the very core of what they do and this resonates outwards and impacts on all elements of the business. These companies give their staff free reign to use their own intuition when it comes to delighting customers.
These are two fairly polarised views – but what it does highlight is that, although change may take some time, an outside-in company can indeed become customer-centric by placing the customer at the heart of all decisions. However, in all case (all successful ones, at least), decisions such as this must be lead from the top – from the CEO to the person at the store counter, the whole business has to have the customer at the forefront of their mind.
One exercise that is useful for any company is to understand what the issues are that your customers expect, and which issues really delight them. In many cases, issues that companies believe to be differentiating areas, are in fact seen by the customers as hygiene factors.
We can split elements of a product or service offering into three distinct categories:
· ‘Hygiene factors’ are the elements of a service or offering that customers expect. These issues will not increase satisfaction, but they will decrease it if they are not delivered against.
· ‘Nice to haves’ are issues that can influence satisfaction. These are elements of a product or service that are not necessarily expected and can drive satisfaction higher if they are delivered effectively. Over time, nice to haves can regress to become hygiene factors as they become expected by customers.
· ‘Differentiators’ are the delight issues – these are things that customers do not expect; the examples of going ‘one step further’, or of exceeding expectations. These are the things that set companies apart from their competitors. There is sometimes a perception that differentiators can be expensive to implement (see Denning’s quote at the start of this article) due to the impact and value that they deliver to customers. However, in many cases these areas can be easy and inexpensive to implement and instead come down to allowing staff a little flexibility to embody a focussed company promise, and to shine in their own way to deliver a personalised service.
What would you say are your company’s hygiene factors, nice to haves, and differentiators? Do you think your customers would agree, or would they position them differently on the pyramid? Many differentiators are so simple; sometimes they can be the fundamental elements of a product or service offering that no other company in the market currently does well, where providing an exceptional service can really set a brand or company apart from the competition.
Steps Towards Implementing An Holistic Customer Experience Research Programme
With the above in mind, how do we then approach a typical programme of customer experience research? There are number of different approaches, techniques and tools that can be used. In this white paper, we shall take an initial look at some of the more common techniques.
Customer experience research programmes typically involve a number of key stages:
1. Mapping the customer journey (both from an internal perspective, and an external perspective)
2. Assessing how the company performs at all stages of the customer journey, and at key touchpoints
3. Developing a core set of values or a brand promise that can be brought to life at all touchpoints in the customer journey
4. Tracking performance and customer satisfaction on an ongoing basis.
Start From The Top
In order for all the stages above to fully gel together and deliver dramatic change within an organisation, there needs to be full senior support. With that in mind, for any organisation looking to conduct such a programme, we would always recommend involving all senior stakeholders in the key stages of the research. This should be from the very first commissioning meeting, right through to the final strategy workshop. Taking this approach ensures that all senior staff not only feel ownership of the project, but are also able to deliver change far quicker than might otherwise be the case.
Take A Hike
When working through the stages of such a research programme, there are a number of tools and approaches that can be used to bring (in hypothetical terms) the customer to the heart of the business. At the start of the customer journey mapping research, it may be that we want to take the senior stakeholder on a clue-spotting safari. As grandly-named as this may sound, it can essentially be a trip around a company’s store, offices, or similar place where customers might interact with the organisation. On this trip we would encourage the stakeholders to take pictures of the small details that build up their perception of the customer experience – anything from loose shopping trolleys in the car park, to faulty TVs on display. Although these small details may seem trivial, it is indeed the small details that help us build our perception of things (indeed, even the ends of a toilet roll being carefully folded in a luxury hotel give off the message that the hotel has close attention to detail – and yet it costs the hotel nothing to implement).
Once the stakeholders have an understanding of how these elements can influence the customer experience (just as much as any product guarantees, or a product’s quality might), it enables us to deliver a much more comprehensive and thought-out strategy at the back-end of a project. Placing the stakeholders in the shoes of the customer, and focussing on the detail, highlights just how much a company’s values can be shown through so many different aspects of what the organisation does.
Be Creative
Research and insight has moved on dramatically in recent years in terms of the creativity that it can deliver when bringing data and information to life. Customer experience research especially lends itself to this creativity. One of the key elements of success in delivering change within an organisation is ensuring that all staff are ‘bought in’ and understand the changes, and one of the most effective ways to do this and to bring research findings to life is through video. A picture does indeed speak a thousand words, and when a short video clip can highlight a particular problem that customers face, or a particular event that fills them with delight, the message is instantly clear to staff. Some of our clients have been keen on video clips merged with customer journey maps, whereby particularly troublesome touchpoints are highlighted with video evidence so that employees know how to deliver effectively against them in the future.
Tracking And Monitoring Satisfaction
A core part of many customer experience research programmes is conducting an on-going satisfaction tracking survey with customers. Trackers tend to be conducted in waves at regular intervals (e.g. every month, every quarter, every 6 months), and involve surveying a large enough sample of customers to allow differences in satisfaction to be measured robustly from one wave of interviews to the next. Data from these trackers can be fed into reporting dashboards that can be used to interrogate and monitor satisfaction data as it comes in, to highlight areas for immediate action. The effects of this live data can also be amplified through real-time ‘hot alerts’, whereby an email alert can be automatically sent to a particular team or individual if a very low satisfaction score is received on a particular topic (as an example, a member of the accounts team might receive an email notification when a customer has given a low satisfaction score relating to ‘prompt invoicing’). Data can also be married up with existing client data and, with analytics applied, can help us understand such things as ‘potential revenue at risk’ due to poor satisfaction and loyalty scores.
Social Media Monitoring
Another development in customer experience research is the advent of social media monitoring. As many companies know, a good or bad comment on twitter can spread like wildfire. With most customer experience programmes, we now suggest that clients consider combining social media monitoring exercises alongside customer satisfaction research – in many cases, this can be delivered as part of a tracking dashboard so that all information is accessible in one place.
Small Things Make A Big Difference
Something that is often enlightening to many clients is just how much of an impact small (and often low-cost or free) changes can make in improving customer satisfaction. As a follow-up activity to customer satisfaction research, it is fairly obvious that something should be done to improve the relationship with those that are not satisfied. But something that is often overlooked is thanking the people who are truly satisfied – the promoters. These promoters are the lifeblood of any company, and often something as simple as saying ‘thank you’ and displaying gratitude can go a long way.
Concluding Thoughts
In summary, customer experience research is both simple in its aim and highly detailed in what is involved and what can be delivered. Researching the customer experience can deliver great value in highlighting areas of strength and in identifying unmet needs. Crucially, it can help in indicating the disconnect between a company’s perception of its offering and the customer’s perception of its offering – which in some cases can mean the difference between going out of business, or continued growth.
The points mentioned above do indeed only scratch the surface of this exciting area of work. But one point to always remember: any company that asks its customers how it is performing, and is seen to pride itself on an excellent customer experience, automatically raises expectations. Once people have taken part in a satisfaction survey, they expect to see a change.
A Practical 4-Step Guide to Improving Customer Satisfaction
No one would question the importance of keeping customers satisfied. In a small company it is very evident if customers are dissatisfied. People complain directly to the proprietor. The situation is very different in a large company. Customers are dealt with by many different people. There are multiple touch points for any single customer which could cause dissatisfaction – the sales representation, the customer service team, the delivery people, the finance department and so on. The managers of the company undoubtedly have hundreds of customers, possibly scattered around the world, and the only way they can know for sure how satisfied they are is by carrying out a survey. This brings with it a number of potential problems and the survey itself is the least of these. Measuring customer satisfaction is easy compared to the task of implementing improvements.
Doing Is Harder Than Thinking About It
In my experience, too many customer satisfaction studies gather dust because there is no mechanism for turning the market research findings into tangible improvements. This White Paper addresses this subject and begins with a discussion on what customer satisfaction scores mean and concludes with a four-point plan for making improvements.
What Do Customer Satisfaction Scores Mean?
Most customer satisfaction surveys use numerical scales which measure levels of satisfaction. Respondents are asked to provide a score on their satisfaction with a supplier using a scale that runs from 1 (or 0) to 10, where 1 indicates total dissatisfaction and 10 is equal to total satisfaction. Ninety percent of all companies measuring their customer satisfaction achieve average scores in the range of 7 to 9. These scores between 7 and 9 are known as “the corridor of satisfaction”. On this 10 point scale, 8 is in practice the midpoint, not 5. This makes sense if you think about it. If you gave your dentist a satisfaction score of 5 out of 10, you almost certainly would be looking for a new one. We only do business with suppliers who provide good products or services and “good”, on a 10 point scale, begins at around a score of 7 for most people.
Figure 1 – The Corridor Of Customer Satisfaction
It is also fair to say that it is relatively easy to enter the corridor of satisfaction that runs between 7 and 9 and it is progressively difficult to increase the score once within it. Moving an average satisfaction score from 7 to 7.2 is much easier than moving it from 8.4 to 8.6. Because the corridor of satisfaction is quite narrow, a movement of 0.2 is significant.
It should be noted that overall satisfaction is normally asked as a separate question and is not calculated as an average of individual satisfaction scores given to different elements of a company’s product or service. This is because it is possible to have a relatively high score on individual components of an offer and a lower (or higher) score on overall satisfaction. A lower overall satisfaction score could reflect an image problem that a company is facing or it could arise from resentment because a company holds a monopolist position.
On the subject of customer satisfaction measurement, some people prefer “top box” scores rather than mean scores. In other words, the measures they find most useful for measuring and tracking satisfaction are the percentage of people who give a score 9 or 10 out of 10 (“top box”). This focuses attention on what really matters – the proportion of people that give an excellent rating – but for some companies it may mean they have little to work on if they have a lot of scores of 7 or 8 out of 10.
Market researchers often measure numerous aspects of products and services rather than keeping the survey at a high level and asking simply about overall satisfaction. This is because they are seeking to find out what feature of a company’s customer value proposition is driving overall satisfaction.
Companies do not live in isolation and their customer satisfaction score must be related to those achieved by competitors. A company with an overall satisfaction score of 6.5 out of 10 is at face value in a very poor position but if competitors have scores of only 5.5 or 6 out of 10, its relative position may not be so bad. We need therefore to understand how the company sits in its marketplace against direct competitors and other companies that may be used as a benchmark.
Even though our interest is in business to business markets, the buyers and specifiers that rate their suppliers enjoy an experience from a much wider range of products and services. If they visit John Lewis in the UK or Lord & Taylor in the US, they will receive a high quality of both products and services which inevitably will become benchmarks to judge old-fashioned, sloppy service from a business to business supplier. In other words, benchmarks by which we are judged exist everywhere, in every aspect of our life.
Customer satisfaction scores are not the only measure that is used in customer satisfaction surveys. The opportunity is also taken in most surveys to ask respondents the likelihood of them recommending a company and the answers to this question are used to compute its Net Promoter Score (NPS). Using a scale from 1 to 10 on the likelihood to recommend question, it is assumed that people who give a rating of 9 or 10 will be strong advocates or promoters of a supplier while those who give a score of 6 or below are potential detractors and would not recommend the company – they may even “rubbish” it. The subtraction of the percentage of respondents who give a score of 6 or below from those who give a score of 9 or 10 out of 10 produces the Net Promoter Score. It will be noted that scores of 7 or 8 out of 10 are not taken into consideration as they are deemed neutral.
The average Net Promoter Score for b2b companies is between 20% and 25%. It is not unusual to see negative Net Promoter Scores and it is rare that they consistently hit a high of 50%. It is widely believed that there is a strong correlation between a high Net Promoter Score and growth in market share and loyalty.
I suggest that there are four steps to improving customer satisfaction and loyalty.
4 Important Steps to Improving Customer Satisfaction
1. Identify Satisfaction Levels (And The NPS) And What Is Driving Them
The starting point for any improvement plan is to know the current level of customer satisfaction and what is driving it. Let us assume that a survey has been carried out and a company achieves an overall satisfaction score of 7.8 out of 10 and a Net Promoter Score of 24%. Further examination shows that the key drivers of the overall satisfaction score are the speed of response to enquiries, certain aspects of quality, and a general lack of innovation. It is determined from the survey results that any failings on any or all of these three factors have a marked effect on the overall satisfaction score for the company. Having invested in a customer satisfaction measurement program and arrived at an understanding of where the company stands, what should be the next steps?
2. Establish Workgroups To Determine Strategies And Tactics For Improving Customer Satisfaction
Intuitively, people who are at first exposed to customer satisfaction findings believe that the way forward is to examine individual responses and deal with each of them in turn. When an adverse comment is shown in a customer satisfaction report the usual cry from someone in the audience is “tell me who said that”. Salespeople understandably want to visit customers who have given them a low score and put them right.
However, this is not to be recommended. Firstly, the respondents who have fed back their customer satisfaction scores and comments usually do so in the belief that their responses are confidential. It would be embarrassing to a respondent if they were to criticise a sales representative in confidence and then have to face that person who had learned what was said.
Furthermore, the likelihood is that any failure to adequately serve one company is likely to be evidence that the same failure exists within a wider group of customers that have not been polled in the survey. The way forward is to address systemic issues, not individual or granular ones.
It is an obvious point to make, but improving a customer satisfaction score requires someone to sort out those factors which are pulling the score down. Following up on the earlier example, this would mean improving the speed of response to customer contacts, rectifying aspects of the quality problems, and becoming more innovative. How to do this?
Most customer satisfaction initiatives are seen to be the responsibility of the marketing department – but this must surely be wrong. The solution to improving customer satisfaction should be a companywide responsibility.
It is worth considering setting up workgroups that devise an action plan and ensure that it is followed through. In the example which is being considered, there could be a workgroup dedicated to improving quality, one taking responsibility for customer service, and the other for driving innovation.
Small workgroups of four or five people are more likely to make progress than larger ones where there could be too much debate and too little action. The composition of the workgroup should include someone with a deep understanding of the issue that is under consideration – for example, quality, service or innovation. However, it may be appropriate to include people from other disciplines as they will provide a wider context and offer fresh challenges and ideas that come with an outsider’s view.
Any plan for improving customer satisfaction must address fundamental issues, some of which may be strategic, or long-term and which require a significant financial investment. However, there are also sure to be issues that can be addressed which cost very little, can be done easily and although their impact could be quite small, they are worthwhile doing in order that everyone feels progress is being made. These can be simple things such as ensuring that everyone has a standard voicemail message on their mobile phone or that everyone has a consistent sign-off at the end of their e-mails. A very good start would be to make a comprehensive list of all the touch points that a customer comes into contact with and identify where most problems occur.
Figure 3 – Prioritising Actions Following Research
3. Have The CEO Approve The Strategies And Communicate The Importance Of Making Improvements Within A Tight Timescale
Communicating customer satisfaction initiatives throughout a large company is not easy. Firstly, the company may have hundreds if not thousands of employees and it would be a costly exercise and one that would take forever, to make presentations of the findings and action plan to every employee. However, not everyone needs to see the detail or to hear about the actions that are outside their area of responsibility. Dissemination programs can be devised to communicate the right information, to the right groups, in the right way. This could involve cascading presentations to team leaders who in turn inform the people they work with.
One solution adopted by a company implementing an improvement programme was to make a 10 minute film featuring the CEO of the company, who used this opportunity to give his support to the initiative. It included summary presentations from the communications team who were able to clearly state the problems and solutions, and presentations from members of the workgroups outlining what is expected from everyone. The film was shown on the company intranet and on screens placed around areas where people congregate, such as the restaurants and lobby areas.
The involvement of the CEO is crucial. Customer satisfaction is the responsibility of the Board as it is a company-wide philosophy and not the responsibility of any single person or group of people. If the CEO identifies improved customer satisfaction as one of his or her key initiatives, it will be more readily picked up as key initiatives for staff members down the line.
4. Establish Simple Measures To Check That The Program Delivers Improvements
We live in a survey weary world where it is not practicable to return to customers at too frequent intervals to ask for feedback. Indeed, customers are likely to be frustrated if they are constantly pestered to rate customer satisfaction and if they feel that little or few improvements are being made. It can take an inordinate amount of time for improvements to become evident and recognised in the marketplace. This is another reason why some things need doing quickly so that customers can see that a start has been made.
Although the Board may be impatient for a dashboard that frequently delivers customer satisfaction measurements, these may not be possible within a tight, relatively small customer base.
Most customer surveys are carried out annually unless there are a large number of customers from which samples of customers for interview can be taken on a regular basis to measure progress. However, for the majority of business to business companies, measures must be found other than customer satisfaction surveys.
There are many different measures that can be used as a proxy for customer satisfaction. Internal measures related to the subject of improvement will be relevant. For example, if a required improvement is faster deliveries, measurements can be devised that track the speed with which an order is dispatched. If improvements are required in the frequency with which customers are contacted, measurements can be introduced to show how many visits are made to customers, how many phone calls are made, who makes them, the purpose of the call, etc. If the problem is product quality, measures can be taken of the quality as it comes off the production line or leaves the company.
In addition to such obvious measures of improvement, a company could introduce a self policing measurement. The customer service teams could be asked to give their views on the scores that they believe individual customers would award them. If these ratings prove to be overgenerous when finally customers give their views in the annual survey, it would be easy to think of repercussions. Bonuses and personal development programmes could be affected.
In Conclusion
In this White Paper I have explained how to interpret customer satisfaction scores and more importantly how to use these to improve customer satisfaction in four important steps:
1. Identify customer satisfaction levels and what is driving them
2. Establish workgroups to determine strategies and tactics for improving customer satisfaction
3. Have the CEO approve the strategies and communicate the importance of making improvements within a tight timescale
4. Establish simple measures to check that the program delivers improvements
A constant improvement in customer satisfaction should be in the mission statement of virtually every company. The benefits are huge. There will be a reduction in customer churn. There will be increased loyalty. And, not least, there will be increased profitability. In work carried out by Anderson, Fornell and Lehmann more than 16 years ago , and never challenged since, they determined that for every one percent per year increase in customer satisfaction over a five year period, there is a cumulative increase of 11.5% in net profitability.
Increasing customer satisfaction is not complicated, but it is hard work – and it is worth it.
Anderson, E., C. Fornell, and D. Lehmann. 1994. Customer satisfaction, market share, and profitability: Findings from Sweden. Journal of Marketing(July ):53-66
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Beyond Customer Satisfaction
Recently, when preparing for a presentation, Dan was re-reading some material that suddenly struck him in a different way compared with his previous reading of it. Drawing on original USA research from customer satisfaction surveys the American marketing specialist Jack Trout makes the following points.
· More than 40 per cent of customers who claimed to be satisfied switched suppliers without looking back. (So many choices, so little time.)
· Eighty nine per cent of people who owned cars from a certain manufacturer said they were very satisfied and 67 per cent said that they intended to purchase another car from that manufacturer.
· Fewer than 20 per cent actually did so.
Source: Trout (2000) p 33.
Clearly the above raises interesting questions about the subject of customer satisfaction and it has prompted a very lively exchange of thoughts between the two authors named above. Out of this came the decision to write this short B2B White Paper jointly.
Common sense tells us that if businesses fail to satisfy customers they are unlikely to stay in business very long, unless either (a) they are in a monopoly position with no cost-comparable substitutes or (b) they are the final choice supplier in a sector where every other supplier is experiencing fully utilised capacity that is contractually committed and therefore cannot be released at higher, market-clearing prices. Few organisations nowadays find themselves in this luxurious position. Consequently, as Trout illustrates, the achievement of measured customer satisfaction may not always translate directly into customer retention and profit over time.
Is Everybody Happy?
As a backcloth to this discussion, it is helpful to consider exactly what satisfaction means. If someone asks you if you are very satisfied or quite satisfied with your car, exactly what would be in your mind? Although we all have a general view of what satisfaction means, we know that it means different things to different people. To some it may mean, “it’s OK”; to others it may mean “it fully meets all my expectations”. The word satisfaction is like happiness – it is something we are all interested in and would like to measure but it is a soft factor – one that is hard to quantify.
Another point to bear in mind about these measures of “soft” issues such as satisfaction and happiness is that different groups of people could have different views. We see this in global surveys of happiness. Most Nigerians say that they are happy even though it seems that by comparison to us, theirs is a pretty impoverished lot. Also, when we are measuring soft issues such as satisfaction and happiness, the game keeps moving on. The more we have the more we want. The first time we received free bottles of shampoo and conditioner in a hotel we were very satisfied. Now we take it for granted and expect a bowl of fruit and perhaps a bottle of bubbly.
Happiness levels across the world have been measured for some years and we have seen a steady decline in most countries. For example, in the early 1970s in the UK we could expect around 45% of adults to say that they were very happy. Today that proportion is only 30%.
However, despite the rosy mists of the past, most of us would not want to turn the clock back and live without central heating, suffer cars that rust and constantly break down, and give up our electric windows. According to Professor Daniel Kahneman of Princeton University, measuring happiness is not to be fully trusted. He proposes the concept of “objective happiness” in which he measures happiness regardless of what people say. This is something for us to bear in mind in customer satisfaction surveys – can we find measures that indicate satisfaction without necessarily asking if people are satisfied.
Loyalty Is Stronger In Most B2B Markets
Let us turn the discussion to business to business customer satisfaction. We can recognise that the above forces are also at work here. Suppliers are getting better and better in every way. Deliveries arrive fast and on time, prices are falling, products are more reliable – and yet customer satisfaction levels are stuck at scores of around 8 out of 10 for most companies.
The good news is that the lack of loyalty and degree of supplier switching referred to by Trout is not fully evident (yet) in business to business markets. There are three good reasons for this. Firstly, business to business buyers (remember there is seldom just one person involved – usually a decision making unit) have all to agree in their decision to change their supplier. The “jury” effect of the complex DMU restrains the impulsive actions that we can more easily take as consumers. For us as Joe Public, does it really matter if we buy one brand of shampoo rather than another – but it could matter if we change the brand of lubricating oil in the cutting tool. Buyers are reluctant to make a change to another supplier, ever sceptical that the initial lower prices and promise of better service may evaporate within months. Of course, much depends on the type of product that is being sold – how critical is it to the running of the business? Business to business buyers have some sort of map in their minds that positions the products and services they are buying as critical (or not) to their business. They know when they can chop and change suppliers and when it isn’t worth the risk.
Loyalty Map For Business To Business Products
The second factor that ensures greater loyalty in business to business markets is the “relationship lock-in”. Many of the products that are supplied to businesses involve personal contact with the supplier. We find in survey after survey that customer satisfaction is driven largely by people factors. Friendly, knowledgeable and attentive staff add considerable points to the customer satisfaction score. We have more to say on this later because this is most certainly something that we can influence greatly.
The third factor that ensures relatively high levels of loyalty in business to business markets is inertia. An incumbent supplier to a business has a good chance of keeping that business (unless they screw up badly or if a significantly better offer is made by someone else) because it is just too much trouble to change. Companies, unlike the general public, have a web of knots that tie them into their suppliers. Most suppliers have to go through an approval procedure before they can begin deliveries. Terms of payment and supply agreements have to be set up. Saved dialling numbers to the incumbent supplier simply make it easier to place the order. Getting the paperwork in place is for some companies a sufficient deterrent to leave business where it is unless there is good reason to change.
What does all this mean to us in business to business markets? It seems to us that it poses two important questions:
1. Are customer satisfaction scores valid in the form we know them today?
2. How can we measure loyalty and use those measures to produce even greater lock in for our customers?
Measuring Customer Satisfaction
In the thousands of studies that have been carried out measuring customer satisfaction in business to business markets, we have learned that there are no magic bullet questions. This is because the answers people give are not always the ones we can believe (remember Professor Kahneman) and the interpretation we make about the answers by relating one to the other can be far more enlightening. In a typical customer satisfaction survey there could be as many as thirty to fifty different rating questions on all the aspects of product, service, value and delivery. However, there are eight questions that seem to be central to the study (with obvious modifications to suit). These questions are:
1. How satisfied are you with the quality of the products from ABC Ltd?
2. How satisfied are you with the reliability of products from ABC Ltd?
4. How satisfied are you with the sales service from ABC Ltd?
5. How satisfied are you with the speed of delivery from ABC Ltd?
6. How satisfied are you with the reliability of delivery from ABC Ltd?
7. How likely or unlikely are would you be to recommend ABC Ltd?
8. How satisfied are you overall with ABC Ltd?
In order that we can relate one question to another and keep a score for benchmarking purposes, we have to record the answers to these questions on a rating scale of one kind or another. Everyone reading this in business to business markets will also see the need for obtaining free ranging responses that help us get behind the numbers.
Question 8 is a vital question as it provides a benchmark for comparing with other suppliers and because we can correlate the answers from the other questions with this score to work out the key drivers of satisfaction. Answers to Question 7 show a strong link with loyalty and propensity to buy in the future.
So, at this point of time we have to say that the questions we are asking are probably the right ones but we must make sure that we leave room for questions that measure loyalty since a satisfied customer can still be at risk from a competitive supplier with a seductive lure.
Measuring Loyalty
In addition to question 7, that determines the likelihood of recommendation, we can ask other simple questions to measure loyalty such “how likely are you to buy from ABC Ltd in the future?”
However, we would like to push the loyalty discussion further as it seems to us that for loyalty to really matter, it should be robust and durable. A supplier with robust loyalty would have forces in place that resist other suppliers breaking in. For example, a good rep who has built strong relationships with all the decision makers in the company may be robust enough to head off threats from competition. A supplier with durable loyalty will keep the business for a long period of time. It seems to us that the achievement of robustness is to do with communication and that the creation of durability relates to alignment with customers’ requirements and their identifiable future needs.
Let us look at the two elements, robustness and durability, in turn.
Robust Loyalty
Robustness is achieved by excelling on the soft issues that can sometimes be overlooked. Branding and positioning play a key role here even though they may not show up as key drivers in the selection of a supplier. They are not the sort of things that business to business buyers acknowledge but we know that they are vital in ensuring a fit between two companies. As customers become more discerning and subjected to more frequent marketing messages, the need for identifiable uniqueness increases, otherwise the outcome is that products and services – and even the organisation itself – become “commoditised”. The essence of a commodity is that it is readily interchangeable with other similar commodities. Therefore the logical consequence of this process is that communicating values that resonate with customers is vital to achieving a robust position.
It can be seen from the above that the key to customer satisfaction over time is to do with not only the deal but also the relationship and that this is not achieved by some static once-for-all set of elements of the marketing mix. It requires a more sophisticated approach. But if this approach can be devised initially and managed against the dynamics of changing customer requirements and competitive pressures, the result is sustainable satisfaction leading to reduction in selling costs since, as marketing specialists are quick to point out, it costs several times less to gain business with the existing customer base than by the constant addition of new customers for the ones that desert.
Different customers feel comfortable with different relationships. We can categorise these as “relationship types”: they function independently of the product and service offering, and this is summarised below. What constitutes customers’ comfort can (indeed must) get re-categorised over time as they themselves change under constantly evolving market- and competitor-driven conditions.
This is summarised in a paper addressing a very different subject – logistics – written recently by Dr John Gattorna, a recognised authority on supply chain design. It illustrates why the technologies of Customer Relationship Management have become so significant, along with the concept and practicalities of Key Account Management.
Source: Gattorna 2003, p 13.
Since we need to achieve what is explicit in the above, we need to be able to assess the extent to which we meet customer requirements in terms of relationship at the moment.
Durable Loyalty
Concerning durability and the question of meeting customers increasing demands, the key is to move in synchronisation with the customer. Offering a better product or a cheaper product is not always the answer to meeting changing needs, especially if the advantages can be quickly copied. In this respect the tools and techniques of supply chain management, developed initially for the logistics function of business, have a powerful impact on marketing. Competitive advantage can be derived from anywhere in the supply chain, and the basis of competition is moving to one of supply chain versus supply chain rather than product versus product.
Creating and managing the critical value-adding parts of this set of relationships is central to achieving durability.
Durability is not about being ‘built to last’, but about having the capability to change whilst continuing to perform at or preferably above the industry sector average. This is summed up most convincingly in a recent article by Professor Gary Hamel (Hamel 2003). Again, his perspective is not specifically to do with marketing and selling, but what he has to say about the broader subject of business strategy has a valid message for marketers. Hamel’s basic argument is that value is more evenly distributed than in the past due, inter alia, to “technological discontinuities, regulatory upheavals, geopolitical shocks, industry deverticalisation and disintermediation, abrupt shifts in consumer tastes and hordes of non-traditional competitors”. In this the traditional functions of brand, market share, business model, channel to market, first-mover advantage (we could add more) are becoming less effective, since the key to retaining customers is not simply to do more of the same in a better manner but to do it different – as Hamel puts it, “the ability to dynamically re-invent business models…as circumstances change”. We would argue that the sustainability of customer satisfaction is central to this.
In order to assess whether our organisation has the potential for durability (assuming that, on a snapshot view, we are satisfying our customers in terms of product and/or service) we have to answer, quite simply and unemotionally, two questions. The first is “what is our value to our customer within the totality of the supply chain?” The second is “how do we retain and improve this value faster than our competitors can catch up?”
Concluding Thoughts
Companies of all types and sizes need to take a hard look at their approach to analysing customer satisfaction and to measure it in a more perceptive and holistic manner than by asking simplistic questions that give a snapshot view of product and service. For this view can get outdated alarmingly quickly; and sustainable differentiation, as we have argued in other B2B White Papers, is derived increasingly from other parts of the supply chain.
Satisfying customers is a means to an end. The purpose and goal of customer retention are clearly the important issues here. The key is in understanding the nature of the relationship and in anticipating its potential. Not least, it has significant implications for ourselves in B2B, and our B2B approach to analysing customer satisfaction on behalf of our clients and indeed for ourselves is being continuously improved to take these dynamics into account. This puts any business in a better position to reinforce the triangle of satisfaction/robustness/durability, which in turn translates into more effective cost management and revenue/margin growth.
Satisfaction is of limited value if it does not lead to retention. Product and service are no longer enough: relationship is emerging as the bigger differentiator, supply chain lock-in leads to durability of loyalty. The customer satisfaction concept is overdue for a product reCustomer loyalty research and touchpoint surveys: Reduce customer effort and improve retention
Track b2b customer satisfaction and loyalty and set clear priorities for customer experience improvement – whether for individual touchpoints or across entire client relationships.
Customer loyalty research has shown that most companies lose 45% to 50% of their customers every five years and winning new customers can be up to 20 times more expensive than retaining existing customers. Moreover, just a 5% reduction in the customer defection rate can increase profits by 25% to 85%, depending on the industry.
Our approach: Customer effort analysis and the Customer Effort Score
· Research constantly shows that a key driver of overall customer satisfaction and customer loyalty is a brand that “makes the customer’s job easier”.
· Customer effort analysis assesses the extent to which a brand is seen as actively seeking to make the user experience seamless.
· There is a very strong relationship between performance on the Customer Effort Score and other critical brand health and customer experience metrics.
· In addition to the overall Customer Effort Score and detailed scores throughout the customer journey, the data can be plotted to map the effort a customer perceives to have to put into the relationship versus the effort put in by the brand.
Case study: Supporting Arqiva in achieving CX excellence through actionable, account-level insights and recommendations
Arqiva is a leading telecommunications company, providing critical data, network and communications services.
They had strong Executive level backing for customer satisfaction research to take place annually, however, the most recent program was based on a short online survey and thus, did not provide the detailed insight required.
Arqiva approached B2B International to help refresh the customer experience program for 2021.
Case study: Gathering customer feedback along the customer journey and developing a customer-centric insight program for Brenntag
Brenntag’s overarching aim was to develop an insight program which put the customer at the heart of everything it does, by providing Service Excellence to every customer, every day. As part of the insight program, Brenntag also required a research partner to ensure all customer feedback was collected in an independent and impartial manner.
Our Clients
B2B Customer Experience: A practical guide to delivering exceptional CX
Written by Nick Hague and Paul Hague, B2B Customer Experience is the essential guide to delivering an efficient b2b customer experience (CX). It provides clear advice on how to plan, map, structure, implement and control an effective customer experience.
The book takes key CX principles from the B2C world and remodels them for B2B. Examining leading B2C companies, such as Zappos, Nordstrom and John Lewis, Nick and Paul outline techniques for creating successful B2B customer experiences, how to build on the strengths of a business and how to engage sales teams with the customer experience program.
Activation services: Helping you get the most out of your research investment
Online Surveys
Advanced online surveys to high-quality, targeted respondents which offer cost savings, time savings and improved data accuracy.
Mobile Surveys
Smartphones offer exciting, new possibilities for collecting market research data, particularly in b2b where respondents can be difficult to reach.
Personas / Segment Profiling
Bring your customers to life and gain a deeper understanding of their needs and challenges in order to more effectively market to them.
Dashboards / Reportals
Advanced reporting and insight in real-time through custom reports, survey dashboards and portals.
B2B Insights and Viewpoints: What we’ve learned from doing this type of research
Customer Satisfaction Surveys & Research: How to Measure CSAT
Why customer satisfaction is so important and how to best measure it
10 Key Tips on Building a Winning Customer Experience Program
Customer Experience Management: How To Deliver On Customer Expectations
Get in touch to learn more about how we can give you the edge with customer loyalty
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Customer Satisfaction Surveys & Research: How to Measure CSAT
Written by Nick Hague & Paul Hague
It seems self evident that companies should try to satisfy their customers. Satisfied customers usually return and buy more, they tell other people about their experiences, and they may well pay a premium for the privilege of doing business with a supplier they trust. Statistics are bandied around that suggest that the cost of keeping a customer is only one tenth of winning a new one. Therefore, when we win a customer, we should hang on to them. Conducting a customer satisfaction survey is a good way to start measuring where you stand in terms of customer loyalty.
Why Customer Satisfaction Is So Important
Why is it that we can think of more examples of companies failing to satisfy us rather than when we have been satisfied? There could be a number of reasons for this. When we buy a product or service, we expect it to be right. We don’t jump up and down with glee saying “isn’t it wonderful, it actually worked”. That is what we paid our money for. Add to this our world of ever exacting standards. We now have products available to us that would astound our great grandparents and yet we quickly become used to them. The bar is getting higher and higher. At the same time our lives are ever more complicated with higher stress levels. Delighting customers and achieving high customer satisfaction scores in this environment is ever more difficult. And even if your customers are completely satisfied with your product or service, significant chunks of them could leave you and start doing business with your competition.
A market trader has a continuous finger on the pulse of customer satisfaction. Direct contact with customers indicates what he is doing right or where he is going wrong. Such informal feedback is valuable in any company but hard to formalize and control in anything much larger than a corner shop. For this reason customer surveys are necessary to measure and track customer satisfaction.
Developing a customer satisfaction program is not just about carrying out a customer service survey. Surveys provide the reading that shows where attention is required but in many respects, this is the easy part. Very often, major long lasting improvements need a fundamental transformation in the company, probably involving training of the staff, possibly involving cultural change. The result should be financially beneficial with less customer churn, higher market shares, premium prices, stronger brands and reputation, and happier staff. However, there is a price to pay for these improvements. Costs will be incurred in the market research survey. Time will be spent working out an action plan. Training may well be required to improve the customer service. The implications of customer satisfaction studies go far beyond the survey itself and will only be successful if fully supported by the echelons of senior management.
A Six-Stage Process For Customer Satisfaction Surveys
There are six parts to any customer satisfaction program:
1. Who should be interviewed?
2. What should be measured?
3. How should the interview be carried out?
4. How should satisfaction be measured?
5. What do the measurements mean?
6. How to use a customer satisfaction study to greatest effect?
Who Should Be Interviewed?
Some products and services are chosen and consumed by individuals with little influence from others. The choice of a brand of cigarettes is very personal and it is clear who should be interviewed to find out satisfaction with those cigarettes. But who should we interview to determine the satisfaction with breakfast cereal? Is it the person that buys the cereal (usually a parent) or the person that consumes it (often a child)? And what of a complicated buying decision in a business to business situation. Who should be interviewed in a customer satisfaction survey for a truck manufacturer – the driver, the transport manager, the general management of the company? In other b2b markets there may well be influences on the buying decision from engineering, production, purchasing, quality assurance, plus research and development. Because each department evaluates suppliers differently, the customer satisfaction survey will need to cover the multiple views.
Further Reading
Customer Experience: Why We All Have A Role To Play:
The adage in market research that we turn to again and again is the need to ask the right question of the right person. Finding that person in customer loyalty research may require a compromise with a focus on one person – the key decision maker; perhaps the transport manager in the example of the trucks. If money and time permit, different people could be interviewed and this may involve different interviewing methods and different questions.
The traditional first in line customer is an obvious candidate for measuring customer satisfaction. But what about other people in the channel to market? If the products are sold through intermediaries, we are even further from our customers. A good customer satisfaction program will include at least the most important of these types of channel customers, perhaps the wholesalers as well as the final consumers.
One of the greatest headaches in the planning of a b2b customer satisfaction survey is the compilation of the sample frame – the list from which the sample of respondents is selected. Building an accurate, up-to-date list of customers, with telephone numbers and contact details is nearly always a challenge. The list held by the accounts department may not have the contact details of the people making the purchasing decision. Large businesses may have regionally autonomous units and there may be some fiefdom that says it doesn’t want its customers pestered by market researchers. The sales teams’ Christmas card lists may well be the best lists of all but they are kept close to the chest of each sales person and not held on a central server. Building a good sample frame nearly always takes longer than was planned but it is the foundation of a good customer satisfaction project.
Customer satisfaction surveys are often just that – surveys of customers without consideration of the views of lost or potential customers. Lapsed customers may have stories to tell about service issues while potential customers are a good source of benchmark data on the competition. If a customer survey is to embrace non-customers, the compilation of the sample frame is even more difficult. The quality of these sample frames influences the results more than any other factor since they are usually outside the researchers’ control. The questionnaire design (further reading: The 7 Steps of Questionnaire Design) and interpretation are within the control of the researchers and these are subjects where they will have considerable experience.
What Should Be Measured?
In customer satisfaction research we seek the views of respondents on a variety of issues that will show how the company is performing and how it can improve. This understanding is obtained at a high level (“how satisfied are you with ABC Ltd overall?”) and at a very specific level (“how satisfied are you with the clarity of invoices?”).
High level issues are included in most customer satisfaction surveys and they could be captured by questions such as:
· What is your overall satisfaction with ABC Ltd?
· How likely or unlikely are you to buy from ABC Ltd again?
· How likely or unlikely would you be to recommend ABC Ltd to a friend or colleague?
It is at the more specific level of questioning that things become more difficult. Some issues are of obvious importance and every supplier is expected to perform to a minimum acceptable level on them. These are the hygiene factors. If a company fails on any of these issues they would quickly lose market share or go out of business. An airline must offer safety but the level of in-flight service is a variable. These variables such as in-flight service are often the issues that differentiate companies and create the satisfaction or dissatisfaction.
Working out what questions to ask at a detailed level means seeing the world from the customers’ points of view. What do they consider important? These factors or attributes will differ from company to company and there could be a long list. They could include the following:
Customer facing staff in the research-sponsoring business will be able to help at the early stage of working out which attributes to measure. They understand the issues, they know the terminology and they will welcome being consulted. Internal focus groups with the sales staff will prove highly instructive. This internally generated information may be biased, but it will raise most of the general customer issues and is readily available at little cost.
Further Reading
Six Steps To B2B Customer Experience Excellence:
It is wise to cross check the internal views with a small number of depth interviews with customers. Half a dozen may be all that is required.
When all this work has been completed a list of attributes can be selected for rating.
How Should The Interview Be Carried Out?
There are some obvious indicators of customer satisfaction beyond survey data. Sales volumes are a great acid test but they can rise and fall for reasons other than customer satisfaction. Customer complaints say something but they may reflect the views of a vociferous few. Unsolicited letters of thanks; anecdotal feedback via the salesforce are other indicators. These are all worthwhile indicators of customer satisfaction but on their own they are not enough. They are too haphazard and provide cameos of understanding rather than the big picture. Depth interviews and focus groups could prove very useful insights into customer satisfaction and be yet another barometer of performance. However, they do not provide benchmark data. They do not allow the comparison of one issue with another or the tracking of changes over time. For this, a quantitative survey is required.
The tool kit for measuring customer satisfaction boils down to three options, each with their advantages and disadvantages. The tools are not mutually exclusive and a self-completion element could be used in a face to face interview. So too a postal questionnaire could be preceded by a telephone interview that is used to collect data and seek co-operation for the self-completion element.
When planning the fieldwork, there is likely to be a debate as to whether the interview should be carried out without disclosing the identify of the sponsor. If the questions in the survey are about a particular company or product, it is obvious that the identity has to be disclosed. When the survey is carried out by phone or face to face, co-operation is helped if an advance letter is sent out explaining the purpose of the research. Logistically this may not be possible in which case the explanation for the survey would be built into the introductory script of the interviewer.
If the survey covers a number of competing brands, disclosure of the research sponsor will bias the response. If the interview is carried out anonymously, without disclosing the sponsor, bias will result through a considerably reduced strike rate or guarded responses. The interviewer, explaining at the outset of the interview that the sponsor will be disclosed at the end of the interview, usually overcomes this.
How Should Satisfaction Be Measured?
Customers express their satisfaction in many ways. When they are satisfied, they mostly say nothing but return again and again to buy or use more. When asked how they feel about a company or its products in open-ended questioning they respond with anecdotes and may use terminology such as delighted, extremely satisfied, very dissatisfied etc. Collecting the motleys variety of adjectives together from open ended responses would be problematical in a large survey. To overcome this problem market researchers ask people to describe a company using verbal or numeric scales with words that measure attitudes.
Further Reading
The Momentum Matrix – A Customer Experience Framework:
People are used to the concept of rating things with numerical scores and these can work well in surveys. Once the respondent has been given the anchors of the scale, they can readily give a number to express their level of satisfaction. Typically, scales of 5, 7 or 10 are used where the lowest figure indicates extreme dissatisfaction and the highest shows extreme satisfaction. The stem of the scale is usually quite short since a scale of up to 100 would prove too demanding for rating the dozens of specific issues that are often on the questionnaire.
Measuring satisfaction is only half the story. It is also necessary to determine customers’ expectations or the importance they attach to the different attributes, otherwise resources could be spent raising satisfaction levels of things that do not matter. The measurement of expectations or importance is more difficult than the measurement of satisfaction. Many people do not know or cannot admit, even to themselves, what is important. Can I believe someone who says they bought a Porsche for its “engineering excellence”? Consumers do not spend their time rationalizing why they do things, their views change and they may not be able to easily communicate or admit to the complex issues in the buying argument.
The same interval scales of words or numbers are often used to measure importance – 5, 7 or 10 being very important and 1 being not at all important. However, most of the issues being researched are of some importance for otherwise they would not be considered in the study. As a result, the mean scores on importance may show little differentiation between the vital issues such as product quality, price and delivery and the nice to have factors such as knowledgeable representatives and long opening hours. Ranking can indicate the importance of a small list of up to six or seven factors but respondents struggle to place things in rank order once the first four or five are out of the way. It would not work for determining the importance of 30 attributes.
As a check against factors that are given a “stated importance” score, researchers can statistically calculate (or “derive”) the importance of the same issues. Derived importance is calculated by correlating the satisfaction levels of each attribute with the overall level of satisfaction. Where there is a high link or correlation with an attribute, it can be inferred that the attribute is driving customer satisfaction. Deriving the importance of attributes can show the greater influence of softer issues such as the friendliness of the staff or the power of the brand – things that people somehow cannot rationalize or admit to in a “stated” answer.
How Many Organizations Measure Customer Satisfaction In 2021?
In a 2021 survey of marketing, insight, CX and business strategy decision-makers at B2B brands, capturing customer satisfaction ratings is the most common method organizations are using to measure customer loyalty.
Overall, 68% of organizations surveyed captured customer satisfaction ratings, while other key metrics such as customer retention, NPS and customer lifetime value were captured less frequently (60%, 51% and 31% respectively).
What’s important to note here is that CX Leaders (companies who are strong on at least 5 of B2B International’s 6 CX excellence indicators) are far more likely to capture customer satisfaction ratings compared to their average (87% vs 70%) or low performing counterparts (87% vs 54%).
This highlights the importance of measuring customer satisfaction if a brand wants to deliver a leading customer experience.
Further Reading
Putting the Customer at the Heart of the Business:
What Do The Measurements Mean?
The scores that are achieved in customer satisfaction studies are used to create a customer satisfaction index or CSI. There is no single definition of what comprises a customer satisfaction index. Some use only the rating given to overall performance. Some use an average of the two key measurements – overall performance and the intention to re-buy (an indication of loyalty). Yet others may bring together a wider basket of issues to form a CSI.
The average or mean score of satisfaction given to each attribute provides a league table of strengths and weaknesses. As a guide, the following interpretation can be made of scores from many different satisfaction surveys:
Someone once told me that the half way point in a marathon is 22 miles. Given the fact that a marathon is 26.2 miles it seemed that their maths was awry. Their point was that it requires as much energy to run the last 4.2 miles as it does the first 22. The same principle holds in the marathon race of customer satisfaction. The half way point is not a mean score of 5 out of 10 but 8 out of 10. Improving the mean score beyond 8 takes as much energy as it does to get to 8 and incremental points of improvement are hard to achieve.
Other researchers prefer to concentrate on the “top box” responses – those scores of 4 or 5 out of 5 – the excellent or very good ratings. It is argued that these are the scores that are required to create genuine satisfaction and loyalty. In their book ‘The Service Profit Chain’, Heskett, Sasser and Schlesinger argue that a rating of 9 or 10 out of 10 is required on most of the key issues that drive the buying decision. If suppliers fail to achieve such high ratings, customers show indifference and will shop elsewhere. Capricious consumers are at risk of being wooed by competitors, readily switching suppliers in the search for higher standards. The concept of the zone of loyalty, zone of indifference and zone of defection as suggested by the three Harvard professors (JL Heskett, The Service Profit Chain; The Free Press; New York 1997) is illustrated below in diagram 1:
Diagram 1: Customer satisfaction and the effect on customer loyalty
This raises the interesting question – what is achievable and how far can we go in the pursuit of customer satisfaction. Abraham Lincoln’s quote about fooling people could be usefully modified for customer loyalty research to read “You can satisfy all the people some of the time, and some of the people all the time, but you cannot satisfy all the people all the time”. As marketers we know that we must segment our customer base. It is no good trying to satisfy everyone, as we do not aim our products at everyone. What matters is that we achieve high scores of satisfaction in those segments in which we play. Obtaining scores of 9 or 10 from around a half to two thirds of targeted customers on issues that are important to them should be the aim. Plotting the customer satisfaction scores against the importance score will show where the strengths and weaknesses lie, (see diagram 2) with the main objective to move all issues to the top right box.
Diagram 2: XY graph to show where customer satisfaction needs to improve
How To Use A Customer Satisfaction Survey To Greatest Effect
No company can truly satisfy its customers unless top management is fully behind the program. This does not just mean that they endorse the idea of customer satisfaction studies but that they are genuinely customer orientated.
Yodel’s Customer Satisfaction Journey
A recent example of how to use customer satisfaction scores to greatest effect comes from our own experience in working with Yodel, one of the largest delivery companies in the UK.
Company leadership began a program to “own” what customers really thought by asking real customers for feedback.
To gather feedback from as many customers as possible, they added a simple link onto delivery notifications for the millions of online shoppers using their services every week. The results were immediate with tens of thousands of responses coming through every week. The volume of responses meant data could be generated and tracked through to the region, local service centre and ultimately to the delivery driver.
With this data in hand, thoughts turned to how they could use it to drive the voice of customers into their daily operational performance and company values. After the first million reviews, Yodel asked themselves a critical question – “what does it take to get 100% CSAT?”.
With the data available, they were able to boil it down to 4 key aspects that customers were looking for. These were that parcels were delivered on time in a good condition, with a good attitude whilst being kept informed throughout.
Yodel now had a simple and clear way of explaining their mission to get to 100% CSAT, and also knew what happened to CSAT when one or more of these aspects were below customer expectations.
Further Reading
The Customer Journey and How Businesses Buy:
Why Customer Satisfaction Scores Are Only Part Of The Story
A customer satisfaction index is a snapshot at a point in time. People’s views change continuously and the performance of companies in delivering customer satisfaction is also changing. Measuring satisfaction must be a continuous process. Tracking surveys provide benchmarks of one’s own company’s performance and, if competitor suppliers are also being measured, there will be measurements of relative performance. This places considerable onus on the researcher to design a customer service survey that will accurately show real differences, one survey to another. The questionnaire needs to be consistent so there is no dispute about answers differing because of changes to questions. The sample of each survey must be large enough to provide a reliable base and the selection of the sample must mirror earlier surveys so like is being compared with like.
Benchmarking in customer satisfaction can go beyond comparisons with direct competitors. Some firms have taken this type of benchmarking a step further. Instead of just developing a benchmark on competitors, they identify the best firm in any industry at a particular activity. L.L. Bean may be benchmarked for telephone order processing or customer service. American Express may be benchmarked for billing and payment transactions.
There has been considerable research into the links between customer satisfaction and employee satisfaction – Kaplan & Norton (1996), McCarthy (1997), Heskett, Sasser & Schlesinger (1997). The argument is a very obvious one. Happy employees work harder and try harder and so create satisfied customers. A co-ordinated customer satisfaction program should consider linking with an employee attitude survey. The employee attitude survey could also be used to check out how well staff believe they are satisfying customers as there could be a dangerous gap between internal perceptions of performance and those of customers.
Developing An Action Plan That Rectifies The Weaknesses And Builds On The Strengths
The purpose of customer satisfaction research is to improve customer loyalty and yet so often surveys sit collecting dust. Worse than that, customers have generously given their time to assist in the customer satisfaction survey believing that some positive action will take place. Their expectations will have been raised. The process of collecting the data seems easier than taking action to improve satisfaction levels.
In any customer satisfaction survey there will be quick fixes – actions that can be taken today or tomorrow that will have immediate effect. These could be quite specific such as a newsletter, changes to the invoicing, or a hot-line for technical information. In the longer term, cultural changes may well be required to improve customer satisfaction, and that is more difficult.
A five-step process can be used to make these longer-term improvements.
Step 1: Spot the gap
· Look at the survey data to see where there are low absolute scores and low scores relative to the competition
· Pay particular attention to those issues that are important to customers
· Assume the scores are correct unless there is irrefutable evidence to the contrary – and remember, perceptions are reality
Step 2: Challenge and redefine the segmentation
· How do satisfaction scores vary across different types of customer?
· Are segments correctly defined in the light of the customer satisfaction survey findings?
· How could a change in segmentation direct the offer more effectively and so achieve higher levels of satisfaction?
Step 3: Challenge and redefine customer value propositions, customer journeys and understanding of customer needs
· Are satisfaction scores low because the customer value proposition (CVP) is not being communicated effectively to the market?
· Are scores low because the CVP is not being effectively implemented?
· Is the CVP right for the segment? How could a change in CVP achieve a higher customer satisfaction index (CSI)?
· Is a broader focus on customer experience management required? This goes beyond just conducting feedback surveys – Instead “customer centricity” lies at the heart of the organization’s decision-making.
· This wider discipline of CX management often focuses the business on customer requirements through techniques such as customer journey mapping, buyer persona development and customer needs research
Step 4: Create an action plan
· Describe the problem
· Think through the issues that need to be addressed and list them out
· Identify the root cause of the problems
· Identify any barriers that could stop the improvement taking place
· Set measurable targets
· Allocated resources (usually money and people)
· Assign people and time scales to the tasks
· Measure and review progress
Step 5: Measure and review
· How has the customer satisfaction index (CSI) moved?
· Is the movement significant/real?
· Has the action recommended in the plan, taken place? Has it been enough? Has it had enough time to work?
· Revisit the steps – spot the gap, challenge the segmentation and CVP, more action
Many of the issues that affect customer satisfaction span functional boundaries and so businesses must establish cross-functional teams to develop and implement action plans. One of the best ways of achieving this involvement by different groups of employees is to involve them in the whole process.
Further Reading
A 5-Step Framework for Driving Action and Seeing Results from your CX Programs:
When the survey results are available, they should be shared with the same groups that were involved right at the beginning. Workshops are an excellent environment for analyzing the survey findings and driving through action planning. These are occasions when the survey data can be made user friendly and explained so that it is moved from something that has been collected and owned by the researcher to something that is believed in and found useful by the people that will have to implement the changes.
As with all good action planning, the workshops should deliver mutually agreed and achievable goals, assigned to people who can make things happen, with dates for achievements and rewards for success. Training may well be required to ensure that employees know how to handle customer service issues and understand which tools to use in various situations. Finally, there should be a constant review of the process as improving customer satisfaction is a race that never ends.