Man Bites Dog – The Problem with Customer Satisfaction Programs are the Very Satisfied

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How is this for man bites dog? The problem with customer satisfaction is the Very Satisfied. This seemingly ridiculous claim becomes more credible if you consider,

1) Customer satisfaction programs are mostly about remediating bad experiences. Most corporate entities use c-sat to evaluate a given, isolated experience – e.g. a shopping trip, a call center interaction, an in-person service call, a hotel stay. The better programs will trigger – in some automated fashion – alerts to follow up with customers who give bad scores. The idea is that the company wants to “make it right”. For those who give “good” scores nothing happens since there is nothing to “make right”. This lead to the following corollary:

2) Your “top box” or very satisfied customers are considered safe when in fact; there is a very high defection rate. The problem is that customer satisfaction scores are not very good predictors of future behavior – especially among the “top-box” folks, those giving 8 to 10s on a 10pt scale. This means there are many of those “very satisfied” who will defect next time. In other words, many of your 8 to 10 folks are as “at risk” of defection as the 1 to 3 folks who complained about their last experience.

The solution is a single measurement system that captures historical, transaction based (i.e. cust satisfaction) AND leading indicator ratings. A good leading indicator must,

1) Capture the customer’s level of commitment, or passive agreement, to buy the brand, which translates into latent or future cash flows for the firm.
2) Be predictive of actual spend or other key behaviors
3) Be parsimonious. If it takes 10, 20 or more questions then any notion of more frequent measurement as an indicator goes away because it is too cumbersome and expensive

The analysis from such a system can be simplified for management into a 2×2 matrix of Hi/Lo customer satisfaction scores and Hi/Lo Leading Indicator scores (our measure for this is called Customer Attachment). This puts every customer into 1 of 4 segments ranging from truly “SAFE” (Hi Attachment and c-sat) to “MAJOR RISK” (Low Attachment, Low c-sat). The group that is completely missed with only a c-sat approach is the Hi C-sat and Lo Attachment group. This segment requires remediation based on their medium and long-term potential to defect. The remediation is based on identifying the key drivers of Attachment and their particular history with the firm.

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