Does Higher Customer Satisfaction Necessarily Mean More Sales?
In brief, the answer is “No!” – you must do more than merely drive customer satisfaction scores up. As an illustration, consider the Cadillac Brougham of the 1980s. The design of this automobile had virtually no changes from 1978 through 1992. During most of those years, I was working at Cadillac. The result? The people who loved that car kept buying it, through several lifetimes of automobiles (typically 2 to 5 years of ownership). They tended to be very loyal. During that ten-year plus span of time, the average Cadillac buyer aged almost ten years as well. Customer satisfaction was going up for this car. Those who lived long enough bought several and loved each one. However, sales went down!
We were experiencing a diminishing, perhaps dying (literally) market of customers who loved our product. Thus, despite the notion that satisfying customers leads to increased sales, it is not merely the driving up of the scores that delivers sales. You must also have exciting products that attract and please new customers as well. By the time the Brougham was significantly altered, many of the original target market had died. It had been 14 years. Even though these buyers loved that car, we needed to attract a new audience to maintain or increase sales.
Thus, increasing customer satisfaction scores is not enough. Remember, these scores come after the fact, sometimes one or more years after purchase. They can testify to the initial purchase process and design, as well as customer service. However, what you want is increasing scores AND increasing sales. This necessarily means product enhancements and service enhancements to attract and satisfy new customers.
As you examine the proposed improvement efforts for your product or service which can lead to higher customer satisfaction scores, ask your sales and marketing staffs which of these improvements can be used in sales and marketing material. In previous work, we have discussed using the “Voice of the Customer” to drive customer satisfaction proposals and marketing messaging. The improvements must lead to the marketing and sales excitement, as well as improve customer satisfaction, or you may not ever see the link between customer satisfaction and sales.
Chris
The analytical approach to customer satisfaction taken by Cadillac that you describe, where improvements in customer satisfaction are traded-off against improvements in sales & marketing results, is perhaps a part of the problem that Cadillac (and General Motors) obviously has, rather than the solution.
Compare the Cadillac approach with Toyota’s approach. Toyota’s approach to satisfaction is called Complete Customer Satisfaction. It urges staff, dealers and suppliers to think continuously about what can be done to improve customer satisfaction in one way or another. This approach is driven by the Pursuit of Perfection, that is a hallmark of the Toyota Way. It is no coincidence that Toyota has recently eclipsed General Motors as the world’s No1 car manufacturer and has long eclipsed the top five manufactuers combined as the world’s most profitable car manufacturer.
Satisfaction is a complex construct that nobody really understands well. And its many direct and indirect effects drive customer behaviour in many more ways than are measureable through sales & marketing results. We need to take a more balanced view of satisfaction than the analytical approach you suggest. And that includes doing all that you can do satisfy customers. Period. Just talk to Toyota, they will show you what I mean.
Graham Hill
(Full disclosure: I have consulted with Toyota for a number of years and am an Interim CRM Manager at Toyota Financial Services. I have also worked extensively in the sales & marketing arms of other auto manufacturers)