How useful is customer satisfaction as a measure? Aldi tops M&S and Waitrose.
Research by the UK’s Institute of Customer Service involving 10,000 consumers has found that Aldi has overtaken Marks & Spencer and Waitrose as the top UK supermarket for customer satisfaction. The results are part of a study the ICS completes bi-annually. We ask how useful is customer satisfaction as a measure?
According to business school theory, companies need to choose one of either, low cost, product leadership or “customer intimacy” as their primary strategy. The theory goes that only by relentlessly focusing on one will a company be able to create competitive advantage. Trying to pursue two or even three strategies simultaneously would lead to confusion – internally and in the mind of customers – and poor performance.
Has “conventional wisdom” had its day or are we now seeing a new breed of company that can drive costs down and at the same time deliver sector leading customer satisfaction? The ICS noted that the German discounter had made the biggest gains among the supermarkets in terms of market share, while the three supermarkets with the lowest customer service scores – Tesco, Asda and Co-Op Food – saw small drops in market share. The same pattern is to be found in retail financial services.
A deeper dig into the numbers reveals various possible explanations for Aldi’s meteoric improvement in customer satisfaction.
The first is that customer satisfaction represents a weak test and by making relatively modest improvements Aldi is able to outperform its competitors. It is interesting to note that across all sectors, the ICS research highlighted that customers problems and effort had increased. Also, Net Promoter Scores showed decline reflecting the fact that customers were less likely to recommend the places where they shop. Despite these deteriorating metrics, customer satisfaction across all sectors increased when compared with the previous six months.
A second possible explanation is that Aldi customers are more easily satisfied that those of M&S and Waitrose. If price is the primary driver for most Aldi customers then the provision of reasonable service may be a welcome surprise. Aldi customers may simply have different expectations which shapes their perception and the value they attribute to the experience they receive.
The last thought is that the amusing, tongue in cheek advertising campaign may have created a level of affection from Aldi’s customers. The campaign focuses on the brand’s low prices and does so with an endearing humour that validates the good sense of economy conscious consumers.
Whatever is driving Aldi’s satisfaction improvement, the only real proof of this metric is if there is a consistent, direct, proven causation between satisfaction and per-customer share of supermarket purchases, not market share, which can have numerous outside influences.. The reality, for some time, is that satisfaction represents tactical, functional performance and customer attitudes. Further, it is a transactional, rather than a relationship or perceived value, measure.
I agree with Michael, customer satisfaction is tactical and transactional–far from the metric used to guide an organization’s progress as it relates to customers. But, let’s dig a bit deeper.
One way to look at any customer’s encounter with any organization is that it has two sides. One side for the customer is: “Did I get my need met?” The other side is “What was the experience like in getting my need met?” Let’s take a simple example. I board an airplane for one primary reason: to get from point A to point B safely, on-time with my luggage in tow. That is the outcome I seek. Given the price of airfare, I clearly am not there for the gourmet meal! If the airline fulfills that basic promise and achieving my expected outcome, I am satisfied. Satisfied comes from the root word that means “enough, adequate or sufficient.” I do not expect the airline to exceed my expectations by landing early, giving me brand new luggage, or getting me to my destination safer than safe!
The other outcome I might need from an organization is a product (an object rather than an outcome). If the product I buy performs exactly as promised, I am satisfied. I do not expect my new trash compactor to play Mozart while it crunches up my garbage, especially if I did not purchase that feature.
The other side of the customer’s encounter with an organization is the experience in getting my need met (whether getting a product or getting an outcome). This is the side where an organization can create a positive memory in the mind of the customer. I never stand up and cheer when my flight lands on time or fails to crash. The experience can be just what I expected (no more, no less) and I take the experience completely for granted. In other words, I am satisfied with the experience.
The experience is the most fertile ground for differentiation today because customers assume the outcome or product they buy will be as promised and the price will be a fair one. Outcomes filled with errors or inferior products are quick routes to being “out of business” today. Prices that are excessive have the same results since social media and the Internet have armed customers with instant information to know the truth and learn of other customers’ experiences.
Getting the customer to return or buy more or advocate on your behalf today takes more than “I was satisfied.” This is especially true since customers today have many sterling, delightful examples of great experiences for an easy comparison. Southwest Airlines makes me laugh; so, what do you think I expect of Mayday Airlines? My Lexus service manager makes me feel important and valued; so, what do you think I expect of the service manager at the boat place where I need to get my pontoon boat serviced? Additionally, customers generalize experiences beyond a particular industry. When the Disney World cast member treats me like a long-lost cousin, it raises my expectations on kind of greeting I will get from your receptionist or contact center operator. Hailing a ride via Uber or Lyft has changed my expectations for getting a pizza delivered.
Some research shows that about seventy-five percent of customers who leave an organization to go with a competitor say they were satisfied with the organization they abandoned. I suspect if you looked at the granular data underneath that research, you would find an organization effective at getting customers the outcomes or products they sought; but only average at creating a delightfully positive experience.
But, having a high percentage of “satisfied customers” sounds good to the folks on the board. They fail to realize that “satisfied” might be the grade of A on the customer’s report card when it comes to getting the outcome or product they sought; but only a C when it comes to their experience in getting that product or outcome. Peter Drucker wrote, “The purpose of an organization is to create and retain a customer.” That purpose is not likely to be achieved if the organization sets its standard at “average” (a.k.a., satisfied).