Ian Addie Ian joined Nunwood as Innovation Director in March 2004 following positions with MORI, Research International and NOP. With more than 15 years valuable insight experience focusing on advanced research methods, he is well placed to suggest big changes are afoot. And Nunwood, he maintains, is prepared. Read the full biography here.

What is satisfactory?

some musings on CRM

By Ian Addie - 12th September, 2011

A Harvard Business Review article written by Matthew Dixon, Karen Freeman and Nicholas Toman is beginning to make waves. ‘Stop trying to delight your customers’ discusses how customer satisfaction (CSAT) and net promoter scoring (NPS) provide little predictive power over bottom line performance. The crux of their argument rests upon a discussion that business is not retained through exceeding customer expectations, but through providing satisfactory service which does not push an existing customer away. It redefines what makes a satisfactory customer experience by saying it’s more important to provide a hassle-free process than to deliver 'added value' bells and whistles.

As such, a Customer Effort Score (CES) is proposed, measuring the perceived effort required of a customer, and in turn has a far stronger correlation with future sales performance. There’s logic here.

They ask: 'How often does someone patronise a company specifically because of its over-the-top service? You can probably think of a few examples....but you probably can’t come up with many.' They also ask: 'How often do consumers cut companies loose because of terrible service? All the time!' In my experience, this rings true. When we compare customer satisfaction, in whatever way this is measured against future actual behaviour from customer databases, we regularly see a much stronger relationship between low satisfaction scores/reduced usage, than we do between strong satisfaction/heightened usage.

So satisfaction leads to retention of customers, but doesn’t have so much weight in terms of acquisition – meeting customers’ expectations is more critical to retention than exceeding them. In a world where choices abound there’s a cost, as well as a benefit. Consumers often cannot afford the time, hassle or risk associated with changing provider.

If there’s no reason to do so, the easiest option is maintain the status quo. We’ll only shop around if the hassle and risk associated with breaking our habits becomes perceptibly lower than that associated with not changing them. So the proposed measure of a customer effort score is likely to be a stronger correlate with customer retention, therefore enhancing future business performance. However, this is nothing new.

In conducting customer satisfaction research, we also go beyond a simple top line measure and capture perceptions of individual aspects of service in order to understand how these influence the customer. Many measures focus not upon the delivery of service features (bells and whistles), but on the ease of the customer experience – how easy it was to get through to a helpline or find the items wanted in a supermarket.

The notion of a CES as presenting a paradigm shift in the way we measure and understand the provision and implications of delivering customer experiences is maybe an overstatement. Like CSAT or NPS scores, a CES measure at a top level is merely a single indicator of performance in terms of a business’s ability to positively engage its customers with the experience it delivers. We still need to understand how this can be effectively driven through the individual aspects of that experience.

We must also consider that CSAT, CES and customer satisfaction measurement in general only deal with one facet of business performance - the ability of a business to retain custom. We’ve already discussed the fact enhanced satisfaction doesn’t have a particularly strong influence over heightened usage and it could be argued that merely meeting expectations is unlikely to drive customer acquisition.

So what drives that acquisition? The dominant, successful approach is through TV, radio, press, posters, PR. However, advertising wouldn’t be as effective if it were to communicate messages to consumers of an adequate experience.

By purely focusing on providing an easy, but adequate, customer experience, there’s potential to create a disconnect between the externally-voiced promises of the business and the experiences received by customers choosing to place their custom with a business. In effect, marketing/communications risk could be counterproductive, elevating expectations of an experience to a level beyond that which is typically delivered.

Additionally, we’re becoming hyper-connected. Greater leisure time, mobile communications and travel opportunities – and the advent of online social networks – enable us to communicate daily with a widening network of peers. So, little wonder the business world is placing increasing emphasis upon word-of-mouth and consumer advocacy.

But is the world of the übernet really such a straightforward channel to customer acquisition? Can we really deliver a satisfactory experience and expect word to spread? It’s difficult to give a resounding - YES.

Firstly, people don’t tend to talk to each other about products and services they use, they talk about themselves. There are exceptions; Apple probably receives more mentions on social networks than any other brand, but it’s transcended its position from technology provider to that of status symbol, in doing so providing a medium by which people can express their identity by association. When people talk of Apple they’re actually talking about themselves. Secondly, more fundamentally, we must consider the way knowledge passes between us. Even if you can get people to talk about the virtues of the experience you provide, what and who carries weight to influence a decision?

Malcolm Gladwell’s book, 'The Tipping Point', discusses the dynamics of word of mouth. He identifies one particular group - Market Mavens. These individuals are the knowledge hubs of people’s social networks, sources of expert advice people seek if they want to buy a new stereo or plan a holiday.

By definition, Mavens have a greater depth of knowledge about a subject than their peers, built up through a deeper involvement and greater level of research. Mavens may be considered key influencers within word of mouth networks – so you want them to give you a high NPS score. To heighten their role further, consider the weight of influence different types of information have on our decisions. For example, reliability is a high priority for an individual looking to buy a new car. A large scale market survey of car owners shows Volvo comes top – so it goes to the top of the buyer’s consideration set. However, he also goes to his automotive market Maven, who tells the story of a less than satisfactory Volvo experience. Statistically, the buyer should place greater emphasis upon the survey as it’s based on countless experiences. But our buyer will probably go with the trusted expert...

In his book, 'The Paradox of Choice', Barry Schwartz identifies two types of people - Satisficers and Maximisers.

Satisficers make up the majority. They’ll consider a limited number of options available, settle for what they consider to be the best, and not worry there was something else they didn’t consider that may have been better.

Maximisers are different. They exhaustively research all options. Objectively speaking, Maximisers may make better choices as a result of this process, but on a subjective basis they tend to be less satisfied with their decisions. There’s always a niggling concern they’ve missed a better deal. It seems logical they’re far better informed about the wealth of options available. As such, it would seem that by default Maximisers, who are less likely to be satisfied with their choices, are also likely to achieve Market Maven status and are sought to provide expert advice.

So, for advocacy to work best, customer experiences must not only meet the expectations of the Satisfying masses, but exceed expectations of the super critical, highly influential Maximising Mavens. Businesses must understand the diverse, wide-reaching influences customer experience can have on their bottom line. To treat retention and acquisition tactics independently is to continually tread a constantly shifting tightrope. Accepting delivery of customer experience impacts both, and understanding the dynamics of how this influence is exerted, is the key to finding a happy medium in which customers will gravitate towards you - and stick with you.

Ian Addie

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