Marketers want customers to be completely and overwhelmingly satisfied. But a closer look suggests that it isn’t so simple. Let’s start with the most basic question of all: why is customer satisfaction important in the first place? The surprising answer: Maybe it or isn’t. Marketing manager at a major European manufacturing company opines that more than customer satisfaction customer loyalty is important. The conclusion can be that customer satisfaction is not an end in itself. It’s only important because it leads to other things, such as greater loyalty.
In fact, satisfied customers can lead to several benefits. They may buy more of the product from the same manufacturer. They give a greater “share of wallet and they may buy more often (better repeat business). They tend to be loyal over time (higher retention) and even if the manufacturer increases the prices customers may stick with the brand and product. Satisfied customers may also say good things to their friends and colleagues, acting as ambassadors of goodwill and providing recommendations. In fact, some studies show that satisfied customers are often your best sales representatives. And finally, satisfied customers tend to complain less – which means marketer has to spend less on things like customer support or complaint management.
Thinking more precisely to what extent the customer must be satisfied – somewhat satisfied, or totally satisfied? There isn’t one answer that fits everyone.
In some industries, most performance benefits are achieved by getting customers to a moderate level of satisfaction. It’s important to make sure that customers are not dissatisfied, but spending lots of time and effort to delight them isn’t very useful. Consider basic services like utilities, or basic transportation, or the corner bank or grocery store – there’s not much point in trying to achieve extremely high levels.
Let us consider luxury hotels or consumer electronics, a company with the latest mobile phone or personalized financial services. The real benefits begin when customers are completely delighted. That’s when they come back again and again and tell their friends. They don’t blink at higher prices. The key is to understand customers and how their satisfaction leads to performance.
One company, a distributor of auto accessories decided to learn more about its customers. They didn’t hire a consulting company or market research firm, but did the work themselves. First, they put customers in a few categories – large accounts, medium size garages and walk-in customers. Then they asked customers a handful of questions to learn about their buying habits and the drivers of satisfaction. The result was useful for two reasons: they could better focus their efforts on the right aspects of customer satisfaction, and they also helped their own employees get to know the customers – which is always useful.
It’s important for managers to think about the relationship between levels of satisfaction and performance. They should all be thinking about their company, with their customers, what are performance benefits that accrue? And next: The best level of customer satisfaction to achieve.