Embrace Customer Satisfaction

“The customer is always right” has been around, in one form or another, ever since there were customers. It is a simple statement that reflects a way of looking at business based on the necessity for customer satisfaction. Today, in the era of $4 per gallon gasoline, customer satisfaction is even more important since consumers are becoming more selective than ever before about what they are willing to spend gas and time—and therefore money—to reach.

Because of this, it is necessary for businesses of all sizes to embrace the ideal and practice of customer satisfaction. For the big-box stores, this can be—and usually is—done through selection and price; but what about small business? How can a small retailer maintain a thriving customer base even with higher prices and a narrower selection? By making sure the customer experience is the best they can offer.

Factors in Customer Satisfaction
There are five basic factors that go into the experience that a customer will have with your business. Gear these towards your customers and you will likely raise the level of satisfaction your customers express. Gear them toward yourself and that level of satisfaction will probably fall. The first three are the most important:

·        Quality First. High quality products and services make up for many other shortcomings. Delivery and price issues, even poor customer service may be forgotten if the quality of the deliverables is exceptional, but only if it is exceptional.

·        Delivery Second. Perhaps the worst thing you do, aside from deliver shoddy goods and inept services, is to deliver them late. By being late, you set off a chain of events in which everything your customer has planned has to be delayed or rearranged to accommodate your failure to deliver. At best, your customer will be highly annoyed and at worst, they’ll drop you entirely and go across the street.

·        Money Third. The money your customer pays you is an important factor in their overall happiness with your business, but it is not paramount. Reasonable market prices, coupled with high quality and good service are really more valuable to most customers than the lowest possible prices.

These first three comprise, perhaps, the best things you can offer to a customer: High quality delivered on time and on (or under) budget. There are, however, two more items on the list.

·        Problem Resolution. Any business relationship has problems and there needs to be a mechanism (or mechanisms) in place for resolving these issues quickly and positively for all concerned. The key is to determine whether the issue is legitimate or trivial. Everyone is happy to work through legitimate issues, but the trivial ones are not so well accepted. Remember: What you consider to be trivial is usually highly legitimate for your customer. Therefore, you need to take every issue seriously and be able to resolve it as if it were both valid and important to you.

·        Accommodation. Customers request changes to both product and procedure all the time. A special order, the need for you to hold something until they arrive or perhaps alter your payment arrangements in order to help them pay you in a timely way are all examples and you need to be ready to respond to these special circumstances. Your customer is not asking on a whim. He has a reason for his request, a reason pressing enough for him to ask you for a favor. As long as that favor is not materially damaging to you or your business, cooperate with your customer. At the very least you will foster a new level of goodwill that an only enhance your business relationship.

Determining Customer Satisfaction Today
Once you have decided to hop onto the customer satisfaction bandwagon, you need to determine how satisfied your customers are right now. After all, how can you fix a problem when you don’t know where that problem is? That said, there are two basic views toward determining customer satisfaction: External and Internal.

External Methods. The primary way businesses develop external data is through surveys. These can be either online or on paper, they can be something that a pollster administers on the spot or that a customer takes with them and mails back later. This kind of information gathering can yield some valuable results, but it does have a downside: It is an aspect of human psychology that we rate people and companies that we like higher than those we don’t like. What is worse, once a company does decide to go ahead with a customer survey, it often makes predictable and unnecessary mistakes.

According to Customer satisfaction guru Naomi Karten, there are five major errors that businesses make in regards to client surveys. She writes:

If organizations really want customer feedback, why do they make it so difficult for customers to provide that feedback? Here are some examples of common flaws and how to avoid them:

1. Requesting feedback irrelevant to the customer
At a hotel I stayed at recently, I was satisfied with all the items listed on the feedback form: quick check-in, clean room, and so on. However, unlike in most hotels, the peephole in the door was over my head. Way over my head. When you're my height, such things are important. How am I to follow the hotel's advice to look out the peephole before opening the door to visitors if I can't reach the peephole? Customers can give top ratings to the attributes you consider important and still be dissatisfied because you've fallen short on the attributes they consider important. If you want satisfied customers, find out what they consider important, and invite them to rate your services on those attributes.
2. No space for feedback
In addition to asking customers to rate the items listed, many feedback forms invite customers to add their comments. Some of these forms provide plenty of space for comments – provided customers write in a one-point type size! A request for customer comments is a key element of a well-designed feedback form. Given lots of blank space, customers often fill in extensive amounts of high-quality commentary. However, it's counterproductive to request comments and then not provide adequate space for them.
3. No time to think about feedback
I got a call from an office supply store I often shop at. The caller said he was conducting a survey, and asked what I liked and didn't like about his store. I told him I could give him better feedback if I had some time to think about it, and asked him to call back the next day. He said he would, but he didn't. I guess he wanted feedback only from those who'd provide it on the spot. Some people can instantaneously retrieve information from their mental databases. Many other people need time. Whatever method you use to solicit feedback, try to give respondents ample time to reflect on your questions. The quality of feedback you get is likely to be worth the extra time.
4. Inconveniencing customers
One of my favorite feedback forms is from a restaurant whose form is a postcard that requests responses to several questions. The instructions on the postcard state how important the feedback is – followed by the reminder: "Don't forget to affix a stamp before mailing." Instead of returning the postcard, I saved it and now use it in the feedback segment of my courses as an example of how not to solicit feedback.

Few enough people fill out feedback forms to begin with; most won't bother if they have to pay for the privilege of doing so. To maximize the amount and quality of feedback you receive, make it as easy as possible for customers to respond. If you ask dissatisfied customers to inconvenience themselves to inform you of their complaints, you've just given them one more thing to complain about!

5. Not responding to feedback as promised
I received a mail survey from a hotel shortly after staying there. One item on the survey asked if I had any complaints. I did, and used the space provided to elaborate. Another item asked if I'd like someone to contact me about my complaints. I checked the "yes" box. It's been about three years now, but I'm waiting patiently.

It's a measure of sophisticated service to offer to contact customers about their grievances. Doing so tells customers that you value their feedback and want to set things right, and this evidence of concern can keep customers who might otherwise take their business elsewhere. But by not calling me as promised, this hotel fell lower in my estimation than if no such promise had been made. Don't offer to contact disgruntled customers unless you really mean to do so.

Karten then offers some advice on how to improve your surveys:
1. Set survey objectives.
Is your intent to learn about customer preferences? Their perceptions of your responsiveness? How they are using your products? Multiple objectives are fine, but define those objectives before you start, or you'll end up with a list of questions that are unanswered because they were unasked.
2. Keep survey length under control.
A survey should be only as long as it must be to collect essential information. Avoid nice-to-know-but-so-what questions. A well-designed survey can be completed in less than ten minutes. More than that, and customers will either dump it or fill it out haphazardly, either of which can lead you to draw unwarranted conclusions from the responses you do manage to collect.
3. Make the survey action-oriented.
Surveys are often full of thermometer questions. For example, "Did you enjoy our restaurant?" is a thermometer question. Responses may suggest the existence of a problem, but provide too little information for you to understand the problem or recommend changes. If, instead, you ask about the accuracy of the order, the quality of the food, and the courteousness of the staff, you can use the responses you receive to plan a course of action.
4. Use both open-ended and closed questions.
Closed questions ask respondents to select from a set of fixed responses. Respondents can answer these questions quickly, and responses can be tabulated, summarized, graphed, charted, analyzed and reported. Open-ended questions, by contrast, ask respondents to answer in their own words. Responses take time to review and are subject to interpretation. However, open-ended questions frequently provide a level of insight into the customer perspective that is impossible to obtain from closed questions. When organizations ask me to evaluate their surveys, I often recommend the use of more open-ended questions.
5. Ensure an adequate survey response.
Let's face it; eagerness is not a word most people associate with completing a survey. To generate interest, set the stage by publicizing the importance of the survey in helping you improve your service effectiveness. Explain your objectives and how quickly the survey can be completed. Marketing, publicizing and promoting the survey can dramatically influence the level and quality of the responses you'll receive.
6. Tell customers about your survey findings.
Customers sometimes wonder if you do anything at all with their surveys. If you want them to believe you're really listening to them, inform them of your findings and changes you'll make as a result of their feedback. When you implement customer-suggested changes, announce that you're doing so because of their feedback. Don't overlook this essential element of providing feedback to customers about their feedback to you.

Between these two series of suggestions, you should be able to polish up your survey quite nicely. Of course, you still need to get past that little psychological quirk discussed earlier, that we all tend to give higher ratings to those we like. That brings us to the subject of internal methods.

Internal Methods
You need to develop a way of measuring satisfaction that is divorced from bias. It needs to come from metrics that are objective in nature such as the five factors listed above—quality, delivery, price, problem resolution and accommodation. These are the customer expectations that you have to meet. According to Karten, the whole thing can be expressed as a mathematical formula:

Customer Satisfaction =

    Your Performance    
Customer Expectations

“This calculation serves as a reminder that your customers' level of satisfaction can be affected by changes in either their expectations or your performance. That means you have to pay attention to both” says Karten.

The process is fairly straightforward: Based on these criteria (or whatever criteria you determine would be most suitable for your business), do you meet your customers’ expectations? If so, then your customer satisfaction rating should be high. If not, then you know that you have some work to do. Now, bear in mind that this has nothing to do with how hard you and your staff are working. Rather, it has everything to do with how your customers perceive you and your efforts. In other words, as long as your customers think you offer great service, then you do; and as long as they think you don’t, then you do not.

So what does that mean for your internal methodology for determining customer satisfaction? It means that if your metrics show that you are meeting expectation but your satisfaction rates are low, then the problem is not in what you are doing but rather in how you are doing it.

Generating a Customer Satisfaction Rating (Internal Methodology)
Many times it is simply easier to reduce a complex issue, like customer satisfaction, to a rating number. This is accomplished using a formula developed by Karten that is based on ratings for each of the following:

·        Quality Rating
This is based on the acceptable number of errors (accepted defect density) and the actual number of errors (actual defect density). The formula to work out this rating is:

QR = (actual defect density – accepted defect density) ÷ accepted defect density

·        Delivery Rating
Using the dates that are on the purchase and shipping orders, as well as the number of days acceptable to the customer for delivery, this rating is a contrast of the accepted delivery time with the actual delivery time.

DR = (actual days taken for delivery – accepted days for delivery) ÷ accepted days for delivery

·        Price Rating
Compute this using the agreed upon price before taxes and the final amount charged. The formula for this is:

PR = (actual amount billed – agreed upon price) ÷ agreed upon price

·        Problem resolution Rating
This one is a little tricky in that you need to define the Issue Density (ID). Actual ID is fine, that is easy to compute as follows:

Actual ID = Number of issues raised/project size

Project size can be computed by almost any metric you like as long as it can be plugged into the above formula. As for an acceptable ID, there is really no good way to define it and so your business should come up with a standard ID that can be used across the board. From there, the actual Problem resolution rating can be calculated:

PRR = (actual ID – standard ID) ÷ standard ID

·        Accommodation Rating
This rating is based on the number of change requests made vs. the number of delays caused by such change requests. The formula is:

AR = (no. of change requests received – no. of change requests implemented without affecting delivery date or price) ÷ no. of change requests received

The results for each of these formulae are simple to interpret. If the result of the formula is 0, then customer expectations were met. If it is negative, you have exceeded those expectations. A positive result means you failed to meet expectations. Bear in mind that these were primarily designed for product producers such as software firms. They can, however, be modified—criteria can even be dropped or substituted—to work across a broad spectrum of industries.

To develop the composite customer service rating (CCSR), you need to weight each of the criteria so that between them all, their weight = 1.0. For example:

Rating
Weight
Quality Rating (QR)
w1 = 0.30
Delivery Rating (DR)
w2 = 0.30
Price Rating (PR)
w3 = 0.30
Problem Rating (PRR)
w4 = 0.05
Accommodation Rating (AR)  
w5 = 0.05
Total Weight
1.00
The calculation to find the overall level of customer satisfaction, Karten’s 5-point Composite Customer Satisfaction Rating is:
CCSR = 5 – (QR*w1 + DR*w2 + PR*w3 + PRR*w4 + AR*w5)
Let’s plug in some numbers see it in action:

QR = (actual defect density – accepted defect density) ÷ accepted defect density
QR = (2-3)
÷ 3 = -0.333

DR = (actual days taken for delivery – accepted days for delivery) ÷ accepted days for delivery
DR = (3-3)
÷3 = 0

PR = (actual amount billed – agreed upon price) ÷ agreed upon price
PR = (998 - 1000) ÷ 1000 = -0.002

PRR = (actual ID – standard ID) ÷ standard ID
PRR = (4-3)÷3 = 0.333

AR = (no. of change requests received – no. of change requests implemented without affecting delivery date or price) ÷ no. of change requests received
AR = (6 - 6)
÷ 6 = 0

CCSR = 5 – (-0.333*0.30 + 0*0.30 + -0.002*0.30 + 0.333*0.05 + 0*0.05)
CCSR = 5 – (-0.1 + 0 + -0.006 + 0.01665 +0) = 5 – (0.08935)
CCSR = 4.91

Using the Composite Customer Satisfaction Rating
The best use of the Composite Customer Satisfaction Rating is in comparing the results from the CCSR to the results returned by the surveys. The CCSR offers a more objective rating while the surveys give you the all important customer perception. If there is agreement between the CCSR and the surveys, then customer expectations are being met and things are running as they should. If the CCSR results are below those of the surveys, then customer perception is far higher than the reality of your business’ products and services. This is not a time of celebration! This is a time to retool your business so that reality meets the high perception. Finally, if the CCSR is much higher than the survey results, your products and services are actually better than the customer perception of them. This is a warning that your marketing and communications are not where they should be.

It take a little work and some time to bring in the data, but you will find the exercise will yield results that could just make the difference when it comes to getting through today’s tightening economy.