Some simple and high impact ideas
By: Ignacio Barros
Despite all the effort and money that companies invest in CX (Customer Experience) tools, customer satisfaction in the world, in general, remains in the doldrums. In the United States, which is the country that monitors this variable most permanently, it is at its lowest level in almost two decades, according to data from the American Customer Satisfaction Index (ACSI). But the conclusions of this study are perfectly extrapolated. From our own experience, we know that customer discontent, in many industries, is firmly in place in Latin America.
This negative dynamic creates the challenge of figuring out what’s wrong and what companies can do to fix it. The short answer, although not necessarily true because the customer does not always pay what this implies, is that companies must always provide an incredible customer experience and exceed their expectations. And the argument behind this axiom is that customers no longer only compare companies with their competitors, but compare them with the best companies and brands in all sectors. This then raises the question: which customer satisfaction fronts should companies address as a priority to generate higher benefits at lower cost, or with lower risk?
We base our answer on ACSI research, analyzing millions of customer data. For three decades, the ACSI has been the leading quality-related satisfaction index for brands sold by companies with significant market share in the United States. But the conclusions, we repeat, are clearly applicable in other geographies and, particularly, in Hispanic countries.
In summary, the following are the main areas that a company should focus on in order to satisfy its customers and generate higher profits with lower risk.
1. Understand what your customers expect
What kind of demands do they have? Which characteristics are essential, which are desirable and which are irrelevant? Over the past 12 years, according to ACSI data, customer expectations have been relatively stable on a macro level, across all industries and companies, scoring between 79 and 82 on a 100-point scale (where 100 represents the highest expectations). Now, there are industries more demanding than others. Companies in the automotive industry, for example, such as BMW or Mercedes Benz, always have much higher expectations than the average (in fact, they exceed 90 points). Despite constant expectations from all industries, the most popular choice for many companies remains to aim higher and higher and “always exceed customer expectations”. Will this be the future trend? In practice, this is the wrong argument, as companies should avoid making promises to “always exceed expectations” as attempting such a strategy is not sustainable. Companies can and should delight the customer with a good experience, but with realistic goals.
2. Invariably, the perceived value is closely related to the price
Overall, global customer perception of value has improved over the years more than among the other drivers of satisfaction (for example, compared to quality or compared to expectations). This is directly related to technological progress, which has reduced unit costs and a good part of this improvement has been transferred to customers via prices. Given this fact, which is based on ACSI data over 30 years, is it still sensible to focus primarily on value as the primary driver of satisfaction? Maybe. But as in everything, there are positive and negative aspects of driving satisfaction and economic growth through a value proposition based more on price than on the quality of the product or service. And while perceived value metrics have risen over the last three decades, not all sectors and industries have a consistent value ratio. So each company and industry must make its own analysis in this regard.
3. Quality and performance matter
In general, how has customer perception of the quality of products and services evolved? The first thing is to define what constitutes quality. Measured according to ACSI, quality refers to reliability and the level of personalization (or customization), and curiously, personalization has more weight in the satisfaction metric than reliability. On a macro level, for the last 12 years, quality has been in the range of 79 to 83 on a 100-point scale (where 100 is the highest quality). For example, the food brand Quaker has impressive scores for overall quality, and BMW (cars) and Publix (supermarkets) have the highest levels of product and service quality, respectively, in the United States.
A key issue going forward will be strategies to improve satisfaction in the absence of relevant improvements in perceived quality. Contrary to what many managers often believe, quality trumps price in the overall satisfaction measure. Generally speaking, quality also trumps value as a driver of customer satisfaction in most economic sectors and industries.
4. Clearly define the points of contact between your company and the client
Many companies now have chief experience officers (CXO) and customer experience managers (CXM), leadership roles that indicate that companies are focusing on measuring, monitoring, and managing their customer experiences. And while these leadership roles may not formally exist, the customer journey with a company’s brands, products, and services is an important aspect of the buying and retention process. This path is often called a service blueprint. Companies follow their customers along that journey, looking for weak points and moments of pleasure.
Customer experience management is ultimately about driving satisfaction and loyalty, but it’s important to use the right levers in the right context. Managers tend to overestimate customer expectations, perceived value, satisfaction, and loyalty, while underestimating their complaints.
5. Finally, encourage feedback and complaints from your customers
Learn to appreciate when your customers complain. Why? Complaints can be annoying, time consuming and require resources to address and manage. But companies that manage complaints efficiently create greater customer loyalty. Complaint handling has to be near perfect to keep customers coming back and being at least as satisfied as they were before the complaint.
Companies that take complaints seriously build more competitive brands, products, and services. In other words, complaints should be considered positive. Unfortunately, many dissatisfied customers choose not to complain, and this unknown can have long-term negative consequences for businesses.
In short, customer satisfaction is a strategic asset. In mathematical terms, it should not be maximized, nor should it be ignored; must be optimized. Businesses thrive by meeting customer satisfaction expectations, combined with quality, value, and complaint management. The focus should be on managing the optimization of satisfaction in relation to customer expectations and the resources used. This satisfaction optimization is important to understand and measure, as there is a tricky and ultimately negative correlation between satisfaction and market share. That is, while high customer satisfaction can trigger market share growth, maintaining high satisfaction once market share grows becomes more difficult. This is because a larger market share often means a more heterogeneous customer base and more diverse customer behaviors, making it difficult to achieve a high and sustained level of satisfaction.
Sources
- 10 ways to boost customer satisfaction (Harvard Business Review, Jan 2023)
- Customer satisfaction: why it’s important in 2023 (Survicate, Feb 2023)
- theacsi.org
- SYNERGOS internal cases
