Why Measuring Customer Satisfaction Is Not Enough

Measuring customer satisfaction with your product and services is a good start, but not enough to develop a sustainable customer retention strategy. The correlation between customer satisfaction and retention is not always a strong one.

Why Satisfaction Is Not Enough

Customers may continue buying your products and services because of:

• Habit or inertia when the cost and risk of change are perceived to be higher than the benefits and the customer experience may be “good enough”
• Competing alternatives are as good or nonexistent
• Price
• Clearly superior products and services as well as excellent customer experience

In customer satisfaction research, we typically ask about overall satisfaction with products or services. However, when inertia, lack of competition, price, and partially good offerings are the main reasons why customers continue patronizing a product or service, and the overall customer satisfaction score may be misleading.

Measure More Than One Thing

To avoid being misguided by an overall customer satisfaction metric, you should include other metrics, such as the likelihood to continue being a customer and the likelihood to recommend the products (NPS) and services to others. The fact is that no single customer satisfaction metric alone will be accurate enough.

Consequently, you should design a customer satisfaction research plan with metrics that reflect the performance of your business in key areas, customer touchpoints, and how you stand against the competition.

In other words, try to avoid putting a lot of weight on a single satisfaction score, making business decisions, or basing employee compensation on it.

Consider monitoring:

• Product/service design and performance
• Customer experience with your product or service
• Customer service
• Usage and satisfaction with competing alternatives
• Price sensitivity

In conclusion, measuring customer satisfaction is not enough. When it comes to customer retention, adopt a holistic approach, use more than one metric, and focus on key drivers.

This article was published on January 27, 2012, by the Dallas Business Journal