The customer satisfaction equation
What is customer satisfaction?
It was a long time ago. I was in class, in an Amphi full of people. The professor had just called me out and asked that seemingly simple question.
He was an excellent teacher. But at that time though, the first lecture of the day, with about 60 pairs of eyes looking right at me and waiting for my answer, I did NOT like his methods…
I don’t exactly remember what I said back then. But now, after many years running operations and managing various types of businesses, I think I have a pretty solid answer.
Customer satisfaction is relative:
If you’re delivering a product or a service to your customer, that customer will judge you based on what he/she EXPECTED to receive.
Customer Sat is:
What you delivered to your customer
divided by
What you promised to your customer.
Let’s break this down:
- One is when what you’ve delivered is precisely equal to what you promised (good).
- If the customer receives LESS than what he/she expected from you, then your customer satisfaction is below one. You’re not fulfilling your promise to your customers. They will be unhappy (bad).
- If the customer receives MORE than what he/she expected from you, then your customer satisfaction is above one. Excellent? Not so fast… Read on…
If customer satisfaction is TOO high, you’re probably doing something wrong:
If you are significantly above a “One” result on the Customer Sat equation, then you are delivering much more than what you promised. You’re leaving money on the table. You shouldn’t do that either.
Maybe your marketing and sales message should be changed.
Maybe you can work on explaining how good your product or service is so that people are willing to pay the right price for it.
How to improve Customer Sat with minimal costs?
A lot has been said and written on how you can improve your product or service. That’s the “what you deliver to your customer” part. I’m not going to talk about that here.
The Customer Sat equation helps you realize that you should also focus on the other side: “what you promised to your customer.”
You can usually find a few low hanging fruits on this side of the equation. Pick those out, and you WILL improve how your customers rate their experience.
Manage your customer’s expectations:
Big promises increase willingness to pay (you can sell at a higher price).
Big promises also make your life more difficult and can significantly increase your costs.
Are you a 5-star hotel or a backpacker hostel? Are you a food truck or a 3 Michelin stars restaurant?
Make sure that you’re crystal clear when you explain the experience that your customer shall expect from you.
Everyone should be able to explain your promise to your customers:
Not only your customers, anyone in your team needs to understand your promises and obligations to your customer.
In every organization I was involved with, even in the companies I created, some people were unclear about what we were supposed to deliver to our customers.
The fastest, cheapest, and most effective way to improve customer satisfaction is to fix these incorrect assumptions first. Marketing, sales, operations, finance, you’re all in it together!
Don’t assume that your people should know. Ask, check, train them to make sure they know!
If your people don’t know what your company is supposed to do, your customers will have a bad time.
4 tricks to maximize Customer Satisfaction:
1- NEVER let your people write cheques your organization can’t cash:
When I was (much) younger, I worked in sales for quite a while. When I had to deal with a customer complaint, I was taking the easy route.
Yes Sir, we will take care of this today.
And then I put a massive amount of pressure on my operation and support teams to make it happen.
They did not like me…
Then I moved to operations, and I genuinely hated this kind of person.
It is your responsibility, as a manager, to make sure that NO ONE “over-promises” in your organization.
“I don’t know yet, let me check and get back to you within the next 2 hours.”
That is a compelling answer which will most likely INCREASE your customer satisfaction score IF you get back to that customer within these 2 hours, and with accurate information.
2- Always try to (slightly) under-promise and (slightly) over-deliver:
People hate bad surprises and love good ones.
Imagine that you need to have the windshield on your car replaced. Which is the best scenario from a customer satisfaction perspective?
Option 1: The person at the counter tells you that you’ll have to wait for two hours. One and a half-hour later, the floor supervisor comes back to you with the keys to your car and wishes you a good day.
Option 2: The person at the counter tells you that you’ll have to wait for one hour. One and a half-hour later, the floor supervisor comes back to you with the keys to your car and wishes you a good day.
As a customer, which option would be most satisfying?
Think of it as a safety buffer too. Murphy said it first. Sh.. WILL happen, and you should always account for that reality.
3- Communicate often:
We’re living in an age where you can track your pizza delivery order on your mobile phone.
Accurate and timely communication is one of the most efficient keys to increase customer satisfaction.
And when something goes wrong, you owe it to your customer to let him/her know what’s happening and tell him when you will fix the problem.
4- Get the right tools for your business:
Make sure that you have the tools and systems in place to capture and track incidents.
That’s the best way to make sure that everything is under control (or not).
That’s how you can measure your performance and identify where and how you can improve.
The right tool shall enable you to keep track of any incidents and issues.
Then you can fix these.
Then you can understand where and when you need to deploy your people to maximize efficiency and productivity.
A useful incident management tool will also help you learn from all these issues, give you insights to identify and limit recurring problems, and implement long term fixes.
What do you think? How would you define customer satisfaction? What are your tricks to improve Customer Sat in your business?
Originally published at https://www.linkedin.com.
Franck is part of the Antler Network as an advisor. He plays an important role in supporting founders and coaching Antler portfolio startups.
About Antler
Antler is a global early-stage VC enabling and investing in the world’s most exceptional people. Present in 12 locations across 6 continents — Including Singapore, New York, Nairobi, London, Oslo, and more — Antler brings together experienced operators, technologists, and entrepreneurs to build their next companies.
Learn more at www.antler.co
