Published: September 15, 2010 | Comments (1)
The strong relationship between customer satisfaction and loyalty is widely known, as are the dramatic financial benefits of keeping existing customers versus acquiring new ones. Here we talk with Professor Claes Fornell, Director of the National Quality Research Center, University of Michigan and chairman of CFI Group, about winning and losing strategies, as well as the impact of customer service on customer satisfaction.
"As long repeat business is important and as long as customers have choice, there are no shortcuts: You have to satisfy your customers or they will find somebody else who will," says Fornell. Here's what he considers common winning and losing strategies:
- Overemphasizing productivity
- Overemphasizing complaints reduction
- Aiming to exceed customer expectations
Of those losing strategies, exceeding customer expectations – or delighting customers – is something that contact centers pay frequent attention to. Fornell asserts that not only is this a backburner issue but it's one that should come off the stovetop altogether.
"All our data suggest that it is not usually a good strategy to try to delight customers. This is similar to trying to exceed customer expectations. This may sound strange, but it becomes clear when the assumptions of such strategies are made explicit," he says. "One assumption is that it is costless (or not very costly) to delight customers or to exceed their expectations. This is usually not so. Another assumption is that expectations don't change. Not true and then the cost of delivering even more service in the future goes up as well. In the long run, it is doubtful that any company can succeed in delighting its customers. Why have a policy or mandate that is doomed to fail?"
- Earning the loyalty of your customers by making sure that they are satisfied (instead of buying loyalty with discounts and price promotions)
- Managing customer relationships as investments in the future and cutting costs (when you are forced to) where they have the least impact on the return on these investments.
But how do you know what impact customer service has on satisfaction and loyalty?
Fornell says there are at least two ways contact centers can track their impact on satisfaction. "One is at the individual customer level, but that requires a good system for capturing and storing data on customer interactions over a relevant period of time. Another way is to have continual sampling/surveying of customers that have experienced the service and statistically model the impact of the service on satisfaction."
To understand and track the impact of customer service on loyalty, Fornell advises making sure that the statistical modeling used in the sampling/surveying process is right. "Too many companies use very primitive methods that will not be able to isolate effects (and thus not be able to determine the value of customer satisfaction or the value of any particular service)."