Why, Oh Why, Is ANYBODY Still Measuring Customer Satisfaction?

by Michael Lowenstein on August 31, 2016

Michael Lowenstein, Ph.D., CMC Thought Leadership Principal, Beyond Philosophy

When Customer Retention, my first book on customer behavior was published, now over 20 years ago, one of the strongest reactions voiced was my contention, and the proof offered, that satisfaction and retention were fundamentally different concepts, and that they required different measurement protocols. Many felt that satisfaction and retention were the same. In reality, they are very, very different, conceptually and measurement-wise. Retention is about behavior, the motivation to remain a customer, whether at lower, equal, or higher purchase levels. Satisfaction is not about any of that.

Satisfaction has always been largely about attitudes about a product or service experience. Attitudes are superficial and tactical, essentially dealing with transactions and interactions rather than longer-term experiences and relationships. It is, as well, sometimes about behavioral intent, not behavior itself. Satisfaction is also about the tangible, functional, and rational components of value (time/timeliness, accuracy, completeness, suitability, price, functionality, etc.) of value delivery. For decades, satisfaction has been a cornerstone of what we understand to be total quality in products and services, as perceived by the customer. Unfortunately, satisfaction has been proven to have very little impact on, or connection to, actual customer behavior. I’d submit that the hourglass sand on satisfaction meaning and actionability have finally run out.

Even total quality icon W. Edwards Deming believed that satisfaction was not an ineffective metric for understanding the impact of satisfaction on customer actions. In his book, Out of the Crisis (MIT Press, Cambridge, MA, 1982, p. 141), Deming said: “It will not suffice to have customers that are merely satisfied. An unhappy customer will switch. Unfortunately, a satisfied customer may also switch, on the theory that he could not lose much, and might gain. Profit in business comes from repeat customers, customers that boast about your product and service, and that bring friends with them. Fully allocated costs may well show that the profit in a transaction with a customer that comes back voluntarily may be 10 times the profit realized from a customer that responds to advertising and other persuasion.” This quote appeared in Customer Retention (ASQ Press, Milwaukee, WI, 1995, p. 9).

When. 35 years ago, Deming said “Profit in business comes from repeat customers, customers that boast about your product and service, and that bring friends with them”, he was talking about what, for the past decade, we have understood, and effectively measured and applied, as customer advocacy behavior.

The satisfaction (and delight, NPS, and CES) metric does not take consumer brand favorability and volume/type of positive and negative online/offline word-of-mouth into consideration. And, as many consulting organizations have determined, today these factors are critical for both understanding leveraging downstream customer behavior. Advocacy and bonding, principally based on the kind of positive/negative customer word-of-mouth and impression of the brand or vendor that Deming identified, has tremendous power and potential to create desired high-end customer behavior. Word-of-mouth, however, is a double-edged sword; and customers’ negative communication, as much as praise, can have a damaging effect on other customers and non-customers, as well as the communicating customer.

As a core performance metric, customer advocacy is very much alive and well in both B2B and B2C products and services. Scores of studies, in many verticals around the globe, have demonstrated that informal word-of-mouth and brand reputation are essential decision-making levers. If anything, due to the more critical nature of touch points, performance, brand perception, and relationships in B2B, bonding may well be more important in this arena than in the business-to-consumer world. Critically, in both B2B and B2C performance measurement, there is little evidence of metric flatlining or reaching an actionability plateau.

So, all of that said, is there a role for tangible quality, as measured by satisfaction, on customer behavior? And, what is the most actionable way to measure it? Based on extensive consulting, training, and research experience, in b2b and b2c verticals around the world, I’d suggest that much of tangibility is about the emotional and memorable underpinnings of trust and confidence these elements represent. As noted in many of my blog posts and white papers, there is an emotional subtext to all components of value delivery, whether tangible or intangible, whether transactional or experiential over time. Especially with regard to rational value elements, these basic “table stakes”, when delivered to spec or as expected, will help drive trust, confidence and future consideration. When the basics are not attained, tangible element under delivery will undermine trust, and influence negative downstream behavior.

Some experiences are pleasurable in the subconscious, some are painful, some are superficial, some go deep. They can create sensations and feelings that can be a challenge to articulate, but which cause people to take action. Translating these subconscious emotions and feelings is the ‘holy grail’ of customer journey design.

Seemingly forever, marketers and researchers have been trying to identify stable and predictable links between what consumers say about product and service experiences, what they mean, i.e. the emotional and unconscious underpinnings about what they really think and believe, and what they do in terms of actual decision-making and actions in the marketplace.

There is an intersection between customer experience with a product or service, internal reaction to that experience, informal peer-to-peer communication about the experience, and downstream customer decision-making. It occurs in the personal emotional and subconscious distillation of that experience in creating memories forming the customer’s behavior. This may sound a little technical and psychological for some, but reckoning with the meaning of emotional and subconscious response to experiences has important ramifications in the marketing world. It can mean knowing what customers really want, whether they will stay or leave a vendor, and whether they will be loyal brand advocates or not. We’ve come a long way from satisfaction.

Republished with permission from CustomerThink.com

Michael Lowenstein provides strategic consulting, research design and in-depth, leading-edge analysis that helps clients deliver outstanding business results through deeper customer experience, communication, relationship, employee and brand equity insights. Beyond Philosophy provide consulting, specialised research & training from our Global Headquarters in Tampa, Florida, USA.
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Michael LowensteinWhy, Oh Why, Is ANYBODY Still Measuring Customer Satisfaction?

Uncovering the Secret to Predicting Customer Behavior

by Colin Shaw on August 30, 2016

By now, it’s clear to many of you that your Customer Experience is an excellent competitive differentiator for your organization. However, if you only consider the aspects of your experience that appeal to people at a logical level only, you are not taking full advantage of what we know about customers and what influences them.

All people have different influences that come to bear on what they buy and from whom. Many of these influences aren’t rational at all, nor are customers even aware of them at a conscious level. It’s like we always say in our Customer Experience Consultancy work:

Over 50% of the Customer Experience is emotional

Why is this fact so important to remember? It’s important because the emotions customers feel from conscious and subconscious interpretations of various cues in your experience then trigger psychological principles that influence their behavior during your Customer Experience. In other words, understanding the emotions your experience creates are the key to understanding why customers do what they do.

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Colin ShawUncovering the Secret to Predicting Customer Behavior

Digital Transformation in Retail Banks: Potential Impact on Brand Equity, Customers, and Employees

by Michael Lowenstein on August 24, 2016

Michael Lowenstein, Ph.D., CMC Thought Leadership Principal, Beyond Philosophy

Discussion of the myriad and varied ramifications of Digital Transformation is, seemingly, everywhere (and unavoidable). I’m capitalizing the first letter of each word because the pervasiveness of digital transformation has all the feel of Big Data a few years ago and Reeingineering in the 1990’s.

All things digital and innovative, especially mobile access and communication, is now consuming both attention and resources at many organizations. It is having most impact, and will likely continue to do so, in traditional industries such as retail banking. Digital innovation in banking can be seen in the transformative way people transact and organize their finances. It is also impacting financial service cultures, as it forces banks to shift from a largely product-centric perspective to a customer-centric one.

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Michael LowensteinDigital Transformation in Retail Banks: Potential Impact on Brand Equity, Customers, and Employees

Artificial Intelligence: It’s Coming to a Mall Near You!

by Colin Shaw on August 23, 2016

If you follow retail trends, you know that department stores are in trouble.

As shoppers have headed online and to discount stores, traditional mall department stores are struggling to define their niche and halt falling profits. Many are now focused on creating a better in-store experience in hopes of motivating customers to shop in person.

One of the most interesting customer experience initiatives is coming from Macy’s, which also announced last week that it is closing 100 of its stores.

In 10 of its U.S. locations, Macy’s shoppers can now use artificial intelligencethrough their mobile devices to help them navigate the shopping experience. The “Macy’s on Call” service allows customers to type natural language questions into Macy’s website instead of asking a sales associate. But unlike most online chat tools, this one is powered by IBM’s Watson cognitive computing service. Over time, Watson will learn to give better answers and customize them to specific stores.

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Colin ShawArtificial Intelligence: It’s Coming to a Mall Near You!

Why Arianna Huffington’s Move Is Good for Customer Experience

by Colin Shaw on August 18, 2016

I was intrigued by Arianna Huffington’s announcement last week that she is leaving the Huffington Post to concentrate on her new health and wellness startup.

Her new company, Thrive Global, is a corporate and consumer platform aimed at reducing stress, exhaustion and burnout and putting an end to the idea that burnout is a necessary price of success.

“Stress and burnout are a global pandemic, costing businesses hundreds of billions of dollars per year – 300 billion in the U.S. alone. But as the latest science has shown there is no tradeoff between living a well-rounded life and high performance. In fact our performance actually improves when we make our health and well being a priority,” according to a press release announcing Thrive Global’s founding.

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Colin ShawWhy Arianna Huffington’s Move Is Good for Customer Experience

It Takes Teamwork: Customer Experience Management and the Little Red Hen

by Michael Lowenstein on August 17, 2016

Michael Lowenstein, Ph.D., CMC Thought Leadership Principal, Beyond Philosophy

Think back, if you will, to your favorite childhood nursery rhymes and you’ll no doubt recall the lesson learned from the Little Red Hen. She and her brood of chicks planted and cultivated the corn, harvested it, made it into batter and baked it into delicious bread. Suddenly, the other farmyard animals — who had stood around refusing to help while she and the chicks did all the work – also wanted to enjoy some of the coveted cornbread.

There’s a nice metaphor here that can be applied to the development and execution of customer experience management programs, particularly the elements that are dependent upon skilled, user-friendly data development and management. Think of customer experience results as the cornbread. A lot of work has to go into making the customer experience project a success. But is everyone willing to share in the responsibility? When these programs fail to meet ROI and other objectives, as they are considered to do in 60% to 80% of the cases, no one wants to take responsibility for strife and underperformance. In fact, many are quick to point fingers and cast blame. However, when these programs go well, and when benefits are reaped, then everybody wants to take credit and share in the results: everyone wants a piece of cornbread.

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Michael LowensteinIt Takes Teamwork: Customer Experience Management and the Little Red Hen