Satisfaction: How Every Great Company Listens to the Voice of the Customer

Library Journal

Soundview Executive Book Summaries

Despite the rhetoric, most organizations have not made a significant and sustained commitment to customer satisfaction. This lack of attention to customer satisfaction can be costly. There is an intractable connection between high levels of customer satisfaction and increased shareholder value. Anecdotal evidence abounds to support the theory that high customer satisfaction is important, but most chief executives need more than a good story to prod them into action.

The Relationship Between Satisfaction and Shareholder Value
One J. D. Powers and Associates study showed that the relationship between satisfaction and shareholder value wasn't just visible; it was paramount! Companies were divided into one of three groups: companies whose customer satisfaction rank within their industry remained constant, those whose rank improved and those whose satisfaction ranking dropped relative to their industry competitors. The companies that improved customer satisfaction more than doubled their shareholder value! And those whose rank declined lost 22 percent of their value within the previous five years.

Loyalty: The Common Denominator for Improving Customer Satisfaction
Studies show that customer satisfaction does in fact impact the likelihood your customers will return, but customer satisfaction is only one of many factors that determine actual loyalty.

Different Companies, Different Touchpoints
It might be difficult to compare the fortunes of a plumber, a major Japanese automaker and a U.S. office supplies retailer, but Mike Diamond Plumbing, Toyota Motor Co. and Staples have one very important point in common: Each has demonstrated an in-depth knowledge of the various ways its business touches customers and has used that knowledge to maximize both its sales and customer satisfaction. Each company offers up dramatic examples of how the three major categories of businesses - service providers, product manufacturers and retailers - touch its customers in a unique way.

Take Enterprise, for example. Rather than standardize every movement an employee makes, the car rental company lets the unique talent and personality of each employee shine through, thereby providing the branch with the opportunity for greatness in its own unique way. By measuring the relationship between a branch's customer satisfaction and its financial performance, Enterprise was going where few companies had gone before. The results were clear: Narrow the performance gap between branches and overall customer satisfaction will improve.

Consider hotel chains. In the eyes of the customer, best is always better than good. Providing the best, however, just isn't always economically feasible. Not every company can be The Ritz-Carlton; someone has to be the Holiday Inn, and someone even needs to be Motel 6. You just need to balance the financial benefits of any action against the cost.

Just because you're Motel 6 doesn't mean that you shouldn't spend money to improve customer satisfaction. You may find that providing coffee and donuts in the morning is cheap compared to the resulting increase in satisfaction, but that installing down comforters in every room is not.

Full Disclosure
Among other touchpoints, full and honest disclosure during the sales process (both in spirit and in fact) is one of the fundamental features that characterize companies with high customer satisfaction scores. High-scoring companies refuse to mortgage their future and their reputations for a short-term bump in sales. These companies are very clear that short-term profits are meaningless if they come at the expense of a hard-earned spotless reputation.

Perhaps the most common broken promise of all is one made with the intention - or at least the hope - that it will be fulfilled. These “best-case scenario promises” are promises likely to be broken and should never have been made in the first place.

Listen to Complaints
Too many companies that empower their employees to do good watch those employees take the easy way out by trying to buy their way out of a bad situation. Don't just automatically offer a $25 gift certificate to every customer who walks up with a legitimate beef. Take the time to really listen to your customers when they complain. Sure, for many customers the correct, and perhaps only, course of action is to incur the cost to make the problem go away. But, for others, by listening and trying to find the root cause of their discomfort, you will not only be able to do a better job of building advocacy, you may be able to save money in the process. Copyright © 2006 Soundview Executive Book Summaries