Metric Monday: Satisfaction and Willingness to Recommend

How do you know if your customers are happy? How do you know if they’re not? How do you figure out the intensity of their feelings? Understandably, most customers who are really happy will tell you. The same goes for those who are not. It’s the unwashed middle that you should be worrying about. They represent the part of your customer base most susceptible to the competition.

Whether your customers are actual consumers of your product or service, donors to your cause, or partners with your organization, understanding what they feel about you – and how intense those feelings are – is an essential metric that when used can help your bottom line. In today’s edition of Metric Monday I am going to offer a few perspectives on how to assess satisfaction and willingness to recommend.

Most marketers know they need to measure customer satisfaction, but not the real reason why. Satisfaction serves as a predictor of future success. It is one of the few forward measurements that can be taken whereas most metrics are latent in nature. Willingness to recommend serves in this same function, but is a good measurement of the intensity of satisfaction. Both metrics quantify an important dynamic. When a brand has loyal customers, it gains positive word-of-mouth marketing, which is free and highly effective (see my radio interview with Andy Sernovitz, founder of the Word-of-Mouth Marketing Association).

Customer satisfaction is generally measured on a five-point scale allowing for two positive ratings, one neutral rating, and two negative ratings. I hate this and think it is a misguided way of looking at satisfaction scores. Here are my problems with this approach:

1. Customers are either satisfied or not. You can’t be half in love, or half anything for that matter. You either are, or are not.


2. It’s nearly impossible to quantify the difference between what a score of 4 or 5 is in either direction of satisfied or unsatisfied. What does it mean to be a 4 and not a 5?


3. Giving customers a chance to select neutral only provides people the opportunity to not really make a choice. That ambiguity doesn’t help you one bit. You WANT to know if they’re happy or not.

Okay, so I suggest that your surveys or whatever tool you use to say, “Hey, are you satisfied with your experience?” use a YES or NO response. You can certainly add a skip logic question if the answer is NO to find out what the problem was. I also don’t see any harm in doing the same for a YES response – find out what worked for that customer.

Then for both YES and NO respondents, ask the willingness to recommend question. This gives you the insight as to how deeply they feel about you. In asking this question I suggest you use a three point scale: No, Maybe, Yes. If you set up your survey correct, you should be able to do some cross tabulations to see how many unsatisfied people answered yes, no, and maybe, and how many satisfied people chose those same options.

Here is an example of what the data might mean to you. If you get a bunch of satisfied customers who say they are not willing to recommend you, then your problem could be that although you’re meeting expectations you’re not very exciting, inspirational, or are seen as an undifferentiated commodity. Basically it means there is no energy behind your brand. In another example if you have a bunch of unsatisfied customers who may be willing to recommend you, then you have a major opportunity to fix something and generate a bunch of advocates for your organization. I’ve created a simple matrix below for you to consider as possible action plans. (Click on the image for a larger view.)

Bottom line: Measuring your satisfaction scores is a must. Collecting and analyzing the data over time will help to identify trends that are critical not only to your competitive success but also to your ability to identify problems and fix them before they become serious problems. Measuring your audiences’ willingness to recommend your organization, or products, is a great tool for identifying action plans to retain customers while growing your base of grass-roots evangelists.

How is your organization measuring customer satisfaction or willingness to recommend? How is it working for you? What actions are you able to take from that metric?

-- David Kinard, PCM

Fight Commoditization with Real Value

I just finished reading an amazing book by Erich Joachimsthaller, Hidden in Plain Sight: How to find and execute your company's next big growth strategy. It's a fabulous book and I'll be interviewing Erich on my radio program on Wednesday, November 19 on wsradio.com.

One line in the book hit me like a ton of bricks this weekend while I was reading it.

"We were a highly specialized product turned into a commodity."

To be clear, the line references a German insurance company who by all accounts was a superior product in the marketplace, but because people where shopping on price, none of their elaborate feature sets meant anything. I see this same situation so often; price-driven markets turning complex and highly differentiated products into commodities. So what is a markter to do?

Well, first you should read this book and it will tell you what the insurance company did. But aside from that, you need to ensure your head is not hidden in the sand, hoping that somehow consumers will suddenly wake up to your messaging and branding and agree with you that your products are truly the unique offerings you believe they are. It's never going to happen.

When a product is willingly or unwillingly turned into a commodity by the market and consumer opinion, the simple fact of the matter is that the product has failed to rise above the fray and create a demand ecosystem. In other words, I would say that most products suffering this fate are developing and pushing feature sets that are not relevant, not important, and don't resonate with consumers. That's why they're comparing only on price, because you're just as good, or good enough, as everyone else.

I think Joachimsthaller brings out many excellent ideas in his fresh book and it shoudl be required reading for MBA students. Oh wait, I teach MBA classes, and I assign the books. Guess what folks -- it's now on the reading list!

-- David Kinard, PCM

Hidden in Plain Sight is also the American Marketing Association Foundation’s Berry Book Award winner for the best new book in marketing.

Dim Bulb Illuminates Once-Smart Marketers' Failure

My friend Jonathan Salem Baskin, author of the popular blog The Dim Bulb, wrote yesterday about Sprint losing

another 1.3 million subscribers, and turned in a quarterly loss of $326 million. It promised to boost ad spending. Company CEO Dan Hesse said they'd "make the case for competitive pricing." He's been the spokesperson in some of the ads so far.

Baskin suggested in his blog that Sprint go out and steal some customers from AT&T and T-Mobile.

However, I would venture that just stealing customers won't fix Sprint's problems. People are leaving Sprint for the same reasons they will soon leave At&T or any other carrier -- they get bored with the brand and will flock to the next new shiny thing that comes their way. Any investment spent on stealing a customer has a tenuous long-term ROI attached to it.

Rather, I think the problem is much deeper for Sprint -- they've lost their way. They stand for "simply everything" (Sprint's new catchy slogan -- just Google "sprint simply everything to see how pervasive it is) but mean nothing. When they draw a clear line in the sand, gain the courage to do something remarkable and valuable, then I think they'll begin to solve their customer migration issues.

As usual Baskin highlight's the most absurd in big-dumb-company marketing. It is amazing how quickly once-smart people can lose their wits when they enter the corporate board room.

Meaning Matters – Adapt or Die

In 2001, the American Society of Association Executives Foundation published a seminal book on Exploring the Future. In it, authors Olson and Dighe reported on fourteen trends facing non profits, especially associations. Those trends represented seven strategic conversations that any enterprise benefits from engaging.

Charles Darwin is often attributed with the phrase, “Adapt or Die.” He was referring to the survival of the species but his comment applies to all organizations that are facing relevancy issues. And with today’s troubling economic times, those who survive will be the ones who are most effective and efficient in creating meaning for their customer communities.

Meaning matters. In the marketing world we know these words as customer value. However, there is a much richer interpretation of the words when looked at from a non-profit’s perspective – and an application of them that could mean increased customer loyalty and competitive positioning.

The competitive company will create more than just the traditional supply of products and services laden with various feature sets that are an attempt to beat out the competition. From a meaning matters perspective, the competitive company will create an opportunity for belonging and identity on behalf of the customer. Social networking sites are attempting to do this, some with more success than others. But when the formula is right, they become the enduring qualities that drive customer loyalty and create brand evangelists.

Meaning matters suggests we stop looking at our customers as transaction channels. It demands from us a perspective that treats customers as members of a community. Their payments to us are an act of investment into the community, and we then serve as stewards of those dollars. We take their investment and strive to make the community, and it’s value, richer and more meaningful to the members.

It’s a different perspective, but one that has been working for non profits and associations for more than a century now. And if you think there’s no money to be made by thinking this way – just consider the tens of billions of dollars raised every year by non profits, and the seven-figure incomes of their senior staff.

Meaning matters.

-- David Kinard, PCM

Delivering Customer Value

One of my friends got laid off today -- the economy is hitting people and companies hard. He took it well and in stride, figuring now was his opportunity to do some consulting. We chatted about how to best position himself and it reminded me of the importance of thinking in terms of delivered customer value.

In business we talk about customer value all the time. But what rarely happens is the quantifiable approach to seeing what we actually deliver. (Not to mention the fact that often what we think of as value is merely functionality and features to the customer.) This formula, originally created by marketing sage Philip Kotler, is a foundational approach to determining and delivering customer value.

The formula is easy -- each item is worth five points for a total of 20 potential points of value and cost. From a customer perspective, rate each item between 0 (zero) and five. Do the simple math of addition and subtraction and you can figure your delivered value. Now, complete the exercise with your competition in mind -- again from the customer's perspective. If you can't be objective, go out there and find some customers to do this for you. It's bare naked truth time!!

Once you have your delivered value score, well, then the real work begins to increase value and reduce costs.

-- David Kinard, PCM

Customer Wait Times -- How Long is Too Long?

If you’re like me, you hate to wait in lines at the store, or too long for service at a restaurant. These long check out lines, or not enough employees available to answer your questions, it seems like we as customers are often getting the short end of the stick. What impact does that have on a business – when customers are asked to wait? Will a long wait time even cost you business? And if so, how long is too long to wait? We talked about this and more in today's Marketing News Radio broadcast.

On the program today to look into this issue of how long customers expect to wait for service was Tom Krause – he’s the director of strategic consulting for Martiz Research Retail Group. His team just completed a study of more than 1400 American consumers to see what their expectations and limits are when it comes to waiting around.

I'll admit I was surprised by what I heard. For the most part, Americans aren't that bothered by having to wait in lines. Perhaps we accept it as part of the cost of doing business someplace. And, to our credit, we are rather forgiving when wait times are too long if the employee is courteous, genuinely sorry for the inconvenience, and smiles.

But there is a dark side to an extended wait time. Fully 80% of the respondants walked out of a restaurant, 40% left a bank, and 50% walked out of a convenience store because the wait was too long. And for those who walked out -- 30% of them never went back.

Sure, long waits are inevitable. An unexpected rush of customers can easily overwhelm a manager's best attempts at staffing. Krause offered up a list of NO COST things an employee can do to minimize negative impacts of long wait times and even some suggestions for what retailers might do this holiday season to preclude frustrations before they happen.

Experts from Maritz Research are regular guests on this show and today was no exception to the interesting topics and practical value they bring. Be sure to check the show archives for other radio programs with Martiz covering customer experience and customer engagement practices.

-- David Kinard, PCM