Customer Satisfaction Defined

With virtually every area of business operations relying on technology and with so many types of IT providers available to an organization, it is critical for IT to consider the role customer satisfaction plays in establishing and maintaining a strong relationship with the business.  Customer satisfaction (or CSAT) can be defined by its relationship to customer retention: customers will stay with a brand, provider or vendor because they are satisfied with the goods and services that vendor provides. In the age of instant communication, fueled by the Internet and social media, one bad experience going viral can cause a major impact on a business’ reputation. Consider the video of a doctor being dragged off of an oversold flight and the damage it did to the airline’s brand.

According to Wikipedia:

Customer satisfaction (often abbreviated as CSAT, more correctly CSAT) can essentially be looked as knowing and understanding the customer's perception of the value of the product or service provided or it's quality vs price.

Customer satisfaction can be defined in several ways:

Customer satisfaction is also expressed as a metric of a customer’s satisfaction and intention to stay with the business or provider, most frequently by marketing organizations, where an attempt is made to quantify the level of customer satisfaction provided. Most essentially, when a business focuses on delighting customers with every interaction, their goal is to retain these customers by driving their customer satisfaction up and gaining a competitive edge. From an IT perspective, retention can be thought of as IT retaining its place in the business as the primary provider of IT services (vs. outsourcing).

The importance of Customer Satisfaction for IT

It’s often said that it takes more to win a customer than to keep a customer. Certainly, from an IT perspective, driving customer satisfaction is easier than addressing outsourcing, major organization shuffles or even shadow IT.

Consider the upheaval present when an organization decides to make a significant change to their IT provider. Establishing service with a new provider means that the provider must:

For internal providers, like IT, winning business back after it’s been outsourced will meet some of the same challenges, along with the need to hire new team members to reestablish the organization. Attention to customer satisfaction makes it possible for IT to retain its relationship with the business, focusing on how IT can help the business be more innovative, more competitive and retain its own customers.

While the result is not the same level of brand loyalty that might be seen at the commercial level, improved customer satisfaction can help IT become more embedded in strategic outcomes of the business:

None of this is possible unless IT can look at customer satisfaction from the consumers' viewpoint. When things go well, their needs are met with an expected level of effort. But when someone engages IT and things don’t unfold as expected they may become annoyed or frustrated. At this point, there is still likely a way to turn the transaction around and satisfy the customer, but if the provider has no practices in place to support this, frustration is likely to give way to anger. Eventually, the customer may even abandon the transaction and IT’s reputation with the business begins to suffer.

This impact is very close to the concept of customer churn, which is the loss of customers due to dissatisfaction with a provider and can be addressed in many of the same ways as addressing customer churn. Where a commercial organization uses customer satisfaction efforts to prevent customer churn, IT can do the same thing to benefit its reputation with the business.

Employees that are both engaged with the customer and empowered to make decisions about how to prevent churn can go a long way towards appeasing a customer, even in an internal IT organization. Not only is this good for the IT organization’s reputation with the business, but it also increases employee satisfaction. It’s far more rewarding to engage with satisfied customers than angry ones. When the culture of a business is to satisfy others and provide amazing experiences, stress levels are lowered both internally and externally.

Looking at this, it’s easy to see that customer satisfaction is important not only to attract and retain customers, but it also improves the ability to retain good staff.

Measuring Customer Satisfaction

As with any area being managed, it’s critical to measure customer satisfaction on a continuous basis. Measurement forms the basis for identifying improvement activities and tells the IT leadership how well their organization is doing.

Most measurements of customer satisfaction come from the very subjective CSAT, or customer satisfaction survey, which is touted as the measure of importance. This is a short view however, due to the subjective and general nature of the survey. Objective measures should be combined with surveys to broaden the view. Thus, it’s important to develop a metrics program that aligns with critical success factors of the business or IT initiatives, and which provide opportunities to identify areas that need improvement.

 

Metrics of Importance in Customer Satisfaction

There are several ways customer satisfaction can be measured, combining key metrics to get this complete picture:

While some providers focus solely on customer satisfaction surveys, these alone don’t tell the entire story. They do provide a good overview however they don’t provide the detail needed to improve customer service. NPS and CES questions can be added to basic customer satisfaction surveys and drive metrics that broaden the scope of the survey.


CSAT Score:

Customer satisfaction is most commonly measured via the use of surveys. Surveys can and should be taken on a regular basis and there are several means of surveying customers:

Each of these provides a different set of information that the organization can use to improve performance:

 

Most CSAT surveys will be analyzed by scoring each question, then totaling the scores or showing the percentage of each question considered to be a great result, good result, neutral, negative or very negative result. It’s important to look at the results of each question individually as they will indicate where improvement might be needed.

 

Net promoter score (NPS)

The net promoter score is a newer measure that has grown in importance because of social media and the Internet. This metric looks at the brand loyalty of a customer and whether they will continue to support IT or push for replacement. Thus, the net promoter score is a measure of an individual’s opinion and which of the following type of customers they have become:

 

The metric itself is expressed relies on specific questions in a survey (such as “how likely are you to do business with us again” and “how likely are you to recommend us”) as a percentage of positive responses versus the total number of responses. The metric is expressed as follows:

(Positive Responses – Negative Responses) / Total Responses

In this calculation, the passive or neutral responses are not considered. The final percentage shows the number of promoters, with the detractors removed, as compared against total responses. There may be other opportunities with passives and detractors, but these would fall into efforts for improving customer service.

 

Customer Effort Score (CES)

Ease of engagement can greatly impact the relationship between IT and its customers. Thus, the customer effort score, which measures how easy it is to do business or conduct a transaction is critical. This score can be subjective, via surveys but can also leverage web site metrics to notice when a customer fails to engage or gives up. Consider a scenario where an employee visits the service request catalog and puts several items into a shopping cart, moves around the checkout process, but fails to execute the submission. It is likely in a situation such as this that there was a design issue with the catalog making it difficult to finalize the checkout, causing the customer to abandon the purchase.

When surveying customer effort, a simple question asking how easy it was to obtain the desired outcome, with a sliding response scale enables a business to calculate the percentage of time it was easy or very easy vs. the percentage of time it was hard or too hard. The most important aspect of this measure compared to other methods of measuring customer satisfaction is that it is used as a means of churn prevention. Determining the aspects of engagement that are difficult enables IT to put improvements in place that improve the effort on the next transaction, helping with customer engagement. A customer may do things “the hard way” once or twice, but if it’s always difficult to do business with a particular company, adoption will suffer. This is why CES is so important to customer satisfaction measurement. It’s also worth noting that this is a critical measure for web site experiences like a service portal, where interaction with an employee may not happen. One way to avoid dissatisfaction in this scenario is to have a chat window pop up if the activity indicates a customer may be running into difficulty.

 

Customer Churn Rate (lost customer/total customers)

The customer churn rate measures customer retention expressed as the percentage of customers who have stopped doing business with a provider. This metric directly expresses or calculates the overall churn, but when combined with customer effort and net promoter metrics can help a business determine when a customer will leave (churn) and how to prevent it. This knowledge leads to taking positive steps to impact retention. The metric is calculated as follows:

Total # of Lost Customers / Total Customers

Looking at the power of this area, measuring and prevent churn demonstrates an intentional effort to satisfy their customers, who are already a captive audience and while it takes some effort, retention is an important activity in ensuring customer satisfaction and continuing to grow the relationship between IT and the business.

Improving Customer Satisfaction

IT organizations should always have a vision and a goal that form the basis of an improvement program when their results do not meet these goals. Customer satisfaction is a key area for ensuring success and should be subject to ongoing improvement efforts when metrics indicate IT is falling short. That’s why improvement efforts start with measurement, to understand where the IT may be falling short in satisfying their customers.

Each of the metrics discussed previously plays its own role in developing customer satisfaction improvement opportunities:

 

There are two basic parts to implementing an improvement strategy. The first is to analyze the metrics that will help identify areas in which improvements can be made and the steps to be put in place.

 

Knowing what needs to be managed is the first part of the process. Realize that sometimes it will be necessary to make some changes to be able to obtain the measures that are identified, so putting the measure in place is also part of the improvement program.

Once the measures are in place and gaps are identified, a mitigation or improvement program can be started in earnest.  They need to be implemented and monitored so a correction can be made where needed:

This detailed look at an improvement process is based on two concepts:

The ITIL continuous improvement process is a metrics-based approach to identifying and improving services and processes, while the PDCA is leveraged by ITIL to ensure improvement is consolidated then continued, to avoid backsliding. It’s critical to keep the measurement aspects of the ITIL process in place throughout the effort, or backsliding can occur without notice. The components of the Deming cycle include:

  • Plan: Identify the improvements and an execution plan

  • Do: Begin performing the activities according to the improvement plan

  • Check: Measure the results and compare them against the goals established

  •  Act:

    • If results are as expecting, keep performing the activities as planned

    • If the desired outcome is not achieved, go back to plan

The check and act portion of the cycle represent the activities that present the backsliding.

Ultimately, once a customer satisfaction improvement program is put in place, the gradual or incremental increases in customer satisfaction measures will immediately start to pay off. As long as the activities continue to be taken and measurement continues to ensure there is no backsliding, improvement will continue until the desired levels of customer satisfaction are reached. Care should be taken at this point to institutionalize use of the measurements at least until the new processes are fully ingrained in the culture. At this point the frequency of reporting can be slowed down.

Customer satisfaction software products and their benefits

When looking at the importance of customer satisfaction measures and their role in achieving customer satisfaction excellence, IT needs a way to measure their results. The only way to do this is to manage all aspects of customer service in a way in which these activities can be tracked. This is where a suite of customer satisfaction software products is needed. This suite should ideally include the ability to do the following:

 

These capabilities are important because they combine the ability to conduct daily business with the ability to produce the metrics required to spot issues and rectify them as well as to be continually engaged in overarching improvement activities. There are several areas to consider when looking at the capabilities needed:

 

With these benefits in mind, it’s easy to see why customer satisfaction tool use is increasing and becoming integrated into daily operations. The opportunity to provide customer satisfaction happens with every aspect of the business from sales to support to the customer experience. This may change slightly from organization to organization, but they are merely changes to the flavor of the experience, the tools will support all of them if well designed and implemented:

As with selecting performance measures, when selecting a tool, it’s important to which areas of customer service it should address and how it will be used with other support systems. Time to determine the features needed and build a list of critical needs helps the selection process. In addition to the feature set, the ability to integrate to other tools or grow to support other areas could affect overall success. For customer satisfaction to be achieved, it needs to be integrated with virtually every area of the operation, so the toolset needs to be able to make a similar leap across functions

An Outcome-Based View of Why Customer Service is so Important

When you look at the factors that customer included in customer satisfaction it’s easy to see why it’s so important. As revealed, these factors include:

 

Looking at this list holistically, it’s easy to take look at these factors and realize they are the core activities in which an organization needs to excel in order to achieve success. Thus, customer satisfaction can be considered leading indicators in an effort to increase reputation and revenue (where IT charges for its services). Looking at these individually, compared to the list above:

 

Aside from the direct impact customer satisfaction has on customer retention and increased sales, it’s easy to see that customer satisfaction is also important as an indicator of how well IT is delivering in its core activities: service operation and support.

The importance of customer satisfaction in any business

Regardless of the type of business, industry, vertical market or market space the business occupies customer service will be a differentiator when there is competition in the space. With technology at the core of business success, it’s worth looking at a few examples to see how IT success and customer satisfaction can help drive overall company success:

Customer satisfaction goals

IT is in an interesting position of being able to measure customer satisfaction directly with internal customers but also being able to use external customer satisfaction for their business as an indicator of how well they are doing in helping the business provide service excellence into external customers.

Thus, when looking at appropriate goals for customer satisfaction, it’s important to start by looking at what’s important to the business within their market sector, how IT supports this and which of the factors mentioned here make sense to use as a core focus. That said, knowing which measures are important to the business, is not quite enough, the measure to strive for is also important. This is an area in which industry benchmarks, along with the businesses performance history should be combined to develop customer satisfaction goals to be used to measure the business’ success over time. Additional measures of how IT makes this possible are also critical.

Benchmarks showing how an organization performs against others in their industry can also be easy to find, either via the Internet or by purchasing benchmark results. For example, ACSI, the American Customer Satisfaction Index, provides a listing of top Internet business’ customer satisfaction ratings since 1995. Looking at a spread from 80 to 85% one could consider 85% to be a CSAT rate to shoot for. Considering as well, that Amazon was the leader throughout almost all of the years, often several points ahead of their competition making the importance of this measure clear, given their company’s success during this period.

This measure is only a measure, however. Bear in mind that understanding how the measurement and surveys are designed and remaining consistent to that measurement measure is important, avoiding an “apples to oranges” comparison situation. Using the Internet and commercial benchmarking services is a place to start.

Having said this, a company’s customer satisfaction performance over time may be a better indicator. Simply identify periods of growth and success for the business, and mine any customer satisfaction indicators possible. Use these as an internal baseline and consider them while establishing goals.

Considering the critical nature of customer satisfaction, setting customer satisfaction goals as a leading indicator of success is an important activity. This is another area where the activities involved in the Deming Cycle or Plan-Do-Check-Act come into play. After setting initial goals, the organization needs to check: compare the goals they have attained in customer service measures against lagging indicators like growth and revenue. When the goals of the business are not being met, analysis and corrective action are needed.

IT should at this point be working both on their internal customer satisfaction measures and ensuring their relationship in supporting their business, but also recognizing that at some point, their ability to support customer satisfaction with the business they are in is also critical. This is a critical area of focus for any business, both as a leading indicator of success but also as a differentiator in an industry or market space. A business might get away with taking the attention off of customer satisfaction in the short term, but it will be in the short term as lack of performance in this area will soon take their toll.  IT is no different. Continued success and maintaining a good relationship with the business relies heavily on customer satisfaction and perception of value, both of which are wrapped around customer satisfaction. The use of customer service management tools for tracking actions related to sales and service helps measure this critical area, as well as providing a good tool for managing these activities.