The number one objective of any business should be the creation of happy customers. Businesses that create happy customers grow and flourish, while the ones that don’t stagnate and perish.
Yet, for the #1 objective, it is severely underrepresented in most companies’ goals and metrics. This is partly due to the fact that measuring customer satisfaction is not as straightforward as e.g. measuring revenue streams or website visitors, making it hard to set up clear goals. There are however some great metrics and tools out there designed for this purpose. Let’s go through some that can be applied in your business today.
Surveys to measure satisfaction
There are many ways to measure customer satisfaction. Surveys of customer perceptions are the most common. However, the objective measures of operational activities are often used as alternate measures that substitute for talking with customers. An objective measure is considered to be hard data, such as number of units sold or time that customers spend in a queue waiting for service that is not affected by perceptions of people.
For example, a hotel might record the waiting time for guest check-in and the waiting time for check-out at the front desk. Registering the number and nature of customer complaints and recording product returns are also common activities in many organisations that provide an objective measure for the causes of dissatisfaction.
The call centres should automatically be tracking the number of calls, time that customers spend waiting on hold, abandonment rates and the average length of the call.
Organisations can hire internal personnel whose skills will develop over time to conduct satisfaction surveys or organisations can subcontract the measurement task to external suppliers. However, it is important for managers to be aware of the basic elements involved in satisfaction surveys if the customer relationship management (CRM) system is to be designed to benefit from this feedback over time.
Customer surveys typically, but not necessarily, follow a generalized pattern of eight stages: (1) defining the problem and objectives, (2) planning the survey design, (3) designing a questionnaire, (4) selecting a sample, (5) collecting data, (6) analysing data, (7) drawing conclusions and preparing a report and (8) following up.
The steps in the survey process are highly interdependent. These stages overlap and affect one another. For example, a decision to sample customers of low educational levels (Stage 3) will affect the wording of the questions posed to these customers.
Stage 1: Defining the problem
Problem definition is the starting place for a customer satisfaction survey. Surprisingly, this fact is not evident to aft and its importance is often overlooked. Managers should expend a great deal of effort answering the question - Why are we conducting a customer satisfaction survey?” “Getting closer to the customer” is a generalized objective, but one that is not very precise. Understanding customer expectations, evaluating critical performance attributes, determining if there have been any recurring problems, assessing performance of a brand relative to its major competitors and learning if customers have noticed continuous quality improvements are examples of some specific answers to the question, “why are we doing this?”
An informal study to provide background information, exploratory research, is usually needed to clarify the nature of a customer satisfaction problem. A symptom, such as declining sales, signals the need to clarify the issue. Sometimes, checking secondary sources—magazines, journals or information on the Internet—may be appropriate. In other cases, a short series of interviews with a few customers or sales representatives may be in order. Library information, search engines, interviews with employees and focus groups are aft commonly used to help managers understand the basic issues involved.
The culmination of Stage 1 of the survey process is a formal statement of the problem(s) and the research objective(s). Research objectives outline the information needed to solve the dissatisfaction problem. In essence, the research objective formally states the purpose of conducting the study.
Stage 2: Planning the survey design
After the problem and purpose are stated, a formal survey design specifies the particular techniques and procedures that will be used to collect and analyse data relevant to the satisfaction issue. The three basic research designs are exploratory, descriptive and causal. Exploratory research is used to define the problem. The goal for a descriptive research study is to measure the characteristics—who buys, what do they buy, how much do they spend, when do they buy, where do they shop/purchase—of defined segments.
Causal research studies use carefully controlled experiments to isolate reasons for behaviours or outcomes. Although direct observation of behaviour can be beneficial, most satisfaction studies use surveys in a descriptive research design and collect data by means of telephone interviews, personal interviews (door-to-door, shopping malls or some other public place), mall or an electronic medium such as a fax, e-mail or the Internet. Telephone, mail and Internet surveys are currently the most common.
How does the researcher choose the appropriate survey technique? The researcher may need to answer some additional questions, such as is the assistance of an interviewer necessary? How willing will customers be to cooperate? How closely do we need to represent the views of the population?” The survey design may be affected by the design of the questionnaire, the types of questions that need to be asked, the time available for the study, the level of accuracy needed and the budget available for the research.
Stage 3: Designing the questionnaire
Wording survey questions appropriately is a shift in which the goal is to ask the relevant questions that the respondents can answer. The researcher should avoid complexity and use simple, accurate, conversational language that does not confuse or bias the respondent. The wording of questions should be simple and unambiguous so that the questions are readily understandable to all respondents. Double barrelled questions have two subjects or nouns (i.e., How satisfied are you with the cost and quality of the product?) and can be difficult to interpret. If the respondent is dissatisfied, the researcher has no way of knowing if the cause is the price paid or the quality delivered.
Stage 4: Selecting a sample
The next step is to select a sample of people, organisations, households or other group of interest. The methods for selecting the sample are important for the accuracy of the information provided by the study. Sampling is any procedure in which a small part of the whole is used as the basis for conclusions regarding the whole. A sample is simply a portion, or subset, of a larger population. A survey of all the members of a group is called a census. Sampling requires answers to three types of questions who will be sampled, the size of the sample and how the sample will be selected.
Who will be sampled?
Specifying the target population or the total group of interest is the first aspect of sampling. The manager must make sure the population to be sampled accurately reflects the needs of the organisation. Suppose a nursing home wishes to measure customer satisfaction. Should residents, family members, insurance providers, legislators or all of these groups be sampled?
Lists of telephone numbers, club memberships, utility customers or automobile registrations are a few of the many population lists from which a sample may be taken. If the list is not accurate, the sample may not be representative of the larger population of interest.
What is the sample size?
The conventional, tongue-in-cheek response to this question ‘big enough’ suggests the true answer. The sample must be large enough to properly represent the characteristics of the target population. In general, bigger samples are better than smaller ones. Nevertheless, if appropriate sampling techniques are used, a small proportion of the total population can give a reliable measure of the whole. A general rule of thumb is to select at least three respondents for each question on the survey. With higher needs for accuracy, a researcher may suggest attempting to obtain up to 10 respondents per item on the survey.
(To be continued next week)
(Lionel Wijesiri, a corporate director with over 25 years’ senior managerial experience, can be contacted at firstname.lastname@example.org)