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Tuesday, February 17, 2009

Customer Satisfaction Doesn't Matter

I'm a satisfied cable television customer. My TV signal generally works, I have it bundled with my home internet access and in four years of service I've only had one issue, and it was fixed relatively quickly. The price I pay is average, and though I'm not getting a great deal, I'm also not getting overcharged. When I call my cable provider for any reason, I can usually get through and have my questions answered. By every metric you could choose to assign to my experience, I'm a satisfied customer.

Now let me tell you something that should scare you, no matter what business you're in. If something even slightly better came along as another option for me, I would switch without hesitation. Luckily for my cable provider, they have a near monopoly as my other other option would be satellite. But this situation is not uncommon. The fact is, in today's market customer satisfaction doesn't matter as much as customer loyalty. So how do you generate this loyalty? A small part of that may be your customer service. A greater part is whether your product or service actually delivers. The rest depends on the personality of your brand and whether it gives people a sense of belonging and participation that makes them unlikely to switch no matter what else comes along.

That last part is what word of mouth marketing focuses on. It's what social media can be great at igniting. Most importantly, it's the one thing that only the best companies ever figure out.


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Interesting take, Rohit, and I agree with you about the personality of the brand creating a sense of belonging or participation (or "stickiness" or whatever else we want to call it).

I would note this, though: customer service can play a bigger role when it's an outlier -- either ridiculously bad, in which case customers flee, or ridiculously good, in which case it *becomes* an engine for customer loyalty.

I think this may be especially true in markets where every provider's product or service delivers a similar basic level of performance.

What do you think?

Interesting. As an evangelist in the technical world, I always tell people that my job is a "loyalty broker."

I couldn't agree with you more! Here's my story. I took my Saturn Outlook in for repairs of the air conditioner and after three times, they still have not fixed the problem.

However, at 8:30 PM the other night, I get a call from a customer service person at the dealer. She asks how my experience was. I told her that it was terrible. I had been to the dealer and they have not fixed the problem. I was very direct that I wasn't happy. She sounded shocked to have called a customer who if was sent a feedback survey from the manufacturer, would rate the service experience at the dealer negatively. I figured that since I expressed my concerns - and clearly stated that the problem wasn't fixed, that I would hear back from the dealer / service manager offering a solution or to take another look etc. Never happened.

So guess what? Would I buy a Saturn again? No. It really is a nice car, but if my local dealer can't support the car,and provide adequate services, then I certainly can't be loyal to the brand - and Saturn / GM needs all the loyalty they can get right now.

Which comes first: a company using social media to engage with loyal or pending customers, or a company using social media as an extension of customer service?

I'm seeing more of the second, despite a want for companies to do the first.

Yes. You are right... Your business should be ready for upcoming competitors and market fluctuations that could trigger bankcruptcy.

When a possible big time competitor is coming, make sure your service is far better than them.

I agree with ariherzog, as companies grow and with the economy in the shape it is, long gone are the days of loyalty with consumers and businesses but also the other way around.

I think you've made an excellent point here. Right now I get my water, electricity, cable, internet, and (now) VoIP phone through a local city-owned utility company. I had AT&T landline service before, but the utility just started offering it, and I switched in a heartbeat. Part of that is that I'm now saving $15/mo over AT&T, but mostly it's because I'm fiercely loyal to my local utility. I rarely have a problem with my services, and when I do, they are great about getting it fixed quickly. I get great internet speeds from my local utility company, while AT&T has only very basic DSL in my area. I could save money with Vonage for my phone (about $10/mo less than what I pay now) -- I've used Vonage before and liked it -- but my loyalty to the local utility co. and slightly better service keeps me with them.

Since it's city-owned, some of my tax money supports the utility, and my bills are lower as a result. It's a rather unique situation not many others could follow, but it gives the sense of belonging and being a part of the company. The whole town helps support the company, so we're all a part of it.

You're right to point out that "satisfied" isn't good enough.

But how do you get from that to personality is more important than customer satisfaction?

You're merely satisfied with your cable because it works. But how does it deliver to give you something extra? How do they go above and beyond in each touch point, from how you get your bill to what happens when you call for service or check on their website?

It doesn't so you have no loyalty.

Perhaps you would argue that what you call "personality" I would just call having a great product and great customer experience, always giving that something extra, that "wow" that is worthy of word-of-mouth. But I hope that goes beyond window-dressing and personality, that it has substance.

I may be satisfied with my cable company, but I can't shake the feeling that they are squeezing every dime they can out of me. Hard to be loyal when when you know it is a one way street.

I have been telling the story of Dell Online Customer Service in my recent presentations.

Richard Binhammer and the team at Dell have done a great job creating customer service oriented brand awareness for Dell. Recently, we ordered a Dell for a new employee. The machine was about 4 days late and my VP was getting really frustrated.

Instead of blogging or Tweeting our unhappiness I reached out to @RichardatDell with a DM or Direct Message on Twitter. Richard was able to help us find the missing machine and he averted a potentially negative situation.

This is a complete reversal from the semi-famous Dell Hell blogs written by popular blogger Jeff Jarvis just a few years ago.

Jay Berkowitz

There's a stat that we quote at my agency all the time (sorry, don't have the source, but it may have been from a Harvard Biz School paper): 74% of companies rated the service of their agency as satisfactory... when they cut them.

Satisfactory isn't enough as Rohit points out. And yes, Social Media can be an excellent tool for consumer brands. For service industry types like us, creating strong personal bonds is essential.

That is an really interesting take on customer satisfaction versus customer loyalty. In my business we are 100% dedicated in creating a customer experience program for our clients that foster positive experiences. Our goal is increase customer loyalty through customer satisfaction.
Social media is increasing tool for brands and companies to get in touch with their consumers. Several companies do this extremely well - Zappos comes to mind.
Smart companies will measure their customer satisfaction levels with an outside agency but also using social media. It sounds like your cable company needs to take a good look at their customer experience program and revamp it!

I don't agree.

To understand the importance of the convenience, you should have a single (one is enough) bad experience with new provider. Then, you will put a new metric (convenience) into the calculation.

According to the customer satisfaction surveys, the service level of the company is much more important then price. (espacially when the difference in only single digit percentage.)

I am in agreement with you. I wrote a similar post that supports your point. Fred

@Tim - I'd agree that customer service can have an outsized impact if it is on either extreme - good point and thanks for sharing.

@Brian - Interesting story, and even more interesting that it was the first one you thought of to share when reading this post. I think what that says about all of us is that these experiences are ones that we WANT to share, good or bad - and the collection of them is what makes us either loyal or movable.

@ari - Good chicken and egg sort of question to raise. You may be right about the examples of social media being led through customer service ... though most of those cases were fueled by some sort of brand controversy or crisis. In the cases where a brand proactively engages with social media, I might argue that they would indeed start with the first point you mentioned.

@Dale - You hit a hot button here, because I actually do think that personality of a brand IS that combination of the service and product and "wow" as you called it. In fact, I wrote an entire book about this idea. In my mind, the service and product are the foundation ... the base of the mountain. Without those in place, you don't have anything. But alone, they are not enough to break through and stand out. To me, personality in a broader sense can do that. I see it as much more than just window-dressing, and actually closer to the real core of a brand. Every brand that is able to have that customer loyalty finds a personality to go with it.

@Jay - Great story and you're right that Dell's efforts are definitely working when it comes to having many positive stories like yours. In fact, it is these positive experiences that can insulate them, if anyone else ever has as negative of an experience as Jarvis once did.

@Ugur - I believe that service may be more important than price in some cases, the product always has to deliver. And when it comes to providing satisfactory service versus something more, I would argue that it is going beyond the obvious that will truly impact customer loyalty.

The sad thing is, that many companies do realize this and try very hard to keep their monopoly in a specific area. Going back to your reference of the cable company, in my area a certain company holds a monopoly in the surrounding counties, and since I have a relative that works for that cable company, I know to what measures they go to keep other companies out.

However, if a company did break through, the cable company in question would be basically out of business for the reasons you mentioned. They have a reputation for horrendous customer service and offer a product that is not as good as it could be. There is no loyalty with the company, but instead of "fixing" their issues, they continue to spend money on keeping others out.

Here is the result of Turkish audience :-)

A single digit percentage difference in price may lead to CHURN for supermarkets, but not for cable TV, telecom, ADSL operator, etc... (what about other service sector companies such as utilities, banks, education, consultancy, ???)

An other research should be made for "slightly superior product". What is the required superiority for CHURN.

I love the conversation. I would add that the company should have a plan, or even better, a "Process Mantra" in place, that rules when it comes to a dissatisfied customer. An example would be, "First and foremost 'satisfy the customer if there is anyway possible when it doesn't cost the company any extra dollars except for your time."

To that end (and I have the transcript to prove it) I was in an online chat with HostGator, supposedly one of the top hosting services out there, unable to revive one of my blogs. The technician helping me was almost like a Hitler with his condescending tone telling me that I basically needed to figure things out on my own, It was such a bitter experience that it will definitely be something I will push for some resolution around the treatment.

Suggestions I have heard from others when it comes to poor customer service is to just call the company back as you will likely find someone who will offer you something better. However, since I can blog and have some influence I would rather use my power to broadcast these brand-tarnishing experiences.

What Rohit is referring to is basically the Conversion Model - which is a model of customer commitment owned by TNS. The idea behind the model is 3-fold:
- you have to be satisfied with the product
- you have to care about the product
- you would choose it over the alternative

Rohit covers two of the above items - but what is missing (and is very important) is how important is the decision to you? I could be very satisfied with Tide, and think it is better than any alternative, but could pretty much care less abou the decision. That would make me a less committed customer, and Tide had better start getting me to care about my decision on the very likely chance a competitor comes along that does seem slightly better (better price, better efficacy - etc - whatever is driving me to buy Tide in the first place).

Developing commitment (NOT loyalty - that is simply behavioural) requires building a relationship with your customer. Customer service is part of this, but not everything. Every consumer touch point should be created, and have the purpose of, reinforcing this relationship.

Sheer silliness -- dissatisfied customers are more likely to defect than satisfied customers. Your claim that you would switch without hesitation is a fantasy -- there are costs for switching services, and there are tradeoffs -- different channels, configuration options, DVR capability, bundling, etc. One service is rarely better than another in every category. As for "personality", intelligent people ignore such gimmicks and emotional manipulation and stick with objective analysis.

@ Morgan - Your comments would be extremely well received in a world void of what I would call the human condition. We are emotional creatures and consequently make emotional decisions. Nobody wants to be in a tepid relationship - whether it is a love affair or a cable company contract. People like to feel special and they like to be courted. That is what I see as the biggest market impact point for social media - courtship and high maintenance tools for companies to employee in their capture and retention strategies.

Rohit's willingness to switch in a heartbeat is reason enough that monopoly businesses should have a loyalty strategy and be concerned about their customers’ satisfaction. Any baby boomer remembers when there was no choice in electricity provider, long distance service, etc. These once-upon-a-time monopoly businesses have found survival in a competitive world to be a challenge. Any cable TV provider or phone service provider who enjoys a government regulated monopoly in their area best come up with a loyalty scheme to retain their customers when deregulation happens!

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