Todd Hollander Market Research

In today’s increasingly competitive marketplace, more and more companies are realizing that customer satisfaction research is a “do or die” process.

By and large, companies that are prospering have recognized that measuring customer satisfaction is an essential business process. These companies are regularly and effectively using customer survey data to identify opportunities to increase customer satisfaction and more effectively win new customers.

Conversely, companies that do not regularly and effectively measure and act on customer satisfaction data are at significantly higher risk of losing market share and profit margins to those that do. On the “do or die” continuum, these are the companies that are likely to die.

Somewhere in the middle are those companies that recognize the need to ingrain customer satisfaction into their corporate culture and business processes, but have not gotten started. For these companies, there are several challenges including:

• How to get buy-in from key stakeholders
• How to plan an effective customer survey process
• How to avoid common mistakes made by organizations that are new to the process
• How to approach, evaluate, and engage market research suppliers
• How to ensure that customer survey data is reliable and actionable

Because these challenges can be daunting to companies that are new at customer satisfaction measurement, many are tempted to postpone the development of a customer satisfaction survey process and instead rely on antiquated surrogate measurements of customer satisfaction such as:

• Sales figures
• Anecdotal evidence from sales reps
• Counts and frequencies of customer complaints
• Aging accounts receivables

While these measurements are not without value, they are not an adequate substitute for an effective customer satisfaction measurement process and have a tendency to dress company managers in “The Emporor’s New Clothes.”

The bottom line: A well-designed and consitently implemented customer satisfaction measurement process is a critical “do or die” strategic business tool. If your company has not embraced this reality, it must do so now or face the perils of competing with those companies that already have.

There is an excellent article in the latest issue of Strategy and Business about how successful high-end brands such as Lexus, Nordstrom, and the Ritz-Carlton Hotel Company are able to maintain consistently high levels of customer satisfaction.

Authors Robert Reppa and Evan Hirsch assert that for companies such as these, superior service — rather than superior products — is the crucial ingredient of customer satisfaction. The products are essentially the “table stakes” that get these companies in the game. Superb service is what keeps them at the table. Specifically, the authors state:

“Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.”

The article says that there are four things that nearly all top-performing luxury brands do:

1. Create a customer-centered culture.

2. Use a rigorous selection process to populate the organization with superior sales and support staff.

3. Constantly retrain employees.

4. Systematically measure and reward customer-centric behavior and excellence.

The bottom line: Superior products alone do not guarantee customer satisfaction. Superior products delivered with consistently superior service are the true measure of successful high-end companies, nearly all of which have a top-down commitment to customer satisfaction.

For more information, see “How to build a customer-centric organization: Step 1- Change the corporate culture” (April 10, 2007).