Focus on Satisfied Customers, Not Customer Satisfaction
We begin the 12th year of writing this column and look forward to the theme of Creating a Customer Centric Culture. With almost 100 articles written since 2009, readers may find value in previous articles available on the Farm Equipment website and with links from the Machinery Advisors Consortium (MAC) site.
In the first 3 years, the theme was “Planning for Profits” with the focus on numbers — the metrics, KPIs, ratios and processes that the best dealers achieve.
For the next 3 years, the theme was “Technology for Profit,” which presented various leading-edge technologies used in farm equipment dealerships.
Then in “People & Profits,” we tied together the two previous themes and emphasized that all aspects of operating a successful, profitable farm equipment dealership are clearly centered on people and performance. We culminated this theme with the challenge to dealership leaders to make 2018 the Year of Investment in Human Capital.
Starting in 2019 we changed to “Leadership Lessons” which focuses on
development and growth of the executives of a dealership — that means you. The challenge in a fast-paced world with consolidation, technology, demographic changes and new business models, is for the leader of a dealership to be in a position to better lead through the changes through your own self-learning.
In 2020, the Leadership Lessons focused on the Good to Great Dealership flywheel — what elements a dealership executive must build better to create the momentum for a sustainable dealership. Fostering culture is arguably the most important of the G2G elements and so in 2021, we’ll focus on the 4Cs – Creating a Customer Centric Culture.
MAC Advisor Bill Mayes should spark your thinking by questioning customer satisfaction as a metric and promoting use of your own data instead. Bill Mayes is a founding member of the Machinery Advisors Consortium. The group offers training, consulting and coaching to improve processes and people, resulting in repeat customers, better customer value and more business profits. He can be reached at Bill.Mayes@machinery advisors.org
— A Note from George Russell, Machinery Advisors (MAC)
The customer is king! The customer is always right! The customer pays all our paychecks! You’ve heard these things and you’ve probably said them many times. I know I have. So, how can I possibly hate customer satisfaction?
The truth is I love satisfying customers. What I hate are surveys. In my career, I’ve created and managed the customer satisfaction measurement process for two global machinery companies as well as other smaller firms. The driver of these was always to determine the CSI — Customer Satisfaction Index — and to give it a numerical value. The higher the number, the more satisfied the customers … supposedly.
But the number wasn’t enough. What we really wanted to know was “What made the customer a satisfied customer?” and eventually the popular question was “Would you recommend us to others?” — the key driver of NPS (Net Promoter Score).
CSI Does Not Tell You Why Customers Buy
I worked with the statistics department of a major Midwestern university to create the best and most statistically reliable survey possible. We looked at answer scales. Should there just be three levels? Dissatisfied, Satisfied, Very Satisfied? Should there be 5? 10? How many surveys do we need to be statistically relevant? Do only dissatisfied customers reply? What is a self-selected survey (a survey where the party being surveyed decides for themselves whether they will return it) and why would we use one? Should we be focusing on the NPS?
But the most telling moment for me was when the dean of the statistics department told me, “Bill, I can tell you statistically if the question you’re asking correlates with being a satisfied customer, but even if there is a 100% correlation, I can never tell you if that is the cause of the satisfaction.” I was floored. The whole reason for the program was to find out if our actions were creating satisfied customers, and I learn that correlation and cause are two different things.
Fast forward to today and what do we see? We are bombarded with surveys. It seems like every transaction we have with a company drives another survey request. Buy a plane ticket, get a survey. Stay in a hotel, get a survey. Place an online order, get a survey. “Would you be willing to stay on the line for a short survey about the service you just received?” PLEASE. ENOUGH!
But as business owners where does that leave us? Customers are our life blood and we should be focused on creating repeat satisfied customers. And if you don’t have a way to measure your success in creating satisfied customers, you’re just shooting blindly in the dark.
Look at Your Own Data
But there is good news. We don’t have to survey our customers. The answer lies in our own data and looking into our own sales history. But the key is having your data organized so that it provides real value — information that can drive tactics, programs and repeat customers. Rather than ask customers if they like doing business with us, why don’t we look at their actions? Are we in fact creating repeat customers?
Here are a few ideas for seeing if your customers are staying with you and which might be leaving.
Have you analyzed your sales revenue from high to low by customer, department and year?
Which customers are repeat customers? Which are first time buyers?
What percent of your customers are repeat customers within the last 24 months?
Which customers have not purchased within the last 24 months? Where did they go?
How many new customers have you added in the last 12 months? How many of your customers bought from someone else in the same period? What is the net difference? Are you growing your customer base or is it shrinking?
If they are first time buyers, where did they purchase before?
Who are the top 20% of customers by sales in each department? Where is the overlap among departments? Which customers are buying from only one or two departments?
These are questions you can answer looking at your own data. And the best part is that this isn’t based on opinion. This is based on real buying behavior.
While survey data like the Net Promoter Score can give you an indicator of how your customers feel about you, it doesn’t tell you how you compare to other companies in your industry. And it doesn’t tell you why the customer feels the way they feel.
So, of course, I don’t hate customer satisfaction. I just think we need to do a better job of understanding how our customers feel by looking at their actual buying behavior. Because I love creating lifelong satisfied customers.
This article was first published on farm-equipment.com.