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Stacey Barr
Stacey Barr
Performance Measure Specialist

Stacey Barr Pty Ltd
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Why You Should Avoid Customer Satisfaction and Customer Complaints KPIs

Posted 6 months ago

They are the two most used measures for customer performance: customer satisfaction and customer complaints. But they aren’t the most useful measures if you want to truly drive the success of your organisation or business.

Customer satisfaction has been researched and compared with other ‘states or feelings’ that customers can have toward a company, and it usually comes up poorly in terms of predicting profitability.

Extremely satisfied customers have been shown, by research conducted by the Gallup Organization, to be no more profitable than customers less than extremely satisfied.

And extremely satisfied customers have been shown to be less profitable than customers who are also “fully engaged” with the company. So customer satisfaction, while it did a fab job of focusing organisations on customer service in the 1980s and early 1990s, is no longer among the most powerful and transformational measures for customer relationships.

As Gallup say in one of their articles: Satisfaction without engagement? Worthless. Satisfaction with engagement? Priceless.

And on the topic of Number of Complaints as a measure of customer relationships, the diagnosis is even worse. Firstly, complaints are usually offered up by customers who are passionate enough to complain. There will certainly be customers who defect and leave you, who couldn’t be bothered complaining.

And Number of Complaints only offers you one side of the customer experience spectrum: they only tell you the bad side and not how frequent or how impressive the good side is, when customers are delighted with your product or service.

And personally, I also try to avoid measuring ‘in the negative’, where you’re measuring what you don’t want. It keeps your attention on what you don’t want – and how to avoid it – rather than keeping you focused on what you do want, and how you’re going to achieve that.

My advice is don’t bother measuring Number of Complaints, but have a system for managing them as one of those ‘moments of truth’; in the customer relationship. And you may still get value from measuring customer satisfaction, but don’t use it as the ultimate measure of your customer relationships because it’s just not powerful and all-encompassing enough. It only has value when used in companion with other measures.

Remember: no matter what you measure, always be sure that you have defined the important result you want to achieve or create or change, before you even think about what the measure should be. Don’t try and retrofit your measures to results, because you’ll end up measuring the wrong things for the wrong reasons.

JOIN THE DISCUSSION:

How do you measure customer performance? Have you correlated your customer measures to measures of profit or mission fulfilment? Share your suggestions on the blog.

Comments (3)

Bill Fotsch
Bill Fotsch
Open Book Coaching

With B2C coaching clients of mine, I find the Net Promoter Score approach, founded by Fred Reichheld to be quite effective at tracking customer loyalty, which has been clearly linked to profitability, particularly when one includes the profit from referred customers. Are you a fan of NPS?

With B@B customer, I have developed a customer interview script that is a modified version of Fred Reichheld’s Ultimate question. This has been very effective at generating repeat and referral revenue, as well as proving great customer input for marketing / planning purposes. If you or your readers would like a copy of the script, just send an email to bill.fotsch@openbookcoaching.com.

Posted 6 months ago | permalink
M.Zeeshan Zaki
M.Zeeshan Zaki
Mgr.Sys.Dev.& Compliance at Focus-MSSP

Dear Stacey, would you please elaborate what do you mean by “Fully engaged customer”? What indicates that our customer whether our customers are engaged with our company and upto what extent?

Posted 5 months ago | permalink
Stacey Barr
Stacey Barr
Performance Measure Specialist

M.Zeeshan, the Gallup Organization have devised a scale of questions that collectively define what engaged really means. It’s a multi-dimensional construct. If you’re interested to learn more, you can contact them using the link above in the article. They don’t make their questionnaires easily available, as they are proprietary!!

Posted 5 months ago | permalink

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