Is customer satisfaction really a KPI?

11/07/2018 / Digital Transformation / Field Service / Erica Tuite

Customer Satisfaction is often quoted as being an important KPI for any business. While it is undoubtedly important, is it really a KPI? In this post from Steve Scott, Astea’s Managing Director – Asia Pacific, we consider how businesses can improve upon customer satisfaction.

It probably should go without saying. Certainly it is a statement that should not need to be defended or justified. Happy customers are of critical importance to any business. A happy customer is good for top line revenue and for margin. They are more likely to buy from you. They are more likely to be willing to pay a premium price because a relationship built on trust has an intrinsic value to them. Furthermore, a happy customer will help grow your market share and penetration. Word of mouth is the most effective force behind market growth for many companies. And don’t forget that with employee mobility on the increase, people will take their attitudes and opinions with them to their new employers.

How to measure customer satisfaction

In a recent Aberdeen study, service organizations ranked customer experience as their biggest opportunity for competitive differentiation. But as important as it is to a business, customer satisfaction is notoriously difficult and expensive to measure accurately. In fact, does it even make sense to think in terms of accuracy when referring to human emotions such as ‘satisfaction’? Emotions are qualitative and can’t really be measured in a quantitative way. Also, customer satisfaction surveys often lack statistical validity due to the small sample sizes. In most situations only a minority of customers respond, and often responses are limited to the statistical ‘outliers’. Those that are either particularly happy or particularly unhappy are the most likely to respond.

However, the biggest problem with treating customer satisfaction as a Key Performance Indicator (KPI) is that it is a trailing indicator. By the time any measure of customer satisfaction has been calculated and used as a catalyst for change, it’s probably already too late. If your customers are unhappy with your service, making them happy again is a difficult, expensive and time consuming process.

For a KPI to be most useful, it should be easy and quick to measure accurately from a statistically valid sample size. More importantly, it needs to be a leading indicator. Your KPIs need to alert you to issues before they start to have a negative impact on customer satisfaction.

So, rather than asking your customers if they are happy, start by determining what it takes to make them happy. If you find that being kept well informed is important to them, ensure you have a KPI to measure response times. If they tell you that multiple visits to fix a problem makes them unhappy, make sure that you are measuring first time fix rates, and the reasons for failing to fix on the first visit. If your customers indicate that meeting your SLA is important to them, have KPIs that measure SLA failure rates and analyse the reasons for failure.

Is customer satisfaction worth measuring?

A recent Aberdeen report entitled Self-Service: Create Happy Customers & Reduce Costs found that virtually all best-in-class service organizations currently have a process through which they analyse customer interactions to identify common issues. As shown in the figure below, the leading companies then update their processes accordingly. One example may be to migrate some lower value interactions to a self-service model. This allows their support team to focus on interactions deemed to be of higher value by their customers, and ultimately offer the best customer value with every interaction. Rather than assuming, for example, that customers prefer digital forms of communication in all circumstances, these companies take the time to observe, analyse and make data-driven decisions about how to improve customer satisfaction. More importantly, they take time to talk to their customers and actually ask them what is important to them.

There may not be a simple way to measure satisfaction, but there are certainly ways to measure its determining factors, and those are always worth measuring. But don’t forget, “information gathered but not used has a cost but no value”. You must adapt in response to what you learn in order to have a positive impact on your customer satisfaction levels.

To see how field service management software from Astea can help measure your KPIs and improve customer satisfaction, click here.

Follow us!