Is Customer Satisfaction Really a KPI?

4/08/2019 / Field Service / Katia Loboda

Business experts often point to customer satisfaction as an important key performance indicator. While it’s undoubtedly important, is it really a KPI? In this post, Steve Scott, Astea’s Managing Director – Asia Pacific, considers how businesses can improve customer satisfaction.

It probably should go without saying: Happy customers are critically important to any business.

Why?

  • They are good for top-line revenue and margin.
  • They are more likely to buy from you.
  • They are more likely to be willing to pay a premium price, because relationships built on positive experiences have intrinsic value for them.
  • They will help grow your market share and generate referrals.

The value of a positive customer experience is undisputed. But is customer satisfaction really a KPI?

How to Measure Customer Satisfaction (CSAT)

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, CSAT is notoriously difficult and expensive to measure accurately.

In fact, when referring to such human emotions as “satisfaction,” does thinking in terms of accuracy even make sense? Emotions are qualitative. We can’t really measure them in a quantitative way.

In addition, most customer satisfaction surveys lack statistical validity due to small sample sizes. In most situations, only a minority of customers respond, and often responses are limited to the statistical outliers: those who are particularly happy or unhappy.

The biggest problem with treating customer satisfaction as a KPI, however, is that it is a trailing indicator. By the time you calculate any measure of customer satisfaction to use as a catalyst for change, it’s probably 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 make a negative impact on customer satisfaction.

The KPI Drivers of Customer Satisfaction

Instead of asking your customers if they’re happy, start by determining what it takes to make them happy.

  • If you find they value being well-informed, ensure you have a KPI to measure response times.
  • If they tell you multiple visits to fix a problem make them unhappy, make sure you’re measuring first-time fix rates and the reasons for failing to fix on the first visit.
  • If your customers indicate meeting your service-level agreement (SLA) is important to them, your KPIs need to measure SLA failure rates and analyze the reasons for failure.

Is Customer Satisfaction Worth Measuring?

The Aberdeen report Self-Service: Create Happy Customers & Reduce Costs found virtually all best-in-class service organizations have a process through which they analyze customer interactions.

As shown in the graph below, leading companies analyze interactions, identify common issues, and then update their processes accordingly.

Migrating lower value interactions to a self-service model is one example of this adjustment process. The migration allows support teams to focus on interactions customers deem to be of higher value and ultimately offer the best service value with every interaction.

Rather than assuming they already know what customers want, best-in-class service companies take the time to observe, analyze, and make data-driven decisions about how to improve customer satisfaction. Most importantly, they take time to talk with their customers and actually ask them what’s important to them in order to improve their experience.

Measure, Learn, and Act

Customer satisfaction isn’t a KPI, and there may be no single, simple way to measure it. But there are certainly ways to measure its determining factors.

Measuring and taking action on those factors always proves worthwhile. 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 make a positive impact on customer satisfaction levels.

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

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