Why do organisations conduct customer satisfaction research?

One of the great things about teaching an undergraduate course in market research is that it makes you re-visit fundamental questions, such as “Why do organisations conduct customer satisfaction research?” The flippant answer would be because a) everybody else does and b) the textbooks say you should. But if we address the question properly, I think the answer is something like: The Business Case There is a widespread belief that: Satisfied customers are good for business Dissatisfied customers are bad for business Key assumptions, factors and beliefs Customers have choices, if they don’t like what you are offering they can take their business elsewhere. Acquiring new customers is more expensive than retaining existing customers. Satisfaction makes re-purchase more likely and leads to positive word-of-mouth (WOM). Dissatisfaction makes re-purchase less likely and leads to negative WOM. Customers can tell you useful things about your own products and services, including how to improve them and how to meet unmet needs. The process of engaging and empowering the customer is itself a good strategy for improving brand equity/loyalty/affinity/love Note, many of the assumptions above may not actually have been tested in your specific business and may not always be applicable. However, they are […]

Why is so much customer satisfaction research so unsatisfying?

When I talk to research users, one of the most common themes I hear is dissatisfaction with customer satisfaction research (and its new expansion into customer experience). Key problems appear to be: It tends to be based on people’s memory rather than their current or recent experiences, resulting in inaccurate measurements. Halo effects can swamp actual, real-time experiences and distort the recalled evaluations. For example, if somebody likes an experience they are prone to say everything was good. However, if the experience was negative they are prone to describe most of the experience as negative – this makes the findings less actionable. The research is often targeted at phenomena that are of little interest to research participants. For example, questions about how a customer is greeted at the bank or supermarket can result in blunt and hazy measurements if users do not find that aspect salient to them. A company’s area of interest is often too wide to create a meaningful research instrument. One consequence of the breadth of interest has been the creation of ever longer customer satisfaction surveys, delivering ever lower levels of satisfaction to the users of the research. Customer satisfaction and experience is a lagged measure, […]