Why do organisations conduct customer satisfaction research?

ListenOne 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

  1. Customers have choices, if they don’t like what you are offering they can take their business elsewhere.
  2. Acquiring new customers is more expensive than retaining existing customers.
  3. Satisfaction makes re-purchase more likely and leads to positive word-of-mouth (WOM).
  4. Dissatisfaction makes re-purchase less likely and leads to negative WOM.
  5. Customers can tell you useful things about your own products and services, including how to improve them and how to meet unmet needs.
  6. 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 widely believed and underpin the use of customer satisfaction.

I would love to hear your thoughts about the points above. Have I missed some key aspects? Would you disagree with any of the points above? Would you change the emphasis?

PS

Note, I am not specifically talking about customer satisfaction surveys. This post is just about why organisations conduct customer satisfaction research. The research could include  customer satisfaction surveys, mystery shopping, qualitative research, social media research, passive research, biometrics etc. There is a big difference between “Why conduct customer satisfaction research?” and “How to conduct customer satisfaction research?”

2 thoughts on “Why do organisations conduct customer satisfaction research?”

  1. I’d add: A drop in customer satisfaction can signal something is going wrong, and early detection can result in turning things back around before having a big impact to the business.

  2. Perhaps building on the point about of new customers being more expensive to acquire would be the idea of customer lifetime value. The more satisfied a customer, the higher their lifetime value is likely to be.

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