Consulting » Service with a smile

“Customer satisfaction is the most basic measure of a company’s success,”
says Jeffry Barno, senior manager at consulting firm Bearing Point. “It can make
or break a business, and so it’s essential to get it right.” Indeed, satisfied
customers keep buying from you, recommend you to their friends and tend to be
willing to pay more. Dissatisfied customers, on the other hand, are a drain on
resources. The issue is so important that the measurement of customer
satisfaction has become central to many businesses.

Traditionally, this research has involved asking a customer a series of
questions about how they feel about the company. These range from: “Were you
satisfied with the state of cleanliness of the cinema?” through to the direct
“Were you satisfied with your overall experience?”

The problem with research such as this is that it does not necessarily
produce an accurate representation of customer satisfaction. For example, Simon
Matthews, partner at brand communications agency Rise Communications, says:
“I’ve just bought a new house and overall am very satisfied with it. However, my
satisfaction is more to do with my enjoyment of the area than with the house

Modelling techniques
Research firms claim to have developed modelling techniques that overcome these
problems. Caspar Teale, director of service industry research at JD Power, says:
“Just asking people what’s important to them doesn’t work, as people tend to
exaggerate the importance of hard issues such as price and downplay softer
issues such as customer service. You need to ask detailed questions and then use
a complex formula to interpret the results.”

Other companies have concluded that it is not enough just to ask customers
how they feel and have begun to develop broader indices, which incorporate
actual business results such as call centre statistics, stock levels, number of
complaints and sales. While producing more accurate results, these techniques
are cumbersome and expensive.

In his book, The Ultimate Question, Frank Reichheld of Bain &
Company has proposed a simpler measure, and it is one that is rapidly gaining in
popularity. Dr Simon Bell, senior lecturer at Judge Business School, University
of Cambridge, explains: “According to Reichheld, the willingness of a customer
to recommend a brand is the only way to determine customer satisfaction. He
advocates asking customers to rate their willingness to do so on a scale from
one to ten and this is the Net Promoter Score.

“The research industry, which has a vested interest in keeping us doing these
complex surveys, is not happy about this, but I’m already seeing companies
adopting it. It is simple, to the point and, most crucially, it’s related to the
bottom line.”

Action results
Berni Simmon, director of marketing at predictive analytics firm SPSS, says:
“Getting the research methodology right is important, but it is still
meaningless if nothing is done with the findings. According to 2001 Gartner
research, 95% of companies gathered customer satisfaction data, but only 50% of
companies give their staff the results of their research, and only 30% make
decisions based on this insight. This needs to change.”

Tim Ogle, marketing director at retail research agency Retail Eyes, points
out that technology is helping in this regard by shortening the time between
gathering research results and translating them into action. “Many companies are
sending out text surveys to customers on the same day as the transaction and
then feeding this back to the individual store within 48 hours. Not everyone is
doing this, but the ones that are will soon start to reap the benefits in
increased sales and profits,” he said.

Twenty questions
In 1994, Enterprise Rent-a-Car launched its Enterprise Service Quality index
(ESQi). Customers were posted a form with about 20 questions on the quality of

Enterprise quickly realised it only needed to ask two questions: whether they
were happy with the overall service and whether they intended to use the company

In the UK, the firm now employs an independent research company to make
100,000 calls, representing about 10% of its customers, and presents its overall
ESQi score on its annual financial statement next to its profit figure. No one
in the company can be promoted if they work in a branch that is achieving below
the company average on its ESQi score.

Brice Adamson, UK managing director, says: “In the US over the past 16 years,
we have created a market out of almost nothing for city centre vehicle rental.
It has grown from $2bn (£1.01bn) a year to $11bn, and we have about 75% of it.
Much of this growth is down to our high levels of customer satisfaction, and
this is a direct result of the fact that we measure it accurately.”