In the relentless pursuit of customer satisfaction, businesses across industries have become focused on a single north star: the almighty customer satisfaction score. But what if I told you that this obsession might be costing you more than you think?
The Satisfaction Trap
For years businesses have operated under the assumption that higher customer satisfaction scores lead to better business outcomes. It’s a comforting thought and makes sense in our head, but the reality is far more complex.
Recent data from the American Customer Satisfaction Index (ACSI) reveals a surprising trend. Despite significant corporate investments in customer experience over the past decade, there has only been a slight increase in the national ACSI score. As of the second quarter of 2024, the national customer satisfaction score stands at 77.9 (on a 0-100 scale), which is barely higher than it was in 2013. So where is all that investment going if it’s not actually doing anything?
The High Price of High Scores
- Short-term Thinking: With pressure coming from higher-ups wanting to boost satisfaction scores, organizations often resort to quick fixes – discounts, freebies, or bending policies. While these tactics might bump up scores temporarily, they can erode profitability and set unsustainable expectations.
- Ignoring the Silent Majority: Businesses tend to focus on the extremely satisfied and dissatisfied customers. But what about the silent majority in the middle? Research from Gartner suggests that moderate satisfaction scores are actually better predictors of future purchase behaviour than extreme scores.
- Overlooking True Loyalty Drivers: Satisfaction doesn’t always equate to loyalty. A study by Bain & Company found that between 60% and 80% of customers who switch to a competitor said they were “satisfied” or “very satisfied” with the company they left.
Beyond Satisfaction: The Path Forward
So, how can we fix this and make sure our investments in CX are actually providing the return we’re hoping for? Here’s a few ways to get started.
- Focus on Customer Effort: Gartner’s research shows that reducing customer effort is 40% more accurate at predicting customer loyalty than satisfaction. Their Customer Effort Score (CES) measures how easy it is for customers to handle their issues. Low-effort interactions result in 94% of customers intending to repurchase, compared to just 4% of those experiencing high effort.
- Embrace Friction: Sometimes, a bit of friction can actually enhance the customer experience. The IKEA effect, documented by Norton, Mochon, and Ariely, shows that customers place higher value on products they’ve put effort into assembling. This suggests that involving customers in the creation or customization process can increase their perceived value of your offerings and give them a sense of ownership.
- Measure What Matters: Instead of obsessing over satisfaction scores, focus on metrics that truly impact your bottom line. Customer Lifetime Value (CLV) and Net Revenue Retention (NRR) often paint a more accurate picture of customer relationship health. The ACSI data shows that industries with high satisfaction elasticity, such as banks, subscription TV providers, and internet service providers, have the most to gain (or lose) from changes in customer satisfaction.
The Takeaway
Don’t get me wrong – customer satisfaction is important, but it’s also expected. With the amount of reviews and research customers can quickly conduct nowadays, they aren’t bringing their business to someone they don’t think can satisfy their needs. Customer satisfaction shouldn’t be pursued at the expense of sound business strategy and long-term profitability. It’s time to look beyond the scores and dig deeper into what truly drives customer behaviour and business success.
As CX professionals, our job isn’t just to make customers happy – it’s to create meaningful, mutually beneficial relationships and connections that stand the test of time. This means:
- Designing experiences that balance customer needs with business objectives
- Focusing on reducing customer effort across all touchpoints
- Leveraging data analytics to understand the true drivers of loyalty and profitability
- Continuously measuring and optimizing the entire customer journey, not just isolated interactions
Are you ready to rethink your approach to customer experience? The future of your business may depend on it.
Sources:
- American Customer Satisfaction Index (ACSI), “U.S. Customer Satisfaction Growth Stagnates, ACSI Data Show“, 2024
- Bain & Company, “Closing the delivery gap“, 2005
- Gartner, “What’s Your Customer Effort Score?“, 2019
- Norton, Mochon, & Ariely, “The IKEA effect: When labor leads to love“, Journal of Consumer Psychology, 2012
- Temkin Group, “Customer Experience Matters“, 2016