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In this Guide…

Learn how to drive financial improvements in your business by improving customer experience… And why setting a target for customer satisfaction is such a bad idea.

It goes without saying that everyone wants a high score for customer satisfaction – or Net Promoter Score (NPS), or CSat, or Customer Effort Score, or however you want to measure overall satisfaction.

And of course, setting targets is a great way to accelerate improvements – targets help people focus their efforts and they provide visibility of progress towards a goal.

But setting a target for satisfaction itself is a bad idea.

You may well get a higher score, and if you attach a bonus payment you’ll definitely get a higher score, but you’ll also discover that people find plenty of resourceful ways to get a higher score without making customers happier or the business better.

Problem 1: Satisfaction is subjective, not objective

The first reason is because satisfaction is subjective. A subjective measure is not a bad thing. But putting a number on something that’s subjective does not make it objective.

Subjective measures, like customer satisfaction, or NPS, are still useful – because by expressing a feeling or sentiment on a scale you can gauge the severity.

Is your customer so happy and confident in you that they’ll be prepared to risk their personal reputation by recommending you to others? Or are they a little unhappy due to a minor problem that you can quickly fix? Or are they hanging on by a thread and you’re in danger of losing them?

It helps to know where they are on the scale, and it’s really easy for them to tell you, but it’s pointless (and nonsensical) for it to be accurate to two decimal places.

Customer satisfaction is not the only area in business which is susceptible to poor targets being chosen. Goodhart’s Law, a principle established by economist Charles Goodhart in 1975, can be summarised as, “When a measure becomes a target, it ceases to be a good measure.”

How to use objective measures and subjective measures in customer experience.

An objective measure, on the other hand, is much better suited to target setting. Being objective means it’s deterministic – several people can measure the same thing and get the same result.

It’s also repeatable, and it’s harder to manipulate. For example, how long it takes you to answer phone calls, deliver your products or respond to email enquiries. Or how many customers your business has gained and how many it has lost in the last twelve months. It’s about objective facts not subjective feelings.

Where subjective measures come in handy is for finding out whether or not a problem exists, and how seriously it’s affecting customer sentiment.

Measuring overall satisfaction is not an exact science.

Fortunately, it doesn’t need to be – when the (subjective) satisfaction measure has revealed a problem (and the severity), then its work is done, and it’s time to choose different, objective measures that are better suited to targeting.

Problem 2: Satisfaction is only a proxy for what’s really important

A low satisfaction score tells you there’s a problem, but making the score higher doesn’t fix the problem.

Just like having a high temperature shows that you’re ill – the cure is not treating the symptoms with an ice bath, but treating the cause of the problem.

Understanding that Net Promoter Score (NPS) and other satisfaction measures are proxies is the key to understanding why it’s unwise to set a target for NPS or customer satisfaction.

By ‘proxy’ we mean it’s one convenient representative of several other things.

When a customer gives a satisfaction score they’re summing up in one simple number, that’s easy to collect and easy for the customer to judge, how well you’re doing as an organisation at the whole range of things that are important to them in their dealings with you.

So a single ‘satisfaction’ score represents various factors, depending on your type of business, such as:

  • Quality of products and services
  • Quality of customer service
  • Speed of delivery
  • Is it easy to place an order, or a repeat order?
  • Are technical specialists knowledgeable?
  • Are promises kept, on time?
  • Are commercial policies reasonable?
  • Are your people friendly and enjoyable to deal with?

In giving an overall satisfaction score, or how likely they’d be to recommend you, a customer will be taking into account all aspects of their experience. These are just examples, in your company there may be more or there may be just a few, but there will be certain things that customers want you to be brilliant at and it’s how you perform on a combination of those measures that will determine what overall satisfaction score they give.

Those specific aspects of performance that are most important to customers are your starting point for choosing better targets. When you set targets you need to adopt a more granular approach.

The critical mistake is to assume that setting a target for satisfaction score will result in improvements to the things that really matter to customers.

A list of things which affect both satisfaction and satisfaction score. Some things in the list are easy to fix, but only affect the score customers give you, not how they feel

It’s easy to increase satisfaction score without increasing satisfaction.

Actually, setting a target would be reasonable if the satisfaction score depended on those factors alone because you could only improve it by improving things which directly improved customer experience. But that’s not the case. Satisfaction scores are influenced by other inputs which are less obvious, too – inputs which can be manipulated to increase the satisfaction score.

For example, satisfaction scores can be skewed by what your people say to a customer if they know a survey will be sent. Or by arranging for surveys not to be sent in some cases. They can be skewed by the visual design, adding hints or colours to the satisfaction scale. Some companies even try to get a higher score by reversing the direction of the scale, scoring from 10 to 0 instead of 0 to 10.

These other influences might sound trivial, and you’d like to think your people would focus on the wholesome, underlying factors which will improve customer experience. But the reality is – if you place a target on satisfaction, people will go for the easiest ways to increase the number. All the more so if they’ll get a bonus for hitting the satisfaction target.

It’s usually very easy to spot surveys that come from organisations who have set a satisfaction score as a target, and this can make customers cynical about the process.

Examples of maniuplative survey scales. The first colour-codes certain numbers to infuence the reviewer to not pick these scores. The second is reversed to induce confusion.

Don’t try and nudge the score by playing mind games with the scales.

These shortcuts and others can give you a higher score, but they absolutely do not mean there’s been an improvement in the things that customers value.

This means three bad things have happened:

  1. People have spent effort that’s unproductive (finding ways to manipulate the number to meet their target rather than on improving customer experience).
  2. Your satisfaction score is no longer trustworthy (because it’s been manipulated).
  3. The score may be higher when in fact customers have experienced no improvements whatsoever, things may even have got worse for them.

This is a big deal, because only by improving the important factors will you see an improvement in things which will make a positive impact on your business – customer retention, customer recommendations, spend per customer and reputation.

The creator of NPS, Fred Reichheld, discourages targets for NPS because it can be manipulated: “I had no idea how people would mess with the score to bend it, to make it serve their selfish objectives.”

The surprising thing is – low scores can make you the most money, which is yet another reason why deterring them is not a wise move.

If you can spot a customer at risk, who would previously have gone undetected, you can retain someone you would otherwise lose. Of course there’s momentary horror when you get a bad score. But turn them round and it’s more cash on the bottom line because every new customer is then an addition rather than a replacement.

In short, it’s not at all unusual for people to be paid bonuses for increasing the customer satisfaction score, probably even feeling a worthy sense of achievement for hitting their target, while revenue, profitability, customer numbers and reputation may have declined.

The hidden benefits of choosing better targets

Good targets are those which can only be met by improvements which will demonstrably improve customer experience, and which can’t be achieved by manipulating other factors.

Well chosen targets lead to concrete financial benefits for the business such as higher profits from customer retention, more new customers via personal recommendations and higher average spend.

A spin-off benefit is that this means you’re improving the things which are attractive to ‘higher quality’ customers (for example, those who have a higher lifetime value). Whereas the customers who are the most price sensitive can also be the most… demanding.

So choose targets which will tangibly improve customer experience, knowing that your satisfaction score will increase as a result, rather the other way round.

Which targets are better?

To recap, we’re looking for specific targets that will improve the things which are most important to customers, which can’t be fudged, and which will result in an increase in overall satisfaction, or Net Promoter Score.

In turn that means the business will benefit, for all the right reasons, because by improving in these areas you will improve:

  • Reputation & customer acquisition
  • Customer retention
  • Customers willing to recommend
  • Willingness to spend more (cross-sell, up-sell)

Set targets for improving your product or service.

Some examples of targets you could set for improving quality:

  1. Measure and improve satisfaction with the quality of your products (or services).
  2. Right first time – measure and reduce the frequency and severity of defects or rework.
  3. Commercial policies: Can you improve satisfaction with the fairness, transparency and simplicity of your terms?

Set targets for improving customer service.

Some examples of targets you could set for improving customer service:

  1. Measure and improve how easy customers find it to deal with you: Use their comments to simplify processes and improve systems.
  2. Measure and improve satisfaction with the speed and quality of delivery.
  3. Measure and improve the accuracy & reliability of order deliveries: what percentage of orders are ‘On time, in full’?
  4. Measure and reduce the time taken for someone’s call or email to get through to the right person when they need help.
  5. Measure and improve how well you do at keeping your promises – how satisfied are customers that you do what you’ve said you’ll do, when you’ve said you’ll do it?
  6. Satisfaction with communication – do you keep customers informed as well as they’d like you to?
  7. Measure and improve satisfaction with issue resolution: If a customer has a problem how easy do they find it to get a fast, satisfactory and first time resolution?
  8. Measure and reduce the volume of escalated problems (complaints) by fixing issues first time.
  9. Don’t undervalue service recovery - spotting customers at risk, and saving them, is very profitable: Not only do you retain their business but you eliminate reputation damage and loss of confidence amongst potential customers. In fact there’s evidence that these customers will be more valuable in future than if they hadn’t experienced a problem. You can set a target for the speed and satisfaction of complaint resolution.

Set targets for growing the business

  • New customers – use ongoing feedback to discover why sales are being lost and set a target for reduction.
  • Customer retention – measure and reduce the number of lost customers using feedback to identify and eliminate the causes. Make sure you only lose customers where it’s unavoidable (no requirement, change of circumstances, change of ownership if b-b).
  • If customers do leave, are you parting on good terms? Or will they be detractors, spreading bad news about you? With an exit survey you can measure satisfaction and make sure customers are still singing your praises even if they no longer need you themselves.

That’s a lot of targets – prioritise them.

It wouldn’t be wise to set them all at once. But it’s never too early to start making improvements.

Begin by measuring satisfaction with the things that you know are most important to your customers so you can uncover any problem areas.

The best way to do this is to invite customer feedback at key steps in the customer journey. Different factors, or combinations of factors, will be important at each step. Measuring them with focused satisfaction questions will tell you where your strengths and weaknesses are and you can assess the importance and urgency of corrective actions.

By setting targets for each specific factor, you’ll achieve a higher score for satisfaction overall.

The difference is that your higher score will have been earnt by making customers’ lives better, and the results will show in the bottom line.

Also, you don’t have to keep the same targets for ever – once you’ve fixed the first underlying problems that you’ve discovered, and you’re consistently scoring well there, you can remove that question from your survey and shine the spotlight somewhere else.

Nobody expects perfection – so if you’re normally great, and you make it amazingly easy to fix the occasional problem, then you’re the ideal supplier for every reasonable customer out there. What’s more, most of us would be happy to lose the unreasonable customers to our competitors!

Take the first step…

Connect with a CX expert who’ll help determine your current VoC programme maturity level and provide a 3-step action plan to improve.