A collection of articles written by Customer 1st

The Voice of the Customer: Do We Really Know What Our Customers Think of Us?

10th March 2011 | Posted in Customer Insight, Customer Satisfaction

Customers are consistently telling us they are not receiving good service! Why are many companies still not really listening to their customers?

Poor customer service is costing UK businesses £15.3bn per year as customers defect. Organizations that become customer centric during (or coming out of) a recession have a great opportunity to increase sales and profit margins, and to gain market share over complacent competitors. It is a critical time for organizations to maximize customer retention and loyalty.

Research conducted by the UK's Institute of Customer Service (ICS) shows that organizations with a reputation for service excellence have on average a 24 percent higher net profit margin than same-sector rivals that do not have the same standing. These customer-focused organizations can achieve up to 71 percent more profit per employee! Surely that is a staggering incentive for companies to improve service for their customers.

Research in the US and Canada also tells us that customers are not happy. This research by Empathica from 2010 stated that, “US and Canadian consumers believe that customer service is suffering in today's economy. Regionally, in the US, consumers in the South were more likely to say that customer service is getting worse (58%), compared to those in the West (49%).” But why, with all this research at hand, are companies still losing customers? Organizations that continually ignore customers do so at their peril. Why should customers stay loyal in today's competitive marketplace? Most don't even complain. They just defect. Beware, though, because even though they might not tell you they are unhappy, they may choose to use social networking sites to tell thousands of others about your bad service. This, of course, can do serious and irreparable damage to your brand.

Leaders and senior managers need to ask themselves, “Are we doing everything we can to create the best possible experience for our customers?” Do not be fooled by your marketing departments that communicate to stakeholders and customers alike that the organization's service delivery “exceeds customer expectations.” Without evidence, I call this corporate arrogance, and it is suicidal for businesses.

Customer insight means getting to know your customers intimately, understanding their behaviors and what they expect from you. There are many ways of gathering customer intelligence. There are the ever popular customer satisfaction surveys, the feedback from which many organizations disregard or do not interpret correctly. Some even create the surveys with the primary intention of achieving good results by asking the questions that will highlight their good practices because that is what they want to hear! Perhaps we should also be reminded that a customer's experience depends a lot on the expectations that the customer had to begin with. A budget airline might score highly because we have low expectations of such a business, but we are also likely to score a more prestigious airline lower because we have high expectations.

Leon Paternoster, of the ICS, in this customer service topic sheet, states, “To say that you need to ask the right questions when undertaking a customer satisfaction survey may seem obvious. In practice, asking the wrong questions is a very common mistake. For an accurate measure of customer satisfaction, the survey must always be based on the same criteria that customers use to make their satisfaction judgment.”

In order for any organization to establish a reputation for service excellence, it is essential to systematically collect and utilize feedback from customers that truly represents customers' actual experiences and perceptions. The precise tools and methods used to gain such feedback (and there are many of them) are critical, and they will vary according to the particular business situation, but it is essential to measure customers' perceptions of the service they have actually received. The detail matters here. When collecting information about customer satisfaction and expectations, it is critical to recognise that customers do not base their opinions of service just on one or two transactions. In reality, the whole of the customer journey is relevant. A view of the customer journey as a sequence of touch points can help the organization and its employees to understand customers' views and expectations more clearly. Customer-centric organizations will analyse all the key touch points to try to anticipate how they will be viewed by the customer.

Without reliable and accurate customer feedback, including measurements of the levels of satisfaction of customers, it is impossible to understand how effective your service delivery is. Organizations should strive to create highly effective processes for gaining customer information and feedback, measuring both customer expectations and their perceptions, thereby making improvements on behalf of customers and, as a consequence, becoming world-class service providers. Therefore, let's all listen intently to the customer's voice; it's telling us what we need to do to succeed!