Published September 2005 in Sbusiness magazine, pg. 36-40
Customer and Employee Surveys for S-Business Organizations
When it comes to s-business, there is no metric more vital than customer satisfaction. Service and support is, by definition, a customer- centric activity. Despite the enormous impact that customer satisfaction has on the future success of s-business organizations, many companies lack a formal process to measure customer sentiments accurately and act on the information. Luckily, there is a convenient and relatively low-cost way to give a voice to the majority of customers who otherwise may pass through the service and support process silently and unnoticed: customer satisfaction surveys.
Why Customer Satisfaction Matters
In the landmark book entitled The Loyalty Effect by Frederick Reichheld, the author reports on the results of a two-year study he led that examined thousands of organizations across a wide range of industries in order to determine the effect that customer loyalty has on corporate profitability and growth. Much to their own amazement, Reichheld and his team found that companies could improve profits by at least 25 percent just by reducing customer defections by five percent.
The study found that customer loyalty results in higher profits not only because it increases volume, but also because it reduces the cost to service customers. Further, loyal customers often refer friends and colleagues, which results in higher sales with no marginal sales costs. As if that weren’t enough, companies with high customer loyalty can charge a premium price because customers are willing to pay more to continue doing business with them. When all of these factors combine, the impact on profitability is staggering.
The study team also documented a strong correlation between a firm’s five-year revenue growth and the percentage of their customers who are “net promoters.” This refers to those customers who indicate on a customer satisfaction survey that they are likely to recommend the company to a friend or colleague. This phenomenon was noted in a wide variety of industries, from airlines to rental car companies to computer manufacturers.
Why Customers Leave
The first step in avoiding costly customer defections is to understand what typically causes customers to defect. A study conducted by the American Society for Quality found that the majority (68 percent) of all customer defections are caused when a customer is turned away by an “attitude of indifference” on the part of the service provider.
The next most common causes for customer defection include dissatisfaction with the product (14 percent), being lured by a competitor (nine percent), and the influence of friends (five percent). However, an attitude of indifference remains the number one cause of defection by a hefty margin.
The Employee-Customer Profit Chain
A well-trained employee with a positive, caring outlook is not likely to exhibit an attitude of indifference, thus allowing the organization to avoid the most common cause of customer defections. This creates an obvious link between employee attitude and customer loyalty, and this link is examined in the study entitled The Employee- Customer Profit Chain at Sears by Anthony Rucci, Steven Kirn, and Richard Quinn. The authors of this study found that measurable improvements in employee attitude will drive measurable increases in customer satisfaction, which in turn will drive a number of positive financial outcomes including revenue growth, higher operating margins, and higher return on assets.
With employee attitudes, customer attitudes, and corporate profitability so inextricably linked, the question you may be asking yourself is, “What can we do to measure and improve our employee and customer satisfaction?”
Surveys as a Management Tool
A study conducted by Wirthlin Worldwide, a management consultancy, found that Fortune 1000 executives cite customer satisfaction surveys as the most effective tool at their disposal to improve customer satisfaction. They very astutely listed employee training programs as the second most effective tool. Given that Fortune 1000 executives consider surveying to be such a vital tool, shouldn’t every company start conducting more surveys? Not necessarily.
The idea isn’t to conduct as many surveys as possible, but rather to conduct only a few, very short, targeted customer and employee surveys. Because most companies are limited in the number of touchpoints they have with a customer or employee, it is imperative that these points of contact provide insightful and actionable information while minimizing the burden on the customers and employees. It’s about surveying the right way.
Surveys in S-Business
For service and support organizations, customer satisfaction and loyalty is more important than in almost any other industry. In The Loyalty Effect, Reichheld examines which industries enjoy the highest increase in net profitability based on a given increase in customer loyalty. It was found that service- oriented organizations get more “bang for the buck” from customer loyalty programs than non-service-oriented organizations. Since an s-business essentially sells service, it could be inferred that they would enjoy substantial benefits from customer satisfaction and loyalty initiatives.
Customer surveys help an s-business organization to better understand the reputation that the company has among consumers, which is a key factor in the future success of the business. Word of mouth has been a highly studied phenomenon in recent years, and many studies have found that good word of mouth can affect a company’s sales metrics more powerfully than multimillion-dollar advertising campaigns. The only way to increase the benefits your company gets from word of mouth is to improve the level of satisfaction shown to customers, and it’s a proven fact that customer satisfaction levels can be greatly improved by the institution of an employee and customer survey program.
Following are some important factors to consider in successfully surveying your employees and your customers:
- Buy-in. An otherwise wellplanned and well-executed survey program can be rendered useless without the proper level of organizational buyin. Everyone in your organization must be made aware of the upcoming survey program, educated as to its benefits, and committed to acting on the results.Experience shows that a memo from the company’s CEO touting the importance of the survey program is a fast and effective way to get employees on board. Not only does this demonstrate how valuable the survey program is to upper management, but it also alerts managers that the “silent majority” of employees and customers is about to be heard.
- Survey design. A well-de- Companies that have committed to an ongoing survey program often will tell you that it’s a worthwhile investment. The instantaneous and actionable feedback that online surveys provide can prove to be an invaluable tool for achieving higher levels of customer satisfaction. September/October 2005 Sbusiness 39 signed survey is essential to the collection of valid, reliable, actionable data.Typical customer surveys are designed to measure overall customer satisfaction, product-specific satisfaction, timeliness of delivery, customer service process satisfaction, return/exchange process satisfaction, interest in new products and services, and of course, willingness to recommend. Naturally, these topic areas will vary by industry and company need. It’s important to address all aspects of the customer experience that might affect a customer’s likelihood to remain loyal.Typical employee satisfaction surveys are designed to measure overall satisfaction, corporate culture, supervisor relations, training, pay and benefits, physical work environment, and corporate communications. In contrast to customer surveys, a good employee survey will look quite similar across a wide variety of industries.
The technical aspects of survey design typically are managed by a company’s IT department if the survey is conducted online and in-house. There are a number of user-friendly tools that can be used to assist with this process, including both standalone software programs and online applications. Some companies decide to outsource the process to a third-party online market research firm, as they can bring relevant experience and expertise to the table.
A survey instrument is a measuring tool, and as with any measuring tool, the measurements it takes are only as accurate as the tool itself. Since measuring employee and customer sentiments can be a challenge, the questionnaire design stage is often considered to be the most “sensitive” stage in the process.
- Survey administration. Online surveys are an effective way to gather real-time feedback. One of the main advantages of online surveys is that they tend to achieve a higher response rate than off-line methods. Most customers and employees prefer completing a survey online, as they may do so at their leisure. Further, online surveys are fairly easy to complete.Online customer survey response rates will vary greatly depending on the nature of your client interactions (transactional vs. relationship) and the degree to which clients feel they have a stake in your organization. Employee survey response rates also will vary depending on a number of factors, though the industry average response rate for an employee survey is around 60 to 65 percent.Bringing in a third party to conduct the survey can help, as can sending e-mail reminders and offering multiple survey-completion options (e.g., online and paper). Using targeted email reminders, respondent incentives, real-time reporting, and multiple survey- completion options can help organizations to achieve a higher percentage of response rates in both employee and customer surveys.
- Survey analysis. The survey results are in. Now what? Blending the feedback of hundreds or thousands of individuals into a single coherent voice can be difficult, but it is of vital importance if meaningful conclusions are to be reached.The most common method of identifying trends in survey responses is through a range of mathematical techniques called statistical analysis. We are all familiar with the statistical concept of a mean or average, but this represents only one tool in an arsenal of statistical analysis methods. Other good statistical techniques include standard deviation analysis and regression analysis.Standard deviations are useful for calculating the level of agreement that respondents exhibited to each survey question. The lower the standard deviation, the closer responses tended to hover around the mean. For example, if Question X had a mean response of 3 with a standard deviation of 0.5, and Question Y also had a mean response of 3 but with a standard deviation of 1, we know that customers felt similarly about both issues, but there was more agreement when it came to Question X.
Regression analysis measures how often certain survey responses tend to correlate, or move in tangent. Looking at such correlations can give us insight into respondents’ sentiments that they may not have been conscious of. For example, if we notice that customer survey respondents who are very satisfied overall tend also to indicate an excellent relationship with their account representatives, we might infer that positive relationships with account representatives will lead to satisfied customers.
- Results implementation. Far too many well-designed, administered, and analyzed surveys fail to yield positive change due to a simple lack of results implementation. The results implementation stage is where the proverbial tire meets the road. Every report summarizing survey findings must conclude with an action plan, including a list of actionable recommendations, the names of those responsible for each change, and a deadline for completion. Intended changes must be realistic, achievable in the short and medium term, and most important, backed by data.Many organizations find that survey results confirm their existing beliefs or suspicions. Even if this is the case with 100 percent of the results, however, the survey project was not done in vain. Quantitative results in the form of graphs and numbers are much more compelling and actionable than hunches or anecdotal evidence.It is important to remember that instituting an employee or customer survey is not an isolated event, but rather the beginning of a continuous improvement cycle. Even while the results of the first survey are being implemented, plans should be underway for the next survey administration. Survey re-administration every six to 12 months is a good frame of reference to go by in survey planning and scheduling initiatives.
Employee and Customer Survey Best Practices
Once you’ve mastered the basics of instituting an employee and customer survey program, you can move along to some more advanced surveying techniques. A few of the latest advances in employee and customer surveying are outlined below.
- Online surveys. Surveys conducted via the Internet offer a number of advantages over paper- or telephonebased surveys, including faster turnaround, lower cost, real-time response validation, increased usability, and more advanced functionality. When an organization has the technical competencies to conduct a survey online, it’s often the preferred method.
- Branching logic. Both online and telephone surveys allow the use of branching logic, which means that the survey customizes itself in real time based on each respondent’s unique answer choices. For example, one common use of branching logic is to prompt each respondent with an immediate follow-up question if they indicate dissatisfaction in a specific area. It also can be used to ask different questions to high-volume vs. low-volume customers.
- CRM system integration. Customer survey programs are most effective when they are integrated with a company’s CRM system and processes. Some companies have configured their CRM systems to invite support customers to complete a survey immediately when a trouble ticket is closed, when the service experience is fresh on customers’ minds.
- Red-alert report. Another recent customer survey innovation is the redalert report. This is a special kind of real-time report that highlights incoming customer surveys requiring immediate attention. A company can log in to their red-alert report with a user name and password and then view a list of customers who indicated in their survey responses that they require immediate attention.
Companies that have committed to an ongoing survey program often will tell you that it’s an investment well worth it. The instantaneous and actionable feedback that online employee and customer surveys provide can prove to be an invaluable tool for achieving higher levels of customer satisfaction. Those companies that fail to give a voice to their own silent majority do so at their own peril.