3 Reasons to Manage Customer Relationships, Not Just Numbers

Customer feedback scores are a wonderful thing—especially in the traditional world of customer experience management. These figures help managers understand what is good, what is bad and where to focus our attention. Right? Well, yes and no.

In isolation, feedback scores help leaders to manage businesses by understanding things like the relative performance of different divisions, departments, teams or staff. Scores allow us to understand the proportion of customers that are satisfied with our services, or the proportion that would recommend us to friends and family.

On initial inspection, this makes total sense and customer feedback measurement and management is widely recognized as a useful business tool.

However, it’s not necessary true that in the realm of customer experience, satisfaction and loyalty, that more is always better. The reality is much more nuanced.

We need to begin to talk more about making each customer more satisfied with your brand than they are with your competition. Here are three reasons why:

1)     Beware money losing delighters: Some initiatives to improve the customer experience will drive satisfaction but will offset any profitable return with their cost to the business. The starkest example of this is with price. One of the quickest ways to make customers happier is to have lower prices for products or services. However, if a company doesn’t have the business model to support lower prices, the return doesn’t support the investment. The same can be true of elements of service—you can invest in a wonderful service model but not have the revenue to support this in the long term. Both of these are examples of how a company can chase happier customers while losing sight of the bigger picture. Happy customers are not necessarily profitable customers and vice-versa.

2)     Bigger doesn’t mean better: Larger companies tend to have lower satisfaction scores than smaller companies. The bigger you get, the harder it is to stay true to a single vision, philosophy and offer. This tends to mean that a company is competing on many different fronts and gaining share with it. While this doesn’t mean that the customer experience is going to be bad, it does mean that the focus on customer experience can be diluted. Contrast this with a more boutique operation that competes in a narrower field. Here the vision—and oversight of this vision—can be tightly maintained, be more agile and reactive to needs. Thus, being bigger means that you might not be better.

3)     The importance of being #1: Lost within company averages is the fact that customers choose brands based on preference and ranking—not their absolute ‘satisfaction’ with a brand. The implication from a customer experience perspective is that you need to know how well you perform relative to the competition. Persons A and B might give you top marks for your experience, which is a good thing, on the face of it. However, now take into account that person A gives everyone top marks but person B gives everyone else low marks. Now the picture changes. Now you want to know what you can do for person B as they are giving more to you.

So, while averages are great at motivating staff and getting the attention of senior execs, they are not always as helpful as you need them to be. Focus instead on the customer—managing individual customer feedback and understanding how to drive performance relative to the competition. In doing this a company focuses on profitable satisfaction, not satisfaction for satisfaction’s sake.

To learn more on this subject, read Tim Keiningham’s article, The High Price of Customer Satisfaction.