Ideas for Leaders #543

What Companies Learn from Customer Satisfaction Surveys

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Key Concept

Are customer satisfaction surveys worth the trouble? Addressing and correcting for some of the core issues with customer satisfaction surveys — specifically, that they are based on perceived and not actual performance, and that there is a potential bias in the results based on who fills out the surveys — a new study confirms that they provide vital information for businesses, including the link between performance and customer behaviour.

Idea Summary

How well is your company performing? For many companies, the answer to this question comes through customer satisfaction surveys, which tell companies where they are successfully meeting customer expectations and where they are falling short. Although subjective — that is, based on the customer’s subjective opinion of the company’s performance — customer satisfaction surveys are especially important for any company that has no objective way to measure its performance.

In its role as an objective performance measurement proxy, the customer satisfaction survey has a flaw often ignored by marketers: not everyone will fill out the survey. The danger of bias in the survey results stemming from the ‘self-selection’ of survey respondents (in other words, they decide whether or not they want to fill out the survey) is obvious. For example, imagine if dissatisfied customers motivated to express their frustrations and are therefore more likely to take the time to fill out the satisfaction surveys. The results from the satisfaction surveys would thus indicate that the company’s performance is below standard when in fact this conclusion stems from the bias of the survey respondents.

A team of researchers sought to test whether customer satisfaction surveys were, indeed, worth the investment by looking at two core assumptions at the heart of the process:

  1. Are customer satisfaction surveys effective proxies for objective performance? In other words, do customer satisfaction survey accurately reflect the actual performance of the company? 
  2. Does customer satisfaction, as measured by the surveys, lead to the desired customer behaviour, which is, specifically, repurchases.

Answering the first question required studies that involved industries in which objective performance was available (thus allowing a comparison with the subjective performance as seen through the eyes of the customer). The researchers looked at data from two different industries — the quick service restaurant industry and the auto rental industry — that offered objective performance measurement.

One of the first results of their study was to confirm the bias in customer satisfaction surveys. The researchers found that customers who were satisfied with the company’s performance were more likely to fill out surveys. In addition, customers who had recently filled out a survey were less likely to fill out another survey. The results from customer satisfaction surveys were therefore going to be biased toward happy customers who haven’t purchased recently.

Despite the bias described above, however, customer satisfaction surveys provide important information to companies. The data showed that two weaknesses in a company’s performance — specifically inconsistency in its performance and a gap between customer expectations and actual performance (what academics term ‘disconfirmation’) led to low ratings in customer surveys. The data also showed that low ratings in customer surveys led to longer periods between customer purchases.

It’s important to notice that the data does not show a direct relationship between the company’s objective performance (specifically inconsistency and disconfirmation) and longer time between purchases. The data only uncovers an indirect path by studying the relationship between poor performance and low customer satisfaction survey results, and, subsequently, between low customer satisfaction survey results and time between purchases. 

In sum, customer satisfaction surveys have two important functions. First, they act as effective performance assessment proxies in the absence of objective performance data. In other words, the subjective perception of customers accurately reflect the actual performance of the company. Second, surveys bridge the gap between objective performance and customer purchase behaviour.  

Business Application

Customer satisfaction surveys may be expensive and time-consuming for companies, but they are worth the time and effort. In the absence of objective company performance data, they offer an important window into the company’s performance despite some bias. They are especially important in predicting customer behaviour. A customer who fills out negative customer survey is going to repurchase less quickly — and the reason for this negative behaviour can be pinpointed through the customer surveys. In sum, customer surveys do provide information to the company that is above and beyond objective performance data.

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Authors

Institutions

Source

Idea conceived

  • July 2015

Idea posted

  • September 2015

DOI number

10.13007/543

Subject

Real Time Analytics