Have companies given up trying to improve customer satisfaction?by
The latest statistics show that customer satisfaction is at an all-time low. Forrest Morgeson of the Customer Satisfaction Institute at Michigan State University tells Colin Shaw why the latest results aren't as alarming as they sound.
I've followed the American Customer Satisfaction Institute (ACSI) results since I started Beyond Philosophy in 2002. Guess what? It's at an all-time low for the last 17 years. When you consider all the resources organisations and individuals have put into customer experience and the Voice of the Customer, I wonder… was it worth it?
We asked Forrest Morgeson, assistant professor of marketing at the Broad College of Business at Michigan State University and the director of research at the Customer Satisfaction Institute at Michigan, to discuss it with us on the podcast. His research focuses on customer satisfaction, customer experience, measurement and management. So, I wanted to share his insight here with you, too.
These days, you might want to blame the results on COVID. However, Morgeson says this downward trend happened way before COVID, although the pandemic did not help matters.
So, how can this be? With so many companies concentrating on investing resources in customer experience management, with all the technology and tools in use to make it easier than ever before, why don't we see the opposite? It's counterintuitive that the ASCI customer satisfaction numbers aren't through the roof and instead declining.
Morgeson thinks there are two answers:
- Organisations need to do more than measure satisfaction. When they see something they want to improve, they need to do something about it. Fixing things takes time, investment, and commitment. Unfortunately, many companies still don't give that credit to their market research folks and what the marketing metrics tell them.
- Customer perceptions and attitudes about the experiences that they're having with companies are dynamic. In other words, we can compare satisfaction today to what it was in 1994, 2000, or 2005. However, Morgeson says before five years ago, we had a different economic system. So, keeping up with this moving target is challenging for these companies.
Morgeson hit the nail on the head with both of these. For my part, people focus on the wrong things. They're not focused on the things driving value or customer satisfaction. They're fixing things, but not necessarily something that moves the dial.
Also, you can't blame increased customer expectations either. Morgeson says that's a common fallback excuse used in corporate culture, but it isn't what the data shows. Over the past 30 years, they have seen that customer expectations are not exceptionally high. Instead, they are very much related to customer satisfaction.
Customers expect what they've recently received, he explains. However, over the short-term, customers demonstrate rationality regarding this area. They're not constantly adjusting their expectations upward. Morgeson says that as satisfaction has decreased, so have expectations.
However, Morgeson admits that the Amazon Effect is at work, too. When an organisation changes the game so drastically, it becomes an example, not just for like companies but for all companies. So, in that way, expectations change.
That said, the expectations do not continuously climb to unattainable levels. They do climb at times, but not in the dramatic surge we often hear organisations complain about when their company gets a report suggesting that customer satisfaction is declining.
Have organisations given up?
Years ago, in my corporate job, I was responsible for customer research and reporting it to the team. I noticed something after doing this for a few years. I would say that we weren't doing well with our customers, and everyone would acknowledge it and then do nothing about it.
One year I called out the team's habit of ignoring the report. I hoped that we would do something. Instead, the group agreed that they wouldn't do anything about it. Worse, one cheeky bloke suggested that if that were the case, maybe we shouldn't spend money on customer research. Talk about a tactic backfiring!
To a certain extent, CEOs might adopt my ex-colleagues attitude about customer experience management as they stare into the void of a recession. However, they might instead cut resources there to keep the budget in areas where they can see an effect.
Morgeson says there is some truth to that. However, their MBA programme has many middle- to senior-level management types who use technology to tackle this problem. Specifically, he explains that rather than abandoning these efforts, he thinks business leaders are using technology to measure these experiences seamlessly. Then, they implement changes based on the findings. So, rather than relying on human decision-makers, they will use AI and technology to make these decisions.
My optimistic side likes Morgeson's take on this challenge. With elevated advocates for customer experience, like chief marketing officers, directors, and vice presidents of customer experience, more voices are in the room regarding expertise than ever before. It is feasible to imagine that these voices will result in firms making closer to real-time changes to products and services to provide satisfying experiences to consumers.
Morgeson also says they have seen convergence within most industries regarding satisfaction. In other words, we see a smaller spread between top and bottom than we used to, which is what you might expect from the strategic management and marketing perspective. After all, whenever someone comes in with a competitive advantage, everyone adopts that innovation as quickly as possible to keep up with that company.
However, this convergence isn't a problem. It doesn't matter how high your satisfaction level is per se; what matters is your satisfaction level relative to your direct competitors.
Moreover, Morgeson says that from a strategic customer satisfaction perspective, you don't want to have perfect satisfaction scores. Instead, you only want to be significantly better than your nearest competitor to maintain your competitive advantage. Otherwise, you might do more than you need to in customer satisfaction.
So, in what direction will satisfaction go next?
Customer satisfaction will always have ups and downs, and many factors will drive these variances. However, based on the cyclical nature of these things, Morgeson thinks that we are due for an up after a few years of downs in satisfaction scores.
He also sees significant changes in the types of experiences we have. Instead of customer experiences driven by human interaction, he says we will have more technology-driven interactions. For example, fast-food restaurants might have very few staff in them soon. Also, grocery stores might have more self-service options.
Morgeson explains that these trends result from seeing data over the years that any industry with significant human intervention in consuming goods and services scores lower than those without it. Therefore, organisations will double down on developing more competent and intuitive virtual assistants to deploy across the customer journey. Morgeson thinks this effort will help satisfaction in the long run, although he does worry about the employees this technology might displace.
He also anticipates growing pains from this technology implementation. For example, demographic differences will become apparent as some of the older consumers aren't going to like technological interactions. There will also be late adopters who don't appreciate these new technologies. But the bottom line is switching to technological-led interactions will probably improve customer satisfaction.
There is nothing worse for a score than relying on an unhappy, poorly-trained, underpaid person providing customer service with a frown on their face, Morgeson says. Replacing that interaction with an intelligent system that handles it with neither a frown nor a smile will be an improvement.
It is also essential to remember that this is one set of data. We shouldn't draw too many conclusions from the customer satisfaction scores. Therefore, we should neither pour all our resources into customer experience management nor abandon our programmes based on what we see here. Some of the driving factors for customer satisfaction are things you can control; others aren't.
So, instead of punting the whole effort, I would encourage organisations to learn from what we see here. This decline is an important and concerning trend, but from a competitive differentiator perspective, delivering a satisfying customer experience to improve the score is still essential. So, continue to watch the cycle, learn from it, and avoid making any sudden movements to try to move the needle.
Colin Shaw is an original pioneer of 'Customer Experience.' LinkedIn has recognized him as one of the 'World's Top 150 Business Influencers', where he has 291,000 followers.
Shaw’s Customer Experience consulting company, Beyond Philosophy LLC, has been recognized by the Financial...