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Customer happiness is not enough

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12th Oct 2009
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Delighting customers. Exceeding their expectations. Creating happiness. Is it possible these objectives can work against you?

Can your company get great reports on customer satisfaction but still leak both top and bottom line performance from your organisation?

It’s true.

Last month, Louise Druce wrote about how customer satisfaction doesn’t necessarily drive revenue. Frankly, her findings weren’t surprising. In the very beginning, there are no products or services; there are only needs. Every customer experience begins with a person who has a need, problem, or desire they would pay money to solve. Whether or not they are able to solve their need is their ultimate measure of success. Whether or not you help them solve that need is yours.

Because satisfaction is only part of what it takes to solve your customer’s need, it makes perfect sense that studies show that customer satisfaction is only partially linked to financial performance.

Said differently, customer satisfaction and customer experience are not the same thing.

So what's the differenece?

Customer satisfaction is often defined as a degree of “happiness” or “contentment.” Alternatively, an ideal or target customer experience is what happens and how a customer feels from the point they realise a need all the way through the point when they solve it (or not) and evolve to their next need. Your performance can be measured here, too.

While studies have found a partial link between satisfaction and financial performance, Aveus’ recent national research found evidence of a conclusive link between customer experience and performance. In our study, we asked nearly 650 leaders if there was a definition of customer experience commonly understood throughout their organisations. We also asked about financial performance.

We found that that twice as many organisations that begin with a clearly defined customer experience exceed revenue and profit targets than those that don’t. (Wow!)

In fact, 30% of the organisations that have a clearly defined customer experience reported they were beating profit performance targets – a higher prevalence than organisations that focused on satisfaction as the driver of daily decisions, and higher than any other group in our study.

Don't dismiss satisfaction

Satisfying your customers isn’t a bad thing. However, making them happy and solving their need is not the same thing. I like to illustrate this point by talking about what happens when I go to the doctor. If the doctor’s main goal were to make me happy - to satisfy me - I’d leave the office with some really good drugs and a scale that lies (kidding about the drugs, of course!). Is that solving my need? No, but I’d sure be happy!

Does this mean you can forget about satisfying your customers? Not at all! It just means that your investment in making them happy should be metered by what solves their need, and not some unending scale of happiness. Take motel chain Motel 6. If it invested the same amount of money and effort that Four Seasons invests in making customers content, it would be a waste of money. Motel 6 customers aren’t looking for a holistic, spa-like, luxury respite. They’re looking for a warm, safe, clean place to spend a short amount of time.

More is not always better. Infinite is rarely best.

Matching your investment in customer satisfaction to what best solves a need will eliminate that nagging feeling that exceeding expectations is a tradeoff to profitability.

Imagine the last time you had a need solved perfectly. That’s an experience that would make anybody happy.

Linda Ireland is partner at global strategy and operational change firm Aveus LLC. She is also author of 'Domino: How Customer Experience Can Tip Everything in Your Business toward Better Financial Performance'. 
 

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