Customer satisfaction is a critical tool for middle market growth. According to research by the National Center for the Middle Market, more than 25 percent of middle market companies say that customer acquisition through new channels and markets is their top source of growth. In fact, it's hard to believe that any company with an interest in growth doesn't have an eye on customer acquisition.
But acquisition becomes a much more formidable task if it has to make up for poor retention. Existing customers are typically the biggest source of profit and revenue for any company. Keeping them is important, so you want those customers to be happy, which means at the very least keeping them satisfied. In addition, according to Gallup research, "customers who are fully engaged represent an average twenty-three percent premium in terms of share of wallet, profitability, revenue, and relationship growth over the average customer."
You would be hard-pressed to find any executive who expressed no interest in keeping customers satisfied, but there is a long distance between wanting and achieving. A general interest is not the framework of a strategy for achievement. Here are four concrete steps you can take to improve the overall satisfaction of your customers.
Don't Just Cut Costs; Add Value
Cutting unnecessary costs is an important aspect of management. That may seem like an imperative, especially in areas like supply-chain management, which many middle market companies consider as an expense. But you can also use basic aspects of operation to improve customer satisfaction. For example, good supply-chain practices, when implemented properly, can lead to better and faster product availability for customers. Improved customer service generally translates into higher satisfaction, and the same goes for product design and engineering. Don't save a penny in operational costs to lose a dollar in lifetime customer value.
Let Employees Know What Is Important
If you don't tell employees that you want to focus on satisfaction, they won't know. Robb Lippitt, CEO of Revolution Dancewear, has said that the entire organization must know the value of an engaged and satisfied customer because a breakdown at any level and in any part of the company can ultimately translate into customer dissatisfaction. You have to help every employee understand that they are partly responsible for company health and long-term growth.
Get What You Measure
Keeping customers satisfied isn't some feel-good concept. If you treat it as such, you won't be able to manage and encourage it. Develop metrics to help establish customer satisfaction. For example, you might undertake periodic surveys with a sample of customers. Have customer-service personnel ask customers to rate their degree of satisfaction with the company's ability to resolve problems on a scale of one to five or one to ten. Explore the Net Promoter concept, in which you gauge customer likelihood of referring others to your business. The better a grasp you have on the degree of satisfaction, the more effectively you can influence it.
Compensate for Satisfaction
A classic business mistake is to state some grand strategic goal but leave in place a compensation plan that provides incentive for other types of behavior. No matter what management says, the language of a paycheck will always have the last word. So tie portions of everyone's compensation to customer satisfaction in a way that employees can and will benefit when customers are happier.
Unlike many fads in business, it is difficult to go wrong with a real emphasis on customer satisfaction. When customers keep coming back and bring their friends and family, your business is bound to grow, so make sure your company is embracing the concept of satisfying and retaining customers.
Do you have any favored metrics for measuring customer satisfaction? Let us know what you think by commenting below.
Erik Sherman is an NCMM contributor and author whose work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, Newsweek, the Financial Times, Chief Executive, Inc., and Fortune. He also blogs for CBS MoneyWatch. Sherman has extensive experience in corporate communications consulting and is the author or co-author of 10 books. Follow him on Twitter.