Going Beyond Average - The Long Tail of
by Clive Hickman, European Insight Manager at SmartWorld
In the middle of a downturn, customers are becoming increasingly aware of the need for good service, good products and most importantly good value. During these times businesses need to do all they can to retain customers and stop them leaking away to our competitors.
Customers are the life blood of any business, and their retention is vital. Because of this, a lot of effort is devoted to improving Average Customer Satisfaction Scores.
This is in line with the basic message that 'Satisfied' customers will return more often, spend more money and recommend more friends. But is this mind-set too simple? Rather than focus on increasing Average Satisfaction should we actually be looking hard at 'Unsatisfied' customers?
Working with averages can be misleading. In the case of Customer Satisfaction, it often hides the number of outlets where the Customer Experience is significantly below par.
To illustrate this the graph below, using real data from a 2009 SmartWorld conducted survey, shows the cumulative percentage of outlets which achieved a certain Customer Satisfaction Score. This is based on a Mystery Shopping survey covering 2000 outlets.
The Long Tail of Dissatisfaction
The graph shows that 15% of Outlets received a score of 65 or
less. A score most businesses would see as unacceptable. Indeed,
30% of outlets scored below 80% a score usually considered
acceptable. The average Satisfaction Score was 84%, which the
client is aiming to improve on.
The data implies that only half of the client's customers going into one of their outlets is receiving what they would consider a genuinely 'Good' experience (a score of 90 or more).
Conversely, almost one third of all customers were leaving having received a mediocre or poor experience a score of less than 80%. Just how many of these can be expected to return?
This is, of course, a rather less comfortable message than simply saying "We have a Customer Satisfaction Score of 84% and our objective is to improve this next year."
However, the difference in revenue from outlets in the bottom 15% compared to average outlet performance will almost certainly be significant. Quantifying outlet revenue performance by different Satisfaction levels helps to focus attention on this.
By focusing on issues within the bottom 15% of outlets and getting them to improve to a point where they can all achieve a score of 65% or more would achieve the goal of an Average Customer Satisfaction Score of 86% and improve retention.
The message here is one of consistency. Consistency is one of the most difficult aspects for any business to achieve, especially as the estate and staff levels grow. The secret in achieving Customer Satisfaction is in ensuring consistency in delivery, and keeping the 'Tail of Dissatisfaction' as short as possible.
Having a short tail will help you to keep dissatisfied customers to a minimum, and reduce defection to competitors. Of course this may not be sufficient to make them all 'Promoters' of your brand but it will reduce the number of 'Detractors' and improve your reputation (and Word Of Mouth) on the street.
This in turn should lead to more returning customers, more referrals and higher revenue.
The winners in this recession will not be those who just improve Customer Satisfaction Scores. Instead, the victors will likely be those who are able to ensure consistency of delivery, ensuring all of their customers receive a first class experience, not just most of them.
Now is a very good time to look at that long tail of dissatisfaction.