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The Problems with a Customer Satisfaction Index and How to Overcome Them

Much has been written about the dangers of having a Customer Satisfaction Index (CSI) and although we create and use a CSI, Customer Relationship Auditing wholeheartedly endorses some of these concerns.

Arbitrary Customer Satisfaction Index (CSI) – You have every right to be worried about an arbitrarily set Customer Satisfaction Index. It is meaningless to everyone and is imposed by someone who thumb-sucks a number like 80% or 90% because it sounds good.

I remember talking to the upper management at a company who were very concerned about an 80% customer satisfaction level that had been set because their bonuses depended on it. I asked whether that meant 80% of their customers are happy with them or are their customers 80% happy with them? The scary part is they did not know.

An arbitrarily set CSI with no foundation on past performance or knowledge of how that figure has been calculated can cause a lot of damage and must be avoided at all costs.

Only one benchmark figure – Some companies ask their customers what service level they would like. They then use this level as a measurement to determine whether they are above or below that customer satisfaction level.

This is a step in the right direction, but unfortunately if customers are only given one level they will select an “ideal” state, which could be impossible to achieve. This could potentially destroy company morale as you feel customers are too demanding and you are incapable of satisfying them.

Set an Upper and Lower customer satisfaction level – At Customer Relationship Auditing we ask your customers to set two levels of customer service from an “ideal” supplier. The upper level is what they would love to get and the lower level is the minimum they are willing to put up with. This way each of your customers set their own customer service levels and you can measure your performance levels for those customers.

We then ask how well you are performing against these two levels. This way we can identify whether your customers are happy with you or not.

With these two customer determined levels you can now measure your performance and your customer satisfaction and potential to defect to the competition quite accurately. If a specific customer scores your performance as below the minimum the probability to defect is significantly higher than if your performance is above the upper level.

Customer Loyalty – A loyal customer is something we all aspire to have – customers that will stick with us through thick and thin. We have found the closer the customer satisfaction index is to the upper level the more loyal your customer is (and obviously if below the lower level they would switch at a whiff of a better offer!). If they are above the upper level, it would take a lot to convince that customer to move to one of your competitors.

Our measurement methodology ensures the measurement you get back from your customer will indicate precisely what they think of you and what their chances are of defecting given the chance. Also, the more satisfied they are with you, the higher their loyalty is, something to aspire to in an economy where suppliers are plentiful and good customers scarce.

Douglas MacGregor

Customer Relationship Auditing

“Building superior business relationships through client intelligence”

+27 (11) 805-3588 (direct)

+27 (82) 414-9394 (cell)