Customer Satisfaction Vs Mystery Shopping

In continuation of my article, it is important to note that every company needs to measure customer satisfaction.  It is the heart of any modern business strategy. Research has shown that most companies spend about 3% of revenues on measuring customer satisfaction. Understanding customer demographics, expectations, motivations, and desires creates an opportunity to serve customers better than competitors do.

Serving customers better creates satisfied customers, builds repeat business, and drives profitability.  Customer-driven companies eagerly spend that 3% of revenues to learn more about how they are doing with customers.

Customer-driven companies use customer satisfaction information for input in their long term strategy. Companies also require information to help them serve customers better. Can one set of data serve both short term and long term needs?  Is a customer satisfaction study a substitute for a mystery shopping study?  Can mystery shopping studies be used to gauge customer satisfaction? To answer these questions, you need to understand the overlaps and differences between customer satisfaction studies and customer service measurement studies, such as mystery shopping.

A customer who visited a grocery shop a week ago cannot tell you with accuracy about the specific attributes of his recent visit.  He probably does not remember whether he was greeted within a reasonable time, served within a reasonable time and served with a friendly attitude. All of those attributes of the visit, along with many others, combine to create a level of satisfaction in his/her mind.  That overall satisfaction is important to the strategy of the company and will ultimately affect long term decisions. But does it help the shop to serve customers better right now?  The answer is usually “no”.

Customer satisfaction surveys reveal how customers feel about customer service. They do not reveal why. Customer service measurement reveals the “why” that stimulates continuous improvement. Essentially, satisfaction surveys report perceptions and service surveys report performance.

If a satisfaction survey revealed that customers thought food service was slow in a chain of restaurants, valuable information has been gleaned.  Acting on this information alone would be impractical.   Would the chain simply ask employees to work faster? Would it risk serving undercooked food for the sake of quick service? Would it redesign its units to receive food orders more quickly?  Of course not.  The chain would drill down deeper into the data to determine the root cause, the “why”.

The chain would measure the speed of customer service it provides, likely using mystery shoppers to take those measurements.  If a subsequent mystery shopper study revealed that table-service customers were waiting an average of 10 minutes to receive their order, a specific reason for customers to perceive slow service has been isolated.  Causes for the delay can now be investigated.

Causes might include slow credit card authorizations, understaffing, a backlog waiting for a manager approval, or lack of staff training to use computers.  That one statistic—the more than 10-minute wait–gives managers a specific issue to work toward correcting. It gives the customer-driven company a way to serve customers better in the short term.

Keep a tag on your customers

The first quarter for 2010 has come and gone. Many businesses are still suffering or recovering from the effects of the Global financial recession experienced in 2009. Financial institutions are still skeptical about lending money. Borrowing is still very expensive and other sources of cash flow injection are still beyond reach.

For some companies 2010 promises to be a good year, but for some the misery continues. Consumer spending is still low. Global consumer confidence is picking up, but this has not yet directly impacted on consumer spending habits.

Consumers are still skeptical and spending is still limited to important family needs. This scenario has created a tough environment for businesses in general.

This means businesses have to fight for a share of  the consumer purse. As the market space becomes a battlefield, marketers come up with different marketing strategies in order to get a share of the purse.  Customer oriented companies will survive this temporary setback. Global conglomerates such as Starbucks, Wal-Mart and GE continue to experience phenomenal growth despite the harsh economic environment. Their secret is centered on understanding their customers.

These companies continually gather insights and take action on any feedback they get from the market which directly affects their customers. In order to keep a tag on the ever-changing consumer needs, companies need to invest in regular market insight gathering exercises. This ensures they keep a tag on issues that affect their customers and take timely action.

Keeping a tag on customers involves conducting regular or periodic customer satisfaction and mystery shopper surveys.

I will talk about the difference between Customer Satisfaction Surveys and Mystery Shopping in my next post.

To your success!!!

What are your Customers saying behind your back?

The adverse effects of the economic recession are still making ripple effects across the world. Unemployment is soaring and many businesses have been forced to close due to in adequate cash flow. Companies which are surviving in these difficult times are those that are customer focused. These companies periodically get feedback from their clients/customers through market research surveys. Customer satisfaction surveys are critical in ensuring an organisation keeps abreast with what their external stakeholders think about their business.

Its high time to be customer focused

The reason to become customer focused is to achieve a competitive advantage that enables long-term sustained success. In order to achieve this management should spend some time with customers and be able to communicate their commitment to customers throughout the organization. Customer focus should start from the top down. It is management’s role to ensure a service culture is communicated across the organisation and it should be made part of a service offer through which staff will be evaluated in their appraisals

Implementing a customer service culture is not difficult and does not require capital expenditure. In a study of Fortune 500 corporations, market researchers found that the number one motivator of staff is recognition – knowing that they are appreciated. Customer Satisfaction surveys give managers a forum to provide recognition that’s not based on seniority – but on exemplary customer service. Perhaps even more important is that the recognition doesn’t just come from management – it comes from the workers’ peers. That means you’re creating a shift in culture right at the grass roots. Add to that a few words of open praise from the senior manager to the team, and everyone feels like they are part of a greater good.

Elements of a customer focused

Customer First is clearly ‘ingrained’ into the fabric of the business

• They know who their customer are, what their customers want now and in the future, and how they are going to provide that product or service
• Their strategies, plans, and processes are aligned with their customers’
• Customer satisfaction is an important metric, is tracked, improvement goals are set, and success is rewarded

In order to fully take advantage of valuable feedback from your customers and clients, it is important to note that periodic customer satisfaction surveys must be done across the organisation. This can be done through random customers satisfaction surveys and or mystery shopping surveys.

Results from these surveys will be used to close service gaps identified and to improve in service delivery.

How to gain competitive advantage through market intelligence

In order to survive in today’s cut-throat business environment, all businesses need information to guide their decision making. As an entrepreneur or business manager you need fresh information everyday to aid your decision making. This information desperately needed by managers to make informed business decisions can only be supplied by professional market researchers. Because of this, the research sector plays a valuable role in the commercial, social and political world today.  In a world where technological superiority is gaining momentum, commercial success is dependent more than ever, not on technological superiority alone, but through understanding of customers’ behavior i.e. their needs and using this information to guide your decision making. Sometimes research needs are obvious. For instance if you are planning to launch a new product, you will need to know your target customers’ reactions to your proposed offer. Will they like it? Will they buy it? How much will they pay? How much will they buy? What will trigger their purchase? Launching a product without understanding your target customers’ reactions and basing it on your gut feel and opinion could prove to be disastrous and a sheer waste of time and resources. There is a misguided notion that market research is expensive and sheer waste of time and money, many businesses and managers have learnt the hard way as product launches and brand extensions have proven to be disastrous and a waste of resources without insights from the market. Apart from commissioning a market research survey, there are many ways you can use to gather vital market intelligence about your target customers.

The cheapest way is to use customer feedback forms. This is a sure way of getting feedback on what your customers think about your business. However, there are drawbacks associated with this method of data collection, most customers may not have time to fill and return the forms, and therefore, returns may not be robust enough to make concrete decisions. Feedback forms are very important even on websites, as this provides you with a platform where you will get direct feedback on what visitors to your website site think about your business. Feedback forms will help you to leverage valuable customer feedback to increase conversion rates, reduce customer attrition and to improve customer satisfaction and loyalty. To get a free form up and running on your website, please visit: http://www.kampyle.com

Apart from Customer feedback forms, you can also use face to face interviews with your target customers. This can be done by administering a semi structured questionnaire to your target audience. This is the most effective way of data collection, as it ensures 100% strike rate. Face to face interviews usually cost some money, depending on the sample size, the amount is not much if you are focusing on one location only. Alternatively, if you have a robust contact list you can invite your target audience to participate in an online survey. This will not cost you a dime, but the survey will be limited to people with internet access. You can use a free platform to do online surveys by visiting: http://kwiksurveys.com.

To your success with data collection !!!

Why Measure Customer Satisfaction?

As markets shrink due to the current global melt-down, most companies are scrambling to boost customer satisfaction in order to keep their current customers rather than devoting additional resources to acquire new customers. The claim that it costs five to eight times as much to get new customers than to hold on to old ones is key to understanding the drive toward tracking customer satisfaction.

Defining Customer Satisfaction

Customer satisfaction is the state of mind that customers have about a company when their expectations have been met or exceeded over the lifetime of a product or service. The achievement of customer satisfaction leads to customer loyalty and repeat purchase.

Understanding Differing Customer Attitudes

The most basic objective of customer satisfaction surveys is to generate valid and consistent customer feedback (i.e., to get first hand information from horse’s mouth – in this case it’s the voice of the customer, which can then be used to initiate strategies that will retain customers and thus protect one of the most valuable corporate assets — loyal customers). It is important to understand the highly subjective system that customers apply to their decision making process. Their decision making is primarily based on input from two sources:

• The customers’ own experiences — each time they interact with a product or service, deciding whether that experience is great, neutral or terrible. These experiences are defined as “moments of truth.”
• The experiences of other customers — each time they hear something about a product or service, whether it’s great, neutral or terrible. This is known as “word-of-mouth.”

There is a strong connection between these two inputs. An exceptional experience leads to strong word-of-mouth recommendations. Strong recommendations influence the experience of the customer, and many successful companies capitalize on this connection. How does a customer satisfaction survey program allow you to make the connection between the survey response and the customer’s attitude or mind-set regarding loyalty? Market research conducted by both corporate and academic market researchers has shown a distinct relationship between customer satisfaction measurements and the degree of preference or rejection that a customer might have accumulated. When the customer is asked a customer satisfaction question, the customer’s degree of loyalty mind-set (or attitude) will be an accumulation of all past experiences and exposures which will be indicated as a score from 1 (very dissatisfied) to 6 (very satisfied). Obviously, the goal of every company is to develop customers with a preference attitude (i.e., we all want the coveted preferred supplier status such that the customer, when given a choice, will choose your product or service), but it takes continuous customer experience management, which means customer satisfaction measurement, to get there — and even more effort to stay there. Therefore, it is very important for companies to continously invest in finding out what their external stakeholders think about their service or  products. 

Most Fortune 500 companies have huge research budgets to continously monitor and manage their customer’s perceiptions regarding their service and product offering.

Two ways of Measuring Customer Satisfaction

As consumers reduce their spending due to the prevailing harsh economic environment, it is imperative for a business to measure customer satisfaction.  It is the heart of any modern business strategy. Understanding customer demographics, expectations, motivations, and desires creates an opportunity to serve customers better than your competitors. Serving customers better creates satisfied customers, builds repeat business, and drives profitability.  

In order to survive during these difficult times, businesses need to regularly gather customer satisfaction information on which to base their long term strategies. This information assists businesses to serve their customers efficiently and create competitive clout. Market research has shown that organizations with a well defined service culture have concrete competitive clout. This is more so because service culture is not an event but a process which involves all management from the CEO to the messenger.

It is important to note that one set of data cannot serve both short term and long term needs of the organization. The question to ask before investing in any customer satisfaction study, is a customer satisfaction study the only way to measure overall service evaluation? What about Mystery shopping? How and when should this be used? Can mystery shopping surveys be used to gauge customer satisfaction? To answer these questions, one must understand the overlaps and differences between customer satisfaction studies and customer service measurement studies, such as mystery shopping.

Mystery shopping is a survey method based on a concept called “test shopping” which aims to map the company’s current level of service through capturing the “moments of truth”. This entails the capturing of actual interactions between your staff and customers. For instance, a customer who visited a restaurant a week ago cannot tell you with accuracy about the specific attributes of his/her recent visit.  He/she probably does not remember whether he/she was greeted within a reasonable time, seated within a reasonable time, served within a reasonable time, received ordered food on time, visited a clean rest room, served with a friendly attitude, given a bill promptly, etc.  All of those attributes of the visit, along with many others, combine to create a level of satisfaction or dissatisfaction in his mind.  That overall satisfaction is important to the strategy of the company and will ultimately affect long term decisions. But does it help the restaurant serve customers better right now?  The answer is usually “no”. Mystery shopper studies help management understand what happens when their front office staffs interact with their customers. This provides real time experiences which management can immediately address.

On the other hand, Customer satisfaction studies reveal how customers feel about service they experience from their supplier. They do not reveal why? Customer service measurement reveals the “why” that stimulates continuous improvement. Essentially, satisfaction studies report perceptions and service studies report performance.  If a satisfaction study revealed that customers thought food service was slow in a chain of restaurants, valuable information has been gleaned.  Acting on this information alone would be impractical.   Would the chain simply ask employees to work faster? Would it risk serving undercooked food for the sake of quick service? Would it redesign its units to receive food orders more quickly?  Of course not.  

The chain would drill down deeper into the data to determine the root cause, the “why”. The chain would measure the speed of customer service it provides, likely using mystery shoppers to take those measurements.  If a subsequent mystery shopper study revealed that table-service customers were waiting an average of 10 minutes to receive their bills, a specific reason for customers to perceive slow service has been isolated.  Causes for the delay can now be investigated.  Causes might include slow credit card authorizations, understaffing, a backlog waiting for a manager approval, or lack of staff training to use computers.  

Mystery shopping studies help management understand what happens when their front office staffs interact with their customers. This provides real time experiences which management can immediately address. However, customer satisfaction surveys can be used to gauge and establish a service level index (SLI) for the company, which will then be tracked using Mystery Shoppers. Both studies are very important tools for effectively measuring how customers perceive your business.