Why Customer Satisfaction Is Bad For Business

Customer satisfaction image

Customer service in Australia has a lot of room for improvement! Mere customer satisfaction is simply not good enough.

There is a huge gap between what customers want and what most businesses deliver.

According to the Nielsen Company, a leading global information and measurement company, in Australia, annual advertising spend is a $10 billion industry spanning across free-to-air TV, print, online display, radio, out-of-home, direct mail and cinema advertising.

Many businesses spend more and more each year to attract customers through their front doors. In my opinion, they should be focusing their attention on keeping customers from leaving out the back door, never to return.

Why customer satisfaction is not enough

Just getting it right isn’t enough.

Who wants to just satisfy?

Imagine if someone asked my wife, Isabella, to describe how she felt about me, and she said:

“Oh, Leon’s alright; I’m fairly satisfied”.

I’d be devastated!

Her answer would make it loud and clear that our relationship was on shaky ground.

Of course, the way Isabella would actually respond to this question is:

“Leon is fantastic. I’m so lucky. Being with Leon is the best thing that ever happened to me”.

Isabella is not only beautiful and highly intelligent; she also demonstrates remarkably good judgement!

 Your aim is to be remarkable in your customers’ eyes.

 Customer satisfaction benchmarking

Have a look at the chart below. It shows the results of a recent customer satisfaction survey of some of Australia’s best known clothing, shoe and sport stores. It was conducted by Roy Morgan, Australia’s leading consumer, industry and market research company.

Only three of the 21 retail chains measured for the Clothing Store category satisfied more than 90% of their customers in February, 2015. Eleven of the remaining 18 retailers scored in the high-80s; while the lowest-rating store satisfied only 74% of its customers.

Note: A satisfied customer was counted as anyone who either responded “Very satisfied” or “Fairly Satisfied” on the following 5-point customer satisfaction rating-

  1. Very satisfied
  2. Fairly satisfied
  3. Neutral
  4. Fairly unsatisfied
  5. Very unsatisfied

 

Customer satisfaction: highest rating clothing, shoe and sport stores, February 2015

Customer Satisfaction Survey

Source: Roy Morgan Single Source (Australia), March 2014 – February 2015 (n=15,990).    Base: Australians 14+ who shopped at a clothing store, shoe store or sport store in the last 4 weeks

 

On the surface the results look good, but look a little deeper and you will find problems.

One problem is that even in the best performing store, 8 out of every 100 customers left feeling dissatisfied with the quality of customer service!

One study[1] concluded that 91% of unsatisfied customers will not willingly do business with you again.

Another study[2] found that unsatisfied customer will tell 9-15 people about it, and approximately 13% of your unsatisfied customers will tell more than 20 people about their problem.

But wait, there’s more.

“Fairly satisfied” is given equal weighting as “very satisfied”; really?

What does the term “satisfied” mean anyway?

 

Shouldn’t the questions customers are asked be more specific?

 

I suggest there are only two questions that carry any meaningful weight.

  1. “Based on your experience today, will our business be the first one you consider when you are next in the market for our product/service?”
  2. “Based on your experience today, will you highly recommend our business to your friends and family?”

 

Whatever your business does – Customers are the reason for your existence!

 When you focus on merely satisfying, you set the bar too low.

If you are measuring customer satisfaction – you are measuring the wrong thing and setting yourself up for failure.

Your job is to create highly positive emotional connections between your business and your customers.

In other words, your customers get what they shop for, feel completely satisfied and, during the process of the transaction you have also done something so remarkable in their eyes that it arouses in them a sense of loyalty towards your business.

 

“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”Jeff Bezos

 

Your job is to create such a high degree of loyalty that your customers will enthusiastically keep returning to buy from you, and voluntarily recommend you to their friends and family.

 

To your success,

 

 Leon

 

References:

1 Lee Resource Inc

2 White House Office of Consumer Affairs, Washington, DC.

 

Leon Skaliotis

Leon Skaliotis is Founder and Principal Advisor of Retail Fundamentals. With over 30 years experience in specialty retail, hospitality, financial, franchising and advertising industries services, Leon has gathered, learned and distilled the best ideas, practice, systems, techniques, strategies and success principles that have made average businesses great, and struggling business owners realize good health, wealth and prosperity.
Together with his own knowledge and experience, Leon can draw on the expertise of many partners, (each an expert in their own field), to consult business owners and advise on ways to grow revenue through building, analysing, and improving customer experience programs, supplier relationships, financial advice, exit strategies, staff acquisition and retention, and internal and external marketing strategies.

Leon Skaliotis
M: 0425 833 344
E: leon@retailfundamentals.com.au

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