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Measuring Customer Satisfaction

I’m posting excerpts from a few of the most popular posts from my other blog called Manage By Walking Around.  In this post I explore some ideas of how to think about measuring customer satisfaction.


As I talk to organizations about their performance management journey, one of the most common questions that I hear is “What’s the best way to measure customer satisfaction?” As is my tendency, I often answer their question with a question of my own “Why do you want satisfied customers?” This question is usually jarring to them but my point is to get them to think about their actual objectives. The reason that they want their customers to be happy.

In my experience the explanation usually fits into one or more of the following categories:

  • Highly satisfied customers are more likely to repurchase the same product/service without considering switching to a competitor.
  • Highly satisfied customers are more likely to recommend the product/service to their friends, family, and co-workers.
  • Highly satisfied customers are more likely to pay a premium price as compared to equivalent products/services.

Notice that I used the phrase “highly satisfied customers”.  Research by Xerox found that very satisfied customers were six times more likely to repurchase within the next 18 months than customers who were simply satisfied.  One simple suggestion is that you ask your customers how satisfied they are, not simply if they are satisfied.

Remember, customer satisfaction is from the customer point of view, not your organization’s point of view.  Your organization’s performance may be outstanding but if your customers feel that it is poor – or even no better than the competition – they may report that their satisfaction is low.   Also, an organization cannot be great on all things.  Focus on those things that bring value to your customers.

Recently I spent some time with an operations manager for a federal agency.  He bemoaned to me that employee satisfaction with the on-site cafeteria was low, even though he had already changed outsourced vendors twice.  Since the employees were his customers, he was quite worried.

After reviewing the survey questions that they had used, I suggested that they stop using abstract questions such as “Are you happy with the quality/variety of food?” and instead focus on comparing the cafeteria with other options available to employees.  We settled on questions such as “How satisfied are you with the quality/variety/value as compared to those in nearby restaurants?” and “How satisfied are you with quality/variety/value as compared to other federal cafeterias that you have visited?”  Since the agency isn’t really in the business of serving food, these questions do a better job of benchmarking the cafeteria against expectations and the competition.

With that in mind, I would encourage you to avoid simple questions of satisfaction and instead which of the three goals above you are trying to achieve.   For example, if your objective is to up-sell or cross-sell more products to your existing customers, you may want to ask them how likely they are to do so in the next 12 months.  That question is probably a better gauge of their happiness.

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  • Great article that points out some good internal questions to ask.  unfortunately, most of the people who are in a position to ask these questions are steps removed from the BI Process.
    Thanks for the information.