In today’s hyper-competitive business environment, there are two critical success factors that businesses needed to understand better in order to maintain long term profitability and financial health, those issues are customer and employee satisfaction.
Both employee and customer satisfaction go together hand-in-hand in establishing and meeting high levels of customer-client service expectations. Time and again, we hear from our clients that so many business factors are increasingly leveling the playing field among competitors.
The point of real difference then among competitors is not just meeting customers’ expectations, but exceeding them. The latter is what builds long-term business relationships and most importantly continuous profit and revenue streams… much like a multi-year annuity! Many studies attest to the fact that it costs significantly more to acquire new customers versus retaining those a firm already has. Further, the loss of only a few key customers can impact a firm’s sales and profits in significant ways.
Employee Satisfaction Research
Bearing these aspects in mind, it only makes good sense for companies to control the factors that are within their ability to manage, such as employee and customer satisfaction. Studies have also demonstrated that between the two, the first line of defense and offense should be the assessment and motivation of a company’s employees.
Staff members that have front line contact with customers are absolutely critical to basic customer satisfaction. Individuals that are in sales, distribution, customer service, field service, technical service and even company operators are often the first and only contact a customer has with a firm. That one person and the attitude they conveyed, the helpfulness or lack-there-of provided by them, can all have a dramatic affect on customer responsiveness.
In one study evaluating the relative importance of a company’s staff members’ service level based on “friendliness, speed and accuracy”, it was found that in percentage terms, the relative importance of “friendliness” was most important, and “accuracy” was a close second; 52% and 42% of these characteristics were respectively discovered to be critical to respondents’ interviewed.
So in view of this, it is critical for companies to understand how well their employees are doing with each customer contact. As the preceding study discovered, something as seemingly simple as “friendliness” is a key criteria in how a company is perceived by its customers.
It is imperative then, to further understand how satisfied these key company customer-contact points are, because their personal satisfaction with their employer will have a direct relationship to how they treat customers, and the extent they “go the extra mile” to provide high levels of service. An often-cited example of a company whose employees regularly extend themselves to customers is the retailer Nordstoms. As a result, customers state they keep coming back to this store as much for the quality service as they do the product offering and selection.
From Just the Facts, Inc.’s perspective, once an analysis is conducted of a company’s employee satisfaction level, then a determination of strategies and tactics can be undertaken to address any problems or difficulties, which may exist. In one past study we conducted, two key customers were very close to leaving our client… the reason was dissatisfaction with some aspects of our client’s sales and account team. Our client had no idea how close they were to losing these critical accounts. Once the problem was uncovered, corrective action was taken, and 4 of 5 key customers were saved from defection to competition.
Customer Satisfaction Research
While the previous paragraphs focused on the importance of a company’s employee satisfaction level and their impact on sales and profits, the satisfaction of customers themselves is equal, if not more important. Obviously, if customers are not satisfied with a firm’s products, services, distribution, quality, selection, return policies or other aspects, there is certainly a competitor out there willing to provide the desired service level your customer desires.
Not surprising, is the fact that a major objective of any company in today’s competitive environment should be retention of its customers. The chief goal should be not only satisfying, but also delighting customers. In order to accomplish this, companies must undertake extensive research and analysis to determine what it takes to meet this objective; this should become the primary pursuit of senior management over the entire life of a firm.
In addition to high levels of customer service, we know from past work that increased customer retention pays off in several ways for companies, when this is incorporated into their mission statement. This activity actually increases profits in several ways:
> The cost of acquiring a new customer versus maintaining a present customer is extremely high. Studies show new customer acquisition costs can range from 2-10 times higher than those associated with keeping present customers happy.
> The net effect of retaining current customers, which would otherwise be “lost revenue”, can be accomplished for about 20% of the cost of attaining entirely new customers.
> Improving upon customer retention by only 5% can dramatically increase profits, depending on the customer, by 25% to 80%.
> It has also been found that in many categories, the longer a customer maintains their relationship with a supplier, the more that customer tends to spend with the supplier.
> The longer a customer remains loyal, the less expensive that customer is to service. Many efficiencies are achieved in terms of understanding the customer’s needs, shipping requirements, expectations, and the increased value of established personal relationships between supplier’s and customer’s interfacing staffs.
In short, then, your business needs to pinpoint the key service factors, customer impressions, their expectations and other major service driver-factors, then measure them and determine how well your firm is “stacking up” vis-à-vis competitors. This is a continuous, on-going process that should occur from one-four times per year, depending on the speed, change and complexity of your firm’s business.
