Beware the danger of customer satisfaction. Sure, it's nice to measure and talk about, but it can be an unpredictable and unreliable indicator of your company's customer-centric performance, especially in the short term.
Look at the latest iteration of the
American Consumer Satisfaction Index for example, administered quarterly by the University of Michigan business school. It is a well-researched and useful bellwether for consumer attitudes. However, it cannot by itself be taken as a predictive customer value model.
Short-term attitudes about a company may affect customer satisfaction scores, but don't necessarily take into account a long-term customer focus. And general economic or social conditions, when they change, can also affect these scores. When the economy is headed downward, the general level of customer satisfaction falls, and vice versa.
Case in point: The ACSI energy index, which compares consumer satisfaction with current utilities and other energy providers on a quarter-to-quarter basis, shows only a one-point drop (72 points out of a possible 100) for the entire category. However, look at the three utilities that served the southeast U.S. during Hurricane Katrina and other storms during late summer and fall in 2005 and you'll find some big decliners: Entergy (-7% to 70), FPL Group (-8% to 68), and TXU (-10% to 65).
Did these three utilities fail customers miserably during the first quarter of this year? Did their operations lag behind the dozens of utilities that increased their customer satisfaction scores? No. The effects of the disaster and the service disruptions accompanying it undoubtedly played a big role here. While rising natural gas prices have forced rate increases from each company, these firms went out of their way to serve customers and act as long-term customer advocates in the face of last year's devastating storms.
TXU sent 770 employees to the New Orleans area during and after Katrina's landfall, even though it actually has no direct customers in the area. FPL restored power within six days of Katrina's aftermath, and restored 80 percent of customers within a week of having its electric grid wrecked by Hurricane Wilma. It matched all employee American Red Cross and Salvation Army contributions 100 percent. Entergy had 75 percent of its customers knocked offline by Katrina, and reconnected all of them within 11 days. It implemented a low-income rate relief plan to give back more than $2 million to poor families in the region.
These companies are keeping their eyes on long-term loyalty, hoping to weather the short-term storm of low customer satisfaction, due to events largely out of their control. By acting as customer advocates, they work to forge a trusted bond with customers that goes beyond immediate satisfaction.
Customer satisfaction is a helpful, but not a sufficient condition for maintaining customer loyalty. Metrics like the ACSI index are good snapshots of current customer sentiment, but are only one of many indicators — such as share of customer, lifetime value and willingness to recommend — that show true customer focus.