Customer Satisfaction Scores Don’t Drive Customer Growth

Understanding Satisfaction

There are few things more established in today’s business language than customer satisfaction.

Since it’s early emergence in the 1950s, coupled now with our ability to capture and harness customer data at scale, it has risen in prominence. Today it is the must-do business activity, held by many organisations as the go-to insight for making their customer decisions.

Organisations will stake a flag on the mountaintop of customer satisfaction due to its contribution to customer retention, experience and growth.

Whereas customer satisfaction is often helpful, it’s not always very useful across almost every industry as a primary supporting driver for customer growth.

Here lies the challenge…

If for many organisations high customer satisfaction numbers mean growth, then why don’t all companies with high customer satisfaction numbers have consistently growing or exponentially growing existing customers?

Academic studies from reputable universities, like Cornell, have studied the arguments from economics, psychology, sociology and marketing domains, to review differences in aggregate customer satisfaction across both industries and countries.

They found numerous variances in satisfaction applicability and results. Three of those most important were:

1. Regardless of the methodological approach, there are major differences in customer satisfaction via country.
Meaning: there are broader cultural and behavioural norms that have not been accounted for.

2. Satisfaction response rates are shown to be highest for competitive products, lower for competitive services and retailers, and lower still for government and public agencies.
Meaning: customers weigh up the time and effort they’ll put into responding based on specific criteria.

3. Companies with customer satisfaction scores below five were outcompeted, yet when those scoring between 6-8 were compared to a competitor who scored 9, there were almost no differences in company advantages for areas like revenue, market share, profit and loyalty.  
Meaning: Customers are showing wider weighted areas of preference. Rather than seeking to optimise across all satisfaction areas, organisations must find out what your customers really value and optimise for this.

In addition to this, studies from The Association of Consumer Research reviewed 200 peer studies on consumer satisfaction and noted:

…a consumer does not strive to maximize his/her satisfaction in every purchase decision. Instead, a large proportion of the consumption behaviour is geared towards meeting some range of acceptable pre-consumption standards – that is, satisficing rather than maximizing satisfaction.

The above point is very important.

So, does great customer satisfaction numbers = customer growth?

The research says in most cases that it doesn’t. Experientially speaking after working with many organisations around the world, I too have not seen a link.

This does not mean customer satisfaction isn’t important. Instead, it suggests it should not be trusted as a primary indicator for customer growth and especially loyalty.

Don’t take my word for it. Ask the following questions of yourself and your organisation:

• Has continued customer satisfaction growth in our business resulted in yearly growth from our existing and our most important customers?

• Can we track customer satisfaction as a core lead indicator to other significant customer growth measures?

If your answers are Yes, then that’s fantastic. 

If your answers are No, then we can conclude that although helpful we cannot rely on customer satisfaction alone, or NPS for that matter, as a helpful guide to real customer insights that drive customer growth.

Relying on satisfaction alone is dangerous. It is one of the most common pitfalls made by good companies, who lose great customers. They mistake customer convenience for commitment.

I’m most interested to help you avoid pitfalls, use the great tools you have more effectively and discover better ways of thinking that drive customer results.

Satisfaction vs Loyalty

Satisfaction is about a rating, whereas loyalty is about an emotional and relational commitment. 

Both satisfaction and loyalty have different implications, benefits and challenges.

Satisfaction benefits

What can measuring satisfaction do or tell us?

Benefits

• Understand potential customer needs and wants.
• Awareness of potential customer dissatisfaction to reduce churn.
• Build brand recognition.
• Connect with customers.
• See potential trends over time.

Challenges

• Satisfaction is overly contextual and cannot be weighed accurately over time in the same conditions to determine the movement of a particular feeling.
• Has little defence against bias.
• Proven to be a poor predictor of future behaviour.

Implications

• Provides interesting customer information, but depending on the industry it may not be accurate a week later.

Loyalty benefits

What can measuring loyalty do or tell us?

Benefits

• Learn customer values and what they care about.
• Better understand the root causes of dissatisfaction.
• Build brand recognition.
• Connect with customers to deepen relationships.
• Higher success rates for indicating churn.

Challenges

• Previously difficult to measure.
• Takes more effort and resource to set up.
• Takes time to generate insights.

Implications

• Receive very deep and rich customer insights, but takes effort and potentially more resources to get right.

The decision for any organisation or customer leader is to ask yourself: 

What is most valuable right now, Satisfaction or loyalty? 

I’d argue that we should all be focused on understanding loyalty.

Intimate Loyalty

There is a big difference between what a customer says and what they do.

As a partner, you want more than just information about your customers. You want true confidence in the relationship and insights from the customer relationships you’re building.

True customer confidence comes through three core drivers:

1. Relationship Influence – your ability to systematically and repeatedly connect with your customers at any level, enabling scale to effectively deepen trust and confidence.

2. Value Advantage  – your ability to activate all levels of value in your business to be seen as distinct and more valuable than the best alternative in your market.

3. Intimate Loyalty – your ability to create positive and impactful customer experiences that connects shared values and establishes future commitments.

Let’s focus on Intimate Loyalty. 

I look at it first as it focuses on the creative and emotional triggers that impact day-to-day engagements with customers. Understanding the power of shared values, raising standards, becoming a centre of excellence and creating the customer story; these are all part of Intimate Loyalty.

The commitment-trust theory of relationship marketing states the two fundamental factors of trust and commitment, must exist for a relationship to be successful. The most important commitment you can have with your customers is who you are together. This rests in the ideas of shared values and future expectations.

The focus of Intimate Loyalty is designed to help you uncover meaning and deeper levels of commitment triggers that your customers consciously or subconsciously want you to meet.

The next level of integration into places like satisfaction is the journey to evaluating emotional and relational commitment. The behavioural sciences, neuroscience, analytics, IoT, AI and AEI (Artificial Emotional Intelligence) are getting us closer to systematic ways of measuring this more accurately.

This integration does come with a range of concerns. However, there are also huge opportunities for customer-led, ethical companies wanting to continually serve at a higher level.

Despite this great opportunity, studies today from institutions like the University of British Columbia and Berkeley show…

The post-choice process models provide valuable insights into the understanding of the consumer satisfaction processes (i.e. survey’s). Nonetheless, many of these models lack a coherent theoretical foundation for integrating and underlying the different stages of the post-choice process…

What many of the research groups are attempting to do is find a pragmatic way to increase the accuracy level of post-purchase and long-term customer relationship evaluation.

But there is no one way to do this as yet. 

Today, there are a few core considerations worth reviewing for your organisation. We’ve spent three years testing to discover the outcome.

New Customer Measures for Growth

Satisfaction is about a rating, while loyalty is about emotional and relational commitment.

We must focus on loyalty as a primary customer metric.

There are new and integrated measures for evaluating the health and likelihood of loyalty with your most important customers. It doesn’t originate from a single survey or set of surveys.

It comes from an integrated set of evaluating systems giving accurate real-time and predictive view of your customers behaviour. 

Behaviour is key 

My company has undertaken considerable research and testing to fully study consumer behaviour. 

Consumer behaviour is designed to study consumers’ consumption behaviour which is post-choice behaviour as well as their roles as buyers. It’s only today that the important issues in consumer post-choice behaviour are beginning to exert a major impact on consumer research. 

What organisations need today is an accurate way to predictably measure how their best customers REALLY feel about them. Not based on surveys but on actual behaviours. Not on what a customer says but the corresponding behaviours aligned to what they say.

We discovered a system to determine how an organisation REALLY feels based on behaviours in real-time, as well as over time. We’re seeing great results.

We call this impact evaluation 7 Signals.

7 Signals

Our research of 50 years of customer service history, 200 cited customer research papers and 30 growth global growth projects qualify our findings. 

We’ve seen some of the best companies on the planet miss out on the opportunity to create a real advantage with their customers. 

CSAT (Customer Satisfaction), NPS (Net Promoter Score) and (CE) Customer Effort isn’t enough.

Data doesn’t change, behavioural reasons do. 

If we don’t have the right reasons behind why our customers do what they do, what they believe and why, we will always be vulnerable to a customer leaving.

7 Signals are seven critical insight areas that have a significant impact on long-term profitability and the health of your customer relationships.

• Social evaluation – measures value and cultural alignment that impacts conscientious choices.
• Messaging evaluation – measures base language used across textual communication.
• Behavioural evaluation – measures the corresponding behaviour to what a customer says.
• Organisational evaluation – measures the internal and external experience of employees to the customer and customer to employee.
• Voice evaluation – measures documented feedback and sentiment between you and the customer.
• Economic evaluation – measures direct value impact on the customer acknowledged and appreciated by them.
• Market evaluation – measures external reputation connected to key customers

Today you may not be reviewing all seven of these areas.

In order for you to begin to capture more real-time, accurate and highly valuable pictures of your customers over time we must look to integrate key sources of data. This allows a properly assembled picture of where our customer is. It’s their story of us in their minds today. Not just as individuals, but as an organisation operating in an ecosystem of different impacting points.

Now ask yourself these questions:

How accurate is the view of your current customers?

How do you assess these seven impact areas?

What next

If you want to know how to activate the three growth drivers in your business or start the journey to using the 7 signals system to truly understand the power of Intimate Loyalty, then get in touch or join my mailing list for continued insights, so you can be the adviser or organisation your customer never wants to leave.

Jermaine Edwards
Your Customer Growth Guide