Customer Satisfaction vs. Profitability

There are many reasons why companies should consider customer satisfaction as one of the most important KPIs in a competitive market.

An “extremely” satisfied customer brings in 14 times more revenue than a “merely” satisfied customer. It is also much more cost-effective to retain customers than to acquire new ones.

You might think customer satisfaction is important and a given these days. The reality is that it is a major challenge for many companies to satisfy their customers, as you can very often read in rating portals and the social media.

Price reductions or additional services often do not increase customer satisfaction as intended and additionally lead to a decrease in company profits.

The goal should be to increase customer satisfaction while ensuring that the measures taken do not affect the company’s profitability.

How much should the company invest in customer satisfaction? And how should this be done to ensure that profitability is preserved?

What does customer satisfaction depend on?

Satisfaction depends not only on the “actual” quality of products and services, but also on the following subjective factors:

• Customers’ perceived performance
• The expectations of the customers

When it comes to perceived performance, it is important to consider the following:

• It is determined from the customer’s perspective and not from the company’s perspective.
• It is not based on objective reality, but on perception, which tends to be subjective.
• The performance assessment is also influenced by opinions of third parties or other customers.

Customer satisfaction is further based on the customer’s expectations in a purchase. Expectations arise as follows, among other things:

• The company makes promises to customers about certain benefits (advertising, sales promotions).
• Customers base their expectations on previous similar purchases.
• Customers are influenced in their expectations by friends, family and others, nowadays increasingly by rating portals and social media.
• Customers expect at least what they have received or could receive from competitors.

Some companies try to improve customer satisfaction, even though they don’t have an accurate idea of what the customer really wants, needs, expects or feels. Some rely on the feeling of the sales staff, which does not allow a representative, uninfluenced and structured evaluation.

The purpose of a professional satisfaction measurement is to objectively evaluate the customer’s perception of the products and services as well as his expectations as a whole.

Only if you know the ACTUAL state can you take the right measures.

The customer often has many touch points with a brand or company in the customer journey. His satisfaction depends on the totality of the experiences he has at these “touchpoints”.

It is therefore important to identify in-depth information and emotions, and to do so in relation to all relevant touchpoints. TEMA-Q’s customer experience solutions provide these insights.

This point is important in terms of profitability and to the question posed at the beginning: “How much should the company invest in customer experience and where?”

Using analyzable KPIs from CX management, it is possible to deduce where or in what areas an investment will do the most to increase customer satisfaction.

Many companies that measure the well-being of their customers have the challenge of translating the findings into actions. One of the reasons: The large amount of data presents itself as complex and confusing.

To reduce the complexity and increase the transparency of CX data, TEMA-Q has developed the ClaralytiX software. In it, every employee can access the data he needs for his task in a transparent and simple way.

With the software solution, focal points for dissatisfaction can be easily identified and, with just a few clicks, more in-depth details can be carried out to identify the causes of problems and use them to make the right decisions or take the right measures.

For example, the shipping manager can directly access all conversations concerning shipping, where customers e.g. express wishes about packaging or transport, the design engineer directly learns about all opinions on a new product or all problem descriptions for a certain design, the sales manager learns about the true opinion of customers about his sales force and the strengths and weaknesses of his salespeople.

Thus, the right measures can be developed, the success of which can be measured again afterwards.

Successful companies measure the results of their initiated measures at continuous intervals.

Customer satisfaction is not a task for a one-off project. Customers’ expectations and perceptions change and if you want to stay competitive, you need to proactively know and understand your customers.

ClaralytiX is also a great help for impact monitoring, as developments over time, different areas and markets can be compared easily and clearly.

ClaralytiX offers company-wide access – controlling the provision of information is straightforward, saves administrative effort and makes searching for data simple and efficient.

As a result, all departments in the company have the data they need to make informed decisions for a profitable increase in customer satisfaction.

Customer satisfaction is a task for all departments that must take place continuously.

In order to act profitably, not “any” but the “right” targeted measures must be derived, and from the customer’s point of view.

Analysis and evaluation of CX data and also the development of success should be presented in a transparent and simple way and made available to all departments concerned, so that well-founded decisions can be made and the cost factor “administrative working time” is minimized.

… this is the title of our next article.

There we will talk about examples in the service sector: How some companies self-evaluate their delivery service and how customers’ actual expectations and their perception of the service they received do not match what the companies thought.

We invite you to visit our TQ Magazine again in January to learn how these cases are resolved.

If you have questions about these or other topics, or would like a live demo version of ClaralytiX via video conference, click here to schedule an appointment, or contact us.

Author:

Jacqueline Pirkelbauer – International Sales Director