Customer satisfaction and customer loyalty are a significant area for most companies, and it is an area which has gained increased attention and focus over the last years. The auditing company PwC’s international CXO Survey 2017 shows that 58 per cent of CXOs point to customer satisfaction as a top focus area in the year to come, an increase from 46 per cent in 2016 and 41 per cent in 2015. That means that customer satisfaction is the primary focus area for top executives.
And there is a good reason for that: Satisfied customers are indisputably the best road to maintaining market position and acquiring new customers.
One of the reasons for this can be found in an intensified competitive environment in most industries over the last years on both the B2B and B2C markets. Increased globalisation, easier access to information, liberalisation of markets and technological development – no matter where you look, new opportunities and alternatives pop up and put pressure on existing products and services. You can always get something different and new at the competitor’s around the corner or on the other side of the world.
New customers cost five times as much
This means that there is great value in retaining your existing customers and preventing them from being tempted by something they would consider a perfect replacement for what you deliver. You can actually measure the value. According to Forrester Research, it is five times as expensive to acquire a new customer as it is to resell or upsell to an existing one.
Similarly, Emmett C. Murphy states in his book “Leading On The Edge Of Chaos” that you can increase your earnings by 125 per cent if you reduce your customer churn by 5 per cent. Customer churn is thus a threat to the existence of any company, and that takes us back to why customer loyalty is a primary focus area for top executives.
The question is: How do you acquire and retain loyal customers? In order to live up to the customers’ expectations, you need to know and understand them. One of the most applied methods for conducting customer satisfaction surveys is to uncover the customers’ assessment of the companies and to use Net Promoter Score (NPS) to assess the level of loyalty.
Customer satisfaction surveys provide you with a lot of knowledge on how your customers assess the quality of your products and services, your ability to deliver the right product on time, the quality of your customer service and so on. NPS reveals if your customers are happy enough doing business with you to recommend that others do the same, whether they are indifferent and would choose a competitor if they received the right offer, or whether they in fact are dissatisfied enough to speak ill of you and make potential new customers go elsewhere.
Investment in customer satisfaction
One of the primary points from the CXO Survey 2017 is that customer satisfaction is not just an area which has management focus – it is also an area they invest in. 21 per cent of top executives who chose customer satisfaction as a primary investment area are going to invest 10 per cent more in the area in 2017 than they did in 2016. In other words, the road to new customers and a healthy business is keeping those you already have – so what do you do to keep your customers happy, satisfied – and loyal?