One way to measure customer delight

February 14, 2011 at 10:32 am | Posted in Blogroll, Systems Improvement | Leave a comment

Currently I am reading an interesting book “The leader’s guide to radical management” by Stephen Denning because it is about my favorite topic of exploring Scrum concepts in organizational context. According to the author, in the new business environment “The key to an enduring future is to have a customer who is willing to buy goods and services both today and tomorrow. It’s not about a transaction; it’s about forging a relationship. For this to happen, it isn’t enough that the customer be passively satisfied. The customer must be delighted. When the delight of the client is kept continuously and rigorously in mind, many of the problems of workplace disappear, and the possibilities of a different kind of work – more productive and more satisfying – become possible. When that principle is ignored, all sorts of workplace problems become insoluble.”

One of the principals of management is that you can’t manage anything unless you can measure it. But it is tough to measure customer delight. As per the author, “typical customer satisfaction surveys are long and complicated, and few people like to fill them in. In fact, trying to get them completed tends to annoy the very customers whose satisfaction is being measured. As a result the answers given may not accurately reflect how the customers feel about a product or service.”

I had a similar experience recently with the new car I bought. I am quite happy with the car and would willingly and enthusiastically recommend it to my friends. However, the car company has an irritating feedback system. I have received phone calls almost a dozen times in last three months whether I was happy with the car. The worst case was when somebody called from what sounded like a call center. He started asking my satisfaction about every transaction in minute detail. First few questions I was okay but then he just kept on mechanically and unemotionally asking questions. Slowly my irritation started rising and at one point I told him that I am going to tell my friends to keep away from this company. He said I have been given this work and I have to complete the entire questionnaire. That was just too much and I hung up on him.

 The author has cited interesting work done by Fred Reichheld who spent twenty five years trying to understand how firms create relationships of trust and loyalty and the business impact they get from that. Fred & his team faced problems similar to those cited above. Ultimately they came up with a simple solution called “net promoter score” or NPS for short. Typical customer satisfaction surveys “had focused too much on the entire range of customers, from the most satisfied to the least, with a large body of customers falling into the undifferentiated middle, which concealed what was going on at the extremes where the real engines of growth lay.”

After lot of permutations and combinations, Fred & his team came up with a single question “How likely is it that you will recommend this firm or service or product to a colleague or friend?” where the customers were are asked to respond on a 10 point scale; 0 -unlikely, 6 – somewhat likely, 8 – likely, 10 – highly likely. The responses were divided in three groups: 9-10 promoters / 7-8 passively satisfied / 0-6 detractors. This was used to calculate the NPS as follows.

 % Net promoters = % Promoters – % Detractors

 Because of its simplicity and dependence on response to only one question, this solution has been criticized by some experts but it is practical and intuitive, and most importantly it drives rapid learning and action across the organization. Many organizations have found that it is adequate for practical purposes to move ahead. It also makes sense to frontline managers who intuitively grasp what it means to be increasing number of promoters and reducing the number of detractors. This makes more sense than trying to increase the mean of their satisfaction index.

 Though I did not find any specific information in references on this aspect, I believe that information gathered by typical customer satisfaction surveys will still have value to help identify specific action areas and not as a measure of customer satisfaction / delight.

May be it is worth trying out?

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