Five Costly Customer Satisfaction Myths and Misunderstandings

Most multichannel merchants know why customer satisfaction is important. It is understood that satisfied customers are more likely to make repeat purchases, shop more often, spend more money, and recommend your business to their friends. But companies sometimes fall into the trap of “unprofitable” customer satisfaction, which can hurt the bottom line.

So you want to satisfy customers, but you want to do it profitably, and you want to do it simply. More and more retailers are attracted to single-question metrics that promise to drive growth by measuring likelihood to recommend or other simplified measures of loyalty. But recommendations and loyalty are just outcomes of satisfaction, not drivers of growth by themselves, and unfortunately there is no one-size-fits-all solution. Loyalty, recommendation, share of wallet--all these things matter, and all are critical elements of a comprehensive customer satisfaction measurement program.

Can you prioritize your improvement initiatives in the most effective manner based on a laundry list of desired changes reported by the customer? You may be able to tell which types of customers are going to leave for a competitor, but how can you stop them and solidify their loyalty? How do you sift through reams of customer satisfaction data and charts and turn that into an actionable plan that will generate profitability? Assessing customer satisfaction in the right way--in a precise, accurate, and actionable manner--can answer all these questions.

Many companies have bought into myths regarding how to assess customer satisfaction. Are any of the five myths below costing your organization revenue and profits?

Myth #1: In retail (especially for discount retailers), price is the only factor that matters, so understanding other drivers of customer satisfaction is less important.

In working with a multibrand retailer that had different price positioning strategies for each brand, we discovered that while price has a clear effect on a customer’s initial purchase decision, it had no more impact on customer satisfaction and repurchase intentions for the company’s discount brand than it did for its higher-end brand. Make no mistake, price did play a key role for all of the company’s brands in driving satisfaction, but failing to understand the impact that other elements of the customer experience had on satisfaction would have been a costly mistake.