The pitch: Listen to those customer complaints

By PAUL LINNELL

The head of a nationwide business-to-business enterprise recently described his customer base as a leaking bucket. He is probably not alone.

Unfortunately, many businesses find it easier to keep their leaking buckets full by placing pressure on sales and marketing to attract new customers, rather than discovering why their old ones may have left.

Some firms have turned to customer relationship management to find the answer, while others spend heavily on measuring customer satisfaction.

Without discovering what problems customers experience there is nothing left but to turn again to marketing and sales.

But before assigning customer satisfaction to the too-hard basket, it's worth reviewing the basics behind the management of customer satisfaction.

Let's start with that old marketing adage that "you are in business to solve a customer's problem".

The link between the customer's measurement of success and the benefit to the company can be best summarised by using the following four measurements:

* the value a company offers its customers;

* the degree to which customers are satisfied with what they get;

* the impact that satisfaction has on their "loyalty" (to repurchase, buy more and recommend to others);

* the value (or profit) the company achieves as a result.

A recent study showed that a quarter of respondent companies did not have a systematic approach to measuring customer satisfaction and only 13 per cent had an approach that would allow them to effectively manage it upwards.

The problem is that many simply categorise customer satisfaction measurement as a form of marketing intelligence, instead of using it as a management tool.

The economic imperative for more companies to take the measurement and management of service quality and customer satisfaction was confirmed in another New Zealand study. It showed:

* there is a significant drop in loyalty between the very satisfied and somewhat satisfied customers, sometimes as much as 50 per cent;

* typically, as many as half of your customers may be experiencing problems, even though only 5 per cent may complain;

* a significant 25 per cent drop in loyalty typically exists between customers who have experienced a problem and those who have not.

The research also confirms the importance of effectively dealing with customers when they do take the trouble to complain.

So, our recommendation for a corporate New Year resolution is:

* build the customer into your product and service quality improvement processes;

* move from simply measuring customer satisfaction and loyalty to developing strategies that actively manage it (and profits) upwards;

* keep your old customers happy and give marketing and sales a prosperous New Year attracting new customers - not simply replacing the old ones.

* Paul Linnell specialises in helping organisations measure and manage customer satisfaction.

* The Pitch is a forum for those working in advertising, marketing, public relations and communications. We welcome lively and topical 500-word contributions.
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