A number called customer satisfaction

In my previous post, I covered some of the pitfalls in ‘quantitative management’. In this post, I will cover some common errors in handling customer satisfaction.

Most of the organizations today  have an established process of collecting and reporting customer satisfaction. But are the organizations effective in using this feedback?

There is always a temptation to derive an ‘index’ out of the CSAT feedback that can be aggregated at different levels like project, account, BU and the whole organization. While it is very convenient to have this one uniform number to compare the performance, there is a danger of getting obsessed with this number.

Let’s start from the beginning. The primary objective of seeking customer feedback is to improve the future delivery. But in CSAT index we have a neat number that distracts organizational attention to performance measurements of individuals and teams. Hence the focus moves away from the improvement actions at the level of project and account. So instead of using CSAT feedback for improving the future delivery, it is used to rate the past performance. This is sin number 1.

As some cola ad once declared gleefully (dil maange more), greed seems to drive our minds. The revenue target for the current year is never the same as last year’s. It’s a little more. When it relates revenue we call it growth target, and when it relates to quality or CSAT we call it continuous improvement. The greed to see numbers growing each year leads us to the second sin of setting continuous improvement targets to CSAT ratings. There are multiple issues with this approach. Firstly, the CSAT feedbacks are provided on a fixed scale, providing an absolute limit for the maximum rating. Considering that many of the organizations (especially the ones practicing the continuous improvement targets for some years) have already achieved average ratings of above ⅘ or 6/7 depending on the scale used, what is the scope for improvement? Secondly, maintaining the satisfaction at a very high level itself is hardwork. This is because, as Ron Koffman puts it, customer satisfaction level is like an escalator. If your service made the customer very satisfied last year, the same level of service will make her a little less satisfied as the expectations have gone up. One has to work hard to remain at the level of high satisfaction. A more pragmatic approach is to define a challenging level and set target to maintain that level year after year.

Each of these sins comes with its own private hell. With Sin 1, both the management and the teams tend to lose sight of the customer and her satisfaction. Once the CSAT feedback is available, the management focus is to allocate the blame or credit. Most of the analysis is targeted towards this attribution of blame or credit as the case may be. The primary concern of the teams becomes achieving the CSAT number. How it is achieved becomes secondary or even immaterial. The CSAT strategy of the teams gets limited to choosing the right respondents, choosing the right number of respondents based on how happy the customer is, etc. The CSAT becomes a short term focus for all - right before the survey for the teams, right after the survey for the management.

With Sin 2, the teams are forced to extract improving scores from the customer for the same level of satisfaction. I used the term ‘extract’ intentionally as it takes some subtle (or sometimes not so subtle) arm-twisting to achieve this. A strategy is to remind the customer that a low feedback from them will demoralize the teams as it affects their performance appraisals and compensation. The inference is that a low CSAT feedback will lead to an even lower performance in future rather than the other way around. The car service station where I used to get my car serviced does it differently. While asking for my feedback on a 10 point scale, the person explained the scale to me as follows: “10 good, 9 average, 8 and below poor”.  In summary, I was never allowed to give any feedback less than 9.

Some organizations have one component of compensation linked to organizational and individual performance on various parameters. It is tempting to add CSAT performance as one of the measures of performance, the assumption being that this sends the right message to the teams about the importance of customer satisfaction. In practice, this practice further encourages individuals and managers to engage in manipulation of the number in the name of protecting their teams.  When the teams responsible for administering CSAT survey is also covered by the same policy, even the small balancing force evaporates.

In summary, if you want to have an effective improvement program based on customer feedback, keep 3 points in mind

• Have the CSAT program focus on the improvement and not on rating the past performance
• If you have to set CSAT targets, make sure that it is not moving year after year. Fix a challenging target and maintain it over the years
• Never link compensation of employees to achieving CSAT targets