Why You Should Avoid Customer Satisfaction and Customer Complaints KPIs

May 7, 2013 by Stacey Barr

They are the two most used measures for customer performance: customer satisfaction and customer complaints. But they aren’t the most useful measures if you want to truly drive the success of your organisation or business.

Customer satisfaction has been researched and compared with other ‘states or feelings’ that customers can have toward a company, and it usually comes up poorly in terms of predicting profitability.

Extremely satisfied customers have been shown, by research conducted by the Gallup Organization, to be no more profitable than customers less than extremely satisfied.

And extremely satisfied customers have been shown to be less profitable than customers who are also “fully engaged” with the company. So customer satisfaction, while it did a fab job of focusing organisations on customer service in the 1980s and early 1990s, is no longer among the most powerful and transformational measures for customer relationships.

As Gallup say in one of their articles: Satisfaction without engagement? Worthless. Satisfaction with engagement? Priceless.

And on the topic of Number of Complaints as a measure of customer relationships, the diagnosis is even worse. Firstly, complaints are usually offered up by customers who are passionate enough to complain. There will certainly be customers who defect and leave you, who couldn’t be bothered complaining.

And Number of Complaints only offers you one side of the customer experience spectrum: they only tell you the bad side and not how frequent or how impressive the good side is, when customers are delighted with your product or service.

And personally, I also try to avoid measuring ‘in the negative’, where you’re measuring what you don’t want. It keeps your attention on what you don’t want – and how to avoid it – rather than keeping you focused on what you do want, and how you’re going to achieve that.

My advice is don’t bother measuring Number of Complaints, but have a system for managing them as one of those ‘moments of truth’; in the customer relationship. And you may still get value from measuring customer satisfaction, but don’t use it as the ultimate measure of your customer relationships because it’s just not powerful and all-encompassing enough. It only has value when used in companion with other measures.

Remember: no matter what you measure, always be sure that you have defined the important result you want to achieve or create or change, before you even think about what the measure should be. Don’t try and retrofit your measures to results, because you’ll end up measuring the wrong things for the wrong reasons.

JOIN THE DISCUSSION:

How do you measure customer performance? Have you correlated your customer measures to measures of profit or mission fulfilment? Share your suggestions on the blog.

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  1. Aiste says:

    When you have results of a customer survey, you have to decide what actions have to be taken to improve your activity in order customers were satisfied. In our case we create activity improvement plan. So we measure implementation of the improvement plan. I.e. if we have decided that something has to be improved in June and if we implement the improvement in June, it means that KPI is equal to 100 percent.

    • Stacey Barr says:

      Aiste, I would suggest that ‘getting something done’ is not a real performance measure. It’s project management. Performance management and project management are two different – but connected – things. Here is an excerpt from my upcoming book, Practical Performance Measurement, that speaks about this difference:

      “Events or milestones are not performance measures

      Strategic or operational plans commonly contain so-called performance measures that read like these:
      – ‘Research, discussion, and position papers supported and/or written’
      – ‘Win Banksia Award for environmental achievement’
      – ‘Detailed Risk Management strategy adopted by the Committee of Management’
      – ‘Talent program implemented’
      – ‘Meet the Australian Medical Council (AMC) requirements for re-accreditation in 2011’
      – ‘Delivery of the agreed Environmental Works and Measures Program for each year of the Strategic Plan’
      – ‘Marketing campaign to educate the community developed for implementation in 2010’
      – ‘An organisation-wide skills audit is completed by Dec. ‘10’

      These are not performance measures; let’s take a look at why.

      The first example, ‘Research, discussion and position papers supported and/or written’, was a performance measure for a brain injury association’s goal to ‘Encourage and conduct research and evaluation that is reliable, credible, valid, and relevant to individuals, families and communities’. Supporting and writing papers is not a performance measure because it fails to evidence the result implied by the goal, which is that their research is seen as reliable, credible, valid, and relevant by their members. Having position papers supported or written is simply a milestone. By contrast, having those papers peer-reviewed and accepted for publication in a credible scientific journal might be evidence that they are meeting their goal.

      Monitoring milestones is project management; monitoring results is performance management. Events or milestones fail to give us good performance feedback because they only tell us whether or not we implemented the actions that we’ve chosen to improve performance. They don’t tell us whether those actions worked and actually improved performance. Wouldn’t you agree that knowing what works and what doesn’t is fundamental to improving organisational performance?”

      So I would suggest you would measure both the customer satisfaction AND the drivers of satisfaction, like in this article:

      http://staceybarr.com/measure-up/case-study-customer-driven-kpis-for-a-billing-process/

      Hope this helps.

      • Aiste says:

        Thank you, Stacey, it was really useful.

      • Thomas Mutete says:

        This discussion is invaluable to me. I wish to include another driver from an innovation or creative perspective, which is customer delight. Whilst it is priceless to include or blend customer engagement in our service or product bundle, the challenge here is how to create customer delight that leads to loyalty?
        Apple for example, innovatively create a ”sexy” customer experience through the use of its products which leads to an increase in rents through customer repeats and referrals. I could be biased because I like their products and thought it is valuable example.
        Best wishes
        Thomas.

        • Stacey Barr says:

          Thanks Thomas for your comment. Is customer delight a different concept to customer satisfaction, expect the scale is ‘longer’ to reach beyond completely satisfied to a new extreme of delighted?

  2. Thomas Mutete says:

    Hi Stacey,
    Customer delight might not be a stand-alone concept as it emerges from exceedingly satisfying a customer’s need. When you look at the customer zone of tolerance scale by (Parasuraman et al., 1991, p. 42) it comes on after the customer’s desire has been fulfilled. Managers need to creatively concentrate on these strengths and may be spend less time on identified weaknesses.
    Best wishes
    Thomas.

    • Stacey Barr says:

      Thanks Thomas – that sounds like it’s worthwhile for people to redesign their satisfaction scales to be more like expectation scales. Please, no-one consider this advice, but to provide an example:

      0 = expectations not at all met
      1
      2
      3
      4
      5 = expectations just met
      6
      7
      8
      9
      10 = expectations wildly exceeded

      Does anyone have a proven expectations scale?

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