Customer Satisfaction Is Not Enough
Jan 24, 2019
Business leaders, researchers, academics, and management consultants alike have expressed concern that though customer satisfaction may be a necessary foundation for building strong customer relationships, by itself it’s a relatively poor indicator of future customer behavior. Our data support this concern. Empirical results from a large and growing number of case studies suggest that customers who are extremely satisfied — those who provide the highest rating of overall satisfaction with a company’s products or services — can be classified into two distinct groups: those who are emotionally satisfied and those who are rationally satisfied.
Emotionally satisfied customers are extremely satisfied with the products and services the company provides and have a strong emotional attachment to the company. Rationally satisfied customers, in contrast, are also extremely satisfied with the company but lack the strong emotional connection of customers who are emotionally satisfied. When we examine the indicators of customer behavior within these two customer groups, such as customer attrition, frequency of use, share of requirements/share of wallet, and total revenue and spending, among others, a clear and striking pattern emerges. Emotionally satisfied customers deliver enhanced value to a company, for example, by buying more products, spending more for those products, or returning more often to or staying longer with the business. Rationally satisfied customers, on the other hand, behave no differently than customers who are dissatisfied.
Consider the following case study from a large U.S. retail bank. When we assessed this bank’s customers using an 11-item metric of customer engagement, we found that over a six-month period, emotionally satisfied customers ended their relationships with the bank by completely closing their accounts at rates that were 37% lower than rationally satisfied customers’ rates. Dissatisfied customers, on the other hand, scarcely differed from rationally satisfied customers in their attrition levels.
Similar results emerged for an international credit card provider. Over a six-month period, emotionally satisfied cardholders spent on average $251 per month and used their cards an average of 3.1 times per month. Rationally satisfied cardholders, in contrast, spent on average just over half this amount ($136 per month) and used their cards less often (an average of 2.5 times per month) during the same period. Again, dissatisfied customers were virtually indistinguishable from rationally satisfied customers in their actual purchase behavior: Dissatisfied customers also spent on average $136 per month and used their cards an average of 2.2 times per month during the same period. And, emotionally satisfied cardholders increased their spending by 67% over a 12-month period, compared to an increase of just 8% among rationally satisfied customers. Once again, dissatisfied customers were virtually indistinguishable from rationally satisfied customers in terms of spending increases.
This general pattern is consistent across every industry we have examined, leading us to this powerful conclusion: Customer satisfaction is not enough. Merely satisfying customers by delivering on their rational requirements represents a minimum point of entry for today’s businesses; managing to satisfy customers will not drive the enhanced financial performance today’s business leaders seek. To build the strong customer connections that produce enhanced financial benefits, a more complete view of customer requirements is needed, which incorporates an understanding of the emotional dimensions of customer commitment. Customers want more than transactions— they want relationships.
NOT ALL ADVOCATES ARE CREATED EQUAL
If your goal is increasing customer advocacy, you must recognize that the challenge isn’t to get customers talking about a company’s products or services. Instead, the challenge is to get them talking positively and passionately about your company. That requires your customer to feel the enthusiasm that only comes from strong emotions. Even among customers who say they are extremely likely to recommend the company, the strength of the positive emotional connection is what determines whether that recommendation is lukewarm or glowing. And the strength of the emotional connection is what ultimately determines customers’ future behaviors. Even strong advocates differ in terms of the extent to which they are emotionally attached to a company. Some of these strong advocates are just advocates; others are passionate advocates.
To illustrate, let’s consider three groups of customers. The first group—the nonadvocates— is made up of all customers who are less than extremely likely to recommend the company to others. The next group—the rational advocates—is made up of customers who, although extremely likely to recommend the company to others (the highest possible rating), lack a strong emotional bond with the company. The final group—the emotional advocates—is made up of customers who are also extremely likely to recommend the company to others, but who have forged a strong emotional attachment to the company. If advocacy in itself were all that mattered in driving business performance, then we would expect both groups of advocates to deliver significantly better business outcomes than the nonadvocates. We might expect the two groups of advocates to differ in their actual behavior toward the company. But, according to our research, it doesn’t work like that.
First, let’s look at the investment behavior of customers at an international private bank. When we sorted the customers into three categories—emotional advocates, rational advocates, and nonadvocates—emotional advocates delivered significantly enhanced business outcomes when compared to their rational counterparts, both in share of assets and in the net new assets they invest with the company. Surprisingly, rational advocates did not differ from the nonadvocates on these key financial measures. We found the same general pattern for the customers of an international lodging and hospitality company. In this case, emotional advocates stay more nights and spend more with the company. They deliver significantly more business value to the company than do rational advocates, who behave more like nonadvocates on these key measures. The same general pattern also emerged for a U.S. retailer and a global B2B cargo shipper.
Analysis of data from these companies, as well as a host of other companies in the United States and worldwide, demonstrates that a company’s strongest advocates behave differently toward the company depending on the degree to which they are emotionally attached to it. If you want to drive advocacy — and reap the financial benefits that come from building strong emotional connections with your customers — you must first understand and manage those emotional connections.
Now, obtaining a recommendation from your customers remains crucial to business success. But our research suggests that developing a deep understanding of what makes your customers tick requires more than knowing how many of them would recommend you to others. Human nature is more complicated than that, and business leaders who ignore its complexities do so at their own peril.
Connecting with customers’ emotions carries a huge financial benefit. Establishing strong emotional connections with your customers can mean the difference between creating rational advocates—customers who merely talk about your company—and emotional advocates—those who talk about it passionately.
So go ahead, measure your customer advocacy. It’s an important piece of information. But while you’re at it, don’t stop there. Remember that your ultimate goal is to inspire something more than mere advocacy among your customers. Your true goal is to inspire passionate advocacy at every location and touchpoint because passionate advocacy pays significant financial dividends. Achieving this goal requires you and your employees to forge strong and lasting emotional bonds with your customers. And measuring how effectively you are building and nurturing those emotional bonds is truly the one number you need to grow.
Excerpt from Human Sigma by John H. Fleming, Ph.D, and Jim Asplund. Reprinted by permission of Gallup Press. Copyright 2007 Gallup, Inc. All rights reserved.