When business owners plan their strategies common sense dictates that their game plans should be in line with customer needs. The first step in planning, therefore, is to identify customer preferences. Unfortunately, most conventional approaches to determining customer needs are flawed. Here are five of the most common methods used to gather customer opinions along with their drawbacks. Keep these often-made mistakes in mind when planning your business strategy for 2009 and beyond.
Mistake 1: Counting Cash—One way to find out what customers think—indirectly at least—is to look at revenues. The assumption being that if revenues are increasing, then customers must be happy. Dangerous.
A repeat customer isn’t necessarily loyal. Customers may come back more by default than desire. If that’s the case, the moment your competitor finds a way to truly satisfy your customers, those repeat customers will abandon you.
So, even though your revenues may indicate that you have happy customers, unless you do the research you are potentially vulnerable. Business leaders whose companies endure are those who do not just assume that customers are happy; they create the right systems to know it.
Mistake 2: Counting Complaints—Some managers assume that if they merely reduce the number of customer complaints, they are satisfying more customers. In reality, fewer complaints often mean fewer customers are angry enough to complain. It doesn’t necessarily mean that they are happy.
When it comes to measuring complaints keep in mind your own experience when visiting a restaurant with mediocre service. It wasn’t bad enough to complain. But, it wasn’t good enough to bring you back. If the restaurant manager only counted complaints as a measure of customer satisfaction, he or she would be off track.
Mistake 3: Trusting Focus Groups—A popular method of collecting customer information is using focus groups. This is where a manager or consultant gathers a group of customers and asks their opinions. Consultants often like focus groups because the information looks scientific and they can charge a fee for conducting them. It’s been my experience, however, that focus groups tell you a lot more about group thinking than anything else.
In virtually every focus group I’ve been asked to observe, opinion leaders in the group influence the responses of others. That alone renders focus groups practically useless in terms of finding out what individuals really think.
Mistake 4: Paid Phone Surveys—The most promising way of identifying preferences is to have a one-on-one conversation with the customer. The problem is that the conventional approach to interviews receives miserably low response rates. Imagine you’re at home one evening when the phone rings. An unfamiliar voice on the line says, “Hello Mr. or Mrs. So-and-so, we’re conducting a survey on…” You’re thinking, “Not again,” and end the conversation—click.
As an alternative, rather than using standard telephone surveying, the manager of the company uses a resource I often recommend to my clients: business students. Picture yourself at home again. The phone rings. When you answer, a youthful voice says, “Hi, I’m a business student at the local university. For my marketing class I’m doing a project where I’m conducting a survey on such and such.” You find yourself saying, “OK, kid, let’s make this quick.” Response rates soar. Bonus: Students work for far less.
Mistake 5: Trusting High Ratings—On a customer survey you can ask, “Overall, are you satisfied with the service?” And you may get results that show 96 percent said, “Yes.” But be careful how you interpret those results.
This is where many managers assume that they’re getting an A+ score. Think of the question again; it asks if overall you are “satisfied.” In other words, the survey is asking if the service is adequate. By responding “Yes,” customers are not saying that they were impressed or even pleased—merely that they were satisfied.
According to marketing research expert, Mike Heffring, “It has been shown that it’s the percentage of people who give you excellent or outstanding ratings (e.g., nine or 10 on a 10-point scale) who matter. If you increase that percentage, then market share actually moves. If you don’t, then you may feel better if the percent satisfied goes up but the impact is insignificant.”
Jeff Mowatt is a business strategist and international speaker. This article is based on his book, Becoming a Service Icon in 90 Minutes a Month. For more information visit www.jeffmowatt.com or call 800-JMowatt (566-9288).