Just as customer satisfaction is a key goal for companies, ensuring end users are satisfied is an important responsibility of CIOs. In CIO’s “State of the CIO 2003” survey, 63 percent of respondents said they regularly measure either internal or external customers’ satisfaction with IT’s services. But only 36 percent said this is a highly effective practice for adding value to their business. The discrepancy isn’t surprising. My experience with customer satisfaction measurement in the technology industry suggests that companies?and by extension CIOs?often talk to the wrong people in the customer organization and measure the wrong things. If you aren’t careful, customer satisfaction measurement could be doing your IT organization more harm than good. Here are some tips for getting customer satisfaction measurement right.
Measure Success, Not Satisfaction
Consider the experience of Trilogy, one of the largest privately held software companies. Trilogy employed a classic multivariable customer satisfaction measurement system. It contracted respected outside companies to hone a 40-point index addressing all major drivers of customer satisfaction. Semiannually, these companies would survey a cross-section of customers and analyze and report this data to management. Trilogy management took the results very seriously. Then one day, only a week after Trilogy executives were congratulating themselves on a key customer’s high satisfaction ratings, a senior executive from that account threatened to shut down its project.
What went wrong? Trilogy found that its surveys focused on many intermediate metrics, such as “Do you like our people?” or “Are we easy to work with?” But these measures shed little light on the end result: Was the customer’s experience with the software project a success? Trilogy realized that customers do not care about the technical merits of the software or the responsiveness of the account manager. Customers initiate projects to drive specific operational and financial changes in their businesses. The only thing they care about is the actual business value delivered by the vendor. Trilogy now measures customer success on a set of “business success metrics” established jointly with each customer. These metrics are relevant to the senior business sponsor and are designed to measure the value delivered throughout the life of the project.
Don’t Let Averages Lie
Sometimes, it’s not obvious who the customer really is. Enterprise technology projects involve multiple constituents with differing and often conflicting objectives. IT investment decisions involve business decision-makers, IT professionals, finance executives and end users. These audiences may define value differently.
For instance, in deploying a CRM system, the IT organization may care about ease of deployment and performance. The finance organization may emphasize ROI. The end users may care about ease of use and adaptability of the software to their needs. Given these differences in priorities, one audience could be satisfied while another is unhappy with the same project. An average customer satisfaction score will completely mask these differences. In the Trilogy example, the IT organization was pleased with the vendor, but the business sponsor was dissatisfied. And because the business sponsor was paying the bills, his opinion was the one that mattered.
Loyalty Is Not Satisfaction
Just because your customers are loyal, it doesn’t mean that they are satisfied. A recent study by research firm Miller-Williams of 33 companies in six industries found that loyalty does not correlate perfectly with customer satisfaction. In fact, the study found a negative correlation between satisfaction and loyalty in the software industry. The likely explanation is that enterprise software has high switching costs, so customers are loyal to their vendors even if they aren’t happy. Customers of Microsoft find it difficult to switch from Microsoft Office and Windows because the company dominates the desktop applications and operating systems market. As I tell my friends at Microsoft, there is a difference between loyal customers and hostages. As Microsoft is finding out with the Linux threat in the server business, the true test of loyalty is to retain your customers when they have a real choice.
Replace Ritual with Reality
Sometimes, customer satisfaction programs take on a life of their own. Consider the auto industry. Dealers of luxury autos often reward their sales personnel based on customer satisfaction surveys. However, that practice has unintended consequences, as one of my friends discovered while buying a car from an Acura dealer. Even before the customer satisfaction survey had been mailed out, the sales representative hinted that nothing less than an exceptional rating would do. Another example of good intentions gone awry comes from my experience during a recent stay at the Sheraton World resort in Orlando. Sheraton recently rolled out its “Sheraton Service Promise.” It pledges to compensate guests for any inconveniences. When I checked into my room, I found that the toilet was leaky and would not stop running. I called the front desk and was offered a coupon for a free breakfast. But when I returned to my room in the evening, the toilet still hadn’t been fixed. I left annoyed early the next morning without having time to eat my free breakfast. As far as Sheraton was concerned, I was satisfied, but it never solved my problem.
Lessons for the CIO
The same ideas for satisfying customers of a company’s products and services can help CIOs serve their customers. While service-level agreements (SLAs) are the norm for managing relationships with external IT service providers, many IT organizations don’t have internal SLAs that define expected services to end users and penalties if those service levels aren’t met. In addition, CIOs should work to understand how their customers define success. That requires a close partnership with end users to understand the business outcomes that they seek and the metrics that should be used to measure business value from their perspective. Finally, IT organizations should not forget that business units aren’t captive customers whose loyalty can be taken for granted. CIOs who can’t satisfy end users may find their jobs on the line.
Ultimately, whether you deal with external customers or internal customers, the only way to make yourself successful is to make your customers successful. While satisfaction does not guarantee success, customer success does guarantee customer satisfaction.