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The Dutch business community spends millions annually on customer satisfaction surveys. Customers are then allowed to tick boxes and give scores – whether digital or not. Is the anonymized, aggregated average result a six or higher? Hooray. We are doing a good job. We know what our customers want (or at least the portion that participated in the survey), and we offer exactly what our customers want, or…

No, entrepreneurs often do not know what their customers want. Moreover, the ambition could be a bit higher. If you eat at a restaurant and rate the service a six, do you go home very happy? I certainly do not.

A 7.2 and still losing money unnecessarily

Following a student's HBO graduation thesis in Rotterdam, the student and I conducted research at the company where she had interned. The management had commissioned a customer satisfaction survey and was very satisfied with the outcome: a 7.2. The need to make improvements was not felt.

We decided to go a bit further with the research anyway, and it turned out that renewing a contract with an existing customer cost the account manager two days of work. The effort to acquire a new customer cost seven weeks of man-hours. That is seventeen times as much time – and therefore money – to acquire a new customer. This was convincing enough for the management to take a more serious look at making existing customers more satisfied.

From a 7.2 to a 9

We started by taking stock of what could be improved. The goal we had in mind was a customer satisfaction score of 9 instead of 7.2. Our question to customers was therefore: in what ways could your satisfaction with the service rise from 7.2 to 9? We mapped out and categorized the answers. In doing so, we looked for the 20% of recommendations that could lead to 80% more satisfaction. In other words, which suggestions to improve the service were mentioned most frequently by customers?

The management immediately recognized these initial recommendations. Together with company employees, we began developing the recommendations into concrete changes. This undoubtedly comes down to adjusting at least the following three elements:

1.       Processes.

2.       Employee behaviour.

3.       Leadership style.

The change proposals were approved and implemented by the management. After only a short time, customer satisfaction – among customers who had previously provided their opinion – had risen to a solid 8.

We subsequently applied this process of identifying areas for improvement, converting them into recommendations, and then concrete changes, approval, implementation, and evaluation, step by step, to the less frequently mentioned improvement suggestions from the original survey. All in all, this was a process of one and a half years. Customer satisfaction is still rising, and the company is spending less and less money unnecessarily.

Lasting results through continuous monitoring

At a certain point, we conducted a cost-benefit analysis. We calculated the cost savings now that customers remain customers longer because they are more satisfied. That was very convincing to the management. Therefore, they also implemented a fundamental change within the company: the most important major customers sit down monthly to ask how things are going, what they are satisfied with, what is changing in the customer's market so that the supplier can respond immediately, etc. Consequently, they are continuously monitoring customer satisfaction and seeking solutions and improvements in a structured manner.

I can hear you thinking: but surely that is all logical?

Then we come to the question of why it doesn't happen as standard practice. Why is it "common sense" but not "common"?

Firstly, customers are not surveyed often enough to see how satisfaction is developing, or whether the service delivery still meets requirements. The consequence of this is that changes are not detected in a timely manner. And certainly not among satisfied customers. Surely, they don't need to be surveyed? Well, they do. The world is always subject to change, and the same applies to customers.

Next, we often fail to conduct a cost-benefit analysis. The practical example above demonstrates how important this is for the decision to address the quality of service delivery. Part of the analysis involves the costs of redoing work. If you do not know exactly what the expectations are beforehand, you run a very high risk of not getting it exactly right, meaning you will have to rectify, correct, repair, adjust, etc. This can consume up to 10% of a company's operational time. It takes effort to conduct the analysis, but it is worth the effort.

Then there is also a psychological component. It is known in that field that 80% of people take action when they are threatened, and only 20% when everything is running smoothly. It is not for nothing that the most comfortable posture for our bodies is to lean back. Often, things are going too well to acknowledge the importance of high customer satisfaction. What I advise every entrepreneur is to be constantly on the edge of their seat.

Case study During an investigation at a large purchasing cooperative, it turned out that eight product groups were profitable. Two were heavily loss-making. When I advised them to investigate the cause of the losses in those last two groups, two of the directors responded: "Why would we do that? The rest brings in enough revenue anyway." My response: if you want to throw that money away, go ahead, but it doesn't seem rational to me. Sitting back… They continued with this for three years. Only after these two directors had left did they finally start the improvement process where it was so desperately needed.

Finally, the entrepreneur often asks too few follow-up questions. Sometimes a customer does not immediately know exactly what the problem is. The entrepreneur must be able to spot this. That requires a great deal of empathy. You can develop the intuition needed for this. For example, by regularly asking yourself: is there more going on here? Subsequently, the entrepreneur must also be able to probe further: what is the question behind the question? You can learn that too.

I have advised many entrepreneurs on these topics. Often, I had to watch as things went too well, as people were unwilling to get out of their chairs. The motivation to take action only emerged at the last minute. A terrible waste! The fact that the positive results of active quality management sometimes only become visible in the longer term does not make it any less important to be constantly working on it.

Ha ha, are you laughing now? Entrepreneurs don't have time for these kinds of matters

At its core, entrepreneurship is very straightforward. There are only two goals for the entrepreneur: profit and continuity. He must dedicate all his time to those. Many entrepreneurs regard customer satisfaction, controlled processes, and effective leadership as peripheral matters. The focus lies on the business itself. I tell you that these "peripheral matters" can be the entrepreneur's undoing. The time of pioneering as a self-employed professional passed for good the moment you hired staff, grew larger, and wanted more; you became an entrepreneur.

This means a shift in thinking and doing!