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Seven Requirements of Customer Driven Organizations

By Nancy Nygreen, Ph.D.

Customer satisfaction initiatives have succeeded and failed for a variety of reasons. But as the customer satisfaction field has developed over the past decade, practitioners are beginning to agree on a number of factors which are necessary if a customer satisfaction initiative is to have a significant positive impact on the bottom line. Following is a brief summary of these factors.

  1. Set the bar high enough. Customer satisfaction has a direct impact on customer retention and share of wallet, but the relationship is not linear. It is curvilinear. In competitive markets, a somewhat satisfied customer is often no more loyal that a somewhat dissatisfied customer. Organizations that do not understand how high to set the bar will not succeed.


  2. Focus. Customer satisfaction does not mean being all things to all people. It does mean identifying a target market and differentiated position, and then delivering on the promise. It sometimes means asking some customers to stop doing business with you, as Nordstorms has demonstrated.


  3. Provide value. Customer satisfaction does not eliminate price sensitivity. An integral part of a customer satisfaction strategy is the ability to deliver high customer perceived value.
     
  4. Educate your customer. The clothing retailer Sy Syms is correct when he says that an educated customer is our best customer. Understanding how to use a company’s product or service has a very strong bearing on satisfaction with that product or service.
     
  5. Satisfy your employees. Employee satisfaction also has a direct impact on customer satisfaction. But again, the relationship is often curvilinear, rather than linear.   Moreover, it is not merely an issue of creating happy employees, but a function of strategic understanding and commitment, role clarity and enablement.
     
  6. Change the way you do business. A customer satisfaction initiative can rarely be superimposed on an existing organizational structure and culture. It is not something a business does; it is a way of doing business that depends upon senior management leadership.
     
  7. Assume a long-term investment. Customer satisfaction is a long-term investment that can have a substantial financial impact. But unfortunately, in its first stages Quality is not free. Accordingly, it is essential to decide up-front how the bottom line impact of the initiative will be measured.

An important first step in a customer satisfaction initiative is ensuring that the senior management team understands these seven concepts and the implications they will have on the organization.


Website comments to tnygreen@alumni.princeton.edu. Page saved 18-Oct-2015.