Measuring Customer Satisfaction and Loyalty

Tracking your clients’ feelings toward your services is important

By Deborah Curson-Vieira

Various statistics on the Internet show the value of retaining customers and how much more it costs to gain a new customer than it does to retain an existing one. Many suggest that the cost of keeping a customer is one-tenth of acquiring a new one. Most laboratories would agree that they would rather sell to a current office, where they have an established partnership, than sell to a new office where they have to build that trust and relationship from scratch.

The starting point for growing your business through customer retention is understanding two very important measurements: customer loyalty and customer satisfaction. Often these two terms are used interchangeably. However, they are very different and provide very different insights into how your laboratory is performing.

Customer satisfaction is the degree to which you are meeting your customers’ expectations. Customer loyalty is the likelihood of a customer continuing to buy from your laboratory or promoting your laboratory to a friend or colleague. While customer satisfaction can change dramatically based on a single interaction or case, customer loyalty involves your business at a higher level. It is a reflection of the views or attitudes customers hold about your laboratory or products. It is not easily changed and therefore is a valuable predictor of growth.

Measuring Customer Loyalty

The prevailing measurement for customer loyalty is the Net Promoter Score® (NPS). Developed and trademarked by Fred Reichheld, Bain & Company, and Satmetrix, the NPS correlates strongly to referrals and repurchases that contribute to a company’s growth.

In studying customer loyalty, Reichheld and his team found that one question was the best predictor of customer behavior. “What is the likelihood that you would recommend Company X to a friend or colleague?”

The NPS uses a scale of 0 (not at all likely) to 10 (extremely likely). Based on the answers, NPS segments customers as:

• Detractors (scores 0-6): Unhappy customers who may damage your brand through negative word-of-mouth.

• Passives (scores 7-8): Satisfied customers who are indifferent. They are vulnerable to the competition.

• Promoters (scores 9-10): Loyal fans of your laboratory and your brand who will keep buying and refer others.

Your final Net Promoter Score is calculated by subtracting the percentage of respondents who are labeled “Detractors” from the percentage of respondents who are labeled “Promoters.”

This can range from -100, in which everyone is a detractor, to +100, in which everyone is a promoter.

Industry experts believe that a score of 75 percent or above is considered to be excellent, and 40 to 74 percent is considered very good. Companies such as Zappos, Costco, and Amazon range from 50 to 80 percent. According to NetPromotor.com, the average company has an NPS efficiency of only 5 to 10 percent. In other words, promoters barely outnumber detractors.

Digging Deeper with Customer Satisfaction

While your NPS score is a high-level view of how your laboratory is performing, customer satisfaction deals with the specifics of why it is performing that way. Instead of stopping at a single question, many organizations include a follow-up question such as, “What factors influenced your rating?” or “What is the most important reason for your score?” in order to analyze where they need to focus their resources.

Once you have analyzed your score and the answers to your follow-up question, you will want to ask more questions of the different segments of customers, both positive and negative. For example, in your NPS survey you may have learned that your detractors were unhappy with inconsistent quality. Survey that group further to find out which restorations or services they felt were inconsistent and in what ways. This will give you the data you need to make informed decisions on processes and procedure.

Many different types of surveys are available to measure customer satisfaction. Whether you use an online survey tool and create the surveys in house or you work with a survey company, here are some of the best practices to keep in mind while building a survey:

Keep it simple: As you plan your survey, the first step is to ask yourself, “What is the purpose of this survey?” Are you looking for feedback on turnaround times, product quality, pricing, customer service, or continuing education events? Each of those topics should be a different survey. When you include too many topics in a survey, your respondent gets overwhelmed and the chances of them completing the survey decreases dramatically.

Don’t stack the deck: Include declining accounts and lost customers to your survey lists, not just your top customers. While positive feedback can help motivate your team, you cannot afford to ignore negative feedback. Focus on any negative feedback and take actions to close any gaps.

It’s not a one-time event: For you to truly understand your client’s needs and expectations, surveys are more than a one-time event. After executing a broad NPS survey, chances are you’ll want to send follow-up surveys in order to track changes in loyalty and satisfaction over time. Industry experts suggest sending out broader NPS surveys on a yearly basis. However, you may want to do surveys after events such as product launches or changes to your services, as those can influence your satisfaction scores

As you grow your business through customer retention, it is important to listen to the voice of your customer. If you are able to identify what makes them unhappy, what satisfies them, and what needs they have that are unmet, you have the building blocks to create growth in your organization.

Deborah Curson-Vieira is the director of customer care at Dental Prosthetic Services in Cedar Rapids, Iowa.