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For many managers, the ultimate management virtue is satisfying customers. For others, such as William Toller, CEO of Witco Chemical Co., customer satisfaction is just the beginning: "We're not interested in just measuring customer satisfaction," says Toller. "We look for those things that customers perceive as adding value to their relationship with us. That allows us to focus on the critical few issues that affect both our performance for our customers and our profitability."
Toller knows that in the pitched battles for market supremacy, "loving" customers is less important than demonstrating worth. Yet hundreds of companies have spent millions of dollars measuring customer satisfaction when these attempts often do nothing to improve the bottom-line performance.
One reason is that traditional approaches to customer satisfaction tend to measure the success of their efforts too narrowly. Most measurement instruments are little more than felicity indexes to gauge customer happiness. They are not sensitive to the fact that a customer's voice has a wide range that goes beyond the one note of happiness or satisfaction. Other variables are just as crucial in driving customer decisions.
For example, after examining a customer satisfaction survey, a transportation company concluded that its customers were not all that happy. It decided to send out its salesforce to spread cheer and rebuild relationships. Yet the company continued to lose customers until it realized that a low-cost, innovative competitive offering, and not dissatisfaction, was the real issue. It had sent its salesforce to fix the wrong problem and waste time that should have been devoted to service development.
Without proper information to provide a clear line of sight from customer needs to the organization, improvement activities tend to lack both market focus and the proper utilization of internal resources. At AT&T, CEO Robert E. Allen requires reports from each...