The Customer Aggravation Index: Predicting Customer Loyalty Without Surveys

I don't know about you, but I hate customer satisfaction surveys. We are all inundated with them thanks to email. It used to be these things came in the mail (easy to throw out) or by telephone (hang up). Now, most of them come via email. I stay in hotels 100-plus nights a year, and no matter how big or small the hotel was, they always manage to send me a survey several days later. Like you, I delete the survey unless I really had a bad experience.

I did waste 15 minutes filling out one I got from a St. Regis Hotel vendor and was madder after filling out the survey than before I started it because there was no place for me to explain the problems I experienced at the property. Plus, I had to waste 15 minutes of my time, telling a company I just paid a lot of money to how they screwed up.

Companies know that people are busy and hate filling out lengthy surveys, so two of the latest techniques are to make some vague offer that you might win something if you fill out the survey ("Earn a chance t win 100,000 airline miles") or to make the survey really short. A big trend now is one question surveys, called net promoter score. The biggest problem with these brief surveys is still most people don't fill them out unless they are mad, and if you only ask one question and get a low rating, you don't know what made them mad or what to do about it.

Problems with Customer Surveys

I guess the big advantage of surveys is that they are cheap, easy, and anyone with access to Survey Monkey or similar software can do one. The biggest problem with surveys is that most people don't respond or fill them out, and those that do tend to be really happy or really unhappy, provided an inaccurate reading of overall satisfaction of all customers. A 30% return rate on a survey is considered good, and most don't even get that. Some of the other problems with surveys are:

• Surveys take up valuable customer time
• Surveys may frustrate unhappy customer even more
• Surveys rarely generate any kind of follow-up response, making you wonder if anyone even reads them
• Surveys often fail to include the most important questions like "Did you get a good night's sleep at our hotel?"
• Surveys may not provide enough detail to diagnose and solve problems
• Surveys cannot be done frequently or you could aggravate customer more
• Some corporations like Wal-Mart have policies of not filling out vendor surveys
• Employees figure out how to cheat – real estate agents only handed out surveys to customers they knew were happy with the transaction and car dealers have been caught offering incentives to customers for high ratings on JD Power surveys.

A Better Way

It is vitally important for an organization to measure customer satisfaction and to try to predict customer loyalty. It is also important to detect even minor dissatisfaction levels so something can be done to improve the relationship and keep the customer.

As an example, look at FedEx, who was the pioneer in developing a daily metric that tracks how many customers they made mad on a daily basis and how mad they make them. By holding focus groups with customers from a variety of industries and locations, they gathered a long list of things FedEx had done to aggravate them over the years.

Once FedEx narrowed down this list to a reasonable number of problems, they had customers rank order them from the most maddening to the least, assigning 1-to-10 severity ratings. It turns out the 10 or worst thing FedEx could do was lose a package and never recover it. A minor aggravation rating of a 1 or 2 might be a package that is an hour or two late. Every day, FedEx tracks occurrence of these problems, multiplies the frequency by the severity, and rolls it up into an index that measures customer aggravation levels. It turns out that this index is directly correlated to disloyalty.

Big surprise: if you make a customer angry enough, they take their business elsewhere and usually don't bother filling out your stupid survey.

Tracking Aggravations at other Organizations

Milwaukee airline Midwest Express liked the idea of a daily metric that predicted customer loyalty, and already had data on many of the factors that frustrate customers. Other than a crash, the "10" for an airline customer is the airline cancels the last flight of the night when you are on your way home, every hotel room in Chicago is sold out, and you have to sleep in O'Hare until you can get a flight the next morning. Pretty close to that is that the airline loses your luggage when you are heading to Paris for a wedding and all you have to wear is jeans and a t shirt. Your $2000 tux is gone, and your wife's dress she got at Neimans is also gone. This happened to my good friend and he still refuses to fly this airline ever again. A minor aggravation for an airline customer might be having to check your carry-on because the bins are full, or getting placed on hold for 20 minutes by a reservation agent.

DTE Energy the electric and gas company in Michigan (formerly Detroit Edison) liked the idea of an aggravation index as well and started tracking power outages, billing errors, and other factors on a daily basis. Discover Card in Chicago adopted this metric for a while as well, and tracked call center waiting time, average call length, billing questions, handling of fraud, talking to someone in their call center with a foreign accent and other factors that many people find aggravating. A big frustration for Discover Card customers was trying to use the card and fund out it was not accepted by the merchant.

Advantages of the Aggravation Index

The biggest downside of a metric like this is that it does not provide data on overall satisfaction levels or situations where you might have surprised and delighted a customer – it only measures screw-ups.

However, I think the list of advantages far outweighs the limitations:

• Aggravation index can be tracked and reported on a daily basis, providing real-time performance data
• Customers do not have to put out any time or effort to give you data on their levels of dissatisfaction
• Most organizations track the things that frustrate customers already so there is not a lot of cost in implementing this metric
• The metric is simple enough for all levels of employees to understand
• The data is actionable – levels of aggravation can be analyzed to determine the specific events or errors that occurred and action plans can be put in place to improve
• Aggravated customers eventually leave and this measure gives you a way to detect minor problems before this occurs.

Don't Confuse Loyalty with Satisfaction

The fact that your customers stick around does not necessarily mean they are happy with your products or services. Loyalty is often driven by laziness, risk aversion, habit, and a lack of better choices. Most of us hate paying our cable/satellite bill for television, and have looked around at alternatives, but they are all around the same price and have the same channels, and we may be stuck in a contract, so it is easier just to stay where we are. Predicting future customer buying behavior and loyalty is a tricky business. A customer who consistently rates you a "10" on your net promoter score survey may be gone tomorrow because someone came along with an attractive offer or she just got bored and wanted to try something new. Leading companies like Fed Ex and others have found that a daily metric that tracks occurrence of errors that frustrate customers can be a simple and easy way of measuring and predicting when a customer might leave and never come back.

Mark Graham Brown is a veteran consultant and regarded as one of the leading experts on performance measurement/balanced scorecard and the Baldrige model.