Using Social Networking to Measure Customer Satisfaction

Just about every type of organization today has acknowledged that they have customers, and that customer satisfaction is something that is important to track and manage. Everyone from your lawn guy to your kids' teachers wants to know if you are satisfied with their service. This really is a good thing and most of us are delighted to see even places like the DMV and the IRS seem to want our feedback so they can try to improve. In the case of the DMV in California, they really do seem to have improved since it is now possible to make an appointment online and to dramatically shorten the amount of time you would have spent at the DMV compared to a few years ago.

The bad news about this increased concern with taking care of customers is that the methods used to measure our satisfaction have become no less invasive or sophisticated, and now everyone you deal with at work and home wants your feedback.

Back in the 1970s the car companies and a few other industries started hiring firms like JD Power to do customer surveys. A car is a pretty big purchase, and many of us took the time to complete the 50-question surveys that asked all sorts of questions about the car itself, the sales process and any service experience we had at the dealership. These surveys became so important, car manufacturers began using them to rate dealers and give preferential inventory to the best performing dealers. Rather than improve service, which could get expensive, crafty dealers figured out how to cheat on the surveys by offering incentives to customers like free floor mats or detailing service for a photocopy of a positive rating. If pilots started offering free drinks for positive airline surveys, flying might get to be more fun.

Net Promoter Score – the New and Improved Survey Method

Most of us consumers are surveyed to death and we delete the majority of email surveys we receive, hang-up on the phone surveyor, or throw away the ones that come in the mail in an important looking envelope. To combat this, a consultant from Bain and Company has developed a brilliant solution: a one question survey. The survey asks you to rate the product/service on a 1-10 scale as to whether or not you would recommend it. Simple, eh? Predictably, more people respond to these one-question surveys than longer ones.

There are four major downsides, however:

1. It is still a survey of someone's opinion, and happiness with a product or service does not necessarily mean I will buy it again. I would rate the Kia I had as a rental car as a 10/10, but I would never buy one. I might rate my flight on United as a 3/10, but I would fly United again because I want to earn my 1K status again to get free upgrades.
2. I don't want to take up my time to give your business feedback when I am already mad or even if you did an OK job; I have better things to do with my time.
3. Most people don't respond to any survey unless they are really mad or really happy, so survey scores may not reflect the entire group of customers.
4. If you get a low score on a one-question survey you have no idea why, unless you follow-up with more questions, aggravating an angry customer even more.

Measuring Customer Satisfaction without Surveys

A secret that leading companies like FedEx have discovered is that you can measure customer satisfaction and predict customer loyalty without asking customers to fill out surveys. Years ago, FedEx found little correlation between customer satisfaction and loyalty. Customers might give you high ratings for years and then switch to another delivery company for some unknown reason. Many big companies like Walmart actually have policies against filling out vendor surveys.

A better approach is to measure how many mistakes your company makes on a daily basis and rate these as 1-10 in severity. A really bad mistake might be the one that causes a customer to never do business with your company again. For FedEx, the "10" or worst thing they can do is completely lose a package. For Midwest Express Airline, which also uses this metric, the 10 might be cancelling the last flight of the night due to a mechanical issue, and customers have to spend the night in O'Hare because every hotel in Chicago is sold out. For DTE Energy, another company that tracks this "aggravation index," it might be the number of households that had their electricity mistakenly shut off for more than a week.

Most organizations track operational factors important to customers every hour and every day. The key is to rate them in severity (based on customer focus groups) and then monitor this aggravation index on a daily basis. Organizations that use this approach have found that it correlates very strongly to customers leaving.

Using Social Media

Another useful approach to measuring customer satisfaction without surveys is to monitor what customers are saying about your business on websites like Twitter and Yelp. Yelp is a site that started in San Francisco but has migrated to other cities, and it gives consumers a way to review businesses using 1-5 stars and provide detailed comments on their experience. A small business that cannot afford surveys or simply doesn't want to do them can monitor their reviews and use average rating as an overall metric. The reviews often provide a wealth of useful details on what people liked and did not like.

Twitter or Facebook might be a better bet but there is no overall numerical rating system like Yelp's 5 stars, so it is harder to get quantifiable data. Yes, the words and comments are interesting, but it is tougher to sort and categorize them into useful summaries. There is software available to help you make sense out of all the tweets.

Online surveillance of social networking sites has become the latest tool in the arsenal of techniques for measuring and predicting customer buying behavior. According to an article in USA Today, Indiana University has developed techniques for capturing daily tweets, analyzing them with mood measurement tools, rating the mood of the tweets as positive or negative and calm versus anxious, and then quantifying the data in summary form. Since many people use Twitter and other social networking sites to comment on their experiences, this can provide a wealth of data that might be used to measure customer satisfaction without having to do surveys.

Data from tweets is viewed as unstructured data that is harder to quantify and hence less useful than 1-10 ratings on survey questions, or even counting the number of delayed flights, lost packages, or power outages. However, firms that have figured out how to tap into this data, quantify it and use it for performance assessment and decision-making are often leading their competitors. Several investment firms are even using data from daily tweets to make buy/sell decisions and beat the market. Thomson Reuters' news analytics service measures how positive or negative a news story is about your firm, and combined with circulation data can use these data to predict actions such as a drop in stock price. Market Psych is a company that selling data feeds from its proprietary mood measurement software to investment firms.

Sorting out the Beautiful from Ugly Customers

Lenders have been scoring the relative attractiveness of customers using credit scores for years. We all have some number from 400-800 that influences the likelihood we will get credit as well as whether or not we will get a preferential interest rate. Well, it turns out that we are being rated on more than just our credit worthiness. We are being rated on how influential we are. If you have an account on LinkedIn, Facebook, or Twitter, you are already being rated.

Influence scores range from 0-100. On Klout, the dominant company doing these ratings, the typical score is in the teens and a score of 40 would indicate a strong niche following. A score of 100 would indicate you are someone like Oprah or Lady Gaga. Marketers of the influence scores claim that over 2500 companies are using this data. Audi recently announced that it would be offering promotions based on Klout data. Last year Virgin America offered highly rated influencers in Toronto a free flight to either Los Angeles or San Francisco. The good news from all this is that your level of influence is based on more things than how good looking, rich, or powerful you are. The bad news is there is now another number we are getting labeled with that will impact how easy or hard life will be for us.

Putting It All Together

Now the real magic comes in first defining how attractive a customer is, and then matching that to their level of satisfaction. Making a really important customer angry may be 100 times worse than angering a customer that is of little importance to your firm. Banks already size us up by deposits and net worth, but now they can also include other variables in evaluating how important or attractive we are to them. Businesses that sell to other businesses may have an even easier time rating customers on an attractiveness scale.

A number of my clients have what one calls an "ugly stick" that measures each account quarterly on variables such as sales, profits, ease of doing business, potential for growth, customer financial stability, brand strength, etc. Smart companies are concentrating on making their most influential customers really happy. Having a customer with a strong influence or attractiveness score be your advocate is huge and should be measured very differently than overall level of satisfaction of all customers.

New technologies and new metrics are giving leading companies today a scientific approach for measuring and improving the relationships they have with key customers that drive real business results like growth and profits. Companies relying on unsophisticated measures like surveys are likely to get left behind by those adopting a more systematic approach.

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