Whether you are considering conducting your first customer survey or you have been conducting them for years, there are many issues to consider. Customer surveys are an investment and you want them to pay off by increasing profits, but customer surveys are only profitable if conducted properly. When conducted using scientific principles and methodology, customer survey data can be used as a catalyst for increasing customer satisfaction, intent to return, and ultimately, profits.
In an article published in the Journal of Direct Marketing, Charles Gengler points out that “customer satisfaction research is not only a tool to measure consumer attitudes, but can also be a proactive tool for managing customer relations.” Not only can you use the survey results to implement changes to increase customer satisfaction and intent to return, but Gengler’s study also found that just soliciting a customer’s participation for a satisfaction survey can increase intent to return! Just asking for feedback indicates to the customer that the company cares about customer relations and satisfaction.
When surveying, it is important to remember that you are measuring customers’ perceptions and not necessarily reality. Customer perceptions are more important than reality. This is counterintuitive, but true nonetheless. Mark Davis and Janelle Heineke examined customer satisfaction and compared customer perceptions of wait time with actual waiting time in a study published in the International Journal of Service Industry Management. They found that a customer’s perception of wait time was more important than actual wait time in determining customer satisfaction. In a sense, we are each living in our own reality. A span of time that seems like a fleeting moment to one person feels like an eternity to another. Knowing how your customers perceive your services is vital to increasing customer satisfaction and intent to return.
So we know that customer surveys can pay off in more ways that one. But how do you proceed? First you need to decide whether to design, conduct, and analyze the survey in-house or hire a survey research firm. You can easily make this decision by answering the following three questions:
- 1. Does your company have employees with expertise in research methodology?
- Such an individual should have graduate level (preferably doctoral level) training in research design and field experience with advanced experimental methods, quasi-experimental and correlational methods, program evaluation, and sample survey methods. A person with a background in these areas will have the knowledge needed to design a scientifically sound research instrument.
- 2. Does your company have the manpower necessary for the production and distribution of the survey and the staff to collect the data?
- The number of people needed for these tasks will vary depending on the number of customers you plan to include in your sample.
- 3. Does your company have employees with knowledge of how to conduct descriptive and inferential (predictive) statistics?
- If you have an employee with expertise in research methodology it is probable, but not guaranteed, that this same employee will have a background in statistics. The employee should have completed graduate courses in analysis of variance and multivariate statistical analysis.
If you answered “No” to any of these questions, hiring a survey research firm is prudent. A survey research firm will have the expertise and tools necessary to conduct scientifically sound research, design the survey, and complete the data collection and analysis in a timely manner. We are all familiar with the phrase, “Time equals money.” This is certainly true in customer research. Timely feedback is crucial to accurately address customer issues.
If you decide to hire a survey research firm you will want assurance that the expense of retaining the firm will be exceeded by the profits gained from conducting scientific research. How can you have such an assurance?
Know what you’re buying.
Not all survey research firms deliver the same product. Retaining a survey research firm is like buying a new vehicle. Most individuals have a limited amount of money they are able or willing to invest in a new vehicle. It stands to reason that if you are purchasing a vehicle you would like to get as many options and features as you can for your money. A wise individual does their “homework” before making a purchase. This involves coming up with a list of desired features and comparing different makes and models of vehicles to see which one offers the most “bang for your buck.” But features and price are not the only issues. You will also want to learn about the dependability of the vehicle. Getting a lot of options for a low price is no bargain if your vehicle turns out to be a lemon.
The same holds true for hiring a survey research firm. You need to know what features you are looking for in your survey and data reports. And it is important to be knowledgeable about the quality of the research conducted by the firm. Let’s begin with the features. What exactly should you be looking for?
- Benchmarking data.
- Root cause analyses.
- The ability to integrate customer, employee, and financial data.
Now let’s examine these points in more detail.
Just as any new vehicle you purchase will have an engine, any survey research firm should provide descriptive statistics of your data. As the name implies, descriptive statistics describe your data set. Descriptive statistics give you information such as the average response for each survey item and the most frequently occurring response for an item. While this information is of some benefit, its usefulness is limited because it is very subjective.
To illustrate how descriptive scores are subjective, let’s look at two example items that are used on customer surveys and how their example scores might compare. Your customer survey may provide survey participants with a scale to use in which one equals “strongly disagree” and six equals “strongly agree”. Participants’ average responses to the following items: “I would recommend doing business with the company to others” and “Sales representatives are responsive to my needs” may both have average scores of 3.99, almost at the “slightly agree mark.”
Based on these numbers alone, you may assume that you are performing equally well in these two areas. However, this assumption is not only subjective, but in this example case, incorrect. Why?
Only by utilizing benchmarking data can you really know if these scores are good or bad. Benchmarking data refers to data from survey items that many people (thousands, millions, or perhaps billions) have responded to. When a survey research firm provides you with benchmarking data, they are letting you know how the responses of your customers compare to the responses of thousands of other customers who have responded to the exact same survey items. You may be thinking, “I don’t care what someone else’s customer’s think, I only care what mine think.” However, knowing how other customers think is necessary for interpreting how your own think. Consider, for example, a college student who is taking a physiology course. The student receives a 72% on the first exam and initially thinks it is a bad score, only a low C. However, later the instructor announces that the class average was only 55%. How does the student feel about that 72% now? Great! Another student may feel okay about a 72% in a biology class until the professor announces that the class average was 88%. Knowing about the performance of others provides us with a barometer of our own performance.
Now let’s examine the two survey items mentioned earlier: “I would recommend doing business with the company to others” and “Sales representatives are responsive to my needs.” Recall that each of these items received an average score of 3.99. As it turns out in this example, 3.99 is a poor score for “I would recommend doing business with the company to others” as 3.99 is only at the 38th percentile for this item. That means that 62% of individuals surveyed gave this item a higher score. However, for “Sales representatives are responsive to my needs” a score of 3.99 is at the 96th percentile which tells us that most customers give this item a lower score. Thus, 3.99 is an outstanding score in this case. Benchmarking data provides the objective information you need to make profitable changes in your business.
Root Cause Analyses
One of the features to look for from a survey research firm is the identification of root causes. These should be provided in the firm’s executive summary of your findings. What exactly is a root cause analysis?
A root cause analysis is a sophisticated statistical procedure that examines the relationships between all of the items in your survey. First, baseline relationships between the variables are identified by performing correlations. These correlations indicate which variables have a tendency to increase or decrease with each other. Secondly, a stepwise linear regression analysis measures the degree of influence each survey item has on each of the other survey items. In the final part of the procedure, an organizational psychologist works in conjunction with a statistician to conduct an organizational behavior (psychological) path analysis.
This is where the research really gets exciting! The path analysis is the key part of the survey process because it provides the information you need to increase profits. Profits are directly tied to your customers’ overall satisfaction and intent to return. This part of the root cause analysis procedure identifies the “drivers” of overall satisfaction and intent to return. This means identifying the few items on your survey that are actually determining how customers respond to a majority of the other items. In some cases root causes may influence as many as 80% of the other items on your survey. When the survey research firm provides you with these drivers, you will know the few issues that need to be addressed to have the maximum impact on satisfaction and intent to return. Without a root cause analysis, you would spend months debating which items should be addressed and discussing the budget and human resource requirements of interventions to address the issues.
And in the end what would you accomplish? Little or nothing.
If you try to make changes to increase customer satisfaction and intent to return without conducting research it is like “the blind leading the blind.” If you conduct research, but do not identify the root causes you do not fare much better. Once the root causes have been identified you have your “marching orders.” You know the specific issues to be addressed and addressing these issues will directly improve your bottom line.
Integration of Customer, Employee, & Financial Data
It is important to find a survey research firm that can take your customer data and integrate it with data from your employee survey and with financial data. Increasing employee satisfaction increases customer satisfaction. Think about how dissatisfaction with one’s job can influence behavior. Have you ever been waited on by a clerk who said, “May I help you?” with all the enthusiasm of someone about to undergo a root canal? Customers know when employees are not satisfied with their jobs and it leaves customers with a “bad taste in their mouths.” They will start looking for somewhere else to take their business.
To integrate employee and customer data, a survey research firm needs to be able to identify those employee perceptions that drive employee behaviors and directly impact customer satisfaction. To perform this analysis, employee data must be correlated and regressed against key customer perceptions. These root causes are almost always different from the root causes driving employee satisfaction. Once you have discovered the relationship between employee behaviors and customer satisfaction, you have the most powerful knowledge possible to implement changes that will increase your profits.
Now that you have an understanding of the critical features to look for from a survey research firm, let’s address the issue of quality. Unfortunately, we often don’t fully become aware of a product’s quality until after we purchase it and use it. If we could all recognize a lemon before we drove it off the lot, no lemons would ever be sold.
So how can you gauge the quality of a survey research firm before retaining their services? Examine their reputation.
Before purchasing an automobile you may talk with others who own the same make and model you are considering and you may also read articles about the vehicle published in consumer magazines or on websites. Before doing business with a survey research firm you can learn something about their reputation by asking for a list of the firm’s clients. Word gets around when a business produces a high quality product or service. Look at the list and ask yourself, “Have I ever heard of these companies?” If large, successful companies are using this firm, the firm is probably doing something right. Also find out how long the research firm has been in business. If the firm is a well-established business it has probably survived because it has consistently and successfully met the needs of its customers and has a high rate of repeat business.
Another factor influencing the quality of the services you are purchasing from a survey research firm is how the results are reported and explained. If you receive a report that requires a Ph.D. to interpret it, what is the point in hiring a firm? If you had those resources you would not be outsourcing your survey. Make sure the firm provides a clear explanation of the results and how they are to be interpreted. The executive summary should provide a clear and easily understood method for interpreting your survey scores.