Shared Insights
Q: Why is segmentation so important to the success of a customer satisfaction program?
Customer satisfaction programs are only successful if they drive the right priorities and action plans. Since various customer segments value different aspects of quality and service, they also exhibit different behaviors, and financial outcomes, relating to customer satisfaction.
Customer segmentation is a powerful tool for viewing these customer subgroups as part of a strategic portfolio. Each subgroup benefits from its own focused customer strategy as part of this overall customer portfolio. The result is better serving specific customer needs, optimized investment strategies and ultimately a better return on customer assets.
It is important to remember, though, that segmentation is not a goal in itself. The real goal is to develop action plans for providing superior customer experiences for those segments. If segments are not defined in a way that allows for unique action planning, segmentation efforts, while perhaps interesting, may not yield additional value.
Q: Is CSI a Leading or Lagging Indicator?
An indicator is a measure that is related to business outcomes. If an indicator is used to predict future business outcomes it is called a leading indicator. Quantitatively, a leading indicator and a predictor are pretty much the same concept. Lagging indicators are measures taken subsequent to observed changes that are after-the-fact validation of expected business outcomes.
So how does this relate to your CSI program? CFI Group develops programs such that they reflect a series of cause and effect relationships. As the quality of customers’ experiences improves, CSI will likely increase. (Unfortunately the reverse is also true.)
Such CSI improvements are critical because, as a leading indicator, CSI predicts financial performance resulting from customer retention, price tolerance, cross-selling, up-selling and recommendation to others. “Customer Satisfaction and Stock Prices: High Returns, Low Risk,” published in Journal of Marketing, January 2006, found that a 1% change in the American Customer Satisfaction Index (ACSI) is associated with a 4.6% change in a company’s market value. This is strong validation of CSI as a leading indicator.
Q: How do you recommend dealing with missing responses in a survey?
The guideline used by CFI Group is to report results based on all surveys that have valid responses for at least 67% or more of the questions in the model. This ensures that our results are valid, and that respondents have had adequate experience with the product or service to evaluate it.
If a respondent skips a few questions on the survey, CFI Group does not substitute a mean value for the missing responses. Substituting a mean value can produce misleading results, especially where the sample size is small. Because the Customer Satisfaction Index is the linchpin of the model, CFI Group does require that respondents answer all three satisfaction questions (overall satisfaction, compared to expectations, and compared to an ideal).
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