Customer Satisfaction Slumps, Time to Make Lemonade

In 1994, the University of Michigan Business School, the American Society for Quality, and the CFI Group teamed to create the American Customer Satisfaction Index to measure the quality of the “household consumption experience.” The news from the national ACSI for Q4 2004 is not happy for retailers: Compared to last year, consumer satisfaction is down in categories across the board in e-commerce (-2.7%) generally, and in subcategories such as retail (-4.8%) and auctions (-1.4%), while retail trade shows an overall decline of –3.2%, with department and discount stores at –2.6% and specialty retail stores with a slight gain, up 1.4% from 2003.

But what if you were to make the lemon of customer dissatisfaction into lemonade? Debra Ellis of Wilson Ellis Consulting offers an interpretation of these statistics in her current newsletter, along with a plan for e-commerce companies whose customers may not be as happy this year as they were the year before. As Ellis notes, “resource reallocation from sales to service [is] a questionable practice in most corporate minds.” Customer relationship management, which has seemed to offer the promise of technological enhancement of sales, has frequently suffered because, as Ellis points out, “customers want to be served, not manipulated or managed.” One solution to reverse declining customer satisfaction is for a retailer to shift focus, concentrate on its own unique character and core customer, and work to provide better service. More satisfied customers lead to more sales, this school of thought says.

So if you fit into the profile of e-merchant with customers less happy with your service than they were last year or the year before, Ellis offers five steps to turn that negative fact into a real business opportunity:

1.Develop an internal service index. Start with records of returns, complaints, and inventory management; add customer and employee surveys; coordinate these with financials.

2. Educate all members of the business team—including customers.

3. Start small, measure well, and celebrate accomplishments. Think process rather than project.

4. If you have to make a choice, invest in talent over technology.

5. Measure, revise, measure, revise, and set a schedule for measuring service and sales.

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