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Improving Customer Retention with the right questions on the Customer Satisfaction Survey

In this post we will discuss the importance of asking the right questions that address your business's specific issues and will look at addressing the most common issues in a survey.

Losing a customer is painful. However, failing to learn from that loss is even worse. It’s vital to get Customer Experience and Customer Satisfaction research to understand why you may lose customers, to help you know the areas you need to improve, and to recognize changes in the competitive landscape.

Customer satisfaction is central to any business as it is directly linked to Customer Retention, Loyalty, and Customer Lifetime Value (CLV).


Customer Lifetime Value (CLV) is the total worth of a customer he/she will provide to a business over the whole period of their relationship with your business. It is an essential metric for business financial health as the acquisition of a new customer costs money (in advertising, marketing, offers, etc.)

In order to keep the hand on the pulse of your customer service experience, you need to find ways to listen, collect, and analyze the ‘voice of the customer.’ There are a few ways to do this: passive observation and active research.


Passive observation relates to listening to conversations between customers, a quick conversation with them when they pay the bill, checking on them once the food is served, tracking the number of returning customers (if you are good at remembering the faces or have access to their personal information). Also, it refers to tracking metrics that are already available: daily and weekly revenue, the average amount of the bill, the number of tables taken in any given hour, amount of tips, etc. Active research refers to conducting qualitative or quantitative research among your existing or potential customers. Active research offers the opportunity to ask the questions that close the gaps in your knowledge. The insights from the research help formulate your business strategy, identify and eliminate your weaknesses, and better use your strengths.



How can active research help in your Customer Experience Management?


As mentioned above, you can improve your Customer Satisfaction, increase your customer Retention, stop the ‘leaky bucket’ of customers leaving. This will result in customers staying with your business longer, coming more frequently, spending more during each visit. Ultimately, this will increase the Lifetime Value of your Customers.


The goal is to develop a survey that:

  1. Identifies your weaknesses: tests the different hypotheses (your ideas) of what could be wrong with your service and products.

  2. Checks for your likely strengths: What your customers value? What makes them come back? Is it quality of product, location, price, service level, atmosphere, etc.?

  3. If you want to go deep, you may also ask your current customers what competitors they recently visited and what they liked about their place, products, and services. However, this information has to be used with caution: don’t rush into making changes based on this feedback. By adopting something customers liked in a different place, you may lose your strengths, your unique distinction which customers may value.


While it may sound easy to use a template Customer Satisfaction survey from online and distribute it among your customers, there is a big flaw in doing this.


Don’t aim to do just any research. This is a waste of your time, your customers' time, waste of money. The goal behind any research is to help answer your specific business questions and help fix your problems. Thus, it is very important to stop and think about the 3 points above.

Put some time aside, get a group of your managers, employees, or even loyal customers, sit together, and brainstorm the following:

  1. What are the main issues with your business and environment? What was keeping your awake recently? Is competition heating up? Are sales down? Is the economy showing signs of weakness? Are there new trends in your category? Has there been a problem with online reviews for your business?

  2. What are your true business strengths? Does it have the best product? Strong, loyal customer base? Good location? Amenities? Unique product or partnership? Etc.

  3. What could be causing the problems from point 1? This is where you form hypotheses (ideas) of what are the roots for the problems. Also, you need to think about how your customers are viewing your strengths, can they be further strengthened? Can you develop new strengths to oppose some of the market threats?

  4. Check if you already have the information that may help you answer some of the hypotheses and tell you if they are right or wrong. See where there are gaps in information, and you need more information to answer some questions. See if this information can be collected by asking directly your current or potential customers/clients.

  5. And only now start developing the questionnaire. Each of the unanswered questions from the above must be addressed in your survey. Avoid asking template questions that provide ‘good to know’ information but are not important to your current problems, or that you cannot act on. The information that you cannot act on is useless, but those ‘good to know’ questions will take space on your survey that could have been given to more important questions.


Let’s examine some of the usual issues the businesses face and how they can be addressed in the Customer Experience Survey.


Issue #1: Declining sales, leaky bucket, fewer customers.

The goal here is to understand what is going on and what is making the customers leave.


There are 3 options to ask about their experience:

Q1a. How satisfied are you with your most recent visit?

__ Very satisfied 5

__ Somewhat satisfied 4

__ Neither satisfied nor dissatisfied 3

__ Somewhat dissatisfied 2

__ Very dissatisfied 1


Q1b. How likely are you to come back again?

__ Very likely 5

__ Somewhat likely 4

__ Neither likely nor unlikely 3

__ Somewhat unlikely 2

__ Very unlikely 1


Q1c. How likely are you to recommend your place to your friends and family?

__ 10 - Very Likely

__ 9

__ 8

__ 7

__ 6

__ 5 – Neither Likely nor Unlikely

__ 4

__ 3

__ 2

__ 1

__ 0 – Very Unlikely


Each of the questions has its own pros and cons.

  • Q1a makes customers think about their most recent experience, and you can later drill down into it. Also, it makes them focus on the most recent experience.

  • Q1b can serve as a proxy for future sales.

  • Q1c is the widely used NPS (Net Promoter Score) question. It is good as it measures both satisfaction with your place, but also provides information on the likelihood of current customers serving as a media for your business.

While all 3 questions have their pros and cons, we urge not to include all 3. Despite similarities, they aim to answer the same question. If all 3 are asked, you will waste space in the questionnaire that otherwise could have been used to answer other business questions. Besides, this question is just a way to get to ask the next question, which is:


Q2. Why did you say so?


At this point, you offer your customers the opportunity to tell you what they specifically dislike (if they had bad responses to Q1) or what they like (if positive responses at Q1). The idea is to be able to tap into the ‘voice of consumers’, read what they think and understand the common issues and strengths of your businesses.


Issue #2: Need to understand if we charge fair and competitive prices.

The goal here is not to just understand whether our business is perceived to be more or less expensive, but whether people see the value for the money they pay, are they prepared to come back and pay the same price again. Can we charge more?


Again there are 2 ways to get at the needed information for decision making:

The first option (the combination of questions Q3 and Q4):

We suggest asking two questions to get at the perceived cost and worth:


Q3. Please state whether you think our business is more or less expensive than the other businesses that offer similar services?

__10 – Much more expensive

__9

__8

__7

__6

__5 – About the same cost

__4

__3

__2

__1

__0 – Much less expensive


Q4. How would you rate the services you get from our business?

__Worth more than they cost

__Worth about what they cost

__Worth less than they cost


When the questionnaire length is limited, these can be included as part of one question:

The second option (if space on the questionnaire is limited) is asking just one question below:


Q5. Please rate your level of agreement with the following statements about our business:


The idea behind these questions is looking at the more expensive/less expensive answers: the data will let you know whether your prices are lower, higher, or about the same as your competition. The worth question will let you know whether customers think the price is fair (do they get the expected worth for what they pay). If you see that perceived worth is high, you may consider increasing the prices or using this high perceived worth to your advantage. If the perceived worth is low, you need to think about how to increase it without lowering the price.


Issue #3: Identify the potential weaknesses, problems with your business, products, and services. Identify the strengths.

The goal here is to think about what can be causing the declining sales, customers leaving and checking if those issues are indeed the problem that customers have. The formulation of the list of the issues can be helped by asking an open-ended question like “Why did you say so?” used above. While the open-ended questions are a good place to start, customers are not always able to express their thoughts. Also, when 2-3 people mention an issue in their comments, you need to know if this is a niche perception, or there are other people who think the same, but just could not express the idea.


There are, again, 2 ways we can ask the question about weaknesses and strengths.

The first way is to ask the Satisfaction with the different attributes of your business against expectations. The second way is to ask about the perceived difference between your place vs. competition.

The question for the first option can look like below:


Q6. Please rate your level of agreement with the following statements about our place and your most recent visit.

ROWS

· It offers great dining experience for families

· It is more expensive than other restaurants

· It is less expensive than other restaurants

· It offers food and service that is worth the money you pay

· Overall experience was very comforting and relaxing

· It offers something different from other restaurants

· It is my favorite restaurant

· The food quality was great

· The staff (the person that served you) was friendly and professional

· The location of our place is convenient for you


COLUMNS

· Strongly agree 5

· Somewhat agree 4

· Neither agree nor disagree 3

· Somewhat disagree 2

· Strongly disagree 1


For the second option, you could ask:


Q7. Compared to your experience in other (restaurants, hotels, etc. based on your category) how would you rate our place on the following statements?

Adjust the statements from the above to make sense with this question, but change the responses to:

· A lot better than other places 5

· Somewhat better 4

· About the same 3

· Somewhat worse 2

· A lot worse than other places 1


The second question is generally preferred, as it puts everything into comparison, but the question somewhat limits in terms of statements you can ask. E.g., the statement “It is my favorite restaurant” would not work here.


As you can see above, the list of questions and statements you can use it large, but you have to keep in mind that you are always limited with questionnaire space and the time your customers are willing to spend to fill it in. Carefully examining your situation and picking the key questions is very important.
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