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Customer satisfaction data must correlate to comp sales growth. Otherwise, there is no reason to worry about providing great service--if there is no positive financial result from that effort. Without financial linkage to business results, there is no external validity to the customer satisfaction measurements and you are probably measuring "satisfaction"incorrectly. Let's look at a proven method of measuring your customer's experience that gives you clear financial linkage to comp sales growth.
The model is: A high level of satisfaction drives loyalty and loyalty drives sales growth. Simple, right? But "one discovery by Xerox shattered conventional wisdom: Its totally satisfied customers were six times more likely to buy Xerox products over the next 18 months than its satisfied customers."
In other words, customers who rated Xerox a 5 on a 5-point scale were six times more likely to repurchase than customers who rated Xerox a 4 on a 5-point scale. Only "highly satisfied" customers are loyal customers. That's why high fives matter so much.
Does Xerox's discovery about the distinction between satisfaction and loyalty hold true for franchise businesses? Yes!Comp sales in franchise service businesses are all built on the shoerience a "5" on a 5-point scale. Our studies with 15 million retail and restaurant customers show that "Highly Satisfied" ratings(5's) drive key loyalty indicators such as "Likelihood to Return" and "Likelihood to Recommend."
Let's look at the financial impact of "High Likelihood to Recommend" ratings in one franchise organization in Chart #1. In the graph above, you can see the financial linkage between customer ratings and comp sales growth for three franchise groups. As a rule, the larger the percentage of highly satisfied customers(5's), the greater the "High Likelihood to Recommend" ratings and the higher the comp sales growth rate.
Customer loyalty is a powerful force that builds same store sales through higher frequency of purchase. Customer loyalty correlates with higher average purchase amount. Loyal customers create the 4's who are merely "satisfied."
I recommend that your focus be placed on increasing the percentage of High Fives. The High Fives buy from you much more often and they create positive word of mouth that sends in new customers to try you out. Strive to deliberately create an experience that increases the number of those Highly Satisfied customers. How?
Next time, we'll talk about how area developers can provide individual store managers and employees with customer feedback that points to the right actions needed to raise customer loyalty.
Jack Mackey is vice president of Service Management Group. You may contact him at jmackey@servicemanagement.com or 816-448-4556.