Since 1992, when Professor Claes Fornell, of the University of Michigan, published the article “The National Customer Satisfaction Scale,” consultants have advised managers to invest in customer service and quality in goods and services offered to increase customer satisfaction, customer loyalty, and profitability. In Norway, the most satisfied customers are the wholly and partly state-owned companies Vinmonopolet, Flytoget and Sbanken.
But is high customer satisfaction the best strategy for retaining and attracting customers today – 30 years later? We mean no. Let’s give an example: Imagine a coffee shop in a busy area with many competitors. Management has worked hard to improve the quality of the cafe, food and customer service. The bonus is that they have very satisfied customers. But what happens if a new coffee shop opens nearby that offers the same good quality and service, but is seen as a little more creative and therefore more attractive?
In other words, customer satisfaction alone is not enough to retain old customers and attract new ones. When all customers are satisfied, managers must innovate business to win customers’ interest. Therefore we believe that the blind belief in quality and customer satisfaction as the most important factors of company value should be updated.
In 2023, the managers goal is to have sufficient customer satisfaction. not the highest
We say this on the basis of our research related to the Innovation Index Coalition, a group of innovation researchers in ten countries, which shows that customer satisfaction is a necessary, but not sufficient, factor in influencing stock price and company value. Innovations, as experienced by customers, are a stronger driver of the development of abnormally high stock prices than customer satisfaction. CFOs are surprised that the effects of increased innovation on share price come earlier than the effects of increased customer satisfaction.
Where there is a 20 percentage point difference in Norway today between customer satisfaction (73; a score from 0 to 100, where 100 is best) and the ability to innovate (53), our advice to managers is that they should develop their ability to innovate to a much greater extent and introduce new products. or new and exciting services. By creating better and more efficient everyday lives for customers or by developing new business models, as Airbnb and Uber have done in the lodging and passenger transportation industries respectively, they can become more attractive to the market.
In Norway, Tesla, IKEA, Vipps and Stormberg are examples of companies that have succeeded, according to customers, with innovations in market offering, sustainability and customer interface digitization. The fact that they don’t have the most satisfied customers is clearly not an obstacle to success.
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