Customer Value Versus Customer Satisfaction – Lessons from Sprint and Apple

In the quest to improve business performance, companies and marketing departments in particular have for many years focused on customer satisfaction as a metric worth focusing on for customer retention, loyalty and even growth – (see Fred Reichhold net promoter for his views).

Althought customer satisfaction is undoubtly important, we would argue that a more powerful metric is customer value… but first let’s take a look a customer satisfaction……

Customer satisfaction is certainly an important metric in a competitive market and companies that ignore it do so at their peril. Take Sprint for example, a company that last year cancelled more than 1,000 customers accounts due to excessive complaints? No doubt there would have been some customers that no company would want in that number but I do wonder whether Sprint were really listening to some of those customers that obviously were extremely dissatisfied……perhaps some of them had very valid concerns?

Given the recent news about Sprint’s performance “Sprint Nextel Announces Plan to Lay Off 5,000 Workers” and the fact they lost more than 300,000 customer in the last quarter of 2007, I cannot help but think they have some serious marketculture weaknesses…….namely a lack of customer insight

So it seems customer satisfaction can certainly be a predictor of business decline but how can it help predict growth? This is where customer satisfaction measures can become problematic and it is necessary to look at other measures….

How so you ask? Well let’s take a personal example, I am highly satisfied with my Samsung BlackJack, in fact I would rate my satisfaction 10 out of 10, I have never owned a better phone BUT my next phone with be an Apple iPhone..

Why? Although I am extremely satisfied and would recommend the Blackjack, the iPhone will meet my needs (and wants) better, it has a larger screen, integrated music, looks cool etc…….. to put it technically it provides me with greater customer value than any alternative….

Regular customer value measurement provides companies with a way to predict the performance of their products in the market place and put in place retention strategies based on the real alternatives customers have in today’s hyper competitive marketplace.

So although customer satisfaction is very useful it is no longer enough to stay ahead…..

Customer Value is a central theme for us as a professional services firm with a focus on marketing and you will see many of our services and training programs emphasize this important element of world-class marketing, for more information click here…..

One response to “Customer Value Versus Customer Satisfaction – Lessons from Sprint and Apple

  1. It’s good to be in good company. Thank you for your post and thoughts.
    You’re right Customer Satisfaction is not enough, especially in a commodity market.
    Value is, in fact, is that for which consumers are willing to pay more, that for which they are willing to change brands or that for which they are willing to sacrifice. The question is: Where can they value be found? Sometimes it is in the product (such as your example with the phones), sometimes it is in the experience, sometimes in both.

    Value based on the product is a matter of effective product development and product marketing. In your case, Samsung’s product palnning was not as good as apple and their expereince (although you mentnioend it to be great), not good enough.

    I thought your readers may enjoy to see the actual correllation you are mentioning: (Customer satisfaction and company valuation) take a look:

    http://willtheybuyagain.wordpress.com/2008/01/27/should-comcast-investors-care-about-the-lack-of-customer-centricity/

    Once the product lines are in production and the panograms are decided at retail. There is little we can do about a feature battle (bigger screen, music or no music) other than through $$ at it. The issue is how can we keep our customers in any situation? The answer is: give them more than they expected.
    When you create a positive emotional experience, they give you 5X more loyalty (repurchase) than when you give them what they want.

    take a look: http://willtheybuyagain.wordpress.com/2008/01/09/customer-satisfaction-gets-you-nothing/

    thanks again for a great post.

    Rudy Vidal
    http://willtheybuyagain.wordpress.com

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