CSAT

This piece was originally written by Ernest Wong for Opentalk magazine. Ernest is the Group Product Manager of Data & Analytics at Talkdesk and a session host at the Opentalk 2017 in SF. 

In order to talk about the future of anything, one must almost always first reflect on its past. The origins of customer satisfaction (or CSAT), as a metric, date back to the 1970s — an era in which the business world was much more obsessed with supply chains and pricing than customers or service. Back then, customers were mostly represented as a demand curve, which was largely influenced by the amount of money invested into advertising.

To say the world has changed dramatically since then would be a gross understatement. The rise and fall of world powers, globalization and the internet are but a few of the many things that have — and continue to — transform the business landscape. The pace of innovation and disruption is ever-increasing. Every business leader feels immense pressure to stay ahead of the curve. And, almost 50 years later, customer satisfaction remains a topic of discussion for companies of all sizes, from the scrappy startup to the global conglomerate.

Much has been said about customer satisfaction over the course of its lifetime: it has been studied and refined by academics from multiple disciplines; it has been lauded and adopted by countless companies as a critical KPI; it has been widely criticized for its shortcomings and inability to predict churn; it has been evolved into newer iterations like Net Promoter Score and Customer Effort Score and it has been dismissed and reinvented continuously for years. It seems a bit remarkable and perhaps unexpected that, for its age and critiques, CSAT remains a staple metric in today’s hyper-advanced business world.

Perhaps a significant contributor to the staying power of customer satisfaction is its simplicity; it’s not something that you need to explain to your CEO or to your customer. The advent of crowdsourced services from Web 2.0 have made it so that everyone understands what a five-star rating represents (and that you should avoid everything with less than 3 stars no matter what it is). Truly sophisticated businesses might know how to capitalize on “promoters” or “mavens,” but it seems like customer satisfaction is the first step for any organization looking to build empathy with its customers.

The most impactful change to customer satisfaction over the decades must be its distribution and collection — and this is key to conjecturing about its future. Years ago, mailed paper surveys was the dominant method; however, due to the high cost of this approach, marketers attempting to optimize data collection for their costs tended to write very long surveys (which conflicts directly with response rate). Some of that gave way to the telephone and live interviews as the voice channel gained adoption, but most customers preferred to enjoy their dinners in peace with their families. Eventually, the internet arrived and gifted us with email, enabling a low-cost, asynchronous channel to collect this data.

Soon after that, the internet introduced social media, which allowed customers the ability to initiate the conversation and voluntarily voice their satisfaction (usually dissatisfaction) with a product or service for everyone to see.

If we assume that customer satisfaction as a concept is here to stay, and that both businesses and their customers now have the channels to easily communicate with each other, where does customer satisfaction go from here? One might assert (admittedly philosophically) that the question itself should not need to be asked.

After all, in today’s connected world, a business knows a lot more about how it is operating than its predecessors in the 1970s. We know when a package delivery is delayed, when an app crashes, when a device is not being used and when a customer walks out of a store empty-handed.

Forward-thinking, customer-centric businesses are utilizing advanced techniques involving big data and speech analytics to better evaluate — and, in some cases, predict — customer satisfaction without having to explicitly ask their customers for feedback. These companies are able to identify customers at risk of churn and proactively engage in retention efforts. These companies are able to identify customers who value the product or service and turn them into upsell opportunities. In short, they know how to better segment their customers and target them with the appropriate treatment to achieve their desired business outcomes. Most importantly, they can do so quickly — before a bad experience becomes a decision to cancel and before a good experience becomes forgotten.

It may be that the future of customer satisfaction has much less to do with its administration or distribution and much more to do with its application. We are entering an era of artificial intelligence, sophisticated automation and predictive capabilities — an unprecedented time in which customer satisfaction is more knowable and actionable than ever. While the concept of customer satisfaction should take credit for the recent trend of customer service as a competitive differentiator, perhaps its main failing was presenting itself as a proxy for customer loyalty. After all, satisfaction does not produce loyalty in and of itself. It is the actions a business takes in response to satisfaction that ultimately drive loyalty.

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