From Customer Satisfaction to Profitability

Jonathan Imberi 
2002

Despite all the rhetoric about the importance of being customer focused, most companies are anything but. Short-term profit is the first goal, and creating customer loyalty a distant second. 

Successful companies have realized that the key to profitability is having satisfied customers; everything else is academic. 

The Customer Leader

The average company has dozens of profit leaders. From the board of directors to the CEO to the CFO to the individual product managers, profit is always top of mind and a factor in all product decisions. 

The first step in becoming customer-centric is to define within the organization a clear customer leader who is accountable for understanding and representing the needs of your customers. To be effective, this leader must be able to influence all the strategic and tactical decisions about a product. 

This is a natural role for product managers. It is their responsibility to define and execute the product strategy, and they are already intimately involved with their customers. 

Some companies mistakenly place the responsibility of leading customers on the sales department. Although salespeople are a great source of information about customers, the nature of their job and compensation make them poor customer advocates. 

Quantifying Customer Satisfaction 

To hold product managers accountable for customer satisfaction, you need to quantify customer satisfaction. Here are a few ways SendJax can turn the qualitative world of customer satisfaction into something a little more concrete.

1. Satisfaction surveys. This is perhaps the most obvious method of quantifying customer satisfaction. 

SendJax will create Performance Reports that benchmark and measure your success at increasing customer satisfaction.

2. Retention. This metric directly ties customer satisfaction to revenue. 
    • What percentage of your customers renews their contracts? 
    • What percentage of your customers are up-sold additional goods and services? 
    • How much time passes between purchases? 

The Performance Reports created by SendJax will also deliver this information allowing you to make the tie between customer satisfaction and revenue. Be careful, however, to understand customer motivations. You may find that the reason that many of your customers drop the service has nothing to do with the service. For example, you shouldn't beat yourself up if a customer drops your service because their company goes out of business. 

3. Customer service inquiries. It is fair to correlate the number of customer inquiries about a product with the quality of a product. A well-designed product should require minimal support from your customer service department. 

When you do receive customer inquiries, SendJax will be there ready to get to the root of the problem through interactive communication with the inquiring customer

Building Accountability 


Accountability is only meaningful if there are consequences for performance. Here are a few ideas for holding product managers accountable for the satisfaction of their customers. 

1. Communication – Require your product managers to answer all customer service communications about their product. This may not be the most cost-effective way to handle these inquiries, but it will make your product managers conscious of the individual needs of their customers.

SendJax makes this process almost too easy, by allowing each manager to send out e-mails to each customer asking for feedback, and then follows up to find out how well the feedback was utilized. 

2. Budgeting - If you don't want to spend valuable product management resources answering e-mails, there are other ways to make product managers feel the pain of poor service. One effective approach is to track the time that the customer service department spends on a product and deduct the labor cost from the product budget. 

This again could not be made easier than by utilizing SendJax’s Performance Reports to find out exactly what products the customer service department is dealing with and where the problem areas lie. 

3. Compensation - The most obvious and probably the most effective way to build accountability is to tie performance to product management compensation. Set goals for customer satisfaction, and base bonuses on meeting or exceeding those goals. This, again, requires clear and fair metrics for measuring satisfaction, but it will have the necessary impact. 

With SendJax, not only will you be able to monitor the metrics and goals set forth, but product managers as well - allowing them to see exactly how much they are improving, and where further improvement is needed.