CUSTOMER SATISFACTION AS A DEAD END: Why we need a new apporach for digital business models

“Your opinion is important to us and will help us to improve our services.”

Oh no, not another customer satisfaction survey! I suppose we are all annoyed by so many surveys on our screens that take up our precious time.

No doubt, both vendors and customers want better products and services. As a consumer, we are happy to see that service providers want to hear our opinion. For sure companies have learnt a lot from their regular customer satisfaction surveys during the last years. The results are convincing: shorter waiting times, friendly staff, simple and straight-forward processes, better usability and sometimes an employee that walks an extra mile for us.

A lot has been achieved and we all appreciate it.

 

Many digital offers do not even meet the basic requirements

For digital products and services, however, the situation is a very different one. Digital offers often do not even meet the basic requirements. App store ratings send a clear language: Many automotive apps only get a rating of 2 to 3 out of 5 rating stars. Only some achieve 3.5 stars.

Why do so many digital products perform so poorly? Customer complaints are manifold: The registration is cumbersome, leading to customers giving up right at the beginning of the user journey. Others who managed the registration successfully, report usability issues. Offered features are not found, not understood and do not keep what has been promised. Finally, software issues stress the customers’ patience.

 

No use, no revenue

In 2016 a study by Appboy has disclosed the full drama of low customer app retention and caused significant viral spread. After only one day, 75% of downloaded apps have been uninstalled again (LINK).

The situation gets even worse when considering that registered users are not necessarily active users. Many customers who are registered have not used the service even once.

 

A personal example

I was registered with Car2Go for one year but had never rent one of their vehicles. The reason was a bad experience with another car sharing service provider on my way to the airport. I wasn’t able to disconnect the charging cable which nearly made me miss my flight.

Nonetheless, I received many satisfaction surveys from Car2Go during that time. Why? They knew that I have never used it. Why didn’t they ask for the reasons why I have never used one of their cars? I am sure, this would have been helpful for them and I would have been happy to let them know.

 

Customer satisfaction is becoming less important

This illustrates that the satisfaction construct is not sufficiently targeted to deliver the intended results for digital business models. Three reasons are important:

 

  1. Lost customers are crucial for the business case

Most digital business models do not at all meet the expected user numbers. This is bad, because the business case stands and falls with the number of active customers.

Given the low user numbers, vendors have to attract and keep as many customers as possible in their digital eco system. Hence the primary objective of market research is to deliver an explanation why customers don’t want to use a service or quit after they tried it out.

  1. The decision to purchase is becoming a decision to use

In the pre-digital era products have been sold. The perfect sales process was crucial for success. As soon as a car for example has been sold, the revenue has been made. And let’s be honest: Dealers and manufacturers weren’t overly interested in the customer’s satisfaction before the repurchase three years later.

After the purchase, a customer is tied to his or her decision. It can only be undone at high cost. Contrary to purchasing most tangible products, digital business models are offered as a as-a-service or pay-per-use model. Revenue will not be made before a customer actually really uses the product or a service.

The occasional purchase decision will turn into a continuous decision to use. The change barriers from one service to another are very low. Vendors and service providers will not make any revenue if customer don’t like, understand and regularly use the service.

It’s obvious that market research has to focus on the drivers and barriers for usage instead of the degree of satisfaction during usage.

  1. Traditional satisfaction research is too slow for the digital world

Given the low number of users, many companies follow the approach of trial and error at the cost of their customers. New ideas are being develop continuously and tested for customer acceptance in the market. Companies have to learn fast and adapt their business models again and again.

Until now companies strove to improve customer satisfaction continuously and long-term. This traditional approach is way too slow for the digital market, which is in an early stage today. c

 

Engagement is the new satisfaction

The primary objective of digital business models is to win and keep customers using a product or a service. Why do won customers leave? Which value proposition has not been kept? Do barriers have occurred, which the customer was not able to overcome? These are the relevant questions to answer.

The satisfaction construct has to be replaced by an engagement construct.

How can engagement and customer retention generally be achieved? What are the drivers and barriers for engagement for your customer?

Please call and let’s talk about it.

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