What is this mythical concept of Customer Satisfaction? We hear it bandied around all the time and recognise that Customer Satisfaction is a truism. But how do we really know if we have actually satisfied our customers? Further, is it really worth all the effort trying to satisfy the customer and then determine if we have achieved this goal?

A satisfied customer is widely accepted as one who will continue to buy from you, seldom shop around, refer other customers and in general is a strong advocate for your business and the products & services you offer. This makes sense, as if we are happy with something, then we will tell our friends and relatives about the target of our joy. It therefore seems logical that they in turn will take advantage of that good experience to satisfy their needs and requirements rather than trusting somebody or something that they don’t know. This can be clearly seen in the power of social media where anyone can publish their experiences for all to see, good & Bad.

As an aside, it seems to me that the importance of customer satisfaction diminishes when a firm has increased bargaining power. I’m thinking here of some, Telco’s, airlines, health funds, insurance companies, government departments and banking/finance institutions. Examples of this might be contracts with a lot of fine print and provisions, difficulty in finding and then talking to somebody who can make a decision, coordination and consistency of information between departments, phone systems that are difficult to navigate or do not give you options that you want and many other examples of arrogance making these organisations difficult to deal with. Generally large, these organisations would probably never get away with their approach to customers if they were in a truly competitive environment. How often have you been satisfied with the service you received from the above type of companies? Is this how you would like to operate or be perceived as operating? This is where I believe SME’s have a potential competitive advantage. Choosing to focus on delivering exceptional customer service through business flexibility and customer awareness can be a real differentiator.

In the end only you as the business owner can determine if the effort of satisfying your customers is worthwhile. But before you make your decision on that, consider the following statistics that I gathered while researching for this blog. Although these statistics are based on American businesses, intuitively I believe the concepts hold true in Australia (although there may be some variations in the figures quoted)

  • Almost 70% of the identifiable reasons why customers left typical companies had nothing to do with the product. The prevailing reason for switching was poor quality of service.
  •  91% of unhappy customers will never purchase services from the poorly performing company again with the following caveat:
    •  Up to 95 percent of customers are willing to give your business a second chance, but only if you solve their problem upon initial contact. 

  • Typically only 25-30% of a firm's clients are completely satisfied. Such low satisfaction means that 70% or more of the firm's clients may be open to offers from competing companies.
  • 96.7% of unhappy customers never let out even a squeak of dissatisfaction to the organisation that has given them bad service, but will tell at least 15 other people. Contrast that with the satisfied customer who will only tell a maximum of six other people of their happy experience.

 Assuming that exceptional customer service is the key to retaining customers, consider the following statistics (again information from America with the same idea that the concepts are similar, but some variation in the numbers):

  • It costs about five times as much to attract a new customer as it costs to keep an old one.
  • Raising customer retention rates by 5% could increase the value of an average customer by 25-100%.
  • The probability of selling service to a new customer is 1 in 16, while the probability of selling service to a current customer is 1 in 2.
  • Loyal customers who refer others, generate business at very low or no cost.
  • It's easier to get present customers to buy 10 percent more than to increase your customer base by 10 percent.
  • The average business looses between 10 percent and 30 percent of its customers each year.

My view is that delivering exceptional customer service is mandatory for any business that wishes to grow in an environment that is becoming more complex and more cluttered with competitors from all over the world.

So what do owners and managers need to do to deliver excellence in Customer Satisfaction? The following list is a starting point to delivering Great Customer Satisfaction:

  • Have products & Services that are required by your target market
  • Ensure the delivery of your products & services make the customer feel special
  • Deliver all products when the customer wants them and to where they want them delivered
  • Invoicing and paperwork that is correct and allows easy processing
  • A business which is fair to all of it’s stakeholders (customers, suppliers, employees, investors and the community they operate in) and does not single any out for unfair treatment or abuse
  • An empowered workforce that can make decisions on behalf of the organisation (with the organisation standing by that decision).

How do you rate on these measures? More importantly, how does your customer think you rate on these measures? You as the owner/manager need to know the answer to where you stand in satisfying your customer. If you speculate on how your customer views you, you may be missing out on developing a business competitive advantage.


 If you would like to discuss this further or review any aspects of your business please contact Robert on This email address is being protected from spambots. You need JavaScript enabled to view it.  for a 16 point business audit and report