Editor's note: John M. Cole, Ph.D., is president of Pacesetter Surveys, Inc., San Mateo, California.

The past decade has brought American businesses to a much clearer understanding of the importance of customer perceptions and the measurement of customer satisfaction. Beginning with Tom Peters' book, "In Search of Excellence," emphasis has crystallized on the need to listen to customers closely and regularly, and to collect data on the customer's thoughts. The primary vehicle for measuring customer perceptions in a formal sense is the customer survey. Surveys are now widely used to measure customers' ever- changing satisfaction levels as well as to gauge projected future needs for products and services. Survey data has become a management tool that provides both the direction for change as well as a form of accountability for change.

Pacesetter Surveys has been conducting customer surveys since 1985, primarily with companies that sell to other companies. Over this eight-year period, survey data has brought a number of facts to light that were not originally foreseen as major benefits of the survey process. The focus of this article is to relate some of these unanticipated findings that have provided unexpected and often highly significant benefits to my clients.

Customer satisfaction - The basic stuff

Most companies conducting customer surveys want to know how their customers perceive their products, services, and people. Satisfaction scales are used, and customers indicate their levels of satisfaction on such things as the salesperson's understanding of the business, the quality and reliability of the product, and the effectiveness of the toll- free telephone support center. Customer satisfaction surveys typically provide data that helps a company evaluate how their different departments, product groups, or regional centers are performing relative to each other, or relative to customer expectations. The following survey-derived information has taken my clients beyond their original expectations and in most cases, has provided substantial added value.

1. Finding management "blind spots." As a rule, management reacts to survey results in a fairly predictable way; they acknowledge a few "surprises," but generally contend that the data confirms and quantifies information that they already know. Since most organizations want to appear "connected" to their customers and to be very customer oriented, there is a general reluctance to admit openly that certain aspects of the data were unexpected. This attitude can result in a reduced sense of urgency and a failure to deal with the fact that there are issues that need attention and that management may in fact be out of touch with customers.

One way to deal with the problem is to have managers take the same survey as their customers, with instructions to indicate how well they (the managers) think their company is performing. A subsequent comparison of these managers' survey scores with those of their customers can point out areas of major discrepancy. When these disparities exceed some value, say 20%, one can say that there is a major "blind spot" that needs special scrutiny.

An example of the blind-spot phenomenon recently occurred in a company that was convinced that they had major quality problems. The organization had been listening attentively to complaints about quality and were ready to undertake a major reorganization of their quality department. Survey results from managers documented the belief that quality was perceived to be a major problem. Survey results from customers, however, showed high overall levels of satisfaction with quality, but low satisfaction with product delivery and availability. The comparison of managers vs. customer survey data indicated major "disconnects" on these issues. As a result of the blind- spot analysis, the direction of the change effort was focused on the appropriate area rather than on inappropriate ones.

2. The decision to purchase a competitor. A Fortune 500 manufacturing firm conducted a customer survey that compared customer satisfaction with their own performance vs. that of their competitors. Since customers typically bought from multiple vendors, they were in a position to rate the client company performance as well as that of their competitor. As a result of the analysis, a very interesting fact came to light; a relatively small competitor with only four to five customers was doing an outstanding job in all aspects of product and service. In fact, their ratings were the highest of any of the vendors listed. To make matters even more interesting, this company was for sale. My client now had valuable, proprietary information and was in a somewhat advantageous position to consider a decision about the possible acquisition of that competitor.

3. Survey data as advertising copy. J.D. Power & Associates does it with owner satisfaction data for new car buyers...why not take similar advantage of the area of strength pointed out in your company's customer survey data? While most organizations assume that the value of customer survey data is to point out areas of deficiency, survey results are often quite positive. It is not uncommon for 90+ percent of customers surveyed to report high levels of overall satisfaction. For example, a nationally known consulting firm surveyed customers over a three-year period. They found that 96 percent of their clients were totally satisfied and would choose that company again should a need arise. This information, which had been obtained by an independent survey research firm, was used to considerable advantage in the company's advertising literature as well as their marketing strategy.

4. Pay for performance. Increasingly, customer satisfaction data is being used as a basis for calculating pay-for-performance bonuses. This is most often done to provide incentive to customer service personnel for delivering outstanding customer service (as defined by customer survey scores). It is also being done for top-level executives where the tie between what they do and how their performance affects customer satisfaction is much less clear. In the case of customer service personnel, the amount of bonus compensation tied to survey results is a few hundred dollars per quarter. In the case of executive level managers, the amount can be much greater.

5. Loyalty driver/market damage assessment. Most customer surveys stop short of asking customers about the likelihood that a negative product or service experience might cause them to switch to a competitor (market damage). Conversely, aspects of product or service that are most apt to cement a long-term relationship (loyalty) are seldom explored. Often, considerable value might be derived from knowing this information. Information on loyalty/ market damage can underscore the importance of certain areas of deficiency, help to establish proper priorities, and actually predict the number of customers that might defect and the cost of those defections if identified problems are not corrected.

6. Performance reviews. The emphasis today is for all employees to recognize that directly or indirectly, they are serving their customers. The phrase is often heard, "If you are doing anything that doesn't have a positive impact on your customer, stop doing it." In spite of this, customer satisfaction data is used infrequently in the individual's performance appraisal or review.

Although few of my clients are using customer data as a basis for evaluating job performance, those that are have found real value. One limiting factor is that survey data often indicates satisfaction with a group rather than a particular individual. Even with this limitation, survey data has relevance and encourages teamwork and creates a common commitment to customer satisfaction.

In conclusion, customer surveys should be viewed from a broad perspective rather than just as a customer "report card." When designing your survey, look for ways to detect "blind spots," loyalty drivers, and potential competitive threats or opportunities. Similarly, explore ways to use your data as a basis for providing employees with feedback on their performance, or for rewarding them monetarily for a job well done. Invest the extra time on this front-end of your survey project to ensure that optimal benefits are derived.