How customer-defined metrics deliver better financial results than arbitrary goals

Listen and earn

Editor's note: Greg Ryan is owner of Ryan Consulting. He can be reached at ryan.greg@comcast.net.

Most companies are in a constant struggle to grow their bottom line. Of course, maintaining a healthy balance sheet is absolutely essential for any business but problems arise when the focus on revenues, profits, stock price and earnings-per-share overshadows the needs of the customer. 

A perfect example is Kodak. Kodak was a leader in the film business for many years. Then along came a new technology called digital photography. Rather than researching the needs and desires of its customers around the new technology, Kodak decided to focus on the lucrative short-term revenues and profits generated by its (soon-to-be-outdated) technology. Of course, interest in digital photography skyrocketed and Kodak ended up filing for bankruptcy. 

The legendary failure of the Ford Edsel is another excellent instance of a company that could have avoided a catastrophic loss of $3 billion (in today’s dollars). Ford chose to ignore customer feedback on the Edsel’s exterior design and the rest is history. Think for a moment about what the actual cost to conduct customer feedback research would have been versus a $3 billion loss!

In today’s world, numerous marketing jobs are entirely focused on generating revenues/profits (e.g., lead generation, data mining, web page visits, web history, competitive analysis) rather than measuring customer satisfaction. Even some seemingly customer-oriented marketing jobs like customer success manager are more likely to focus on sales. For example, ads for customer success managers typically list the job functions as: “Expand our revenue in accounts through cross-sell and upsell, influence future lifetime value through higher product adoption.” The job title, which should really be changed to revenue success manager, is an insult to the savvy marketing and marketing research people who actually do strive for customer success. 

The customer should be perceived as more important than stockholders, presidents and executives. Any company can function without some of these groups but it can’t exist without customers. 

The impact to the bottom line from higher customer satisfaction drives numerous vital benefits including: increased revenues; greater portfolio penetration; better attach/renewal rates; hitting the target on market requirements; more efficiencies; avoiding wasting time and money developing poor products and services; more repeat/loyal buyers; a better pipeline of new products/services; and an increase in share of wallet over competitors.

Experiment and evolve 

I have devoted most of my career exclusively to customer satisfaction research. Early on, I worked as a consultant for J.D. Power and Associates (regarded as the pioneers of customer satisfaction research). I’ve also held various customer satisfaction consulting positions at Cisco Systems, Kaiser Permanente and Nissan Motor Corporation. After working for several different industries and companies I have been able to experiment and evolve my questions and methodology to move the needle and demonstrate the ROI for the cost of my customer research. 

My intention with this article is to present a practical and strategic argument for using customer research to deliver that ROI. To start, we need to step back and look at the foundation of marketing. It is essentially based on “the marketing concept,” which author Philip Kotler defined as “determining the needs and wants of the target markets and delivering the desired satisfactions more effectively and efficiently than competitors.”

With this in mind, let’s explore the ways in which researchers can really help companies focus on delivering those “desired satisfactions” more effectively while impacting revenues and profits.

Conducting research that genuinely pinpoints both customer needs and pain points is definitely one of the most effective strategies. In determining the needs or pain points of the customer, many researchers often overlook key questions and/or analyses. For example, the most revealing question I have ever asked customers is to list the top three changes or improvements they would like to see (to a product or service). In my opinion, this single question is paramount and akin to asking “If you had three wishes, what would they be?” 

I’ve found the answers to this question to be illuminating for almost any survey. It is also the question that I look at first when analyzing the survey data because the answers to it inevitably end up being the bellwether for most of the results. 

Fortunately, customers are generally not unreasonable in their suggestions. In fact, the requests are often quite basic, workable and consistent. Like many open-ended questions, it takes some work for the researcher to create good categories (buckets) for the responses to be grouped into. But the rewards are significant. I have told many researchers that if I could only ask customers one question this would be it. 

An important note: This question should be asked at the end of the survey. Doing so lets respondents answer other questions first, warming up their mind-set and allowing them to mentally process and recall their priorties and all the issues they face.

Another often overlooked method of determining and prioritizing customer satisfaction research is conducting a gap analysis to measure satisfaction with a battery of attributes while also asking about their importance. I’ve learned that this is critical for helping marketing teams prioritize and develop action plans. Of course, doing a conjoint analysis to find the implied importance of attributes versus using a scale in a survey to determine stated importance is a good method to use (when appropriate).

In addition to satisfaction levels, it is key to measure loyalty levels. An excellent method for this is asking a customer if they will repurchase the product or service. The Net Promoter Score’s (NPS) assessment of the likelihood to recommend has a slew of very serious flaws – a main reason why many experienced researchers do not support it. (For more about the problems with NPS please read my article “Get your metric right” in the September/October 2022 issue of Quirk’s.)

Wrap it around a larger program

Researchers often overlook the need to link a customer satisfaction program to their customer satisfaction research in order to impact the bottom line. In fact, no customer satisfaction research is complete without wrapping it around a larger program. The key to any successful program and research includes the following aspects:

• Using customer-defined vs. company-defined metrics. Customer-defined means that the customer actually decides how and by which metrics their satisfaction should be measured. Most companies fail terribly in this area, using factors or features dictated by company executives, R&D or marketing to define the metrics.
• Setting realistic customer satisfaction score goals (e.g., using percent of possible index; see sidebar) vs. arbitrary or unrealistic goals defined by the company. 
• Clear, measurable satisfaction goals and metrics that are tied to compensation, especially at the executive level. As an example, in each of my 12 years at Cisco Systems, both employee and executive bonuses were tied to an annual customer satisfaction survey score. 
• Executive sponsors of the program who have influence.
• Placing customer champions and evangelists in key positions.
• Baking satisfaction into all phases of the customer lifecycle. Hewlett Packard developed a great list of lifecycle phases that includes (in order): awareness, consideration, preference, order, deliver, install/integrate, learn, use/operate, support, evaluate, upgrade/optimize.
• Satisfaction research covering all aspects of the business (e.g., brokers/distributors, partners, sales, help desk, customer service, etc.).
• A closed-loop process where customers are informed of the improvements that result from their input.

Many researchers overlook placing questions in surveys that ask what new products or services the customers desire. Sometimes this information can be derived from the “top three changes or improvements” question mentioned earlier. But it is better to pose this question separately. 

Furthermore, asking customers about their business environment yields valuable – and sometimes previously unknown – information about their world that helps put the researcher in their shoes. Including questions in the following areas can elicit and uncover important information:

• current and future business needs and problems;
• current or future changes occurring within their industry and company;
• regulations impacting their business;
• growth opportunities;
• what can be done to save customers (or their customers) time or money;
• barriers to buying more products or services;
• reasons for purchasing competitive products or services and perceptions of value;
• suggested changes to pricing structures and/or ordering.

Also, researchers sometimes leave out the current or future needs of distributors/resellers or brokers but if you want to maintain a competitive advantage and market share, those constituencies need to be listened to as well. 

When it comes to pricing questions, rating “value for the money” versus simply asking to rate pricing is key – especially with higher-end products or services. In other words, you might find that customers believe your product or service is priced too high but the value for the money is good. In those cases, a price drop might be the wrong decision. Asking perceptions about the competition’s value for the money can also provide useful information. 

When analyzing survey data, the top-two boxes (e.g., 4s and 5s from a five-point scale) should be used versus averages (e.g., 1 through 5) because averages distort data.

Here is an example of how to calculate percent of possible index (PPI) when setting satisfaction metric goals:

In a 2024 satisfaction survey the top-two box score for overall satisfaction was 7.2 on a 10-point scale. In 2025 the satisfaction survey score was 7.9. The difference between the two scores is .7. So PPI is calculated by .7/2.8 (2.8 is the difference between 10 and 7.2) = .25. In order to set the goal for 2026 (10-7.9 = 2.1 x .25 = .53+7.9=8.4. Therefore, the customer satisfaction goal for 2026 should be set for 8.4.

Let them dictate

Make your research successful by providing evidence of a strong ROI and impact on the bottom line. Help your clients understand that the customer is at the top of the hierarchy. Keep a focus on customer needs and desires and let them dictate the metrics by which they want to measure their satisfaction or loyalty (versus arbitrary or flavor-of-the-month measures set by executives).

Conduct proper customer satisfaction research using the right metrics, questions and goals encompassing the customer life cycle and tie results to a customer satisfaction program and employee compensation for long-term success.

Immerse yourself in the customer’s world by finding out about their problems and challenges and structure your research so the results will solve some of them and make their life easier. Don’t forget to include research on all business-related customers (e.g. resellers).

Try out the “top three changes or improvements” question and see the results for yourself.

And always be an evangelist for customer feedback and support that position by reminding internal clients of the many ways that listening to customers can boost the bottom line.