How Customer Satisfaction Drives Sales Growth

Editor's Note: Take a look at our featured best practice, Loyalty Program - Implementation Toolkit (Excel workbook). Save time, empower your teams and effectively upgrade your processes with access to this practical Loyalty Program Toolkit and guide. Address common challenges with best-practice templates, step-by-step work plans and maturity diagnostics for any Loyalty Program related project. Download the [read more]

Also, if you are interested in becoming an expert on Customer-Centric Design (CCD), take a look at Flevy's Customer-Centric Design (CCD) Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

* * * *

You’ve been told you should be measuring your customer satisfaction, but you’re wondering if it’s really worth it. Or, maybe you’re trying to drive sales growth and wondering whether improving your customer satisfaction will help.

Well the short answer is “yes, customer satisfaction has been proven to drive sales growth.” Improving your customer satisfaction really will boost your sales. But don’t just take my word for it.

A National Customer Satisfaction Survey

In 2012 the Institute of Customer Service (ICS) surveyed 26,000 consumers in a study specifically designed to test the link between customer satisfaction and business performance.

The ICS study found that:

Amazon had the best customer satisfaction (91.7) and achieved the strongest sales growth (20%).

By contrast, the four retailers with the lowest customer satisfaction all suffered a serious decline in sales. Comet posted the biggest sales fall (-14%) and scored lower customer satisfaction than most retailers in the survey (71.7).

Perhaps this result isn’t surprising. In the battle between Amazon and Comet it’s easy to argue that there are other factors at work.

So let’s take a look at a more straight-forward comparison. How about supermarkets?

The 2012 ICS report showed that:

The two food retailers with the highest customer satisfaction ratings were Waitrose and Aldi, both scoring 84.6.

Despite having very different models and target customers, they also achieved the greatest gains in market share over the Christmas period – Waitrose by 0.2%, Aldi by 0.4%.

Sustained Growth

At the time of the report the ICS were able to draw a clear link between customer satisfaction and sales growth. But could that be quirk of the data? And does it play out over the longer term?

Grocery News recently published the Kantar supermarket industry growth figures for 2013-2014. These latest figures not only support the previous finding that customer satisfaction drives growth, but emphasise them even more strongly.  Aldi not only grew its market share faster than any other supermarket, but significantly out-grew its closest competitor, Lidl – who had a lower customer satisfaction score in the 2012 report. And at the other end of the market, Waitrose grew their share faster then any other non-discount supermarket, including Sainsbury’s and Tesco, who again showed lower customer satisfaction scores in the 2012 report.

British Supermarket Share

So customer satisfaction scores collected in 2012 were a successful indicator not just of growth in that year, but of sustained growth in the following years. It’s the reason some of biggest, fastest growing and most successful companies on the planet are obsessed by customer satisfaction.

Saga Holidays were another of the companies that were rated in the 10 top for customer satisfaction in the UK. In their 2013 Annual Report one of the very first things that Andrew Goodsell, the Chief Executive, noted was how proud he was that they had retained their position at the top of an Ipsos Mori customer satisfaction survey. The only thing he mentioned above that was the fact they’d grown their turnover by 6.4% to £2.2 billion and their profit 4.9% to £621 million!

Customer Satisfaction for Every Business

If it works for the big companies, what does it mean for the rest of us?

Regardless of company size, the fundamentals still hold. And it doesn’t matter if you call it customer satisfaction, customer experience, customer delight or anything else. The more satisfied your customers are the more often they’ll return and the more they’ll recommend you to others. All of which drives sales growth without you having to spend an extra penny on advertising, marketing or sales.

References:

Want to Achieve Excellence in Customer-Centric Design (CCD)?

Gain the knowledge and develop the expertise to become an expert in Customer-Centric Design (CCD). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

In the modern Digital Age, advances in technology and communication, combined with the explosive growth in data information, have given rise to a more empowered global customer. Recent economic and political events highlight the need for organizations to understand how consumers view the world and the most important attributes for their purchasing decisions.

Thus, increasingly more organizations are seeking to invest and focus on Customer-centric Design. A clear understanding of customer needs and behaviors across the organization will help drive profitable growth strategies and provide the confidence to invest in opportunities at a time when staying within budget can be extremely difficult.

Learn about our Customer-Centric Design (CCD) Best Practice Frameworks here.