17 January 2024 808 words, 4 min. read

Measuring customer satisfaction: SMEs are lagging

By Pierre-Nicolas Schwab PhD in marketing, director of IntoTheMinds
Research shows that SMEs measure satisfaction less frequently than larger companies. In this article, we provide a clear explanation based on published research.

Customer satisfaction is central to a company’s growth. Satisfying customers ensures their loyalty and long-term growth. Large companies are aware of this and measure satisfaction structurally, notably using NPS. Small and medium-sized companies, on the other hand, rarely do so. How can this difference be explained?

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Measuring customer satisfaction at a glance

  • 9% of US SMEs measure customer satisfaction, and 45.7% disseminate the results throughout the company.
  • 38% of Danish SMEs measured customer satisfaction in a 1999 research study.
  • In a 2007 research study of 305 Portuguese and Spanish ISO9000-certified companies, SMEs measured satisfaction as much as larger companies.

What is the purpose of a satisfaction survey?

From a theoretical point of view, the results of a satisfaction survey enable a company to:

  • identify changes in its performance indicators
  • find the causes
  • Take corrective action

Corrective actions help to maintain or increase satisfaction and detect changes in customer expectations. One of the limitations of satisfaction surveys is that they need to explain the reasons for the changes observed. Complementary methods such as qualitative interviews or mystery shopping are therefore required. A satisfaction survey is, therefore, only a starting point for stimulating continuous improvement within the company.

How often is customer satisfaction measured in SMEs?

Research into customer satisfaction measurement practices in SMEs is rare. The reason is simple: researchers have concentrated on companies delivering sufficient data for their analyses. And these are, of course, large companies.

That said, it is possible to find some in-depth research into the customer satisfaction practices of SMEs.

This research looked at the quality management practices of American SMEs. It shows that 60.9% of the companies in the sample measure customer satisfaction, and 45.7% disseminate the results within the company. One result surprised us. Of those who conduct this assessment, only 71.7% rate the added value of the exercise as “high.”

In this other research devoted to quality management, 270 Danish SMEs were questioned. Only 38% measured customer satisfaction.

Finally, this research surveyed 305 ISO9000-certified companies in Portugal and Spain, 83% of which are SMEs. The results show no significant quantitative differences between SMEs and large groups, as the ISO standard imposes certain best practices. Satisfaction measurement is one of them for those certified ISO9001:2000. However, there are a few differences in survey administration. SMEs (58%) use online surveys more than larger organizations. The latter are more likely to use qualitative methods, such as qualitative interviews or telephone surveys (CATI).

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How do we explain these results?

As we explained in this article, entrepreneurs are immersed in their market. They are in direct contact with their customers and constantly receive many signals. This immersion is enough for him to “take the pulse” of his customers and market.

SMEs are also structures where pragmatism is more present than in larger structures. There is a more direct relationship between investments and the use of money. SMEs are, therefore, more likely to concentrate their efforts on actions with a clear return on investment.

However, more formal practices are spreading in SMEs at the same rate as business school graduates. The latter import the practices they learned at school. SMEs that do not measure customer satisfaction will become the exception rather than the norm in the years to come, at least for those of a certain size. Such formalization will only become exposed in structures where the marketing function exists.

Is it still worth measuring customer satisfaction?

Is it still worth measuring customer satisfaction? The question may seem provocative. Yet, for many companies, customer satisfaction measurement has become an end in itself. It keeps marketing departments busy and has spawned a whole management software industry. But what’s the point?

Measuring customer satisfaction only makes sense if it has a proven effect on a company’s profitability. This profitability is measured, in particular, by the customer retention rate. The higher the retention rate, the lower the cost of customer acquisition and the higher the profitability. Yet scientific research shows that the causal link between customer satisfaction and loyalty is increasingly tenuous. Most of the time, the correlation between satisfaction and loyalty is not measured. This is a major problem that only some marketing managers are aware of.

Despite this debate, however, the practices ingrained in large companies have remained intact, and no major company today would dream of dropping them. Some “experts” had predicted the end of NPS, but nothing has happened.

In conclusion

Many SMEs measure customer satisfaction because it’s the norm rather than out of necessity.

Although counter-intuitive, we believe that a formal measurement tool should only be introduced under two conditions:

  • There are enough customers for a measurement to be meaningful (representativeness)
  • corrective or improvement actions will be implemented.

If these 2 criteria are not met, we do not advise implementing a formal satisfaction measurement. In this case, it’s better to question customers when an interaction occurs.

Posted in Marketing, Research.

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