Customer Satisfaction Index in custom development
In addition to the problem of finding new customers, the solution of which lies, essentially, in the responsibility of the sales departments, one of the global tasks is the retention of existing customers and their accounting. Building long-term relationships with clients allows you not only to maintain cooperation at the current level, but to develop it, start new projects and attract clients based on recommendations.
All these tasks are very important. In this regard, customer focus becomes not just an addition, but also a necessity. And who, besides existing clients, will tell you about their impressions of cooperation with your company?
CSI. Basic principles
CSI – this is a specialized tool that is necessary for the company’s management to obtain an adequate and not distorted by the company’s employees idea about the level of customer satisfaction with the activities of this company.
This tool is one of the key ones when managing quality of work, introducing customer focus and strategic planning for improving products and business processes.
No matter how strange it may sound, each of us sells something or provides some kind of service. We, as company employees, sell her our knowledge, competencies, and the results of our work over a certain period of time. Divisions and business units provide services to other divisions and/or the company as a whole. The company itself also sells the results of its activities to the external market.
Let's introduce the concept “product” Within the framework of the article, we will generally refer to both the goods sold by the company and the services provided to customers.
Moreover, we will call the goods and services themselves a product in the narrow sense of the word. Product in a narrow sense is responsible only for the client’s interaction directly with the product itself. Product in a broad sense additionally contains all other aspects of the client’s relationship with the company, that is, it includes related processes.
Also, a company can operate in different markets and in their different structural parts, called clusters. What does this mean? To cluster a market, you need to take two or more characteristics, one of which is price. The second characteristic can be selected based on another criterion – type of sale, method of purchase, type of product, and so on. For example, the b2g market is clearly different from b2b. Also, the b2b market can be divided into large, medium or small businesses based on revenue, number of people on staff, or in some other way. There may be a division into subject areas (fintech, foodtech, edtech). In any case, all these criteria are either important to us, and then we take them into account when clustering, or they are unimportant, and then we discard them.
It is important to keep in mind the “product-market-cluster” combinations. This means that if a company has several such combinations, adaptation and implementation of CSI will be required for each of them. Customers in different markets and in different clusters can and most likely will have different requirements for your product and make different decisions about purchasing it from you and your competitors. Obviously, the requirements and expectations for IT development in a large fintech, small edtech or startups will be different.
In this regard, CSI reliably structures the customer-centricity management process, requiring satisfaction to be measured in all projections and dimensions in which the client interacts with the company. This is the whole range of relationships that the company offers its client:
product in the narrow sense
related processes that the client encounters when interacting with the company
the company personnel the customer encounters during this interaction.
Thus, a comprehensive CSI consists of the following blocks:
Product CSI. Evaluates the customer's perception of product quality in a narrow sense.
CSI of related processes. Typically includes characteristics that reflect the customer's satisfaction with all types of business processes that he encounters before receiving the product, during its use and after finishing using it, if these business processes are not a direct part of the product itself.
CSI personnel. Typically includes characteristics that define a customer's personal experience with our employees.
Let us give several examples for each block. Let’s take as a product the implementation of projects according to the model Time&Material:
Product CSI. May include the competencies of the provided developers and teams, compliance of developer profiles with project requirements, flexibility in changing team composition, management of communication and interaction with the team, ease of integration of the team into the customer’s existing team, transparency in the distribution of resources and tasks, efficiency of resource management, control and convenience cost reconciliation, etc.
CSI of related processes. May include the convenience of the ordering process, the convenience of preliminary assessment of the project, the speed of selecting a team, the preparation of reporting documentation, warranty and post-warranty service, etc.
CSI staff. Usually we are talking about the professionalism of the company’s management personnel, their politeness, appearance, etc. Here we will make a reservation that we are talking about personnel not included in the product, if we are talking about T&M, outstaffing, etc.
The algorithm for working with CSI includes a number of steps, some of which will be repeated later. Steps:
Creation of a unit to work with CSI
Choosing the combination “product – market – cluster”
Obtaining a list of characteristics in the CSI of the product, CSI of related processes and CSI of personnel
Determining the importance of each of the selected characteristics (weight distribution)
Regular CSI monitoring
Management implications
Review specifications and weights if necessary.
CSI Composition
CSI is a table divided into blocks, which were discussed earlier, and the content of the blocks is individual for each product, market and cluster. At the same time, the methodology for calculating CSI has common features that make it possible to manage CSI both for each product separately and to create a consolidated CSI for the company.
For each of the blocks, concepts such as “characteristics“, “weight“, “satisfaction rating“, “index“, “block index“, “comments on the rating“, and for the entire CSI it is added “final index“:
Characteristic. The assessed characteristic of the corresponding block.
Weight. It is an indicator by which we determine the importance of each of the characteristics in the corresponding block. The sum of all weights of all characteristics allocated in a block is 100%, or 1, if it is inconvenient to calculate as a percentage. The more important a characteristic is from the customer's point of view, the more weight it is assigned.
Satisfaction rating. This is the same reaction of clients to the quality of the company’s work for each of the identified characteristics. It shows how good or bad a feature is from the customers' point of view. Usually the rating is assigned from 1 to 10, where 10 is ideally high quality, and 1 is terrible quality, but sometimes 0 is a complete absence of characteristics. This means that it is important for the client, but he, the client, did not discover it.
Index (satisfaction). An indicator that allows you to compare results for each characteristic. It is calculated by multiplying the “weight” by the resulting “score”.
Block index. By summing the indices for each of the characteristics specified in the block, we obtain the final index of this block. It shows how satisfied clients are with our work on a scale of ten. If maximum scores were given for all characteristics, then the CSI of each element would be 10. If minimum scores were given, then 1 (if 0 was not given anywhere, of course).
Comments on the rating. This is a set of detailed explanations of the reasons why customers gave a particular rating to the corresponding characteristic. They can be grouped. The column itself gives us an understanding of the reason for the low satisfaction score and what needs to be improved. Sometimes specific names of guilty employees appear here.
Final index. We have three blocks – CSI Product, Processes, Personnel. The sum of the indices of each block is the final index of the “product-market-cluster” combination. Obviously, the final index is in the range from 3 to 30 (again, if 0 was not set anywhere).
Characterizing CSI Elements
All data is recorded from the words of current and recent clients. This is an important point. Current clients are different from potential clients. Most likely, you know that when creating products, the intention of users to use your product must be confirmed by something somehow related to money: directly paid or some costs on the part of the user, for example, for implementation and piloting. Otherwise, we will have a huge number of supposedly potential users who will suggest a set of desired features in your product, but will never actually use it, even if you implement these features. When forming CSI also. A potential customer may say that they are unhappy with your product or your processes. Next, you will spend money to meet the requirements, but this may not make you a client.
The characteristics themselves are obtained through interviews conducted at representative sample. This means that interviews need to be conducted with the minimum required number of clients so that the results, within an acceptable margin of error, correspond to the results that would be obtained if you conducted a survey among all the company's clients in a given period.
Interviews can be conducted either through focus groups or in-depth interviews. A focus group usually involves a simultaneous survey of 6-8 people from different companies, while an in-depth interview involves a conversation with one or more people within one company. In the corporate custom development market, in-depth interviews are more often conducted.
An interview is a free-form conversation about the human mechanism for making a decision. Research is conducted with decision makers or decision makers. The task of this stage is not only to identify the characteristics that lie on the surface, but also more hidden characteristics and motives that influence the purchase of goods and services of the company.
Upon completion of the surveys, a scroll all characteristics heard at least once. Further, these characteristics are grouped by meaning and relate to the Product, Processes and Personnel.
In case of controversial situations regarding the assignment of a specific characteristic to a specific block, do not complicate it – assign it to any of them. If you have several products in your company and the characteristic differs from the characteristic of other products in the company, classify it as a Product. If a characteristic is the same between different or even all products, then classify it as a Process.
There is one very important note: It is forbidden to add a price to the characteristics. Price is not a characteristic of the quality of a product. Firstly, customers in most cases want cheaper. Secondly, the product may be expensive and of poor quality, or vice versa. The issue of pricing lies outside of the satisfaction rating.
Weight distribution characteristics
After receiving a possible list of characteristics, based on which clients in the cluster form their understanding of the quality of the product, it is time to set weights for each characteristic in the surveys. Surveys allow you to determine the importance of the characteristics identified during the interview and assign appropriate weights to each of them.
The survey should be conducted on a random, representative sample of your customers. During the survey, respondents are shown a list of characteristics obtained through the interview and asked to rate the importance of each of them (for example, from 1 to 10). Then the points given to each characteristic are summed up and divided by the total number of points. The weights assigned to each characteristic are obtained.
As a result, we have a CSI: there is a set of characteristics in the CSI of the product, CSI of related processes and CSI of personnel, and the weight of each of the characteristics.
As a last resort, if conducting interviews and/or surveys is not possible, you can create an index yourself, i.e. expertly. However, guessing for a client is fraught with consequences.
Monitoring and managing customer satisfaction. Quality management of the company.
Let's now look at an example of a business process with CSI implemented:
The diagram shows three flows of information:
Instruction to implement a business process
Receiving feedback from clients on satisfaction with the quality of services provided
Organizational conclusions and management decisions based on information received from clients
Organization of work, according to this scheme, allows the manager to obtain adequate information almost directly, bypassing the chain of subordinates who, intentionally or not, distort the information. U management, objective data appearsfrom which it draws appropriate organizational conclusions and makes the necessary management decisions.
An additional unit is specially introduced into the information chain – a division for assessing customer satisfaction. It informs company management about the true level of customer satisfaction and points out problem areas.
The division can be created either within the company’s regular structure or as a third-party contractor. It is fundamentally important that it is not involved in any way in the process of working with clientsso that he has no desire to embellish the activities of the performers in any way. It must also be completely independent (most often the unit reports directly to the senior manager).
In theory, it would be possible to obtain information from clients without a satisfaction assessment unit, but this would lead to possible manipulation of data, isolation of the company's top management from reality, incorrect management conclusions and, as a result, loss of clients and market share, unnecessary costs for improvements wrong business processes.
Regular surveys
The surveys are conducted on the basis of a specially developed questionnaire, which essentially replicates the structure of the index and is designed to obtain customer ratings on the characteristics included in it. The questionnaire is designed in such a way that it is of an acceptable length, and the survey does not drag on for hours. It is especially important to explain to customers that the survey is needed so that the company can improve the quality of the product and the quality of service. Of course, after such surveys, clients should see real positive changes in the company’s work.
The decision on the number of clients surveyed also depends on the market in which the company operates and how many clients it has served in a given period. If there are few clients, usually several hundred, then a survey of all clients is usually carried out. If there are many clients (usually more than 400), then only a certain part of them is surveyed according to the rules that are established to determine a representative sample.
The frequency of the survey depends on the industry. In industries where customers make repeat purchases frequently, the frequency of CSI measurements should be high, such as once a month or once a quarter.
It is important to maintain a balance here: frequent surveys create a burden on your company and can bore your customers, and infrequent surveys will not allow you to accumulate a reliable statistical series from the measured indices. You simply won’t have time to track the dynamics of change.
This is what CSI looks like based on survey results:
Revision of characteristics and weights
The world is changing quickly, so the list of characteristics that customers include in the concept of “quality” may also change. Weights may also change, i.e. significance of characteristics. Events since 2020 regularly show us this. Therefore, a reasonable approach would be to periodically update the list of characteristics and then re-weigh them. It is enough to do this once every three to five years, but there is no strict rule.
CSI competitors
CSI can be measured not only for one's own company, but also for competing companies in the target market and cluster. In this case, the survey is conducted not among your own clients, but on the basis of current and potential clients. This is what a comparison table might look like:
It is divided into left and right halves. The average score is displayed as the arithmetic average of the indices for each characteristic. If the index is above average, then the company is performing better than the average among its competitors; if it is lower, it is performing worse. The right side of the table shows the magnitude of this deviation.
Management implications
We have collected all the data for management conclusions. We may want to change features that our customers feel are lacking. When choosing which characteristics to improve, the combination of the largest weight and the smallest index should be taken into accountthat is, the most important characteristics for our customers, which are poorly represented in our product or processes.
When improving any of the characteristics, one should take into account the cost of resources that must be spent on improving the corresponding characteristics. We are talking about resources that are always in short supply – people, time, money.
Adjusted for the cost of resources required for improvement, sometimes it makes sense to concentrate on increasing customer satisfaction with those characteristics that, although less significant, require significantly fewer resources to improve them, and start improving the characteristics that require more costs later, when such an opportunity arises.
It should be borne in mind that often the higher the starting satisfaction rating for a characteristic, the harder and more expensive it is to improve it.
What's next?
We have reviewed a very effective tool that will allow your company to be customer-centric and increase competitiveness in the market.
Unlike other seemingly similar tools (for example, NPS – Net Promoter Score, Customer Loyalty Index), CSI allows you to draw conclusions and make decisions based on detailed analytics.
All of the above can and should be automated – you can use a simple Excel spreadsheet, survey forms, or more specialized tools.
We did not consider cases when customers have several decision makers, when the product is sold through agents and intermediaries, and also how to enter the calculation of a single final CSI for the entire company. Although these questions are important, many will be able to answer them on their own, adapting everything described above to specifically suit your company and your products.
