Customer satisfaction is critical for business and franchise networks. The importance and logic could not be more clearly stated than by the late Sam Walton, founder of Walmart:
“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
It follows that measuring customer satisfaction should be a high-priority for franchisors. Understanding customer satisfaction at the franchisor or group level and the franchisee level should be of paramount importance. After all, customer satisfaction is variously associated with outcomes (established by research) that matter. Examples are:
- Customer referrals
- Repeat business
- Customer frequency
- Customer spend, and
- Price sensitivity
Related, there are many important considerations. Examples include:
- What is/are the question/s employed? For a measure of overall customer satisfaction, many companies utilise the Net Promoter Score (or NPS) methodology (or similar variant) – originally established by Fred Reichheld of Bain & Company.
- Who is surveyed and how are they selected? This is important. There is nothing worse than franchisees hand-selecting only clearly satisfied customers to complete a survey – thus leaving the dissatisfied completely out of the mix. Careful thought needs to be put into whether all customers are surveyed vs a representative population and, if the latter, on what basis.
- Survey timing. When and how often? Businesses will vary based on their unique situation. Optimal survey frequency may vary from real-time to annual. For some organisations, there can be benefit in real-time measures. For example, one food retail franchisor once gave us an example of how customer satisfaction dropped markedly when a particular franchise owner popped out of the premises.
- Survey tool. How do customers complete the survey? Again, the right approach needs to be matched to the business. Some companies may use an in-store app, invoice link to web page, text message or email survey.
- Who administers the survey? Key in a franchise system is whether this is a franchisor and/or franchisee function. Related, as identified above, there can sometimes be a problem associated with franchisees administering the survey to selected vs all customers.
At Franchize Consultants, we advocate customer satisfaction, being a critical KPI area, franchisors should at least understand annually – both overall and by franchisee.
We also add that the [actual] customers voice, as opposed to franchisor / support staff opinion (no matter how well grounded) can be very influential in changing franchisee mindsets and behaviour.
Relevant questions:
- How regularly do you survey your customers?
- Are there opportunities to improve the type and value of customer insights collected?
About the Franchising Best Practice 500 Series
This is part of a series of franchising best practices. Franchize Consultants is sharing and publishing these best practices weekly for the betterment of franchising. We know that better knowledge and execution of franchising best practices leads to bigger and more valuable franchisor and franchisee businesses.
We have assembled the first 40 best practices into The Best Practice Handbook, which is available for purchase.
