Most distributors see customer satisfaction as an untouchable measure of business. How, really, can the measurement of true customer satisfaction be taken? A majority of those distributors would say, “Well, that's common sense. If the customer wasn't satisfied, he wouldn't be returning for more business.”

Customer satisfaction is a fluid concept. But no matter how vague a description one could put together, the phrasing itself is a major portion of most distributors' corporate strategy. Because, after all, keep them satisfied and they do keep coming back.

“Just the idea of customer service, and measuring it, gives the customer a voice, and just as importantly, tells us how they view our performance,” says Elisa Scarletta, director of marketing communications at Applied Industrial Technologies, a bearings, power transmission and fluid power distributorship headquartered in Cleveland. (Applied ranked #9 on Industrial Distribution's 2006 Big 50.)

“One of our core values is continued improvement in how we do business, and we strive for that with all our teams,” she adds. “We share our customer satisfaction results with managers, and post them on our intranet site to communicate with all local management.”

Applied conducts monthly phone interviews with randomly selected customers. An independent research firm conducts the surveys and sends the information back to the company.

“We get those responses and look at them on a monthly level, but also compile them relative to quarters and annually,” explains Scarletta. “The executive quality improvement team posts that comparison data for all associates within the company.”

Ernie Coutermarsh is senior vice president of F.W. Webb, a plumbing, heating, HVAC, PVF distributorship based in Bedford, Mass. F.W. Webb has 65 branches, and was ranked #19 in this year's Big 50. At F.W. Webb, Coutermarsh says, customer satisfaction is the company's strategy, not a part of it.

“We determine it in a lot of ways, as to how we measure up to what the customer wants from us, such as on-time reactions, order consistency and correctness, and the promise and delivery of product,” says Coutermarsh. “We stay in contact with them to be sure that we are keeping them happy.”

Coutermarsh explains that, while they can be helpful, surveys are not the primary way F.W. Webb conducts research on customer satisfaction.

“For the most part, we deal with repeat customers, and when they come in, we ask them how well they're treated and if they feel we may be taking them for granted,” he explains. “We don't wait to find out that information from a survey. We ask them, and get our answers right there.”

Linda Shea is senior vice president and global managing director at Opinion Research Corp., a research and consulting firm in Princeton, N.J., and has 20 years of experience working with companies on maximizing their customer relationships.

“I'm actually quite leery of the phrase 'customer satisfaction,' because once its meaning is under scrutiny, so many don't see where measuring it provides a return on investment,” she says. “It doesn't mean that they aren't interested in the feedback, but merely that most company owners don't know what to do with the feedback.”

According to Shea, customer feedback is essential to any business: to assessing its relationships with customers; looking at its current results as a guide to the future; and to giving the company a sense of where its customer base is going.

“A lot of companies will use their customer feedback for measuring performance, but you can't measure that kind of satisfaction alone,” she says. “It's important to distinguish improvements and enhancements, too.”

Ohio Transmission & Pump Co., a pump, pneumatic, electrical and mechanical distributorship headquartered in Columbus, Ohio, also conducts surveys and interviews to gauge customer satisfaction.

“Certainly, customer satisfaction is an important part of our strategy for all of the obvious reasons,” says Philip Derrow, president and CEO of OTP. “However, the real challenge is converting the ambiguous emotion of 'satisfaction' into the concrete business value of earned customer loyalty. Too often, these terms are used interchangeably, though from an ROI point of view, they are very different.”

The interviews with key customers and the surveys are informal, says Derrow, acknowledging that gauging the satisfaction is the biggest challenge.

“Customer loyalty, on the other hand, is more easily and objectively measured,” he adds. “Satisfaction is defined by what people say; loyalty is defined by what they do.”

Shea says most of the satisfaction feedback should come from larger customers.

“Always make sure that the larger customers, those that contribute to the 80/20 rule and provide more to the business's revenue, are invited to participate in all the feedback queries,” she says. “An organization should call out those most-valued customers—be they more valued financially, product-related or in some other way—and speak to them regularly. Distribute their results separately from the others.”

As to how often the surveys and interviews should be conducted, well, that's up to the interviewer. Applied's are monthly. OTP's are regular. F.W. Webb's are as the customers come in.

Shea suggests semi-annual or annual surveys for the entire customer base, and of course, keeping in touch with the larger customers more frequently.

“Timing also depends on what you want to know,” she says. “Are you asking about relationship-based items, or about event/transactional work? The relationship-based surveys can be done semi-annually or annually, and are designed to get information on all the components of the business.”

The event/transactional surveys focus more on customer reaction to, as examples, new products, a specific promotion or a new service provided by the company.

“It also is important—if it's feasible—to get information on your competitors through these surveys,” Shea adds. “See if you can get the customers to talk about those relationships, too.

“Also, don't forget about the lost customers. A lot can be learned from talking to them, and more importantly, you can learn if others are following the same profile or path.”

Applied's surveys are tied back to the company's core values.

“Of course, we ask them about the usual suspects, such as getting the correct parts and on-time delivery, but we also ask them more specific questions based on our own proprietary company policies,” says Scarletta.

In a Kentucky distribution center, because customers were not able to effectively track the expiration dates of chemicals in their warehouses, a group of Applied employees took it upon themselves to develop a computer-based tracking system for expiration dates, says Scarletta.

“The program started out as an Excel spreadsheet, but because of its popularity among all our customers, has been incorporated into the company-wide warehouse management program,” she adds.

“A lot of what we get from the customer satisfaction information becomes identified as best practices for us,” explains Julie Kho, Applied's public relations manager. “And those practices, like this one that started in a single building, are spread throughout the company into every distribution center.”

Promoting the customer satisfaction mentality throughout the company's ranks is as important as gathering the information itself.

“Here, the employees are empowered to take action on any customer issues—without the bureaucracy of the corporate structure,” says Coutermarsh. “They have the authority in that location to solve any problem and initiate solutions. We encourage employees to not look the other way when they see something that can be done better, and be candid about any shortcomings.

“It's all in the culture,” he continues. “When the customer wins, the company wins and everyone within the company wins. The employees share in the rewards of doing it right, so when it comes to satisfying the customer, we promote our best practices until it becomes routine.”

Coutermarsh adds that employees who excel at “doing it right” are trumpeted to the company as a whole, and pointed to as examples of good customer service.

However, it's not always so easy to adopt every change in all companies.

“It's hard to get the employees to embrace all the initiatives, as you are talking about some cultural change,” explains Shea. “It helps tremendously to also get feedback from the employees, and to be sure that everyone in the organization knows about the initiatives. Be sure to engage in some discussions with the employees, as they also know which areas in the company function the best, and they work closer with the customers.”

Bring that employee feedback in house and compare it with the customer feedback, says Shea. Share that with the employees, and the pushback reactions you get from initiating changes may not be as hard.

Derrow uses his information as part of the company planning in establishing goals, during regular reviewing processes and in coaching his employees throughout the year.

“[The feedback] becomes part of the information that we use when coaching and planning processes to help us achieve our objectives,” he explains.

As customer satisfaction is among the uppermost levels of a company's agenda, finding out what those customers think can not be undervalued.

“You have to leverage the tools and techniques to learn what's most critical to you,” says Shea. “Go into the surveying and interviewing process knowing what you'd like the desired outcome to be: whether it is discovering your strengths and weaknesses, and/or making the customer your advocate.

“But don't get too caught up in asking about the past,” she advises. “Look to the future as well, by asking how their industry is being impacted by outside factors, such as outsourcing and off-shoring, and you can use that information to strategize for the future.”

Scarletta says that continually improving customer satisfaction all comes back to Applied's core values.

“Talking to the customer regularly and interpreting that feedback is a fantastic tool for us,” she says. “We take pride in improving our customer satisfaction, and the only way to know how we're doing is to ask the customer. We're a check-and-balance service, so we need to know.”

Coutermarsh agrees that, when it comes to measuring how well your company meets a customer's demands, it's best to go to the source.

“We get a lot of comments from customers at trade shows, open houses, and in notes and e-mails about how we're doing,” he says. “But when it comes to actually measuring how you're doing, you can either ask yourself based on that kind of feedback, or you can get on the phone and ask your customers. We prefer the phone and a visit over surveys.”

Derrow also believes that the feedback is worth its weight in gold.

“Any time you have regular and meaningful feedback, and can use it in coaching that is focused on clearly defined strategic goals and objectives, it's good for the company, customers, associates and suppliers,” he says.

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