Best Buy's Customer Satisfaction Problem: How To Measure Happiness

Best Buy has been busy telling investors of its plans to give bonuses to store associates when good customer-service scores are found, in addition to bonuses for strong sales. At a glance, this is commendable and could be a sign the chain now understands that the only true way to fight showrooming—and, ultimately, to survive at all—is through much happier customers.

But dig deeper into the vague statements and it's unclear if any of those happy conclusions are warranted. It might be that the only meaningful bonus involved here is the one Best Buy had hoped Wall Street would give it for even talking about customer-service score bonuses.

This challenge is certainly not limited to Best Buy. There is no major chain today that has a meaningful way of tracking customer service, although some are critically needed.

Issue One: How is customer service fairly measured? Is it a survey of customers after they have made purchases? Hardly, as that excludes everyone who didn't find anything worth buying, a move that itself sharply skews the figures by eliminating many of the most unhappy customers.

Is every 15th customer surveyed as he/she leaves the store? Better, but the psychological dynamics may skew the numbers. Rushing to leave, customers may not want to spend the time discussing the experience. And if they do, they may hesitate to unload a bad experience on a pleasant-seeming clipboard-holding associate at the door.

Is it self-selected, such as a Web survey? That may skew the other way, with the most vocal—unhappy—customers disproportionately volunteering to make comments. At least one customer satisfaction vendor, ForeSee, has made a compelling argument that reaching out to all customers right after sales interactions—not necessarily ones that ended with a purchase—as well as about a week later, when the customer might say the name of the rival where he/she ultimately made the purchase, is the best way to go.

Even ForeSee's approach works better online (and with mobile) than in-store, when customers who do not make a purchase are often hard to identify.

Best Buy declined to clarify how it was going to determine customer happiness. And if those methods are not comprehensive and well thought-out, the results may not reveal much. Even worse, what if the methodologies can change at management's whim to make the scores go in a desired direction?

Big city mayors have long been accused of telling the police to crack down on minor infractions eight months or so before an election, only to be told to ease up about four or five months later. The result? Crime rates plummet as people start focusing on the election.

Clearly, the accuracy of the stats is essential. How much will store managers—who have a huge vested interest in the results—be able to control and influence how the data is collected?

Setting aside the methodologies for calculating the customer-service happiness rate, Best Buy has also been mute on the nature of the incentives themselves. Mike Mikan, who is Best Buy CEO For Now, has said the incentives will be where sales and customer-satisfaction scores increase. Best Buy also declined to specify how that mix would likely work. If it's 99 percent sales and one percent customer satisfaction, that's hardly sending a customer-centric message to the troops. Will it be individualized for each associate, meaning that each associate's customer-satisfaction score—for bonus calculation purposes—would be based solely on what his/her customers said? Whereas overall store scores are important for managers with store-wide responsibilities, shouldn't associates only be judged on matters they can influence or control?

Any methods would need to be immune to tampering by those associates. "You can have it for $300. (Whispers) I'll make it $250 if you give me a rave review on this customer-satisfaction survey. Indeed, I'll sit down with you as you fill it out. What do you care? It's only a form and it's $50 in your pocket."

The beauty of time—waiting a week before someone calls the customer—makes true answers more likely.

How substantial will these bonuses be? If the bonuses are 40 percent of compensation packages, that will get a lot of attention. If it's going to end up being 2 percent of overall compensation, then commissions will blow away any customer-service incentives.

Bonuses for making customers happier is a powerful idea, and it's the right thing to do—for your shareholders and everyone down the line. But it's complex. Building a meaningful system to determine customer satisfaction and to incentivize the conduct you want to happen, that's a lot harder. But if you want to just say you're doing it and take what kudos you can, that may prove to be a very temporarily satisfying approach.