Why knowing customer satisfaction levels is important in SMEs?

Small-to-medium size enterprises (SMEs) and young businesses have a variety of start up costs that they need to manage on a daily basis. Customer acquisition costs are extremely high, and SMEs are generally not large enough to enjoy the benefits of economies of scale. The main advantage that SMEs have over their larger and more well-established adversaries is their ability to adapt to market conditions more quickly. SMEs enjoy the benefit of having less red tape to navigate through when it comes to executing strategic organisational decisions. Departmental teams also have the potential of being more versatile and agile when it comes to executing actions deemed appropriate by management.

Even though larger enterprises are older than SMEs and have more well-established relationships with their customers, it takes longer for them to adapt to their customer’s needs and to apply and adapt to the information collected when engaging the “Voice of the Customer”.

As SMEs are smaller in size and generally interact with their customers more frequently on an individual level; it is much easier for SMEs to realize the benefits of the customer satisfaction measurement process. This article will address the reasons why it is easier for SMEs to realize five main benefits of measuring customer satisfaction- as stated in Letitia Fourie’s academic paper: “Customer Satisfaction: A Key to Survival for SMEs?”.

“To get reliable insight into the market and its own competitive position” (Fourie 2015).

It is essential for SMEs to gain insight into the market and its own competitive position. After conducting the Customer satisfaction measurement (CSM) process and gaining insight about the utility of the services and products offered by the organization as well as customers’ perceptions about current price levels- SMEs will find themselves at an advantage when it comes to the speed of adapting products and services on offer to match customer requirements. It also takes less time for SMEs to change their prices as compared to larger firms, when market conditions change.

“To be aware of dissatisfaction amongst customers as customers do not like to share dissatisfaction” (Fourie 2015).

It is cheaper for SMEs to conduct the CSM process as they are smaller in size. The CSM process also takes a shorter amount of time when it is done at SMEs, as they are smaller in size and have fewer customer touch points. Engaging the “Voice of the Customer” at SMEs is much easier when compared to larger firms, as there are fewer layers in the organization for the information to flow through- to reach management.

“To reveal potential market opportunities” (Fourie 2015).

Even though it may be more expensive for SMEs to exploit potential market opportunities that have been discovered through the CSM process. It takes a much shorter time for strategic actions to be executed to facilitate the exploitation of new opportunities as compared to larger firms.

“To develop a customer satisfaction measurement process that is tailored for the specific business” (Fourie 2015).

It is substantially cheaper for SMEs to conduct the CSM process when compared to larger firms. This allows SMEs to potentially conduct the process more frequently and consequently benefit from more up to date customer insight.

“To expose differences in quality service perceptions between management and the customers” (Fourie 2015).

As the CSM process is cheaper to conduct at SMEs and can potentially be conducted more frequently when compared with larger firms; employee “understanding gaps” in satisfaction levels and importance ratings of customer requirements will be addressed more frequently and are much smaller in size as compared to larger firms (that will conduct mirror surveys less often).

According to Fourie: “Half of customers with problems do not complain; … Customers who complain are, however, more likely to do business with the organization again, even if their problems were not solved” (Fourie 2015). This is illustrated by the “tip-of-the-iceberg phenomenon” shown below:

The aforementioned phenomenon is a huge problem for larger firms that are slow in addressing customer concerns which may have been identified when engaging the “voice of the customer”; conversely, the  potential for SMEs to conduct the CSM process more frequently helps mitigate the effects of the “tip-of-the-iceberg phenomenon” illustrated above.

Barriers to entry exist in all forms and sizes for smaller businesses; on the contrary, the potential speed, frequency and ease of conducting the CSM process and addressing gaps and insights that result from the process should be considered a competitive advantage for SMEs.

Works Referenced:

Fourie, Letitia. “Customer Satisfaction: a Key to Survival for SMEs?” Problems and Perspectives in Management, vol. 13, no. 3, 24 Nov. 2015, pp. 181–188., businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/6944/PPM_2015_03cont_Fourie.pdf.