By Claes Fornell

What can CIOs and other senior IT executives do differently from what they're doing today to dramatically improve customer satisfaction? One of the most important aspects has to do with monitoring the customer experience in a way that obtains not just mere data, but truly useful information. Today, too many companies are overly concerned with the transmission and compilation of data. Instead, they should focus on what the data mean, how they were measured, and what purpose they serve. To help organizations achieve this new focus, the next phase in the information revolution will need to involve data purification, data sorting and data filtering.

More specifically, IT executives need to closely examine how they measure customer satisfaction. Questions to ask include: What's the margin of error? What's the relationship to operations on the one hand, and to revenue and earnings on the other? Is customer satisfaction predictive of buyer behavior? Does it produce earlywarning signals about potential customer defection?

If a company's customer-satisfaction metrics do not provide this data, it's not because such measurements are useless. Rather, it is because the company's customer-satisfaction metrics are useless. If a CIO doesn't fix these measures, the company will pay a high price.

Behind this need is an ongoing change in the world economy — from mass production and consumption of commodities, to production and consumption of increasingly customized services and information. The change, in turn, is being supported by four trends: more accessible buyer information, increased global competition, more services relative to goods production, and the emergence of new market economies. All four trends contribute to a shift in the balance of power between buyers and sellers — in favor of buyers.

Also, the proliferation of the Internet has coincided with, and to some extent caused, global competition and global division of labor. Sellers must now compete harder for buyer preference. It doesn't matter how much a company can improve the quality of its products and services, unless the satisfaction of customers also improves. Otherwise, buyers will be unwilling to pay for quality increases.

Useful information about customer satisfaction tells us both what the company has done to its customers and what customers will do to the company. For example, will customers return, or will they defect? How sensitive would they be to price hikes? Such information is vital to management and to shareholders, because it says something about the company's future financial prospects.

An economic asset generates future income streams to the owner of that asset. Peter Drucker said it best: "The purpose of business is to create a satisfied customer."

Healthy Finances
Satisfying customers brings financial rewards to an organization. The health of the organization's customer relationships makes up the sum of the value of all the organization's assets. In the information age, where both buyers and sellers are better informed, and where buyers are gaining power over sellers, the conventional assets of supply don't tell us much about the future.

It is much more common for a buyer to reject an invitation to buy than it is for a seller to decline to sell. Yet most measures of both our economy and companies continue to be supply-oriented rather than demand-focused. For example, consider the explosion in the production of "nonrival goods," products. If I watch a movie, I do not prevent another person from watching it. The movie is a nonrival good; it isn't used up after it has been consumed. The same is true — even more so — for software and other information.

These types of nonrival products will be the most important source of the new economic growth. Allocation of scarce resources will still be important. But economic growth will largely be fueled by unbounded abundance.

Claes Fornell is the Donald C. Cook Professor of Business at the Ross School of Business, University of Michigan. He is also the founder and chairman of CFI Group, creator of the American Customer Satisfaction Index and author of The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference (Palgrave, 2007).