There is a frightening disconnect between measured satisfaction and customer loyalty. For many years, senior living managers have performed customer satisfaction surveys to measure how happy various customers and consumers are with their communities. These surveys have taken many forms, but the results have been remarkably similar – customers and consumers seem quite satisfied, or happy. Another fact, however, is that satisfied customers are not predictably loyal – too often they walk away to another senior living community. Why? And if happy customers walk away, why bother trying to find out if they’re happy in the first place?

Three theories may explain this situation:

  1. Customers of high vulnerability services (such as senior housing) don’t tell the truth about their level of satisfaction;
  2. Satisfaction and loyalty are not correlated in the markets for these services;
  3. Service dissatisfaction is not the only reason for disloyalty.

There is good evidence that each of these provide at least part of the explanation, and can be helpful in guiding what to measure and how.

Regarding surveyed persons telling the truth, little can be done, although there is some evidence that having an outside person, vendor or agency perform the measurement is useful. Surveyors often must work harder to obtain negative responses through one-on-one interviews, for example. What is clear, however, is that the survey respondents who provide negative responses are offering the surveyor precious information. It is my experience that negative responses are too frequently either dismissed with a roll of the eyes, or rationalized away to the margins. It is human nature to take pride in, and therefore be defensive about, our work, but this human quality does not serve the management of senior living communities in this circumstance.

There is far better news, however with regard to the connection between perceived satisfaction and loyalty. While these two variables – satisfaction and loyalty – seem to float as independent of each other, there is a derived variable that has been shown to correlate with loyalty, and even predict it. This is perceived value. Here’s how it works.

Residents of senior living communities and their families assign relative importance to certain features of the community and compare their perceptions to alternatives. This occurs more often as they become less satisfied. If dissatisfaction with a particular feature, which is sufficiently important, becomes very high, the motivation to embrace an alternative becomes very strong. The key over-riding variable in this dissatisfaction dynamic appears to be relative value for the price paid. In other words, a small decrease in satisfaction with food, for example, will be much more important if the price being paid is seen as high. We have all said publicly or privately, “Considering how much this costs, the “___” should be much better!” And on the other hand, we have all endured poor service and tolerated, or even accepted it by saying, “Well, it’s not bad, considering the price.” The customers of senior living communities, and indeed all of us, use value maps to assess the fairness of our exchanges.

Model Value Map

Model Value Map of Customer Loyalty

The relative importance placed on features and price change with time. Of importance to measure, therefore, on a regular basis, are the relative satisfaction with, and the perceived value of, a communities’ services. How can we do this?

Fist we have to measure the relative importance our customers place on the services provided.

Looking at the initial decision to move into a senior living community, the buying decision is shared among family members (shoppers), and that the shoppers consider 3 – 4 communities. How do they compare the communities? By their perceptions of the communities, weighted by the importance they place on each community feature. In other words, each prospect views each community through a certain type of camera lens.

In the table below, the relative importance of several service areas are displayed, as well as the satisfaction ratings for the Golden Days Senior Community (our subject), and 3 alternative communities.

Model Satisfaction Profile

Model Value Map of Customer Satisfaction and Loyalty

If management were to consider satisfaction ratings only, attention would be focused on several areas with the lowest ratings, i.e., Food, Security, Health & Wellness and Price. The Ratio, which is the ratings of Golden Days divided by the average of alternatives (competitors), tells a different story. The Ratio shows that Golden Days is most vulnerable to its competitors in the area of Security. Wherever the Importance is high and the Ratio low, Golden Days is vulnerable. The converse is also true: wherever Importance is high and the Ratio is high, Golden Days has a leverageable competitive advantage. A Ratio of 1.00 means that Golden Days is at parity, in a competitive sense, with the rated competitors. In this example, Golden Days’ pricing is a competitive advantage due to the Apartments, Maintenance / Housekeeping, and Price. The model Satisfaction Profile offers a far richer array of comparisons and insights than satisfaction ratings alone.

Conclusion

Shoppers for, and consumers of, high vulnerability services evaluate these services in a highly comparative manner. Perceived satisfaction alone does not predict buying behavior or loyalty. By asking shoppers and customers to make comparisons of competitive positions in both service areas and price, it is possible to create a far more useful and predictive model.

Irving Stackpole is the Principal of Stackpole & Associates, a research, training and consulting organization serving senior living and health care clients, located in Boston. (617) 739-5900, Ext. 11.