5 Dangers of Tying Customer Surveys to Performance Bonuses

Warning! Tying customer survey responses to performance bonuses can be a dangerous path. Yet, so many organizations continue to tie performance and bonuses heavily to customer feedback and customer satisfaction.

The principle itself is a sound one. If you keep our customers happy, our business succeeds, so our employees should succeed too. However, many organizations have the the purpose misaligned. The feedback should be unbiased and real, not forcibly aiming the participant to choose a high score. If you tell your customers what to choose, it defeats the purpose and mission of market research which is to obtain true "Voice of Customer" feedback. Unbiased. Untainted. Uninfluenced.

Remember, customer surveys are used by organizations to learn about their customers. hence the "customer" in customer surveys. Oftentimes, the objectives of customer surveys include learning about the customer experience, understanding customer satisfaction, and addressing areas of improvement. These objectives can get muddled when employee bonuses are tied to the results of customer surveys because results become misaligned (in more than one way).

Learn more about the 4 dangers of tying customer surveys to performance bonuses below.

5 Dangers of Tying Customer Surveys to Performance Bonuses

Beware of the dangers of tying bonuses to customer surveys!

Danger #1: First off, let's not forget the point of customer surveys

Measuring customer satisfaction and understanding the customer experience is great, but don't don't forget the point of the research. Customer surveys should provide insight into areas of success, areas of improvement, and the customer experience.

Having a singular focus on the score of one key performance indicator (KPI) instead of the customer experience as a whole puts the integrity of research in danger. There are so many more pieces to the puzzle that go into a customer experience that your organization should be measuring.

Wondering what KPIs your business should be measuring? Visit that link for 6 common ones.

A customer survey should have a larger objective than just, "To measure Net Promoter Score (NPS) for performance bonuses." (Learn more about the ins and outs of NPS.) Having a high NPS score is great, but it's not the whole customer story.

Danger #2: Having too narrow of a focus

NPS measures the likelihood of customers to recommend the organization to others. That's it. Don't get me wrong, NPS is an important market research metric, but focusing on this metric alone leaves out crucial pieces of the customer story. What drives likelihood to recommend? What parts of their experience were they most happy with? What parts need the most improvement?

In a previous blog post we discussed 5 issues with NPS. They were: (1) it does not measure transactions, (2) it has no standalone value, (3) it does not help understand customer segments, (4) it pays little attention to passives (those who rate you 7 or 8 on a 0 to 10 scale), and (5) it creates tunnel vision. For a more in-depth look at these, read more about the 5 issues with NPS.

Placing too much focus on one metric or on feedback from only one or a few customers is not best practice for understanding market research data. In order to truly evaluate customer satisfaction and the customer experience, you have to craft a well rounded customer survey (or surveys) and collect enough responses to draw meaningful conclusions. This might include a full customer experience (CX) program with both qualitative and quantitative data.

Learn more about customer survey questions.

Danger #3: Bias

Another issue of tying the results of customer surveys to performance bonuses? Bias. Yes. The word that makes us purist market researchers cringe. It's the ultimate evil in our line of work.

If your organization or your employees are sending these surveys directly to customers there will undoubtedly be bias. Customer survey responses will be impacted if respondents know employees will be tied to their responses or see the results. If results are going directly back to their rep, do you think someone is willing to be completely honest?

This is a key reason why organizations choose to work with a third-part market research company when conducting customer surveys. The confidentially and outside perspective market research companies provide are benefits that cannot be overlooked. It's a benefit you cannot achieve by conducting surveys in-house.

Learn more about the benefits of using a third-party market research company.

Instead of tying results to specific employees, market research companies will encourage organizations to assess KPIs by the entire organization or departments if necessary. As a "middle-man" in the process it gives customers a route to be completely honest with responses knowing their feedback is protected.

Danger #4: Attempts to game the system

Perhaps the most dangerous caution of all. When putting employees' livelihood at stake you can bet some will be tempted to encourage customers to give them a good score. Even go as far as telling them to do so. For example, take a look at the image below.

Want to find out what your customer's really think? Don't do this.

Clearly, this survey is leading respondents to provide a score of 7 or "Excellent". On top of that they mention 6 being "OK" and 5 being "Poor". Last we checked the midpoint on a 1 to 7 scale is 4. By definition the mid-point of a 1 to 7 scale is average. It's the mean. It's the median. Yet, this employee or organization forces us to believe it's well below average.

Isn't the point of a survey to measure true customer satisfaction, or was it just to receive a pat on the back (or a bonus check)?

Attempts to game the system may not be as outlandish as this example but they are very common. Particularly in the auto business where salespeople are often judged by manufacturer surveys sent out after purchase. Entire commissions and sales bonuses are based solely on whether a customer rates you a 9 or a 10. So I can remember a few times where a salesperson referenced the survey and a need for strong scores while handing over the keys.

It could be as simple as an employee saying, "I hope I gave you excellent service today." right before the survey is handed to the customer. Or it could be as drastic as, "Please give me a 10 on this survey because they base my commission off of customer responses. Anything below a 10 hurts me."

Don't think this happens? Yes, it happens.

Whether gaming the system is obvious or not, it will mean efforts to receive customer feedback have been tainted and cannot be trusted. Market research pros will suggest omitting data that was gained in this manner.

Use honest and reliable market research tactics if you'd truly like to understand how satisfied customers are, areas of improvement, and the customer experience.

This includes developing customer surveys to meet various objectives (more than just a handful of KPIs), conducting fieldwork in a manner that does not lead to bias or attempt to game the system, and using a third-party market research company.

Danger #5: Misinterpreting customer data

The overarching and long-term impact of all of the other dangers including gaming the system directly relate to misinterpretation of the customer experience. If you are trying to improve as a business: correcting faults, fixing mistakes, eliminating frustrations, etc. you need to receive straightforward and honest feedback from customers.

If you bias all of your customers into rating you a 10, you'll never know what areas need to be fixed. Therefore your customer experience looks like a "10" on paper but in reality it's a "7" or "8". So these problems and frustrations customers have will continue to fester. They'll get worse and customers will leave your organization to go elsewhere even though they rated you a "10" on everything (because they were told to do so).

Honest feedback helps root out problem areas and forces organizations to make changes for the better. The danger of tying employee bonuses to customer satisfaction data is misaligned with why market research is done in the first place.

In Summary

I'll leave you with this very simple but real example. Let's say you are a manager of a car dealership and you base commission payouts off of customer feedback and NPS ratings. You think that this is a genius idea because happy customers translates to more business, so aligning bonuses to these scores makes a lot of sense.

You have 2 salespeople. Jessica and Alan.

Let's start with Alan.

Employee Example 1: Alan

Alan games the system. He has been with the dealership for 8 years. He knows he can rack up his commission with strong NPS ratings from customers. After each vehicle sale, he hands the customer a survey and tells them that anything less than a 10 is considered bad and that his commission is based off of 10s and only 10s. So he asks every customer to give him a 10.

Alan is a fairly good salesman but he is weak in a few areas including knowledge of the Dodge lineup, gas mileage figures, and not staying up to date on features of new models. Therefore customers often don't trust Alan and he gives out the wrong information from time to time which really frustrates customers after purchase. Yet, they have been predisposed to know that anything less than a 10 is poor, so they still provide Alan with a 10 because they do not want to hurt his salary or his family's income.

Alan doesn't review any customer feedback and cares solely about how many customers gave him a 10. As a manager you see Alan's scores are always at or near the top for the region and he is considered one your best salespeople because of this. However, the next time his customers go to buy a vehicle they often go to a competitive dealership with salespeople who are smarter, more trustworthy, and up to date on the latest models.

Employee Example 2: Jessica

Jessica has been with the dealership for 2 years. She understands the tie-ins of bonuses to customer survey scores, but her entire focus is on making the customer happy, not an arbitrary score. After each vehicle sale she hands a customer a survey and tells them a response is important because feedback helps us improve service at our dealership. Nothing more, nothing less.

Jessica knows she is weak in a few areas because she closely reviews the data on how her customers score her. Over the past 6 months she's developed some new methods on how to approach customers, build rapport, and answer questions quickly. She's made it a point to be more responsive to phone calls and email questions as surveys have indicated she can take a while to respond.

She works hard at her job and knows the areas she needs to improve on. Her scores are always below Alan's but they have been growing steadily over the past year with her new focus. When return customers come back to the dealership, she knows exactly what she needs to fix. This has created a steady and loyal customer base for Jessica. Many of her customers come back a second and third time to purchase vehicles and they become happier and refer more friends each time.

Based on her attention to detail, understanding what customers want, and what she needs to improve, Jessica is on pace to surpass Alan's customer satisfaction ratings within the next 6 to 8 months. Yet right now on paper she is only the 12th best salesperson in her region.

Which employee performs better?

Who would you rather have on your team? Who is providing the more true and better customer experience? By structuring your bonuses around customer satisfaction scores , you might end up rewarding worse performing salespeople.

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Drive Research is a market research company in New York that works with organizations across the country to assist with their market research needs. Services include Voice of Customer (VoC) research, customer surveys, customer experience research (CX), user experience research (UX), and more. Want to receive a quote or a proposal?

Contact us via email at info@driveresearch.com or call us at 315-303-2040.

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