Wednesday, July 29, 2009

One Way to Fight the Recession

Colloquy has completed a study of consumer participation in loyalty programs. It found that incremental incentives that reward repeat business is up nearly 20% from 2007. About one third of the shoppers say they're relying more on such programs to find value during the recession. The rewards are not likely to entice them to spend more money according to Randy Allen, Associate Dean of marketing and corporate relations for Cornell University's Johnson School. His suggestion is that the loyalty programs might work if they lower prices.

There are a few changes that may give the loyalty programs some traction. Here are some that are popping up:
1. High-tech convenience - some retailers are letting the customers print reward certificates from home or even load manufacturers coupons onto their club card for automatic redemption at the checkout counter.
2. Concierge rewards - some stores are adding concierge-type rewards such as early access to concert tickets or sporting events via ticket brokers.
3. Tiered programs - some retailers are focusing on the customers that spend money so that those who spend more may be given additional rewards or have reward limitations removed.
4. Expanded partnerships - some stores are cross-marketing with other retailers to that discounts can be accrued from more than one store. For example, one store could offer discounts on gas when groceries are purchased at a supermarket.

The bottom line is that the American businessman is adaptable and will find ways to survive even when the economy goes South. This will remain true as long as the government stays out of the way. Regulations tend to have a greater negative impact on small business than the economy. We can only hope the "pols" in Washington get the message.

Saturday, July 18, 2009

Lifetime Patient Value

Dr. Peter Meinhofer, a customer sales representative for Integrated Practice Solutions has written a blog entitled "Lifetime Patient Value" about what, in his opinion, might answer what patients truly want and value. He suggests the following 5 points:
1. Improve returns on patients investment by showing them how their range of motion has increased or missed days at work has decreased, etc.
2. Solutions to their problems by showing patients how their medical issues are being addressed.
3. Provide patients with a system of reduced complexity and which is easy to use.
4. Provide an atmosphere of professionalism so that the patient builds trust with the doctor.
5. Participation with the doctor over the long haul allows for the doctor-patient relationship to evolve into a co-creator participation in the outcomes and progress by the patient.

These five points sound like the selling points that a salesman would create in order to sell something (in this case a chiropractic practice management software system).

Dr. Meinhofer does make some very good points when he points out that the doctor is responsible for everything that occurs with the office. Untrained staff can create dissatisfaction to the point that the patient-doctor relationship is permanently damaged. Some of the dissatisfiers noted are billing problems, appointment mess-ups, and clutter. As a second point he mentions that doctors can damage their credibility in the eyes of their patients by having inconsistencies in the fees, procedures, and record keeping. Finally, the doctor himself can represent an inconsistent picture through his own personal appearance (hygiene, weight, diet, etc.).

I think the article makes some excellent points about managing the image of the practice as well as the personal image of the doctor. I would suggest the most important aspect of building a lifetime patient value revolves around the concept of CARE which seems to have been overlooked by Dr. Meinhofer. Studies of patient satisfaction and loyalty have shown that a clear message of caring for the patient appears to have the greatest impact on loyalty. What used to be called "bedside manner" when doctors came to the home and to the bedside of the patient now needs to be translated into showing the patient care and concern. When the patient can believe that the actions of the doctor and his staff are there to "care" for the patient in every way will the first step toward "lifetime patient relationship" begin.

Friday, July 17, 2009

Good News and Bad News

There was an interesting short article in the WSJ on Monday, July 13th. The headline read "The Customer Knows Best." The sub-headline was "Thanks to the Internet, companies can easily find out what consumers think. They just ask."

First, let's review the good news. The WSJ appears to be tuned into the notion that customers count - a notion to which I agree. In the article, the author, Kelly K. Spors, sees that customer input can help a company make better market decisions when they get feedback from their customers. Once agian, i am in complete agreement. The great advantage to using the Internet to connect with your customers is that the process is very timely and cost-effective. Ms. Spors points out the financial costs of having a customer survey developed and implemented by a professional consultant can be too great for start-ups and small companies. These are very valid points and by themselves would seem to point out that any start-up or small company that wants to improve their business would be wise to develop an Internet survey that will give them feedback on virtually all aspects of their business. The survey might focus on product features, service delivery or any other aspect of their business. This sounds almost too good to be true.

The dark side of this approach is that many surveys, even those developed by professional consultants are often flawed and lead to mis-direction as a result. To imagine that a start-up or small company would be able to develop and create a valid survey is asking a lot and has, in my opinion, very little likelihood of yielding valid results. If building and implementing a survey were a simple task, there would be little reason to offer advanced degrees in survey design and analysis.

I think there is a place for the start-up or small business to use an Internet survey. I am sure that if the survey is kept within the following guidelines, the result would be helpful in guiding the company in making better strategic decisions. Here are some simple principles that will provide some assurance that the survey and its results are valid.
1. Do not worry about whether or not your survey is statistically valid.
2. Send it to the customers you have a reasonable relationship with and can trust their responses.
3. Keep your questions simple and focused on:
a. a few product specific areas (e.g. is the product too heavy?)
b. a few service specific areas (e.g. were our service people knowledgeable?)
c. was the value of our product/service consistent with the price?
4. Do the survey quickly and make sure that the customers who responded get an acknowledgement and thank you from you PERSONALLY.

The bottom line is that surveys should be done by someone who is knowledgeable about survey design and analysis. This is not always a realistic probability. Since not everyone can afford having a survey done in this manner, the survey should be simple and direct with no concern about statistical validity. The survey for the start-up or small company should almost look like a personal letter from the company to a few key customers.

Tuesday, July 7, 2009

Sex and Customer Satisfaction

Researchers, David Hekman and his colleagues, at the University of Wisconsin - Milwaukee have determined the reason that white men continue to earn 25 percent more than equally performing women and minorities. They have found that customers prefer them.

Their experiment was to show a video featuring a black male, a white female, or a white male playing the role of an employee helping a customer. The outcome was that customers reported being 19 percent more satisfied with the employee's performance when they were assisted by a white male. In addition, they were more satisfied with the store's cleanliness and appearance. Their conclusion is that business owners and managers will hire white men when possible and will pay lower salaries to the women and minorities they do hire.

A second study of more than 10,000 medical patients performed by the same researchers showed that patients were more satisfied with their doctor's competence and approachability if the doctor was a white male.

One statistic that the researchers found was that 60 percent of employees have at least some of their pay directly linked to customer satisfaction survey results. As a result of this study, Dr. Bekman offers the following suggestions:
1. Make sure customer satisfaction surveys target specific employee behavior
2. Eliminate anonymous surveys since these can significantly affect the pay scale in many industries.
3. Make sure customers are identifiable and therefore at least somewhat accountable when they provide ratings.

The bottom line is that customer satisfaction does appear to have a component that relates to the sex and color of customer service employees. I believe this is specific to face-to-face interactions. Other research suggests that female customer service reps perform equally well when communicating by phone. However, it is interesting to note this phenomenon. I have not seen any research in this area before and would like to see if these results can be replicated.
 

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