Wednesday, March 31, 2010

A Two-Factor Theory of Customer Satisfaction

I recently re-read an article by Earl Neumann and Donald Jackson, Jr. about a two-factor model of customer satisfaction. While it is not significantly different from models currently being discussed and used, it does present the model using different words that make some sense. For this reason I offer a brief description of this model.

The essence of this model is the use of two factors to describe customer satisfaction. the two factors are hygiene elements and satisfiers. The hygiene elements are those attributes that customers expect to be part of the product or service. The absence of these elements generally result in customer dissatisfaction. (They may be described as dissatisfiers in some models). One key point is that the presence of hygiene elements generally does not contribute to customer satisfaction. One example of a hygiene element would be a clean restroom at the movie theater. Consistently maintaining a clean restroom may not contribute much to customer satisfaction. In general, a company must ensure that the hygiene elements consistently meet customer expectations. These elements are necessary but insufficient to create customer satisfaction. Satisfaction does not become important until the hygiene elements are present at a level that meets customer expectations.

J.M. Juran gave a rank-ordered list of elements based on a study of 2,500 passengers of Quantas Airways. From this list he demonstrated that the hygiene factors would cause the passengers extreme dissatisfaction. He also included the list of those elements that would lead to extreme positive satisfaction. Virtually all of the top elements were hygiene factors. In general, the satisfiers were ranked lower than the hygiene factors. The authors note that satisfaction levels are only achieved when the hygiene factors meet customer expectations and the satisfiers exceed customer expectations.

The conclusion is that while the hygiene elements are a must, the satisfiers are what lead to customer satisfaction. Some of the hygiene factors noted by Juran include: no lost luggage, no damaged luggage, clean toilets, clean and tidy cabin, comfortable cabin temperature and humidity, etc. On the other hand, some of the satisfiers include: comfortable seats, prompt baggage delivery, ample leg room, good quality meals, assistance with connections, quick/friendly airport check in, etc.

The authors present a generic grid of hygiene elements and satisfiers as shown below:
Hygiene elements include: credibility, reliability, accessibility, delivery and accuracy.
The satisfiers include: responsiveness, courtesy, empathy, exceptional quality and personnel who are thoroughly trained and knowledgeable.

The key issue to focus on for this model is understanding the term hygiene and its implications especially in terms of its position as the predecessor of satisfiers. This is a new perspective that I have not seen in other models. In my next blog I will describe their customer satisfaction grid and discuss how they use the grid to examine pre-sale, transaction and post-sale aspects of customer satisfaction.

Friday, March 19, 2010

The Kano Model for Measuring Customer Satisfaction

I recently ran across another model for measuring customer satisfaction. It is referred to as the Kano Model and is named after Professor Noriaki Kano. This post is based on material I found on the web. Some of the material came from a blog by E. George Woodley posted April 14, 2009. The Kano model is built on four identifiers; namely, threshold attributes, performance attributes, exciters or delighters attributes and indifferent attributes. It appears that the Kano model was developed for personnel in the quality function and gives them a methodology for evaluating products and services. Each of these attributes are discussed below.

The threshold attributes are also referred to as "must be" attributes suggesting that they must always be present. These product (or service) attributes are necessary in order for a product (or service) to find acceptance in a market. An example of threshold attributes for a hospital would be quality doctors and adequate equipment in order for the hospital to be considered acceptable.

Performance attributes are those which increase satisfaction of the customers as new services or features are added. For example, a great music system and air conditioning in cars increase customer satisfaction besides the threshold attributes of speed, mileage and brakes. If these performance attributes are removed, customer satisfaction will likely diminish. This suggests that once a performance attribute has been included in a product or service, it must be continued. Performance attributes tend to reflect the voice of the customer. The better the product or service is meeting these needs, the happier the customer is. The Kano model presents a format which allows the company to make trade-offs such as cost versus attribute improvements or trade-offs between various attributes. An example would be trading off improved acceleration performance versus gas mileage for a new model automobile.

Exciter or delighter attributes represent characteristics the customer was not expecting but receive as a bonus. Unlike performance attributes they do not affect customer satisfaction when they are discontinued from a product or service. An example would be the discontinuation of extra planes and train s during the holiday season which are discontinued at the end of the holiday season. The challenge is that some exciter/delighter attributes can become threshold attributes. An example is a dealership that always washes the customer car after servicing. At first it was a exciter/delighter but over time becomes an exciter.

The indifferent attributes do not affect customer satisfaction. They may include such items as the company logo on their stationery or the socks worn by company personnel.

Now that we have described the four identifiers, the model consists of plotting each product/service feature in a 2-dimensional diagram. The x-axis is the degree to which each particular feature is meeting the customer's requirements. The y-axis reflects the customer's level of satisfaction as a result of the level of achievement. The Kano model provides a graph that plots each point (feature) with the measure of how well the feature is meeting its objective and the associated measure of customer satisfaction. Thus, a feature such as gas mileage could have a hypothetical score of 90% indicating the percent of meeting the customer desire for high gas mileage with a corresponding customer satisfaction score of 8 (on a scale of 1 to 10). Thus, the company could evaluate the possibility of increasing mileage versus the cost.

There are a number of flaws in this model which with some effort some of these flaws may be possible to eliminate. For example,
1. There is an implicit assumption that all the individual product/service features are independent with respect to customer satisfaction.
2. Another assumption is that the relationship between feature performance and customer satisfaction is a linear relationship.
3. There is no direct way of rank-ordering the various product/service features in terms of impact on customer satisfaction to eliminate the occurrences when product/service features score low but have less impact than other product/service features.
4. Another assumption is the product/feature performance is linear (even though it appears to be since it is plotted on a scale of 0 to 100%). Is a 5% change at the 25%level the same as a 5% change at the 90% level? Just because a scale is linear does not imply that the characteristic is linear.

The bottom line is this a model that looks good and is probably used by people and companies that are not aware of the flaws in the model. There are many of these models on the market that look good but many are built on a foundation of sand.

I have not been able to find documentation that supports the validity of this model. If I find such documentation I will amend this blog accordingly.

Wednesday, March 3, 2010

The Elements of Success for Call Centers

The Ascent Group has published a white paper and detail report for those with the money to pay for the report. The report is the result of Ascent selecting companies that exhibit high levels of satisfaction. They based their selection of companies on rankings from ACSI, J.D. Power or other third parties (of which no others were named). They culled out the best practices and summarized them in their report. Since I have supported the ACSI as a reputable independent measure of customer satisfaction, and the Ascent Group appears to be acting independently (without bias), the results have value.

The report lists five prevalent (their words) underlying traits that were pervasive among all the companies. These traits are discussed in the following paragraphs.

1. Corporate Culture or Vision - Having a well-defined vision seems to give employees a clear road map of how to act and treat customers as well as colleagues. I recently was a member of a doctoral student whose dissertation topic was to determine if the vision of a founder of a start-up company was an important component of the success of the company. He found that sustaining the vision of the founder was, indeed, an important component of success.

2. Data Mining and CRM Tactics - They are suggesting that companies who are using data mining in combination with the tactical use of CRM are finding better ways to enhance the customer experience. Harrah's Entertainment is used as an example of how a company can use their CRM efforts as a more economical way to compete with lavish attractions or new facilities by their competitors. The CRM effort was combined with a data warehouse that collected patron information in all their properties. From this strategy they have increased their market segmentation and customer profiling. which is leading to a strong brand identity.

3. Actively Measuring Customer Satisfaction and Expectations - All the industry leaders paid a great deal of attention to the customer satisfaction measurements. Some of the companies also looked for dissatisfying situations in order to proactively eliminate them. My experience supports this approach of measuring dissatisfaction as well as satisfaction. The truth is that more customers leave from dissatisfaction than being lured away by other companies. Many companies are their own worst enemies and they don't know it because they focus their attention on the satisfiers and ignore (or unaware) of the dissatisfiers.

4. Hiring the Right Employees - This is so obvious that it requires little explanation. One statement that most would agree with is that employees are the face of the company. The best strategy for a call center to use is to hire the right employees and train them well. When the employees can believe in the company's vision and can be themselves, they become advocates of the company and form the basis of a winning team.

5. Extensive Training - Training is one of the key ingredients in optimizing call center performance. As my previous blogs indicate average handling time (AHT) is not something you want to minimize; rather it is something that you want to optimize. Optimization comes through extensive training. Some companies see this as an investment in quality and see it as a cost. Ritz-Carlton hotels provide 310 hours of training the first year. I find it amazing that companies will cut training budgets especially the on-going training. The assumption must be for these companies that once trained is enough. Using that logic, there is no need for management education after the initial training. Obviously, I don't agree.

The bottom line is this report makes sense. These five factors continue to appear in the literature and on the blogs of the many call center consultants. This attention adds to the credibility of these five factors. The report lists 12 other lesser characteristics, most of which seem equally relevant although not as important. I would stick with these five.

Tuesday, March 2, 2010

More Reasons NOT to Focus on AHT

In my previous blog, I gave some of the reasons I believe that call centers who focus on lower the AHT don't really understand customers. I read a blog by Ann All that gave me some more ammunition regarding the value of long AHTs. There were also some very pertinent facts included in her blog that, I believe, are worth repeating.

1. A survey by Jonathan Whitaker, an Assistant Professor at the University of Richmonith and two of his colleagues studied offshoring and outsourcing activities of 150 U.S. companies from 1998 to 2006 and found that whether or not the company outsourced offshore or to domestic providers, there were similar declines in satisfaction. While this has little to do directly with AHT, it does demonstrate the possible benefit of keeping support calls within the company - as noted in the examples below.
2. Burroughs Payments Systems, a Michigan company found that when the company switched from offshore to employees with actual hands-on experience the customer satisfaction levels increased sharply. The conclusion given by CEO Alan Howard was that customers prefer to talk to people who know what they are talking about. Mr. Howard noted that Burroughs' cost savings is greater than 10 times what they could have achieved with offshore customer service.

Many customer satisfaction surveys of call center operations have indicated that first call resolution is a key to achieving high levels of customer satisfaction. According to Dick Hunter, Dell's former VP of global customer support services, during a September DataInfoCom webcast the average time of technical support call increased from 22 to 32 minutes but with that increase in AHT the percent of first call resolutions increased from 44 percent to 65 percent.

The bottom line is that AHT is not just another measure of call center performance, it is the place where loyalty begins in the call center. As I noted in my previous blog,"killing the call" should be the primary focus of the call center (unless all they are doing is selling).

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