tag:blogger.com,1999:blog-10337892335399400872024-03-18T00:48:26.186-07:00The Customer InstituteThe Customer Institute is a website designed to provide answers to the most important questions for every business; namely, how is my customer asset doing? Is it getting better or worse? How can I improve it.
This site will be the repository of customer data gathered from sources worldwide.Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.comBlogger337125tag:blogger.com,1999:blog-1033789233539940087.post-84828803945534471832021-06-14T13:51:00.000-07:002021-06-14T13:51:50.555-07:00Digging a little Deeper into NPS metrics<br />
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<span style="font-size: 14.0pt; line-height: 107%;">Previously I
discussed how the NPS metric is flawed by including satisfaction and
dissatisfaction within the same metric. I pointed out that the satisfaction
scale and the dissatisfaction scale do not have the same metrics/components and
hence cannot be combined into a single metric such as the NPS metric. Of
course, there may be other metrics that may be able to combine satisfaction and
dissatisfaction based on the assumption that they will be represented
accurately on the same scale. In order to understand the differences between
these two scales, it is necessary to fully describe the parameters of each of
the scales (satisfaction and dissatisfaction).<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">Although
both satisfaction and dissatisfaction are often described using a Likert scale,
there is no reason to believe that the units on each scale have the same value
or meaning. For example, a measure on the satisfaction scale of
"satisfied" (second-highest to "very satisfied") may not
have the same intensity or value with a value of "dissatisfied"
(second-highest to "very dissatisfied") on the dissatisfaction
scale.<span style="mso-spacerun: yes;"> </span>From another perspective, one
might want to believe that the amount of customer involvement of moving from
"satisfied" to "very satisfied" is equivalent to the amount
of customer intention of moving from "dissatisfied" to "very
dissatisfied".<span style="mso-spacerun: yes;"> </span>Of course, this
movement can be expected when we are using ordinal scales but that does not
transfer to equality.<span style="mso-spacerun: yes;"> </span>Remember that
ordinal scales only indicate order but does not include a metric of distance
along the scale.<span style="mso-spacerun: yes;"> </span>Thus, the movement from
one value either up or down on the scale does not require that the distance be
the same.<span style="mso-spacerun: yes;"> </span>Likewise, movement on a Likert
scale for satisfaction does not require the same value for movement on the
dissatisfaction scale.<span style="mso-spacerun: yes;"> </span>Although the
scales are numbered sequentially, there is no requirement for the linear
relationship of the ordinal scale to accurately reflect equivalent linear
values for both the satisfaction and the dissatisfaction scales.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">If in fact,
decreasing satisfaction does not generally lead to dissatisfaction, then a
better terminal value for least satisfied would more likely be the customer is
"indifferent".<span style="mso-spacerun: yes;"> </span>Hence a more
accurate satisfaction scale would follow the sequence very satisfied,
satisfied, slightly satisfied, and indifferent.<span style="mso-spacerun: yes;">
</span>A similar scale for dissatisfaction would follow the same sequence of
very dissatisfied, dissatisfied, slightly dissatisfied, and indifferent.<span style="mso-spacerun: yes;"> </span>I am using the term "indifference"
to describe in non-psychological terms that point in the customer's attitude
where the customer stops caring. In this zone of "indifference".<span style="mso-spacerun: yes;"> </span>At this point, the customer is no longer
connected with the evaluation process and has become indifferent.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">As an example,
I once had a consulting relationship with the company that had very high
satisfaction scores and believed that their customer relationships were all
strong. However, once we analyzed all the customer relationships we found that
a relationship that we thought had no meaning was in fact very important. It
turns out that one of the company’s largest customers had been put on credit
hold because of some delay in the paperwork. Even though the customer represented
the largest account, personnel in accounts receivable were trained only to
collect accounts. There’s no customer training included for personnel in the
Accounts Receivable department. Although the large customer did not change the supplier, it did introduce some significant stress to the company management.<span style="mso-spacerun: yes;"> </span>The satisfiers were well taken care of and
the areas of dissatisfaction that were measured were small. Hence, the NPS
score was very high.<span style="mso-spacerun: yes;"> </span>The simple answer
might be that the company did not include the Accounts Receivable department as
part of its metric. In that sense, a better NPS score may have been computed.
However, the values of satisfaction and dissatisfaction on the metric scale
would not have given had a significant cause for concern since it would not
have been included in the calculated NPS metric. In this case, it almost led to
the loss or at least a diminished relationship with a very large customer.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">The bottom
line is that using a single Likert scale for satisfaction and dissatisfaction
is attempting to mix two very different parameters. Previously I have indicated
that lower levels of satisfaction do not generally lead to values of
dissatisfaction. Similarly, using the same logic, reducing levels of dissatisfaction
does not generally lead to satisfaction. It is time to create complementary
scales for satisfaction and dissatisfaction so that more accurate assessment of
the satisfiers and the satisfiers of the customer relationship can be presented
and understood.<span style="mso-spacerun: yes;"> </span>It is usually reasonable
to believe there is no perfect customer relationship. All customer
relationships have strengths and weaknesses. <span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Not only
is a time to create complementary scales for satisfaction and dissatisfaction, it
is also time to incorporate into the metrics of the customer relationship, multiple factors that more
accurately describe the company – customer relationship. Simplicity is no
longer the answer.<o:p></o:p></span></div>
<br />Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-40005673419663262352020-06-17T13:58:00.001-07:002020-06-17T14:12:30.932-07:00Low-Hanging Fruit - Part 3<br />
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<span style="font-size: 14.0pt; line-height: 107%;">In the
previous two blogs that discuss the elephant in the room, this blog takes the
next step in describing the elephant. As we describe the elephant using such
terms as customer satisfaction, customer experience, customer loyalty, net
promoter score, etc. various metrics are provided with the hope of describing
the elephant. Metrics used by each of these majors often contain similar
measures.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">Each of the
metrics that researchers derived for the various characteristics of the
customer have assumed that the individual metrics captured sufficient
information to describe the company/customer relationship. However, as
described in parts one and two of this series of blogs, are only characterizing
a fraction of the elephant. What has really been captured in the various
metrics noted above is the “low hanging” descriptors of the elephant. The elephant,
which I have used symbolically to describe the entirety of the company/customer
relationship, has only been defined using easily measured parameters.<span style="mso-spacerun: yes;"> </span>These parameters are generally limited to the
direct interaction between the customer and the company and have only
short-term and limited impact on long-term memory.<o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 16.0pt; line-height: 107%;">First Conclusion: </span></b><span style="font-size: 14.0pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">current metrics
represent only the low hanging measures of the company/customer relationship</i><o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">The first
question that comes to mind once it’s recognized that only low hanging metrics
are being used to describe the company/customer relationship is what measures
are missing.<span style="mso-spacerun: yes;"> </span>Within that question are
the questions relating to other customer contacts not included with the low hanging
measures and what measures are missing that are not direct measures.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">A
comprehensive measure of the company/customer relationship requires two
components; namely, direct metrics and indirect metrics.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;"><span style="mso-tab-count: 1;"> </span>The DIRECT METRICS consist of the metrics
of the direct interaction between the customer and the company.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;"><span style="mso-tab-count: 1;"> </span>The INDIRECT METRICS consist of the
non-interactive relationship be the customer and the company continues to have
an impact on both the customer and the company.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;"><br /></span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-size: 16.0pt; line-height: 107%; mso-bidi-font-size: 14.0pt;">Second
Conclusion: </span></b><span style="font-size: 14.0pt; line-height: 107%;">the
perfect relationship between a company and a customer occurs when all metrics
are maximized.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;"><br /></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">Until all
the metrics, between direct and indirect, are known, measured, and maximized
the likelihood of understanding the state of the customer/company relationship
can not be assessed.<o:p></o:p></span></div>
<br />Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com3tag:blogger.com,1999:blog-1033789233539940087.post-18500153486641918492020-06-02T16:20:00.002-07:002020-06-19T15:54:51.799-07:00is there an elephant in the room? part 2<br />
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<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">Each of the individual metrics appears to capture the
chaos embedded in the relationship between the customer and the company. So
when each of the metrics is carefully examined, it appears to be possible to gain insight into how well the metric works. More importantly, it becomes possible to see where
the metric identifies aspects of the elephant, even though that metric is known
to contain errors; either in the metric itself or the variation in the shape of
the elephant.<o:p></o:p></span><br />
<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;"><br /></span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">A
fact: all measurements contain errors.<o:p></o:p></span></b></div>
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<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">Hence when all these metrics are combined, the shape
of the elephant becomes more difficult to visualize and understand.<span style="mso-spacerun: yes;"> </span>One of the reasons for this lack of
visibility describing the elephant is that each of the metrics may contain
different forms of measurement error which may pose a challenge to
understanding the impact of each error. While it would be convenient and yield
better understanding to know all aspects of the elephant, the real objective
for these measurements previously described, is to increase the understanding
between the customer and the company.<o:p></o:p></span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">A
fact: it is not necessary to have a perfect vision of the elephant <o:p></o:p></span></b></div>
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<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">The real value is knowing how well the processes that
are being used by the company to provide its products and services to the
customer are performing. If the processes are perfect and there are no errors
in the implementation of the processes, the company has delivered what it
believes to be the best way of improving relationships with the customer.<span style="mso-spacerun: yes;"> </span>There are two ways in which the company can
fail to maximize its relationship with the customer.<span style="mso-spacerun: yes;">
</span>The two ways it can fail are:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; line-height: 107%;"><span style="mso-list: Ignore;"><span style="font-size: 16pt;">1.</span><span style="font: 7pt "times new roman";"> </span><span style="font-size: large;"><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> 1. </span><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">Unable to </span></span></span></span><span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">deliver
the products and services perfectly with no error<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; line-height: 107%;"><span style="mso-list: Ignore;"><span style="font-size: 16pt;">2.</span><span style="font: 7pt "times new roman";"> </span><span style="font-size: large;"><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> 2. </span><span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;">Unable to p</span></span></span></span><span style="font-family: "times new roman" , serif; font-size: large; line-height: 107%;">ro</span><span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">vide
the best products and services.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">This information noted above provides some of the key
objectives for managers and executives; namely, managers must constantly assure
the processes continue to be provided errorless, and executives must constantly
review the products and processes to ensure that each one meets and hopefully
exceeds the expectations of the customer.<o:p></o:p></span><br />
<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;"><br /></span>
<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">However, there one aspect that has not been considered; namely, the customer. Only those aspects of the customer that has an active connection with the company have been considered. BUT, is there more? </span><br />
<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;"><br /></span>
<span style="font-family: "times new roman" , serif;"><span style="font-size: 21.3333px;">The picture is not complete. The metric needs further definition.</span></span><br />
<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;"><br /></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;"><b><br /></b></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;"><b>Part 3 What is the metric?</b></span></div>
<br />Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-86614758593519167372020-05-21T10:32:00.000-07:002020-06-13T15:56:28.767-07:00Is there an elephant in the room? Part 1<br />
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<span style="font-family: "times new roman", serif; font-size: 16pt;">There are numerous metrics
that measure the different relationships between a customer and the
company. C</span><span style="font-family: "times new roman", serif; font-size: 16pt;">ustomer satisfaction, customer experience, customer
effort, customer rage, customer loyalty, there may be others.</span></div>
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<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">I am reminded of an elephant
in the room described by several people each with a limited perspective.
Each is asked to describe the animal in the middle of the room.
One person grabs the tail and gives a comprehensive description. Another touches the leg and provides a comprehensive description of the leg. Another touches the trunk and like the others gives a comprehensive description of the elephant’s
trunk. I could go on with more descriptions of the elephant by others with similar limited vision, but I think you get the idea, </span><br />
<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;"><br /></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">While it is true that each description of one aspect
of the elephant is accurate there is no consistency between
the metrics to define the entire elephant in the room. This
analogy has some relevance to the metrics that are being used today to understand the relationship between the customer and the company. There are many people who
have carefully constructed metrics that are statistically accurate and allow
hypotheses to be extracted and yield valid data to describe an aspect of a customer/company relationship.</span><br />
<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;"><br /></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">There appears to be a lot of dissent between those who
have rigorously developed a specific metric to describe the elephant with
others who also developed a metric different from all the others. In fact,
virtually all of the metrics have been rigorously developed to describe the
elephant. However, the sum of all the metrics don’t seem to accurately describe
the elephant.<span style="mso-spacerun: yes;"> </span>What is missing is a
comprehensive metric that would support the many individual metrics from the tail,
leg, trunk, and other specific measures of the elephant.<span style="mso-spacerun: yes;"> </span>However, at this time there appears to be no
single metric that integrates the various specific metrics currently used.<o:p></o:p></span><br />
<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;"><br /></span>
<span style="font-family: "times new roman" , serif; font-size: 16.0pt; line-height: 107%;">Part 2 will take the next step.</span></div>
<br />Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-76862714297671274792020-02-21T15:07:00.001-08:002020-06-19T15:55:34.629-07:00Everything is broken<br />
<h2>
<span style="font-size: 16pt; font-weight: normal;"> Another way
of saying that everything is broken is by saying that nothing is perfect. The
next several blogs are going to describe how entropy can be used as one of the
most efficient ways of increasing performance in the service organization. The
following list of quotes has been extracted from several articles that support this focus on entropy.</span></h2>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<span style="font-size: 16.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1 1. </span></span><span style="font-size: 16.0pt; line-height: 107%;">Entropy is a measure of disorder.
It’s a physical law of nature that left untouched, everything will steadily
deteriorate.<span style="mso-spacerun: yes;"> </span>Taken from head
scratchers.com/January 2013 post</span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<span style="line-height: 107%;"><span style="font-family: "times new roman"; font-size: 21.3333px; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> 2.</span><span style="font: 7pt "Times New Roman";"> </span></span><span style="font-size: 16.0pt; line-height: 107%;">Managing entropy in business: a demon
that slowly erodes, disrupts, and destroys organizations. Taken from
bizshifts.com/July 2016</span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<span style="font-size: 16.0pt; line-height: 107%;"> 3. Entropy can show you where additional
resources would make your business more efficient.<span style="mso-spacerun: yes;"> </span>Taken from yourbusiness.azcentral.com.<span style="mso-spacerun: yes;"> </span>No date identified.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<span style="font-size: 16.0pt; line-height: 107%;"> 4. Entropy occurs in every aspect of the
business. Taken from FS.blog/2018</span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<span style="font-size: 16.0pt; line-height: 107%;"> 5. Understanding the law of nature about
entropy can help prevent business deterioration. Entropy is the potential
energy that is not available for work. Taken from slideshare.net/June 2013</span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<span style="font-size: 16.0pt; line-height: 107%;"> 6. Entropy is a quantifiable value
analogous to the amount of randomness in the system. Taken from
fastCompany.com.<span style="mso-spacerun: yes;"> </span>no date identified</span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<span style="font-size: 16.0pt; line-height: 107%;"> 7. Entropy is the tendency of ordered
systems to move towards disorder if left unattended. All organized systems are
like this. You have to continually work to maintain them or they’ll fall into
disarray. Taken from nfx.com/post/entropy. No date identified</span></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<span style="font-size: 16.0pt; line-height: 107%;"> 8. Entropy is the tendency of ordered
systems to move towards disorder if left unattended.<span style="mso-spacerun: yes;"> </span>Taken from nfx.com/entropy</span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<span style="font-size: 16.0pt; line-height: 107%;"> 9. We find that the tendency of
operational routines to decay is widespread. Taken from pubsonline.informs.org.
No date identified.</span></div>
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<span style="font-size: 16.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 16.0pt; line-height: 107%;">As you can
see in these comments taken from various articles entropy is a measure of
disorder or reduction in productivity.<span style="mso-spacerun: yes;">
</span>The purpose of this blog and following blogs is to identify the various
components of entropy that can be found within the service organization. As we
identify each component of entropy, the metrics needed for that component of
entropy will likewise be identified.</span></div>
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<span style="font-size: 16.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 16.0pt; line-height: 107%;">Finally, we
will create a model to combine the various components of entropy to provide
management with sufficient information to reduce the disorder in the
appropriate areas of the business.</span></div>
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<span style="font-size: 16.0pt; line-height: 107%;">Some of the
components of entropy that have been identified are:</span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<span style="font-size: 16.0pt; line-height: 107%;"> 1. Cultural entropy – measure dysfunction </span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<span style="font-size: 16pt; text-indent: -0.25in;"> 2. Economic entropy – measure waste of capital,
human resources, and materials</span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l1 level1 lfo2; text-indent: -.25in;">
<span style="font-size: 16.0pt; line-height: 107%;"> 3. Process entropy – measure scale entropy,
capability entropy, and speed entropy.</span></div>
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<span style="font-size: 16.0pt; line-height: 107%;"><br /></span></div>
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<span style="font-size: 16.0pt; line-height: 107%;">The bottom
line is that while many authors have addressed the various aspects of entropy
in service, there is no integrated perspective that I have found in the
literature. Until we identify the components of entropy, we cannot develop processes that will minimize possible degradation and increase entropy. </span></div>
<br />Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-8860059286007283012020-01-17T14:20:00.003-08:002020-01-17T14:20:53.807-08:00A closer look at apples and oranges<br />
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<span style="font-size: 14pt;">I recently
wrote a blog about apples and oranges as a comparison with satisfaction and
dissatisfaction. In that blog, I particularly related how the NPS metric was
making a large assumption about satisfaction and dissatisfaction that doesn’t
appear to be appropriate. I am going to take a deeper look at these two
parameters. I think when we examine them we can see what makes them different.</span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">It all
starts with the fact that metrics such as satisfaction and dissatisfaction do
not naturally fall onto a numeric scale. Most often these parameters are
measured on what is called an ordinal scale. An ordinal scale is known for its
ability to provide order to a series of values such as flavor (a little sweet,
sweet, very sweet), color (dull, flat, bright) or shape (straight, slight
curves, very curvy). The parameters such as satisfaction (slightly, somewhat,
very satisfied) and dissatisfaction (slightly, somewhat, very dissatisfied) are
most often also characterized on ordinal scales. Most customer satisfaction
surveys use some form of an ordinal scale with both satisfaction and
dissatisfaction identified on the scale. A simple five-point scale usually
consists of the ranking from dissatisfied, slightly dissatisfied, neutral,
slightly satisfied, and satisfied.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">This is where
the trouble begins. The first assumption is that the customer attitude change
between dissatisfied and slightly dissatisfied is approximately the same as the
attitude change between slightly dissatisfied and neutral. This assumption
follows between two consecutive majors on this ordinal scale. Of course, is not
possible to use arithmetic operations on these numbers. One of the strongest
violations of this first assumption is the assumption that the attitude change
between slightly satisfied and satisfied is equivalent (and this is the real
problem) between slightly dissatisfied and dissatisfied.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">The fallacy
of this first assumption is that customer attitudes of satisfaction have the
same impact of dissatisfaction. What is happening is that when the scale is
designed we are saying that satisfaction and dissatisfaction on the same
ordinal scale implicitly assumes is that reduction in dissatisfaction leads to
satisfaction and similarly, reduction in satisfaction leads to dissatisfaction.<o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">Tom Peters
and other authors have noted that dissatisfied customers appear to have
stronger feelings about dissatisfaction than satisfaction. They measured this
by the number of people they communicate with. Those who are dissatisfied will
generally tell more people about their dissatisfaction than those who are
satisfied. The ratio has most often been noted as three or more times more
people are told of a dissatisfaction event to those that are told of a
satisfaction event. The old wives' tale would say “bad news travels fast.” <o:p></o:p></span></div>
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<span style="font-size: 14.0pt; line-height: 107%;">The bottom
line is that satisfaction scales and dissatisfaction scales are more than
numbers in a sequence. Satisfaction causes significantly different responses in
customers than does dissatisfaction. It is time that we start to pay attention
to the reality that measuring satisfaction and dissatisfaction on the same
scale is not just misleading but wrong.<o:p></o:p></span></div>
<br />Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-25497462853872758982020-01-09T14:54:00.000-08:002020-01-09T14:54:04.789-08:00The Tyranny of the Urgent<br />
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I have a somewhat unusual combination of education and job
experience. I think I am one of the few
college professors who have worked in industry as a service manager in a line
management position. From that
background, I have had the opportunity to consult with a number of service
managers in the computer industry. In
all of my consulting perhaps the most common problem I see with service
managers is what I call the “tyranny of the urgent.” I am sure that the phrase "tyranny of the urgent" has been used many times I am not the creator of this phrase but a firm believer in it. I believe it is a phrase that accurately captures the business of service today</div>
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<o:p></o:p></div>
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Before I became a service manager with line management
responsibility I would drink one or two cups of coffee a day.<span style="mso-spacerun: yes;"> </span>Within 6 months of becoming a line manager, I
was drinking six to eight cups a day.<span style="mso-spacerun: yes;"> </span>I
always had a cup of coffee in my hand.<span style="mso-spacerun: yes;">
</span>There was always something going on that demanded my attention.<span style="mso-spacerun: yes;"> </span>I am not sure if I got more of a rush from
the adrenaline of urgent activities or caffeine.<span style="mso-spacerun: yes;"> </span>A customer would be down and there would be no
one available in the field or the call might come from the President of the company that he just received a call from a customer and thought I should look
into the matter.<o:p></o:p></div>
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Urgency is a way of life in the service business.<span style="mso-spacerun: yes;"> </span>We never seem to get involved until things
aren’t working right or the customer is in trouble or the new product that was
shipped has a design error that has to be fixed at the customer site.<span style="mso-spacerun: yes;"> </span>With all of these activities crying for our
attention, we become experts at handling the urgent.<o:p></o:p></div>
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It is ironic that this urgency can become a personal
dictator if we let it.<span style="mso-spacerun: yes;"> </span>This is the
“tyranny of the urgent.”<span style="mso-spacerun: yes;"> </span>The sooner you
recognize it, the sooner you can stop it.<span style="mso-spacerun: yes;">
</span>In a way, urgent activities are good because we can get an immediate
“attaboy’ when we finish them.<span style="mso-spacerun: yes;"> </span>Most of
us get great satisfaction from “attaboys” and thus the cycle begins.<span style="mso-spacerun: yes;"> </span>Perhaps that is what led us into the service
profession.<span style="mso-spacerun: yes;"> </span>I have seen service managers
thrive on constant crisis.<span style="mso-spacerun: yes;"> </span>They are not
happy unless they have all of their employees working as hard as possible, a
stack of calls to return (ASAP) and negotiations going on for credit on
out-of-warranty returned goods. <o:p></o:p></div>
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On the other hand, there are activities that can best be described as important rather than urgent. Spending time strictly on urgent matters will not improve the performance of the service organization. It is only when time is spent on important activities (such as service planning, training, and teambuilding) that improvements can be designed and implemented which will lead to a better service organization.</div>
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The bottom line is that those urgent activities come and go, but never
diminish in number or intensity.<span style="mso-spacerun: yes;"> </span>This is
the nature of the business of service.<span style="mso-spacerun: yes;">
</span>Unfortunately, that is not the only nature of our business.<span style="mso-spacerun: yes;"> </span>There is another type of activity in our
business – IMPORTANT activities. <span style="mso-spacerun: yes;"> </span>All of our
business activities can generally be classified into one of these two groups,
but usually not into both. Success comes to service when both urgent and important activities are well-managed. <o:p></o:p></div>
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<br />Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-10751746461581586712020-01-07T13:22:00.001-08:002020-01-07T13:22:25.836-08:00Apples and Oranges - a Problem for NPS<br />
I think we have been missing the mark when we use NPS as a critical measurement for customer satisfaction. The challenge to this metric is that it appears to be combining "apples and oranges". The metric is defined as the difference between attractors and detractors. That is the problem!<br />
<br />
What makes this an apples and oranges metric is that we are combining two different characteristics. The assumption in the NPS metric is that attractors and detractors are measured on the same scale. If attractors are apples and detractors are oranges, you can't subtract oranges from apples. Let me expand on this notion in the following paragraphs.<br />
<br />
According to the literature, attractors characterize satisfaction. It carries with it the notion that attractors represent aspects of the product or service that encourages the customer to continue using the product or service because the customer is satisfied. Further, detractors characterize dissatisfaction. Dissatisfaction represents some aspect or aspects of the product or service that has a negative influence on the customer.<br />
<br />
Here is the problem. Satisfaction is not the opposite of dissatisfaction. A low satisfaction score may lead to indifference. As satisfaction scores drop satisfaction does not directly lead to dissatisfaction. Nor is dissatisfaction the opposite of satisfaction for the same reasons. Another way of saying this is that dissatisfaction is not the absence of satisfaction, and satisfaction is not the absence of dissatisfaction. Each of these terms, satisfaction, and dissatisfaction, have separate scales that may have the same number of items (such as 0 to 10). You can have a scale of 0 to 10 for satisfiers and a complementary scale of 0 to 10 for dissatisfiers. The current assumption for NPS that the units of satisfaction are the same as units of dissatisfaction. An example of this is a one-unit positive movement of satisfaction that is assumed to be identical to a one-unit negative movement of dissatisfaction.<br />
<br />
Consider an example of a customer who purchases at McDonald's. McDonald's uses a business model that focuses on providing food quickly (it is a fast-food restaurant) and consistent quality (although it may not be the highest quality), it is designed to provide consistency for food quality). Customers would have levels of satisfaction for speed of service and quality of food. And the scale for each could be from 0 to 10. Another component of the service experience of the customer might include using the restroom facility. The restroom facility does not have a satisfaction component. Customers don't usually seek out McDonald's for the quality of the restrooms. The restrooms are considered a convenience for customers rather than a satisfier (a feature that would encourage customers to return). The restroom scale would act as a dissatisfaction scale. It does not add to the satisfaction of the customer experience. The restroom may use a dissatisfaction scale from 0 to 10. In this case, 10 would indicate no dissatisfaction and zero would indicate complete dissatisfaction.<br />
<br />
When we put this customer experience in perspective we see satisfiers (apples) and dissatisfiers (oranges). A simple question might be whether one unit on the satisfaction scale is equivalent to one unit on the dissatisfaction scale.<br />
<br />
I hypothesize that satisfiers and dissatisfiers have different scale values. Hence the assumption that the scale for satisfaction and dissatisfaction used by NPS is equivalent is most likely not true. Customers do not stop going to McDonald's if the service is slow or the quality of food is not as good as usual. Customers will most likely stop going to McDonald's if the restrooms do not appear sanitary. Thus dissatisfiers may act significantly different than satisfiers. <br />
<br />
The bottom line is that the use of the NPS metric gives a distorted view of the customer relationship. It is based on the faulty assumption that satisfaction and dissatisfaction are equivalent and can to be measured on the same scale. Companies that use this metric are likely to be misled about the quality of the relationship with their customers by making decisions based on this metric. It's time that we provide a metric that legitimately considers satisfiers differently than dissatisfiers.Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-17943784746752466262018-02-28T15:50:00.000-08:002018-02-28T15:50:24.347-08:00CSAT vs CES - Does It Matter<br />
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<span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">Many commercial businesses that provide after-sale
services seek ways to improve customer loyalty through their customer service
organizations. In addition, companies want to utilize their resources as
productively as possible. Since there are many dimensions to customer service,
companies want to understand how best to utilize limited resources. The basic
premise that most companies rely on is that satisfied customers are more likely
to increase loyalty than non-satisfied customers. For that reason a number of
metrics have been developed which attempt to measure the influence of various
customer interactions. While metrics can be used both tactically and
strategically, this research has focused on metrics used to measure tactical
performance.<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">Two of the more popular metrics are Customer
Satisfaction (CSAT) and Customer Effort Score (CES).<span style="mso-spacerun: yes;"> </span>The goal of this research is determine which
of these two metrics will have more impact on customer loyalty. Since each of
these metrics has a different objective, the question is whether they could be
used interchangeably. <span style="mso-spacerun: yes;"> </span>Is one more
effective than the other, or should they be used complementary. The CSAT metric
is designed to <i style="mso-bidi-font-style: normal;">maximize satisfaction</i>
whereas the CES metric is designed to <i style="mso-bidi-font-style: normal;">minimize
customer effort</i>.<span style="mso-spacerun: yes;"> </span>The first issue is
whether the two metrics yield the same service factors for resource allocation.
The second issue is, if the metrics do not yield the same factors for research
allocation, then which is preferable. The decision criteria for selection of
which metric would be preferable is the strength of the correlation
relationship between the independent service factors and either the CSAT or CES
metric.<span style="mso-spacerun: yes;"> </span>The metric with the higher
correlation would make the most sense to use.<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">This study included 6381 customers from the medical
electronics and IT industries. Surveys were taken during the months of April
and May 2015 and included customers in both North America and Europe. The
results of the surveys indicated a relatively low correlation (0.51) between
the two metrics, CSAT and CES; however, the results yielded similar
relationships between the independent service factors and each metric when the
total sample was considered. These results also held true when the total sample
was examined independently for field service and technical support. However,
when the sample was examined separately for medical electronics and IT
equipment the most highly correlated independent factors <span style="mso-spacerun: yes;"> </span>with CSAT and CES were different for the two
products.<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">As a result of this research we notice that
maximization of satisfaction and minimization of customer effort only provide
similar rankings for the independent variables. Since the two product groups
which were included in the study yielded different rankings for the independent
variables, a generalization seems inappropriate for concluding that the two
metrics are interchangeable.<o:p></o:p></span></div>
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<span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>Because this
research focused on two very different groups of technology products, the
solution for businesses wanting to increase customer loyalty should be to consider
the use both metrics since it is not clear what the criteria should be for
using one metric in lieu of the other. When both metrics are used the question
is which of the independent variables are most appropriate for the
products.<span style="mso-spacerun: yes;"> </span>Until an individual product
area is evaluated, there is no obvious preferred method. To choose one over the
other without the understanding of the relationships between the individual
independent variables and CSAT or CES may lead to inappropriate allocation of
resources. <o:p></o:p></span></div>
<br />Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com2tag:blogger.com,1999:blog-1033789233539940087.post-78645666805662694892017-08-31T12:38:00.002-07:002017-08-31T12:43:59.215-07:00Loyalty Model – part 2<div class="MsoNormal">
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<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">In the previous blog, the general form for the
construction of a loyalty model was postulated.
A base equation hypothesized that loyalty could be described by
measuring the strength of the relationship between the company and its
customers. A sub-model was proposed to
show that the strength of the company-customer relationship could be explained
by various factors. In this blog, the
two major components of the model will be discussed.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">The two components that describe the company-customer
relationship are those that strengthen of the relationship and those that
diminish the relationship.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">Factors that enhance and strengthen the company-customer
relationship may be considered relationship builders; “satisfiers.” Satisfiers
represent activities or involvements that yield positive experiences by the
customer and also provide value to the company. In the service business,
response time tends to act as a satisfier.
For example, when services are requested, the time to respond will
strengthen the relationship between the customer the company as long as the
response time meets or exceeds the customer’s expectation. Consistently meeting
a customer’s expectation of response time for service has been shown to
strengthen the relationship with the company. More discussion of satisfiers
will be provided in a separate blog.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">Factors that diminish the company-customer
relationship may be considered “dis-satisfiers.” A dis-satisfier is generally
not the opposite extreme of a satisfier. As an example, consider customers who
frequent a fast food establishment. Customers expect a reasonable quality of
food to be delivered quickly. If either the quality of the food or the service
delivery time does not meet the normal expectations, the customers may be
disappointed but probably not dis-satisfied. However, if the restroom at the
same fast food establishment has not been adequately maintained, many customers
may refrain from returning to the restaurant due to a concern that lack of good
hygiene in the restroom may be an indicator of lack of good hygiene in the
kitchen. In this case, the quality of the hygiene in the restroom can be a
dis-satisfier; but the hygiene quality of the restroom is surely not the major
attraction of the fast food establishment and is not considered a satisfier.
More discussions of dis-satisfiers will be discussed in a separate blog.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">Company-customer relationships are not linear. They are not a function of adding the
satisfiers and subtracting the dissatisfiers, which is similar to the NPS metric
when it subtracts the detractors from the promoters. This simplification of the loyalty model
makes no sense since it is equally equating positive values (satisfiers) to
negative values (of the satisfiers or possibly dissatisfiers). Beyond the basic NPS score, many analysts mistakenly
assume that the relationship between each component of the model has a linear
relationship with the strength of the relationship. <o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">As we examine the components that increase the value
of the customer relationship do not assume that each component is independent
and has a linear relationship with the strength of the customer relationship.
There will be some satisfiers that may increase the strength of the customer
relationship dramatically, whereas other satisfiers will only provide an
incremental increase of improvement in the strength of the relationship. <o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif; font-size: 14pt; line-height: 107%;">The same logic also holds true when we discuss the
dis-satisfiers in the future blogs. Always challenge the assumptions! <b>Be curious</b>. </span><span style="font-size: 12pt; line-height: 107%;"> </span>Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com3tag:blogger.com,1999:blog-1033789233539940087.post-27697990928178214942017-08-11T15:57:00.000-07:002017-08-11T16:17:17.025-07:00Building a Loyalty Model<div class="MsoNormal">
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<span style="font-family: "times new roman" , serif;">The kind
of loyalty model I will be discussing in the next several blogs is a basic
business model that is often used in strategic management. The basic premise of
the model is that customer loyalty leads to profitability. The purpose of this
model is to develop an understanding of the business components that contribute
to the loyalty of the customers.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif;"><br /></span></div>
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<span style="font-family: "times new roman" , serif;">In this
blog I will describe the general loyalty model and a sub-model which feeds into
the general loyalty model.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif;"><br /></span></div>
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<span style="font-family: "times new roman" , serif;">The
hypothesis upon which the loyalty model is based is that <i>loyalty is a direct function of the strength of the relationship
between the company and its customers</i>. Logically this makes sense since a
strong relationship between the company and its customers should produce
greater loyalty than a weak relationship. The heart of the loyalty model is built
around understanding the components that make up the strength of the
relationship. There are many variables that contribute positively or negatively
to the strength of the relationship. Recent experiences between the customer
and company would be an obvious component of the strength of the
relationship. A single experience
between customer and the company may not significantly influence the strength
of the business relationship. In fact, there is a “zone of tolerance” that
ranges from minimally acceptable to extremely exceptional. As long as the other
factors exist even an incident that was less than minimally acceptable may not
change the strength of the relationship. Of course, this assumes that any
negative experience may be resolved by the company. Otherwise, there may indeed
be a negative change to the strength of the relationship between that
individual customer and the company.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;">Therefore
the simplest form of the loyalty model is as follows:<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;"> Loyalty = constant x (strength of
the relationship).<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;">The value
of the constant associated with the strength of the relationship will vary with
respect to product, geography, and possibly other variables. Thus, a company
with multiple products may have a different strength of relationship with their
customers based solely on the product. An example would be the strength of the
relationship between the Apple iPhone and its customers versus the strength of
the relationship between the Apple iPad and its customers. iPhone users are
known to have a very strong loyalty connection with Apple; whereas, iPad users
may not have the same level of loyalty.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;">The
strength of the relationship (loyalty) is another way of describing the
business relationship between the company and its customers. The model proposed
would consider variables such as level of satisfaction, recent experience,
product quality, commitment to the relationship by either the company or, the
customers, and the bonds may exist between the company and its customers.<o:p></o:p></span></div>
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<span style="font-family: "times new roman" , serif;">The bonds
that exist between the company and its customers may fall into a number of
categories; such as, legal bonds (contracts), technology bonds (shared or
licensed technology), knowledge bonds (shared information), social bonds,
geographical bonds, cultural or ethnic bonds, and economic bonds. There may be
other bonds as well. The fact is there
are many bonds that may exist and give strength to the relationship between the
company and its customers (such as loyalty points).<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;">The
general form of the model for the strength of relationship is:<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;"> S (Strength of relationship) = function
of (recent experience, level of satisfaction, product quality, service quality,
commitment to the relationship, and appropriate bonds).<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;">This model
presents a challenge of quantifying each variable and assessing the strength of
the relationships between each variable. This model can be simplified by
assuming minimum interaction between the variables contributing to the strength
of the relationship and assuming the variables are linearly related.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;"><br /></span></div>
<br />
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif;">This
discussion will be continued in the next blog where a simplified version of
this loyalty model will be presented with an example. At this point, a simple
loyalty model is presented that includes most of the significant variables that are
usually included in loyalty discussions. <b>Be
curious.</b><o:p></o:p></span></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-16485831694900814832017-08-03T14:50:00.002-07:002017-08-07T13:26:50.789-07:00Another look at your customers<div class="MsoNormal">
In my previous blog I discussed the tyranny of the urgent
and why is such a limiting perspective in understanding customers. I closed the
blog by pointing out that the focus should always be on all your customers not
just the ones who have urgent concerns. In this blog I will point out several
techniques which may be useful in understanding the needs of our customers.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
Several years ago I was working with the company that had a
very complex product which required significant service support. The concern of
the company was that the users of the product were not the decision-makers but
had significant influence about decisions regarding the product. The product was a
complex computer that used very sophisticated software. The end users of the
product were scientists. The computer was managed by the IT department. Neither
the users of the product nor the IT department made the decisions regarding the
product. The decisions were made at a management level above the IT department
and the users department (which included all the scientists).<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The challenge with this assignment was that there was no
department that was responsible for evaluating the performance of the product. Each
of the three groups (users, IT, and management) were involved in the
decision-making process regarding the performance of the computer. The measure
of satisfaction for any one group is not sufficient to understand how well the
product is meeting the needs of the customer. This product required a
multidimensional model of customer satisfaction that incorporated satisfaction
metrics from each of the three departments. The objectives of the metrics were to
assess the satisfaction with each organization department and evaluate any inconsistencies in the
measures of satisfaction between them. In other words, although
satisfaction of each department was important, it was equally important to determine
if there were inconsistencies or discrepancies between the scientists, IT department and upper management.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
While the metrics for a current customer is important, and is
the basis of most customer surveys, some additional areas of interest include
the following:<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> 1. </span><!--[endif]-->measurement of concerns from lost customers,<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> 2. </span><!--[endif]-->specific measurements directed toward ultra-valuable
customers, and<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> 3. </span><!--[endif]-->measurement of the gaps between customer
expectations and the performance delivered.<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<br /></div>
<div class="MsoNormal">
Reflecting back on the previous blog, the intention here is
to provide some areas of interest beyond the basic customer satisfaction
survey. The previous blog pointed out the need to separate normal survey
responses from responses to customers with urgent needs for support. Curiosity
is the watchword for surveys. There are many dimensions of involvement between
the company and its customers. Not all contacts between the customer and
company are from the end-user.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
As an example, consider a previous assignment with another technology company led
to the surprising conclusion that the Accounts Receivable department did not
have customer skills training and was the primary reason for customer irritation. In fact, the Accounts Receivable department put
IBM on credit hold because their payment was overdue. Needless to say IBM was not
happy with this treatment.<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
If your curiosity is great enough, you may find more connections between your company and the customer that may be worth exploring. You may also find that
many of the employees involved in those connections do not have customer management skills training. <b>Be Curious!</b><o:p></o:p></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-44114485222280748532017-07-22T12:11:00.004-07:002017-07-22T12:11:48.966-07:00Who are you listening to?<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;">The “tyranny
of the urgent” is a phrase that is commonly used when working in a service environment.
The phrase reminds people that “urgent”
requests often take priority over “important” requests. Service managers often find themselves in the
role of “firefighting” - putting out “the fires” of customer complaints. Before the manager realizes it, the firefighting
consumes all of his time. The executives will note what a wonderful job the
service manager is doing by managing customer complaints. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;">In this
situation the only customers whose voices are heard are those who are
complaining. The large and small customers who were not complaining are
overlooked. When the urgent requests consume most or all of the service
manager’s time, there is little time remaining to consider what is not urgent.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;">In his
book <i>Exit, Voice and Loyalty</i>, Albert
Hirschman argues that unsatisfactory conditions (such as service problems) may
lead customers to (1) to exit or leave the company without trying to resolve an
issue, or (2) speak up and try to remedy the situation. The “nice” customer will exit without telling
you why and never return. <i> </i>A
“good” customer, on the other hand, is willing to speak up and tell you what is
wrong and is willing to work with you to resolve an issue. A “good” customer is
really your best consultant because he will tell you exactly what is wrong.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;">It is
often said that the urgent requests are like customers pounding on the chest of
the service providers and managers while the other customers who do not require
immediate assistance or attention are ignored.
The fact is that customers’ lack of urgency requests may actually have
more important information to share with the company. Many companies spend too
much time listening to the urgent customers while ignoring other customers.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;">Urgent needs
of some customers inhibit service managers’ time to anticipate, plan and
develop future service requirements. Too many managers spend most of their time
in a reactive mode. To get beyond the “tyranny of the urgent,” companies,
especially service organizations, need to fundamentally change the way in which
they listen to customers.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;">From a
strategic perspective, a balance is needed between urgent problems and
important problems. The urgent solutions generate “at-a-boys” for the service personnel
while the non-urgent solutions pave the way for long-term success. A simple first step to managing the “tyranny
of the urgent” is to set aside a specific amount of time each week or each
month to solve the problems of how to increase productivity, review service
skills, parts inventory, and technology.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;">The bottom
line is to focus on the needs of <u>all</u> your customers. There are three tactics that will provide the
first steps to leave the “tyranny of the urgent”.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;">Step one:
Conduct interviews with customers who have left your company.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;">Step two:
Engage those customer segments that are not being addressed by those customers
with urgent needs.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;">Step
three: Understand why customers left you in the past. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Times New Roman",serif;"><br /></span></div>
<br />
<div class="MsoNormal">
<b><span style="font-family: "Times New Roman",serif; font-size: 14.0pt; line-height: 107%;">Be
curious!</span></b><span style="font-family: "Times New Roman",serif;"> You may discover/uncover
challenges and opportunities you never realize existed.<o:p></o:p></span></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-39434506103754453422017-07-18T13:38:00.000-07:002017-07-18T13:38:02.562-07:00A Different Perspective<div class="MsoNormal" style="line-height: 12.75pt; margin-bottom: 9.6pt; vertical-align: baseline;">
I found this short
comment from the Brisbane, Australia newspaper.
I am not sure when it was published –but it is reasonable to assume this
aspect of loyalty is still around. I
doubt this has happened only once – it may be more pervasive than we want to
believe. There is a naïve perspective
that perfection of loyalty programs is near – maybe not.</div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: 2.4pt; mso-outline-level: 1; vertical-align: baseline;">
<span style="font-family: Georgia, serif; font-size: 14pt;">Be a loyal customer, be taken for a fool<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 12.75pt; margin-bottom: 9.6pt; vertical-align: baseline;">
<span style="font-family: inherit, serif; font-size: 12pt;">I was a passive
consumer, believing loyalty is virtuous and appreciated by business. Having
chosen products and providers I stick with them, anticipating that long-term
allegiances will have their rewards.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 12.75pt; margin-bottom: 9.6pt; vertical-align: baseline;">
<span style="font-family: inherit, serif; font-size: 12pt;">I have learnt,
however, that a more apt description of my conduct was ''mug punter''.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 12.75pt; margin-bottom: 9.6pt; vertical-align: baseline;">
<span style="font-family: inherit, serif; font-size: 12pt;">For more than 15
years I have happily coughed up for cable internet that served its purpose
adequately. The cost disappeared painlessly from our bank account each month
and we rarely troubled our allotted usage limitation.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 12.75pt; margin-bottom: 9.6pt; vertical-align: baseline;">
<span style="font-family: inherit, serif; font-size: 12pt;">Then we did. On the
last day of the month our internet connection slowed to a crawl. Thinking it a
technical malfunction, I rang a fellow at an Indian help desk only to learn
that I had been ''throttled back'' for the day, having finally burst through a
12-gigabyte glass ceiling.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 12.75pt; margin-bottom: 9.6pt; vertical-align: baseline;">
<span style="font-family: inherit, serif; font-size: 12pt;">After 15 years of
good behavior I thought that I might have earned a little leeway. Why, even the
RTA and the courts have a heart. Perhaps a small draw down from the huge bank
of unused gigabytes built up over the years.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 12.75pt; margin-bottom: 9.6pt; vertical-align: baseline;">
<span style="font-family: inherit, serif; font-size: 12pt;">I started to look
around. My limit had become minuscule with the passing of the years and
technological advances. Non-customers were being tempted with gigabytes beyond
imagining, at breakneck speeds, for a pittance. Whither my perceived reward for
loyalty?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 12.75pt; margin-bottom: 9.6pt; vertical-align: baseline;">
<span style="font-family: inherit, serif; font-size: 12pt;">I spoke to another
friend in India. He immediately more than quadrupled my limit, increased my
speed fivefold and knocked $10 a month off my bill.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 12.75pt; margin-bottom: 9.6pt; vertical-align: baseline;">
<span style="font-family: inherit, serif; font-size: 12pt;">Rather than feeling a
surge of gratitude, I felt cheated. They had been ripping me off, probably for
years. I decided to test all the waters in which I swim. My gas and electricity
tariffs dropped. My insurance renewal premium quote was instantly reduced. All
goodwill I might have felt towards those I once thought of as preferred
suppliers evaporated. Worse, I now have ill will towards those who took
advantage of my loyalty.<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="line-height: 12.75pt; margin-bottom: 9.6pt; vertical-align: baseline;">
<span style="font-family: inherit, serif; font-size: 12pt;">I now realize one
can't sit idly by and expect anyone to realize the absolute value of a lifetime
customer. So I whine and moan and price check. It's a waste of my time and
ultimately an expensive way for business to do business, but at least I know
that if it chews up the gigabytes, I only have to blast a call center somewhere
to rectify the problem.<o:p></o:p></span></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-78328364406557323392017-07-15T15:09:00.002-07:002017-07-15T15:09:26.378-07:00Illegal Loyalty Programs<br /><div class="MsoNormal">
What could be illegal about a customer loyalty program? It
seems that almost every business has some form of loyalty program. There are loyalty programs for grocery and
clothing stores, airlines, and just about every other business that would like
to create some form of relationship (loyalty) with their customers. An article
written by Tim J. Smith, PhD identifies a dimension of customer loyalty that
the government finds illegal.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
A particular case noted in his article is Eaton Corporation that
was found guilty of antitrust on the grounds that Eaton’s loyalty program
harmed their competitor in 2014. Apparently Eaton was found guilty of improper
pricing because they held 80% market share that totally dominated only a few
competitors. In addition the pricing structure included rebates which encouraged
their customers to continue to buy from Eaton and not from their competitor.
The Eaton loyalty program required customers to use a high percentage of the
Eaton transmissions, and to require customers to identify Eaton as their
preferred transmission supplier while also encouraging their customers to price
Eaton transmissions below those manufactured by its competitors.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Apparently the loyalty program itself is not illegal;
however the fact that Eaton was a dominant provider in the market impacted the competitors
that had much smaller market shares. It turns out that Eaton was not found to
be selling their transmissions below cost but the program did harm Eaton’s
competitors by locking in their (Easton’s) customers which effectively limited
the market. The damage as a result of this antitrust lawsuit is expected to
exceed more than $1 billion.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The key ingredient to defining a loyalty program as being
illegal is that the company has a dominant market position and effectively
controls the market. If your company is a giant in the marketplace with a
significant market share, it is certainly susceptible to an antitrust lawsuit.
Dr. Smith points out that there is no clear definition of what level of market
share makes you a giant in the market. Basically, if the government can
determine that your loyalty pricing program has done harm to a competitor, it
may be vulnerable.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
A similar lawsuit was brought against Intel in 2009. Intel’s
smaller competitor AMD was paid $1.25 billion in damages. Intel’s loyalty
program was based on requiring customers to use a high percentage of Intel
chips in their products. Intel was not selling their chips below cost; however,
since Intel held a dominant market share of 80% in the global microprocessor
market with its considerable influence on the market, this was deemed
sufficient to warrant the lawsuit and fine.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
The bottom line is for companies that dominate the
marketplace to be very careful and include a legal review of their loyalty
program. For those who do not dominate there does not appear to be any legal
constraints on your loyalty program or the how it is run unless the loyalty
program would lead to selling your equipment or services below cost. For example, if your loyalty program includes
credit for a trade-in, the combined purchase price minus the trade-in may lead
to a net of selling below cost which continues to be illegal in the United
States. Otherwise, the market is yours
for the taking.<o:p></o:p></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com1tag:blogger.com,1999:blog-1033789233539940087.post-45721835132858169042017-07-10T15:26:00.001-07:002017-07-10T15:36:49.567-07:00Words have value too!<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14pt;">A lot of time and energy is spent quantitatively
analyzing the results of surveys. The survey may be based on metrics such as customer
satisfaction, NPS, customer effort, or customer experience. This quantitative
analysis may take on many dimensions of statistical methodology. However, the </span><i style="font-family: "Times New Roman", serif; font-size: 14pt;">comments</i><span style="font-family: "times new roman" , serif; font-size: 14pt;"> that are made associated with
the individual scores are seldom included in the statistical quantitative analysis.
There are several methodologies available for including the analysis of the
comments (referred to as content analysis) with the numerical analysis.</span><span style="font-family: "times new roman" , serif; font-size: 14pt;"> </span><span style="font-family: "times new roman" , serif; font-size: 14pt;">It can be a worthwhile endeavor to compare
the results of the quantitative and content analyses.</span><span style="font-family: "times new roman" , serif; font-size: 14pt;"> </span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14pt;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">A McKinsey study suggests that positive emotions
correlate strongly with profits. The study indicated that after a positive
customer experience more than 85% of the customers purchased more and after a
negative experience more than 70% purchased less. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">In this blog two different types of qualitative
analyses are discussed; namely, <i>descriptive
measures</i> of word usage and content analysis (which is also referred to as <i>sentiment analysis</i>).<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">Analysis of word usage includes grouping for individual
words or word groups into categories. Words or word groups are usually grouped
into three categories; namely, negative comments, positive comments or general
comments. If the comment relates to a specific activity then those comments
will be grouped by specific survey question(s). Within this grouping of word
usage, descriptive measures provide a complementary presentation to the
quantitative results. The descriptive measures are limited primarily to the
number of comments associated with a specific question or questions on the
survey.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">The general hypothesis is that the <i>descriptive measure</i> of positive comments
will be similar to that measured quantitatively. Obviously, the hypothesis is also
extended to the negative remarks which should be reflected by the negative
scores on the survey. This qualitative procedure does not interpret the
intensity of any feelings implicit in the wording. In adition, the words will not
pick up such subtleties as sarcasm or other emotions.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">Content analysis<i>
(Sentiment analysis)</i> is used to determine how customers feel with respect
to a product or service. The primary purpose of sentiment analysis is to
capture strong feelings that may be embedded in emotionally laden words. The
two dimensions of sentiment analysis identify the feelings as being either
positive or negative and the individual words or word phrases can be used to
calibrate the magnitude of the sentiment. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">Content analysis for product support is generally
focused on the statistics associated with word usage (positive and negative).
Typically the primary goal of content analysis is to validate the quantitative
aspects of the survey metrics. Hence, the need for sentiment analysis is often limited.
Only when word usage analysis indicates conflicting results with the
quantitative analysis does sentiment analysis become a worthwhile addition to
add to the perspective of the customers.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">Too often surveys are conducted to understand the
strengths and weaknesses of product support. The comments included with surveys
are often reviewed individually but rarely analyzed in sufficient detail to
provide verification of the quantitative measures taken.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">The bottom line is that qualitative analysis is often
overlooked when examining the relationship between customers and the products
and services provided to them by the company. It may be time to reconsider what
aspects of survey analysis should be included. It is likely that the best
answer is both quantitative and qualitative analyses provide the greatest
insight about the customers. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<br />
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">A note to remember is that feelings persist much
longer than the score presented on the survey. An unkempt restroom at a
restaurant can have a lasting effect on the customers that use it. It may be
the only reason the customer never comes back. An emergency service provided
beyond expectation may create a customer for life. <b>Emotions are powerful</b>.<o:p></o:p></span></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-70644164799860320132017-07-03T12:46:00.002-07:002017-07-03T12:49:25.062-07:00Why bother with loyalty?<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14pt;">Some research suggests the customer loyalty may not be
enough. A study was done by Timothy Keiningham, Lerzan Aksoy, Alexander Buoye,
and Bruce Cooil that has some interesting findings. They performed a two-year
longitudinal study of more than 17,000 consumers and examining purchases in
more than a dozen industries in nine countries. According to the study, they
asked a broad range of questions and purchase histories including satisfaction
and loyalty measurements. Their analysis was based on the largest and most
rigorous of its kind of survey at the time which indicated an interesting
correlation; namely, the rank consumers assigned to a brand relative to other
brands in the industry can be used as a predictor of “share of wallet.” They
refer to the results of this outcome as the Wallet Allocation Rule (published
by Wiley, 2015).</span><span style="font-family: "times new roman" , serif; font-size: 14pt;"> </span><span style="font-family: "times new roman" , serif; font-size: 14pt;">The details of survey
methodology, survey questions, and statistical tools used in the analysis were
not available.</span><span style="font-family: "times new roman" , serif; font-size: 14pt;"> </span><span style="font-family: "times new roman" , serif; font-size: 14pt;">This blog is based on
their article published in the Harvard Business Review (which should be
sufficient evidence that the methodology meets Harvard’s criteria for a valid
survey).</span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14pt;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">Here are two of the findings that should be
considered.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">1.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">Correlation
between changes in satisfaction or intention to recommend and “share of wallet”
was 0.1 – suggesting that satisfaction has little impact on changes in “share
of wallet.” <o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">2.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span></span><!--[endif]--><span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">Correlation
between changes in “share of wallet” score using their metric compared with a
customer’s actual measured “share of wallet” was 0.8.<o:p></o:p></span><br />
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">The Wallet Allocation Rule is proposed by the authors
to be a better metric than customer satisfaction or NPS. In the survey they
asked the consumers to assign a rank of the brand relative to other brands that
the customers were using. The result was that ranking with respect to
competitors was demonstrated as being more important than customer satisfaction
when it comes to increasing “share of wallet.” The point they make is that the
parameters which drive changes in “share of wallet” may not be the same parameters
that drive the change in customer satisfaction. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">This methodology is particularly useful from a sales
perspective. However, this methodology
has limited usefulness when operating in a supportive environment with limited,
if any, competition of other brands of products (such as occurs with product
support).<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">The evidence from the survey provides a strong case
that ranking in the marketplace has more value than customer satisfaction when
compared with the competition.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">A secondary consideration is the impact of ranking on
loyalty. The implication of loyalty follows from focusing on the parameters
that have the greatest impact on rank. If the consumers are increasingly drawn
to a particular brand, it is not unreasonable to believe there will be a
component of loyalty that will follow that move of higher rank with the brand. The assumption that ranking has a greater
long-term impact on loyalty that customer satisfaction needs further
investigation. </span></div>
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;"> <o:p></o:p></span></div>
<br />
<div class="MsoNormal">
<span style="font-family: "times new roman" , serif; font-size: 14.0pt; line-height: 107%;">The bottom line is that “share of wallet” may be the
best metric when focused on increasing ranking with respect to competition. Although this study provides valid
statistical support, its value is diminished when used as a metric for product
support where “ranking” with competition has little meaning.<o:p></o:p></span></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-35620599518962639392017-06-29T12:45:00.000-07:002017-06-30T10:59:31.396-07:00Whoever heard of bad loyalty?<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Did you ever imagine that there could be an issue with
customer loyalty? Could there be a time when customer loyalty may not be the best
answer? When we think of customer loyalty we often think of it as a way to help
a company survive difficult market conditions. We think of customer loyalty
synonymously with the phrase customer retention. Many marketing personnel will
support the notion that selling to a loyal customer is more cost-effective than
creating a new customer.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
One of my favorite phrases is that customers are what make
paydays possible. So to think that customer loyalty might have a negative
component is surprising. Tim Keiningham and Lerzan Aksoy wrote a note several
years ago that discussed the negative component of customer loyalty. This blog attempts to capture the essence of
their note.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
What we would like our loyal customers to be is customers
who can clearly understand why it is important to support us during the good
times and the bad. This clearly occurs most often when the customers can
differentiate our company’s offerings of products and services from a
competitor. They will know what the company stands for.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So, what kind of loyalty is bad loyalty? The authors have
suggested that price driven loyalty is the lowest form of loyalty. They make
the point that the company is not offering any differentiated value to
customers. It also implies the price-driven loyalty does not bring levels of
profitability that often occur when selling to loyal customers. Many marketing studies confirm that the cost
of selling to a loyal customer is usually less than the cost of acquiring a new
customer. Hence a price-driven loyal customer is more likely to provide a lower
margin/profit to the company.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The obvious conclusion is that price-driven loyalty is not
really loyalty at all. Customer loyalty is created when the company can provide
products and services that are differentiated from its competition. Thus the
customer finds the value derived from this relationship better meet its
needs.<o:p></o:p></div>
<br />
<div class="MsoNormal">
The bottom line is that real customer loyalty is good
loyalty only when the company provides consistent differentiation of its products and services from the competitors. The notion that price creates
loyalty does not meet the standard for long-term differentiation. Yes, there is
bad customer loyalty.<o:p></o:p></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-58275699567500676612016-12-30T14:06:00.000-08:002016-12-30T14:06:13.426-08:00A win-win for Social Media<div class="MsoNormal">
<o:p> </o:p>Most companies in the US are using social media as an
important channel for communicating with customers. One of the primary reasons
for using the social media is to provide information regarding products and
services. Several studies such as one done by Simply Measured indicates that
only about one third of the companies that use social media provide a link for
customer service. Other studies suggest there is an increasing trend to provide
customer service through social media.</div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The purpose of this blog is to examine the relationship
between social media and customer service. The conclusion suggests that the
proper use of social media for customer service is a win for the customers and
a win for the company. Hence, using the social media for customer service
reduces the cost of customer service while simultaneously improves response
time of customer service to customer requests.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The advantages for customer service using social media
include the following:<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="font-stretch: normal; font-variant-numeric: normal; line-height: normal;">1.</span><span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">. </span><!--[endif]-->Companies do not need to have support personnel
available 24/7. This will allow the company to maximize the use of support
personnel and reduce idle time. This improvement in productivity should be
sufficient to justify using the social media as a way to acquire customer
concerns as well as accolades.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> 2</span><span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">. </span><!--[endif]-->Companies can utilize self-help diagnostics to
reduce the number of customer interactions.<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> 3. </span><span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span><!--[endif]-->Companies can acquire data from the social media
to improve customer satisfaction and customer loyalty.<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
<br /></div>
<div class="MsoNormal">
The advantages for customers using social media to contact
the company include the following: <o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 35.25pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span>The
customer can contact the company 24/7. Thus the customer is not inconvenienced
by waiting until company personnel are available.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 35.25pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->The customer can resolve made his concerns
through the use of self-help diagnostics.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 35.25pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->The customer can provide detail regarding the
purpose of the call prior to the review by the company. This allows company
respond more knowledgeably.<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 35.25pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<!--[if !supportLists]-->4.<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span><!--[endif]-->The customers will frequently perceive the responsiveness
to their concerns more positively than if they had to wait until someone is
available.<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 35.25pt; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -.25in;">
<br /></div>
<div class="MsoNormal">
Thus the customer and company each benefit by having a
direct path through social media. As customers become increasingly aware of
having customer service available through social media, other methods of
communication will undoubtedly diminish. Companies need to examine how social
media is being used by their customers. It is not unreasonable to expect that the
trend for communication between the customer and the company in the social
media will continue to increase.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
The bottom line is that companies who provide customer
service should be developing plans (if they have not already) to restructure
the customer service strategy to include connection to social media. The signs
are clear that customers will increasingly use the Internet to communicate with
companies.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The companies who understand this trend and plan their customer
service organization to address this change in the way we do business will have
a distinct advantage over their competition.<o:p></o:p></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-48836279211379239962016-12-28T11:41:00.000-08:002016-12-28T11:41:52.327-08:00Customer Experience versus Customer Service<div class="MsoNormal">
One of the latest phrases that is being used is the customer
experience. There is certainly a customer experience anytime a customer or
potential customer interacts with the company. The following paragraphs outline
some of the relationships between the customer experience and customer service
and some of the differences between the two.</div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The first similarity between the customer experience and
customer service is that they both address interaction between the customer and
the company.<o:p></o:p></div>
<div class="MsoNormal">
The second similarity is that both customer experience and
customer service have metrics that provide management measurable perspectives
that can be used for comparison and training purposes.<o:p></o:p></div>
<div class="MsoNormal">
The third similarity is that both customer experience and
customer service are major components of the business strategy of the company.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The first difference between the customer experience and
customer service is that the customer experience is more proactive than
customer service, which tends to be primarily reactive.<o:p></o:p></div>
<div class="MsoNormal">
The second difference is that customer experience does not
always have a customer service component; whereas customer service will always
have a customer experience component.<o:p></o:p></div>
<div class="MsoNormal">
The third difference between the customer experience and customer
service is that the customer experience can be associated with every aspect
between the customer and the company from initial contact with the customer to
termination of the company customer relationship whereas customer service is
most often limited to customers that have already established a relationship
with the company.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Some will argue that the customer experience incorporates
customer service. While this is true, the
customer experience is inclusive of all functions within the corporation. Hence
the customer experience includes marketing to include acquisition of new
customers, transforming potential customers into revenue-generating customers,
providing products and services to the customers, developing and managing the
financial relationship with customers, providing education and training on the
use of the products or services for the customer, and finally to repair the
customer relationship when one or more aspects of the relationship is not
acceptable to either the customer or the company or both. With this perspective of the breadth of the
customer experience, the most obvious manager of the customer experience is the
CEO. While the CEO may be involved to some extent with customer service, this is not
a function that should require the complete attention of the CEO.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Using the argument in the preceding paragraph is clear that
customer service is only one component of the customer experience and as such
should be managed as a component of the company or as a component of one component of the business
with its own metrics that support the overall business of the company. It must also be managed tactically on a
day-to-day and customer-by-customer basis while maintaining its perspective to support the overall business strategy.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
The bottom line is that customer service is only one
component of the company’s business strategy; whereas, the customer experience
requires a broader perspective. The
customer experience requires metrics from every operation in the company that
in some way interacts with the customer (from customer acquisition to
termination of the customer relationship) while the customer service operation
is focused primarily on customer support.
Someone in the C-level should have direct responsibility for setting and
managing the customer experience.
Maximum company performance should be attained when the company assets
are properly tuned to maximize the customer experience.<o:p></o:p></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-53328392735869978582016-07-09T12:15:00.000-07:002016-07-09T12:15:15.677-07:00What Makes an Ideal CustomerBrian Woolf has authored two books on best customer marketing. He is often referred to as the "Godfather of best customer marketing". He says that as a general rule best customers:<br />
<br />
1. Spend the most each year<br />
2. Have the lowest defection rates<br />
3. Visit the store most frequently each month<br />
4. Buy items with a higher average price<br />
5. Buy higher gross margin percentage items<br />
6. Buy from more departments and categories<br />
7. Have lower processing costs (larger order sizes, fewer questions about whre to find items, and fewer losses from bad checks).<br />
<br />
The list is comprehensive and certainly defines the type of customer that is a good revenue source as well as a source of high margin. It is possible that a non-loyal or unhappy customer could provide the same attributes of revenue and margin for reasons such as most convenient location, quickest shipping or the only one providing specific products or services not readily available from other sources.<br />
<br />
This list seems to overlook a few VERY important "Rules" that in the opinion of The Customer Institute really define an ideal customer rather than a "best customer". The following list of four customer relationship aspects do not require the previous list of 7 but, in the opinion of The Customer Institute, are sought by most companies.<br />
<br />
1. An ideal customer will allow the company to make a mistake and understands that no company is perfect. That customer will allow the company to correct the mistake and not penalize the company.<br />
2. An ideal customer will recognize that ever company can only stay in business if they make a profit. For that reason those customers will not challenge every price. Yes, sales are important but in the long run the company can only survive by making a profit.<br />
3. There is a bond of mutual trust between the ideal customer and the company. Both the company and the customer know that the information shared is the truth and is accepted with that knowledge.<br />
4. The products and services of the company fit the needs of the customer. There is no attempt to sell either a product of service that does meet the needs of the customer. There is no attempt to sell a product or service that does not satisfy the customer need and the customer knows that.<br />
<br />
The bottom line is that the ideal customer is more than a source of revenue and profit. The more important aspect of the ideal customer is one whose needs fit the products and services provided by the company. In addition the values of the company are complementary with the customer and provides the basis for an ethical relationship to exist. Business is more than dollars and cents. <br />
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com1tag:blogger.com,1999:blog-1033789233539940087.post-21268451936177505202016-07-02T13:28:00.000-07:002016-07-02T13:30:00.061-07:00Word-of-Mouth Works - A Different PerspectiveEverybody knows that word-of-mouth is a major component of customer satisfaction. Most everybody thinks that most word-of-mouth is negative. There is been some interesting research done lately that gives a different perspective of word-of-mouth.<br />
<br />
A shopper survey performed by Brick Meets Click suggests that positive experiences may occur more frequently than negative experiences. They asked 1000 grocery shoppers about their experience shopping online. For those who shop online – those who had extremely positive or negative experiences how likely they would share them with others. The results are not what I would have expected; namely, only 60% of those who had a negative experience indicated they would share that experience with others whereas 95% of those who had a positive experience indicated they would share that experience with others.<br />
<br />
This information suggests that online shoppers are acting differently than those who are brick-and-mortar shoppers. There is no clear research at this point in time to explain the change from what has been the belief that customers are more likely to provide negative responses from negative experiences than those customers who have a positive experience. Until we understand the components that drive these responses will not be able to construct customer models that will create positive word-of-mouth and higher levels of satisfaction and loyalty.<br />
<br />
The bottom line is that online shopping appears to have very different characteristics than face-to-face shopping. This is an exciting time when consumers are in flux in the way they shop and the way they perceive experiences while shopping.Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com1tag:blogger.com,1999:blog-1033789233539940087.post-10625641820312458482016-03-07T14:30:00.002-08:002016-03-29T13:39:10.806-07:00The Customer Experience is Evolving<div class="MsoNormal">
Social media and texting are having a profound impact on the
way customers and companies communicate.
Their have been studies done by Hailo, a taxi app and by the Pew
Research Center. Statistics that have been
published by Andrew Prokop indicate findings that suggest the evolution. These findings include:<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt; font-stretch: normal;">
</span><!--[endif]-->Text messages represent the two most often used method
of contact by cell phone (both sending and receiving) whereas the voice phone
call ranks as the 6<sup>th</sup> most frequently used method.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt; font-stretch: normal;">
</span><!--[endif]-->American women text more frequently than men
(14%)<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt; font-stretch: normal;">
</span><!--[endif]-->80% of American adults text every day.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->4.<span style="font-size: 7pt; font-stretch: normal;">
</span><!--[endif]-->Text messages are opened more frequently than
emails (98% versus 20%)<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->5.<span style="font-size: 7pt; font-stretch: normal;">
</span><!--[endif]-->Americans exchange more texts than phone calls<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->6.<span style="font-size: 7pt; font-stretch: normal;">
</span><!--[endif]-->More calls are coming to call centers from cell
phones than from and lines<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: .75in; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -.25in;">
<!--[if !supportLists]-->7.<span style="font-size: 7pt; font-stretch: normal;">
</span><!--[endif]-->One study from 2012 (source unknown) noted that
texting was rated higher than voice communication in terms of customer satisfaction (text
scored 90 out of 100 points and voice
scored 77 out of 100).<o:p></o:p></div>
<div class="MsoNormal">
These statistics raise two issues (one good and one not so
good)<o:p></o:p></div>
<div class="MsoNormal">
The good news is that by cross training support personnel to
respond to both productivity can be dramatically reduce the dead
time that occurs during a lull in the arrivals.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The bad news is that the incremental stress that will be
experienced by call center personnel and support personnel despite their ability. The fact that service personnel may be trained to have the ability to multitask multiple text messages as well
as dealing with customers on the phone may have a deleterious effect over time.<br />
<br /></div>
<div class="MsoNormal">
The real problem is that text messaging is fast becoming (if it
has not already become) a new means for supporting customers. This is an issue that cannot be ignored and must be managed. <o:p></o:p></div>
<br />
<div class="MsoNormal">
The bottom line is that the world of on line support has just
experienced a dramatic new dimension that can be used either as a strategic advantage or, if
ignored, will become a major deterrent to customer satisfaction and loyalty.<o:p></o:p></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0tag:blogger.com,1999:blog-1033789233539940087.post-23468717995022252592015-07-25T11:14:00.001-07:002015-07-25T11:17:37.705-07:00Amazing Statistics<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 9.0pt;">
<span style="font-family: Helvetica, sans-serif;">Here are some customer service statistics that demonstrate the power of a positive customer service experience. Note each statistic is provided with a reference for its source. These statistics were compiled by <o:p></o:p></span><i><span style="font-family: Helvetica, sans-serif; line-height: 21.4666652679443px;">Gigi Peccolo, the Content Manager at <span style="color: #337ab7;"><a href="http://www.onereach.com/" target="_blank">OneReach</a>, </span>a consulting firm.</span></i></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">1.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">By the year 2020 (coming
up fast!), customer service will beat out price and product as the key brand
differentiator. (</span><a href="http://www.walkerinfo.com/customers2020/" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Walker Info</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">2.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">It’s 6-7 times more
expensive to attract a new customer than to keep an existing one. (</span><a href="http://www.whitehouse.gov/" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">White House Office of Consumer Affairs</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">3.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">A 10% increase in
customer retention can result in 30% increase in company value. (</span><a href="http://www.bain.com/publications/business-insights/loyalty.aspx" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Bain & Co.</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">4.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">If customers have a
“very good” or “excellent” service experience, 97% of them are “very” or
“extremely” likely to tell friends and family about it. (</span><a href="https://www.surveymonkey.com/blog/2015/05/18/good-customer-service-tips-growing-loyal-customer-base" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Survey Monkey</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">5.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">89% of customers will
start doing business with a competitor after a negative service experience. (</span><a href="http://blog.vpi-corp.com/blog/performance-optimization-2/40-stats-shaping-the-future-of-contact-centers" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">VPI Corp</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">6.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">82% of customers stopped
doing business with a company after a bad customer service experience. (<a href="http://www.slideshare.net/RightNow/2011-customer-experience-impact-report" target="_blank"><span style="color: #337ab7;">RightNow</span></a>)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">7.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">Over 65% of customers
say that valuing their time is the most important thing a company can do to provide
good online service. (</span><a href="http://blogs.forrester.com/kate_leggett/12-06-20-consumers_drive_channel_preference_to_achieve_effortless_customer_service" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">NICE</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">8.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">Three out of five
customers would try a new brand or company in order to get better service. (</span><a href="http://about.americanexpress.com/news/docs/2011x/AXP_2011_csbar_market.pdf" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">American Express</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">9.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">Over 90% of customers
who have an effortless service experience with companies will buy from that
company again. (</span><a href="http://www.thewisemarketer.com/briefs/archive.asp?action=read&bid=4489" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">CEB</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">10.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">Only a paltry 1% of
customers feel that their expectations of good customer service are always met.
(<a href="http://www.slideshare.net/RightNow/2011-customer-experience-impact-report" target="_blank"><span style="color: #337ab7;">RightNow</span></a>)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">11.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">90% of customer service
decision makers believe that delivering good customer service is essential to
their companies’ success. (</span><a href="http://www.aspect.com/globalassets/aspect-ngcc-forrester-wp.pdf" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Forrester</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">12.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">58% of customers are
willing to spend more with companies that provide a great customer service
experience. (</span><a href="http://about.americanexpress.com/news/docs/2012x/axp_2012gcsb_us.pdf" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">American Express</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">13.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">87% of customers share
good service experiences with others. (<a href="https://www.zendesk.com/resources/the-impact-of-customer-service/" target="_blank"><span style="color: #337ab7;">Zendesk</span></a>)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">14.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">Nearly 50% of customers
who had a negative service experience have told over 10 people about it. (</span><a href="https://hbr.org/2010/07/stop-trying-to-delight-your-customers" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Harvard Business
Review</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">15.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">73% of consumers say
that a friendly customer service rep can make them fall in love with a brand. (<a href="http://www.slideshare.net/RightNow/2011-customer-experience-impact-report" target="_blank"><span style="color: #337ab7;">RightNow</span></a>)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">16.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">74% of customers find a
poor customer service experience annoying. (<a href="http://synthetix.pr.co/35674-7-out-of-10-people-think-online-customer-service-will-dominate-over-traditional-call-centres-within-a-decade" target="_blank"><span style="color: #337ab7;">Synthetix</span></a>)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">17.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">85% of organizations
support multichannel customer service interactions. (</span><a href="http://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/us-sdt-consulting-2013-global-contact-survey-051513.pdf" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Deloitte</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">18.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">Over 60% of companies
think mobile customer service is a competitive differentiator. (</span><a href="http://www.icmi.com/About-ICMI/Press-Room/2013-Mobile-Customer-Service-Strategy-Results-Released" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">ICMI</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">19.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">90% of customers expect
to receive a consistent customer experience across channels. (<a href="http://synthetix.pr.co/35674-7-out-of-10-people-think-online-customer-service-will-dominate-over-traditional-call-centres-within-a-decade" target="_blank"><span style="color: #337ab7;">Synthetix</span></a>)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">20.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">74% of customers have
spent more in response to good customer service. (</span><a href="http://about.americanexpress.com/news/docs/2014x/2014-Global-Customer-Service-Barometer-US.pdf" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">American Express</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">21.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">68% of customers say
they’ve switched brands because of bad customer service. (</span><a href="http://www.accenture.com/sitecollectiondocuments/pdf/accenture_utilities_customeracquisitionretention.pdf" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Accenture</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">22.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">U.S. companies lose
approximately $41 billion annually due to bad customer service. (<a href="http://www.smartcustomerservice.com/Articles/News-Briefs/Research-U.S.-Businesses-Lose-$41-Billion-Annually-Due-to-Poor-Customer-Service-93869.aspx" target="_blank"><span style="color: #337ab7;">SmartCustomerService</span></a>)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">23.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">78% of consumers have
bailed on a transaction because of bad customer service. (</span><a href="http://about.americanexpress.com/news/docs/2011x/AXP_2011_csbar_market.pdf" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">American Express</span></a><span style="font-family: Helvetica, sans-serif;">)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">24.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">81% of customers are
likely to repeat business with a company after a good service experience. (<a href="http://blog.kissmetrics.com/happy-campers/" target="_blank"><span style="color: #337ab7;">Kissmetrics</span></a>)<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 2.25pt; margin-left: .5in; mso-list: l0 level1 lfo1; mso-margin-top-alt: auto; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: Helvetica, sans-serif;">25.<span style="font-family: 'Times New Roman'; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: Helvetica, sans-serif;">A 5% increase in
customer retention can increase profits by up to 125%. (</span><a href="http://www.bain.com/Images/BB_Prescription_cutting_costs.pdf" target="_blank"><span style="color: #337ab7; font-family: "Helvetica","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: "Times New Roman";">Bain & Co.</span></a><span style="font-family: Helvetica, sans-serif;">)<span style="font-size: 14pt;"><o:p></o:p></span></span></div>
<div class="MsoNormal" style="line-height: 15.0pt; margin-bottom: 9.0pt;">
<br /></div>
Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com4tag:blogger.com,1999:blog-1033789233539940087.post-1599974917826949922015-05-16T14:15:00.000-07:002015-05-16T14:27:12.223-07:00How much are your customer relationships worth?<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">There's
always a lot of argument about the way companies value their customer
relationships as a percent of the value of the company. The value of customer
relationships falls into the category of an intangible asset when looking at
the balance sheet of a Corporation. Brands
and trademarks are included in the valuation of the company along with the
value of customer relationships as the two major intangibles. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 115%;">MARKABLES is
a cross-border venture of experienced trademark experts who deal with the
challenges of trademark valuation from different perspectives. It is owned and operated by a privately held
company located in Switzerland and specializes in company evaluations for
M&A. <o:p></o:p></span><br />
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<span style="font-size: 12.0pt; line-height: 115%;">There really
is no accounting data that can be used for evaluation of trademarks and
customer relationships. The general methodology used to value intangible data is highly dependent on
comparative data. One of the best ways
of valuing customer relationships occurs when a company unit being bought or
sold since it's value must stand up to the scrutiny of auditors. The process used for estimating the selling price of a company requires valuing the different assets of the company which also includes the intangible assets of the brand or trademarks owned by the company
and the customer relationships of the company. <o:p></o:p></span></div>
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<span style="font-size: 12.0pt; line-height: 115%;">A study of
6000 mergers and acquisitions (M&A) worldwide between 2003 and 2013
revealed some interesting characteristics of the value of customer
relationships and brands and trademarks. Since evaluations were done by experts
and documented, the data which were accrued from the evaluations can be used to
indicate how experts are valuing the two intangibles of brands and customer
relationships.<o:p></o:p></span></div>
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<span style="font-size: 12.0pt; line-height: 115%;">The outcome
of this analysis shows that the value of brands and trademarks has dropped as a
percent of the overall value the company from approximately 18% in 2003 to about 10% in
this 11 year period. On the other hand, the value given to customer
relationships has increased from about 9% in 2003 to 18% in the same time frame. Thus
while brands and trademarks seem to be declining at a rate of approximately 0.8%
per year in terms of asset value of the company, customer relationships value and as a percent of the company seem to
be growing at approximately 0.9% per year. <o:p></o:p></span></div>
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<span style="font-family: Times, Times New Roman, serif; font-size: 12.0pt; line-height: 115%; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">The bottom line is that companies are seeing
greater and greater value being given to customer relationships at the same
time they are giving less value to brands and trademarks as a percentage of the
value of the business. This does not mean the customer relationships will
ultimately replace brands and trademarks in the valuation of the companies. It
does reveal that more value appears to be given to customer relationships.
These two intangibles, brands and customer relationships, are definitely
connected. Continued success will be measured by how well the two intangible variables
are integrated and managed. The challenge for every company will be to build a
strategy that integrates these two variables so they complement each other with the proper
emphasis on each. </span>Dr. Bill Bleuelhttp://www.blogger.com/profile/08666050153166291658noreply@blogger.com0