When companies in the industry think of loyalty, they generally believe that loyalty is one dimensional. From the customers I have dealt with, this is the only way they can see it. They see a loyalty scale and are concerned about where their score is on the scale. They become particularly concerned if their score on the scale is lower than in was in the previous measurement period (which could be a day, week, month or quarter). A typical industry scale combines the scores of satisfaction, likelihood of recommending the company or product to an associate, and the likelihood of buying again from the company. Of course, there are other measures of customer loyalty but they all come back to a scale (usually linear).
The problem I have with these measures is they measure loyalty as if it had only one dimension. I believe the measures of loyalty are biased on the high side for the following reasons:
1. The measure was developed from one or more customer measures that may not accurately reflect loyalty. (I admit this is somewhat circular, but I need a place to start).
2. The measure does not differentiate between natural and unnatural loyalty. I believe that the only persistent measure of customer loyalty is natural loyalty. There has not been any published articles, to my knowledge, that has attempted to quantify or qualify the differences. A more accurate measure may require a two dimensional scale that would measure natural and unnatural customer loyalty separately.
Thus, the current measurement includes a component that may not accurately reflect customer loyalty and since it is included provides a positive bias to the measurement.
I think the following points are valid (although untested):
1. To my knowledge there has been no effort to separtely measure these two components.
2. I am using this blog to begin a discussion of the differences between natural and unnatural loyalty.
3. An initial definition of natural customer loyalty as that loyalty that is derived through personal relationships. This leaves as the definition for unnatural loyalty as that loyalty derived NOT through personal relationships.
4. Some of the obvious examples of processes that develop unnatural customer loyalty might include: mileage reward programs, discount coupons, gifts, invitations to special events, etc.).
5. My hypothesis is that natural customer loyalty is more important in reducing customer defection than unnatural customer loyalty.
6. The problem associated with the unnatural customer loyalty is that it is subject to being out-bid. On the otherhand, it is difficult to out-bid a relationship between two people or a person and a company that has demonstrated trust over time.
7. So, the first difference between natural and unnatural customer loyalty is that unnatural customer loyalty is subject to market and/or competitive situations and the natural customer loyalty is not.
8. The second difference is relationships in natural customer loyalty are reciprocal but there is no reciprocity in unnatural customer loyalty.
9. The third difference between them is that natural customer loyalty takes time and hence is more resilient to problems, whereas, unnatural customer loyalty has little or no resilience when a problem occurs between the customer and the company.
10. The fourth difference between them is natural customer loyalty has a high cost to develop (consider the investment in time to build the relationshiop with the customer) and unnatural customer loyalty has a low cost (the cost of the instituting a "rewards" program).
11. The fifth difference between them is unnatural customer loyalty programs or processes can be started and stopped quickly while natural customer loyalty may out last any formal program.
One of the symbolic analogies I use to describe natural customer loyalty, is the concept of using a string to connect a company to a customer. This string is initiated at the time of the first intereaction. Each time thereafter that a positive interaction occurs, another strand is added to the string connecting the customer to the company. As more and more positive interactions occur, the string becomes a rope which binds the customer to the company so that over time the thickness of the rope grows such that the customer is no longer vulnerable to be taken by competition.
The BOTTOM LINE is that customer loyalty needs to be examined beyond the one-dimensional plane if it is to provide an accurate assessment of customer loyalty.
The next step is for someone to initiate a research program to validate this hypothesis. If this hypothesis is true, there may be a lot of companies being misled by their current loyalty measurement.
Thursday, July 12, 2007
Friday, July 6, 2007
The Measurement Trap
Taking measurements are important. There is also a degree of risk in taking measurements. I refer to this risk as “the measurement trap. The objective of this blog is to identify and discuss a management behavior that appears valid but which can lead to “paralysis-by-analysis.” We normally assume that a measurement is an accurate assessment of some aspect of our business. But the measurement trap derives from a false belief that we can fully understand all aspects of our business strictly through measurements. In my view,
The measurement trap occurs when an executive believes that he can understand the business and customers in his market by increasing the number of measures and level of sophistication within his measurement system.
The four measurement traps
First trap – all aspects of the business can be measured.
To understand the subtlety of this trap consider the most obvious implication – that everything of importance in your business can be measured. This suggests that there is no aspect of the business that cannot be measured. While this may be a dream of people like me who deal the quantitative aspects of business, it is nevertheless naïve. Is it possible to capture the essence of the customer interaction or the level of trust that builds between people with quantitative measurement? Some would offer the examples of employee and customer satisfaction surveys as evidence that the essence of relationships can be measured. To rebut this idea, consider that satisfaction surveys of new car buyers indicate very high levels of satisfaction and yet the loyalty of car buyers, (indicated by repurchase of the same make again) is very low (the highest is less than 50%).
Another example of not being able to capture all aspects of employees is to consider the measures of employee satisfaction as they relate to customers.
Consider measures of courtesy and professionalism. Each measure is incomplete and only an indication at best and misleading at worst. For example, courtesy measures almost always show high levels of satisfaction (with rare exception). It is generally believed that they include a bias from the customer that may be based on the fear of retribution from a low rating or, on the other hand, the employee may have a good working relationship with the customer and the customer is biased to helping a “friend.”
Second trap – you don’t need to work with people.
Perhaps one of the most negative aspects of the measurement trap is that it relieves the executive from the responsibility/necessity of employee interaction with the service employee. If, in fact, all aspects of the business can be measured, there is then no longer a need to interact with employees reporting directly to the executive. The reason most executives interact with employees is to get additional information and details about the operation. They probe to discover the information not available through the measurement system. But, if all the information is available through measurement, he only needs to review the computer printouts. For this executive, the only role of the employee is to create the measurement systems and to assure that the measurements are accurate and timely.
At one time I worked for an executive who was an advocate of measurements. He was also one of the major influences that caused me to understand the concept of the measurement trap. He spent his day pouring over computer printouts and was always thinking of new measurements to take. Actually I have him to thank for getting me into the measurement of customer satisfaction so I guess his efforts were not entirely off based. (One great result of his obsession with measuring was the that the branch service managers were not spending enough time with customers. One of the measures that he took was of the time that branch service managers actually spent with customers. When I was asked to look into this situation and present solutions to get the branch service managers more involved with customers, we initiated an analysis of the activities of branch service managers. We discerned some rather dramatic workload situations:
1. The average service manager was signing about 1000 documents per month.
2. The average service manager was receiving about 20,000 pages of computer output per month.
3. Each service manager had to inspect the lease cars of every technician twice each year and report such items as worn out wiper blades, burned out light bulbs and general cleanliness.
Our findings were that (1) the average service manager needed to work overtime just to maintain his paperwork and (2) there was no time available during a standard workweek to meet with customers. With this information that we uncovered from digging into the operation, we did reduce the level of paperwork at the branch level. (Our digging did not require a measurement system). There is a positive from his perspective, he did discover through the measurement of time with the customer, that there was a problem with the branch service managers. The measurement did not disclose the nature of the problem. It took some detailed investigation to uncover the situations noted above.
One very important aspect of working with this executive was that he did not need to meet with me to discuss the business – all he needed to do was spend more time looking over the measurements. In fact, he rarely met with me or the rest of his staff (no regular staff meetings). My role changed from a planning and analysis role to one of designing more information systems. The executive did not need to work with me, only to pass on his requirements for information and to receive current information. Needless to say, it didn’t take long to figure out that this was not the place for me (and he agreed with me).
Third trap - company culture is not important
A variation on the second trap is that if you don’t need to work with the people around you, you don’t have to worry about what kind of people they are. By this I mean you can ignore the character and personalities of the employees. If the business is completely measurable, then there is no need to deal with employees and who they are. If the executive is really caught up in the measurement trap, he needs only have the measurements delivered to his office. The people on his staff can be the best in the world or a bunch of “goofballs.” The key is that there is no need for employee interaction when you are in the measurement trap. This leads to the obvious conclusion that the kind of people you have working for you is not important as long as you have the right measurements in place.
The factors which this trap overlooks are employee development and employee morale. If the quality of the employee is incidental and not an important aspect of the operation, what value will the employee perceive of himself? If the executive is busy spending his time behind a closed door analyzing measurements, he is not spending time to develop his replacement and is not giving those who report directly to him, the opportunity to work with him and learn more about the business to become more valuable employees.
Fourth trap - given enough measurements all problems can be understood and solved with quantitative information.
When an executive enters the measurement trap one of the largest impacts on the organization is the implementation of the measurement trap. When the executive believes that the business can be defined by measurements, then when a problem occurs, the executive concludes that more measurements are needed to analyze and solve the problem. The first thing the executive does is to implement additional measurements regarding the problem area. A spiral continues when the additional measurements do not provide the solution to the problem so the executive begins to add further measurements. For example, if the executive was measuring time of the branch service manager on the customer site as noted above, he might add an additional measurement of what other ways the branch service manager spends his time. If that did not provide sufficient information, he might add another level of detail to identify the specific activities associated with each of the ways the branch service manager is spending his other time. As a result, the executive gets more and more information and the branch service manager spends more and more of his time supplying the information.
In the extreme case, this continued search for the measurements necessary to solve a problem can create a spiral of ever-increasing efforts to measure aspects of the business to the point where the cost of measurement exceeds the cost of the problem. This may be the process that led to the popular phrase “paralysis by analysis.” The flaw in this aspect of the measurement trap is that all business problems can be understood by having more and more quantitative information and that because the information is not available there is a need to develop further information gathering systems.
Avoiding and Escaping the Measurement Trap
Now that you know what the measurement trap is and some of its obvious consequences, namely; the four traps noted in the preceding paragraphs, the question is how can you protect yourself from getting in it and what do you do when you in it to get out of it.
Staying out of the “measurement trap”
To keep from getting into the measurement trap, the first step is to be aware of the measurements you are currently making and examine each measurement to verify that it is necessary. The fact is that many companies take unnecessary measurements that are costly and have little or no impact of the successful operation of the business. (Consider the auto inspection noted above – was an examination of the wiper blades and associated documentation on a specific form a good use of the time of the service manager?) One of the outcomes from my consulting has been to note how much data companies have and how little information is actually useful. The point is that most companies take measurements without thinking about the cost, value or usefulness.
The second step to staying out of the measurement trap is to be judicious about measurements; select them carefully and constantly audit them for accuracy and relevance. While many measurements can be expensive, time consuming and superfluous, there are measurements necessary to successfully run a business. Remember, measurements are like looking out the rear view mirror, they only tell you what has happened in the past, they do not necessarily predict what is going to happen in the future.
The third step to staying out of the measurement trap is to look at the cost of your measurement systems. If the cost of measurement is disproportionate to your operation, you are probably making too many measurements and probably heading into the trap. When looking at the cost of measurement, don’t forget to include the cost of data collection.
Getting out of the “measurement trap”
The first step to getting out of the measurement trap is to see that you are in it. If you have noticed after reading the four traps noted above that you are in the measurement trap, you have already taken the first step.
The second step to getting out is to change your perspective from an internal perspective based merely on quantitative measurements to an external perspective based on qualitative considerations of the interaction with employees and customers as well as quantitative measurements.
The final step is to always be aware that measurements can be valuable and should be used where necessary but that they will not provide the total solution to any problem.
Conclusion
The measurement trap is easy to fall into because it generally is the easiest way to approach a problem. It doesn’t require the time and energy to work with people and besides who can argue with numbers. One of the corporate games I saw during my tenure in the corporate world was “he who has the numbers usually wins.” In fact, that is why I started to measure customer satisfaction. It was the easiest way to win the argument of how we were doing when the sales organization would introduce anecdotal stories of unhappy customers. In the business world the football adage of “winning is the only thing” doesn’t work because in the corporate world when one wins someone else loses. And that too often is the customer.
The measurement trap occurs when an executive believes that he can understand the business and customers in his market by increasing the number of measures and level of sophistication within his measurement system.
The four measurement traps
First trap – all aspects of the business can be measured.
To understand the subtlety of this trap consider the most obvious implication – that everything of importance in your business can be measured. This suggests that there is no aspect of the business that cannot be measured. While this may be a dream of people like me who deal the quantitative aspects of business, it is nevertheless naïve. Is it possible to capture the essence of the customer interaction or the level of trust that builds between people with quantitative measurement? Some would offer the examples of employee and customer satisfaction surveys as evidence that the essence of relationships can be measured. To rebut this idea, consider that satisfaction surveys of new car buyers indicate very high levels of satisfaction and yet the loyalty of car buyers, (indicated by repurchase of the same make again) is very low (the highest is less than 50%).
Another example of not being able to capture all aspects of employees is to consider the measures of employee satisfaction as they relate to customers.
Consider measures of courtesy and professionalism. Each measure is incomplete and only an indication at best and misleading at worst. For example, courtesy measures almost always show high levels of satisfaction (with rare exception). It is generally believed that they include a bias from the customer that may be based on the fear of retribution from a low rating or, on the other hand, the employee may have a good working relationship with the customer and the customer is biased to helping a “friend.”
Second trap – you don’t need to work with people.
Perhaps one of the most negative aspects of the measurement trap is that it relieves the executive from the responsibility/necessity of employee interaction with the service employee. If, in fact, all aspects of the business can be measured, there is then no longer a need to interact with employees reporting directly to the executive. The reason most executives interact with employees is to get additional information and details about the operation. They probe to discover the information not available through the measurement system. But, if all the information is available through measurement, he only needs to review the computer printouts. For this executive, the only role of the employee is to create the measurement systems and to assure that the measurements are accurate and timely.
At one time I worked for an executive who was an advocate of measurements. He was also one of the major influences that caused me to understand the concept of the measurement trap. He spent his day pouring over computer printouts and was always thinking of new measurements to take. Actually I have him to thank for getting me into the measurement of customer satisfaction so I guess his efforts were not entirely off based. (One great result of his obsession with measuring was the that the branch service managers were not spending enough time with customers. One of the measures that he took was of the time that branch service managers actually spent with customers. When I was asked to look into this situation and present solutions to get the branch service managers more involved with customers, we initiated an analysis of the activities of branch service managers. We discerned some rather dramatic workload situations:
1. The average service manager was signing about 1000 documents per month.
2. The average service manager was receiving about 20,000 pages of computer output per month.
3. Each service manager had to inspect the lease cars of every technician twice each year and report such items as worn out wiper blades, burned out light bulbs and general cleanliness.
Our findings were that (1) the average service manager needed to work overtime just to maintain his paperwork and (2) there was no time available during a standard workweek to meet with customers. With this information that we uncovered from digging into the operation, we did reduce the level of paperwork at the branch level. (Our digging did not require a measurement system). There is a positive from his perspective, he did discover through the measurement of time with the customer, that there was a problem with the branch service managers. The measurement did not disclose the nature of the problem. It took some detailed investigation to uncover the situations noted above.
One very important aspect of working with this executive was that he did not need to meet with me to discuss the business – all he needed to do was spend more time looking over the measurements. In fact, he rarely met with me or the rest of his staff (no regular staff meetings). My role changed from a planning and analysis role to one of designing more information systems. The executive did not need to work with me, only to pass on his requirements for information and to receive current information. Needless to say, it didn’t take long to figure out that this was not the place for me (and he agreed with me).
Third trap - company culture is not important
A variation on the second trap is that if you don’t need to work with the people around you, you don’t have to worry about what kind of people they are. By this I mean you can ignore the character and personalities of the employees. If the business is completely measurable, then there is no need to deal with employees and who they are. If the executive is really caught up in the measurement trap, he needs only have the measurements delivered to his office. The people on his staff can be the best in the world or a bunch of “goofballs.” The key is that there is no need for employee interaction when you are in the measurement trap. This leads to the obvious conclusion that the kind of people you have working for you is not important as long as you have the right measurements in place.
The factors which this trap overlooks are employee development and employee morale. If the quality of the employee is incidental and not an important aspect of the operation, what value will the employee perceive of himself? If the executive is busy spending his time behind a closed door analyzing measurements, he is not spending time to develop his replacement and is not giving those who report directly to him, the opportunity to work with him and learn more about the business to become more valuable employees.
Fourth trap - given enough measurements all problems can be understood and solved with quantitative information.
When an executive enters the measurement trap one of the largest impacts on the organization is the implementation of the measurement trap. When the executive believes that the business can be defined by measurements, then when a problem occurs, the executive concludes that more measurements are needed to analyze and solve the problem. The first thing the executive does is to implement additional measurements regarding the problem area. A spiral continues when the additional measurements do not provide the solution to the problem so the executive begins to add further measurements. For example, if the executive was measuring time of the branch service manager on the customer site as noted above, he might add an additional measurement of what other ways the branch service manager spends his time. If that did not provide sufficient information, he might add another level of detail to identify the specific activities associated with each of the ways the branch service manager is spending his other time. As a result, the executive gets more and more information and the branch service manager spends more and more of his time supplying the information.
In the extreme case, this continued search for the measurements necessary to solve a problem can create a spiral of ever-increasing efforts to measure aspects of the business to the point where the cost of measurement exceeds the cost of the problem. This may be the process that led to the popular phrase “paralysis by analysis.” The flaw in this aspect of the measurement trap is that all business problems can be understood by having more and more quantitative information and that because the information is not available there is a need to develop further information gathering systems.
Avoiding and Escaping the Measurement Trap
Now that you know what the measurement trap is and some of its obvious consequences, namely; the four traps noted in the preceding paragraphs, the question is how can you protect yourself from getting in it and what do you do when you in it to get out of it.
Staying out of the “measurement trap”
To keep from getting into the measurement trap, the first step is to be aware of the measurements you are currently making and examine each measurement to verify that it is necessary. The fact is that many companies take unnecessary measurements that are costly and have little or no impact of the successful operation of the business. (Consider the auto inspection noted above – was an examination of the wiper blades and associated documentation on a specific form a good use of the time of the service manager?) One of the outcomes from my consulting has been to note how much data companies have and how little information is actually useful. The point is that most companies take measurements without thinking about the cost, value or usefulness.
The second step to staying out of the measurement trap is to be judicious about measurements; select them carefully and constantly audit them for accuracy and relevance. While many measurements can be expensive, time consuming and superfluous, there are measurements necessary to successfully run a business. Remember, measurements are like looking out the rear view mirror, they only tell you what has happened in the past, they do not necessarily predict what is going to happen in the future.
The third step to staying out of the measurement trap is to look at the cost of your measurement systems. If the cost of measurement is disproportionate to your operation, you are probably making too many measurements and probably heading into the trap. When looking at the cost of measurement, don’t forget to include the cost of data collection.
Getting out of the “measurement trap”
The first step to getting out of the measurement trap is to see that you are in it. If you have noticed after reading the four traps noted above that you are in the measurement trap, you have already taken the first step.
The second step to getting out is to change your perspective from an internal perspective based merely on quantitative measurements to an external perspective based on qualitative considerations of the interaction with employees and customers as well as quantitative measurements.
The final step is to always be aware that measurements can be valuable and should be used where necessary but that they will not provide the total solution to any problem.
Conclusion
The measurement trap is easy to fall into because it generally is the easiest way to approach a problem. It doesn’t require the time and energy to work with people and besides who can argue with numbers. One of the corporate games I saw during my tenure in the corporate world was “he who has the numbers usually wins.” In fact, that is why I started to measure customer satisfaction. It was the easiest way to win the argument of how we were doing when the sales organization would introduce anecdotal stories of unhappy customers. In the business world the football adage of “winning is the only thing” doesn’t work because in the corporate world when one wins someone else loses. And that too often is the customer.
Thursday, July 5, 2007
Customer Loyalty Management (CLM)
I happened across an interesting set of data that seems worth sharing. It was published by Walker Insight Report. While the data is a little dated (published in 2005), I believe it is still valid.
Walker surveyed a panel of clients and prospects regarding linkage between CLM and financial information. Here is a brief overview of their findings:
1. 95% of the respondents said their companies gather satisfaction and loyalty feedback from their customers.
2. 70% of the respondents said they link operational data to customer satisfaction and loyalty results.
3. 40% of the respondents link CLM data to financial information.
4. Of those not currently linking financial information to CLM, 80% said they have never attempted it before.
5. Of those not currently linking financial information to CLM, 26% admitted they are not likely to start.
6. Of those not currently linking financial information to CLM, 52% said they were very likely to begin linking the CLM results to financial information in the next two years.
Maybe the bottom line is that creating a reliable linkage between CLM and financial information is difficult and expensive. Of course, I would suggest that without the linkage, an executive might just ask, "Why are we spending all this money on these surveys?" He just might have a point.
Walker surveyed a panel of clients and prospects regarding linkage between CLM and financial information. Here is a brief overview of their findings:
1. 95% of the respondents said their companies gather satisfaction and loyalty feedback from their customers.
2. 70% of the respondents said they link operational data to customer satisfaction and loyalty results.
3. 40% of the respondents link CLM data to financial information.
4. Of those not currently linking financial information to CLM, 80% said they have never attempted it before.
5. Of those not currently linking financial information to CLM, 26% admitted they are not likely to start.
6. Of those not currently linking financial information to CLM, 52% said they were very likely to begin linking the CLM results to financial information in the next two years.
Maybe the bottom line is that creating a reliable linkage between CLM and financial information is difficult and expensive. Of course, I would suggest that without the linkage, an executive might just ask, "Why are we spending all this money on these surveys?" He just might have a point.
Wednesday, June 27, 2007
Technology Industry Survey - part 2
As noted in my blog of June 25th that discussed a survey by Accenture regarding customer service and support in high technology industries, one finding was the dramatic difference in perceptions of service and support by executives and their customers. There is more detail provided in the survey report that demonstrates the differences between the executive's and the customer's perspective.
From the survey the executive perspective is:
1. 75% of executives believe their customer's expectations have increased in recent years.
2. 80% of executives describe the customer satisfaction of their overall customer base as moderately or extremely high.
3. 54% rate their service and support an 8 or higher on a scale of 1 to 10 (where 1=very poor and 10=excellent)
4. 75% of executives estimated their customer satisfaction was above average, 57% estimated it was moderately high and 17% said it was extremely high
5. 77% of executives reported having implemented new customer self-service capabilities within the last two years and believe these new capabilities have had a very positive impact on the organization.
6. 93% of executives said they've seen faster resolution of customer problems and 74% said they now have higher customer satisfaction.
From the survey the customer perspective is:
1. 57% of consumers described themselves as somewhat upset, very upset or extremely upset when they accessed their customer service channels
2. 78% of consumers still believe their provider's customer service is at or below the level of service offered by competitors.
3. 46% of consumers said they have to access customer service between 2 and 4 times to resolve their problems and 18% said they have had to do so more than 4 times.
4. 33% of consumers rated their customer service experience about the same as 2 years ago and 22% said it was worse (only 14% rated their experience as "much better")
5. 61% of consumers believe that technology has not improved the service they receive from high-tech companies.
If one can believe the validity of the Accenture survey, and I have little doubt that it is valid and truly representing both sides, then the bottom line is that high technology company exectutives are not getting the real story. It could be that their internal surveys are not measuring customer perceptions correctly, or they may have some filtering going on in their organizations or they just aren't paying attention. No matter what the answer, this should be a wake-up call to these executives.
From the survey the executive perspective is:
1. 75% of executives believe their customer's expectations have increased in recent years.
2. 80% of executives describe the customer satisfaction of their overall customer base as moderately or extremely high.
3. 54% rate their service and support an 8 or higher on a scale of 1 to 10 (where 1=very poor and 10=excellent)
4. 75% of executives estimated their customer satisfaction was above average, 57% estimated it was moderately high and 17% said it was extremely high
5. 77% of executives reported having implemented new customer self-service capabilities within the last two years and believe these new capabilities have had a very positive impact on the organization.
6. 93% of executives said they've seen faster resolution of customer problems and 74% said they now have higher customer satisfaction.
From the survey the customer perspective is:
1. 57% of consumers described themselves as somewhat upset, very upset or extremely upset when they accessed their customer service channels
2. 78% of consumers still believe their provider's customer service is at or below the level of service offered by competitors.
3. 46% of consumers said they have to access customer service between 2 and 4 times to resolve their problems and 18% said they have had to do so more than 4 times.
4. 33% of consumers rated their customer service experience about the same as 2 years ago and 22% said it was worse (only 14% rated their experience as "much better")
5. 61% of consumers believe that technology has not improved the service they receive from high-tech companies.
If one can believe the validity of the Accenture survey, and I have little doubt that it is valid and truly representing both sides, then the bottom line is that high technology company exectutives are not getting the real story. It could be that their internal surveys are not measuring customer perceptions correctly, or they may have some filtering going on in their organizations or they just aren't paying attention. No matter what the answer, this should be a wake-up call to these executives.
Monday, June 25, 2007
The Technology Industry Service and Support
Accenture has issued their 2007 survey results for the technology industry. While I may discuss some of the gruesome details in another blog, the point I want to make in this blog is the dramtic chasm between the perspective of the executives of the technology companies and their customers toward customer service.
From the perspective of the technology executive, their priorities are (in decending order of importance):
1. Increase revenue creation
2. Increasing customer self-help capabilities via the web
3. Becoming more efficient in handling calls
4. Improving product quality through insight and action based on customer service data
5. Improving call resolution times
6. Improving underlying information technology systems for customer service and support.
The priorities from the customer's perspective are (in decending order of importance):
1. Completeness in solving my problem
2. Speed of solving my problem
3. Solve my problem with one service agent
4. Use a logical and efficient process to solve my problem
5. Ability for me to quickly reach a live service agent when desired
6. The ability for me to solve a problem myself with online tools.
WOW! The differences in perspective are so obvious that it seems obvious that the executives are more concerned with the bottom line than the customers. Until this perspective changes, these companies can expect to have significant defections from their customer base.
I will provide some of the details tomorrow.
From the perspective of the technology executive, their priorities are (in decending order of importance):
1. Increase revenue creation
2. Increasing customer self-help capabilities via the web
3. Becoming more efficient in handling calls
4. Improving product quality through insight and action based on customer service data
5. Improving call resolution times
6. Improving underlying information technology systems for customer service and support.
The priorities from the customer's perspective are (in decending order of importance):
1. Completeness in solving my problem
2. Speed of solving my problem
3. Solve my problem with one service agent
4. Use a logical and efficient process to solve my problem
5. Ability for me to quickly reach a live service agent when desired
6. The ability for me to solve a problem myself with online tools.
WOW! The differences in perspective are so obvious that it seems obvious that the executives are more concerned with the bottom line than the customers. Until this perspective changes, these companies can expect to have significant defections from their customer base.
I will provide some of the details tomorrow.
Saturday, June 23, 2007
The American Customer Satisfaction Index
There are almost as many consulting companies measuring customer satisfaction as there are companies who want to measure customer satisfaction. While many of the consulting companies do a good job there are still quite a few who may not be doing it just right. There is a publication, Quirk's Marketing Research Review that annually publishes the names of companies who perform customer satisfaction surveys (or at least pay for the right to advertise as one who does).
Of course, there are those who provide benchmarks for an industry. These companies are usually well qualified to develop and implement customer satisfaction surveys. Some of the large companies are AC Nielsen Burke Institute, Harris Intereactive, Maritz Research, Opinion Research and Polk Research Sampling - just to name a few.
The American Customer Satisfaction Index (ACSI) is a national cross-industry measure of satisfaction with goods and services available in the United States. It was establihed in 1994 through a partnership between the University of Michigan Business School, the American Society for Quality (ASQ) and the now defunct Authur Andersen consulting company. The National Quality Research Center (NQRC) at the University of Michigan Business School is the research and production center for the index. The ASQ is the center for dissemination.
The United States is the third country to establish a national measure of customer satisfaction. The first country was Sweden and the second was Germany.
The ACSI provides a solid base for research when comparing customer satisfaction across industries. It models the survey data to provide a satisfaction index on a
0 to 100 point scale along with indices of drivers and consequences of satisfaction with the products and services of specific companies and industries within seven economic sectors, chosen to be broadly representative of the national economy.
It is a good place to start or a good place to end when examining customer satisfaction.
Of course, there are those who provide benchmarks for an industry. These companies are usually well qualified to develop and implement customer satisfaction surveys. Some of the large companies are AC Nielsen Burke Institute, Harris Intereactive, Maritz Research, Opinion Research and Polk Research Sampling - just to name a few.
The American Customer Satisfaction Index (ACSI) is a national cross-industry measure of satisfaction with goods and services available in the United States. It was establihed in 1994 through a partnership between the University of Michigan Business School, the American Society for Quality (ASQ) and the now defunct Authur Andersen consulting company. The National Quality Research Center (NQRC) at the University of Michigan Business School is the research and production center for the index. The ASQ is the center for dissemination.
The United States is the third country to establish a national measure of customer satisfaction. The first country was Sweden and the second was Germany.
The ACSI provides a solid base for research when comparing customer satisfaction across industries. It models the survey data to provide a satisfaction index on a
0 to 100 point scale along with indices of drivers and consequences of satisfaction with the products and services of specific companies and industries within seven economic sectors, chosen to be broadly representative of the national economy.
It is a good place to start or a good place to end when examining customer satisfaction.
Wednesday, June 20, 2007
Call Center Satisfaction Index
The University of Michigan has done it again. This time a group of faculty have formed a separate business called the CFI Group and have developed an index for call centers. The index uses the same methodology as the University's American Customer Satisfaction Index. Here are some of the preliminary results:
1. Issue resolution is the key driver for call center satisfaction
2. Almost 20% of callers end their call without their issue resolved.
3. Of those who didn't have their issues resolved, 68% of those are at risk of defection
4. 43% of those without their issue resolved said they would defect.
5. Customers who think the contact center lies outside the US rate their satisfaction experience 26 points lower (on the 100 point scale)
6. 88% of the time customer issues are able to be resolved when the rep speaks clearly, compared to 45% of the time when the rep has poor communication skills.
7. PC call centers have low satisfaction ratings because nearly 25% of the callers hang up without their issue being resolved.
8. The industry rankings are:
Catelog centers - 80
Banking call centers - 77
Cell phone service call centers - 69
Cable and satellite Television call centers - 68
Insurance call centers - 68
Personal computer call centers - 64
The bottom line is that most companies see the call center as a cost center rather than a vehicle to build customer loyalty.
1. Issue resolution is the key driver for call center satisfaction
2. Almost 20% of callers end their call without their issue resolved.
3. Of those who didn't have their issues resolved, 68% of those are at risk of defection
4. 43% of those without their issue resolved said they would defect.
5. Customers who think the contact center lies outside the US rate their satisfaction experience 26 points lower (on the 100 point scale)
6. 88% of the time customer issues are able to be resolved when the rep speaks clearly, compared to 45% of the time when the rep has poor communication skills.
7. PC call centers have low satisfaction ratings because nearly 25% of the callers hang up without their issue being resolved.
8. The industry rankings are:
Catelog centers - 80
Banking call centers - 77
Cell phone service call centers - 69
Cable and satellite Television call centers - 68
Insurance call centers - 68
Personal computer call centers - 64
The bottom line is that most companies see the call center as a cost center rather than a vehicle to build customer loyalty.
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