Are your Customers Satisfied?
Kathryn Saducas Partner marketing manager
The importance of customer satisfaction to your business
Customer focused organisation
Goals of Customer Focus:
Creating Better Products or Services Offering compelling customer experience Building deeper customer relationships
End goal of customer focused strategies is the same:
Boosting retention and repurchase = more sales!!!
Business Performance Factors Contribution to Shareholder Value
90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Product/Service Customer Sat. Quality & Loyalty Operating Efficiency Financial Results Innovation Employee Satisfaction
86%
83% 75% 71%
62%
47%
Source: Price Waterhouse Coopers, 2002
Customer Satisfaction = Profits
Knowing what drives Attracting NEW customer loyalty is customer is 4 x cost of important to your retaining existing companys financial health customer Repeat customers and new customers from referrals 5% increase in customer retention continuous revenue streams 75% in aggregate lifetime profits from Disloyal customers are expensive to replace that customer
What are your customers worth?
Customer Lifetime Value = CLV
S = average revenue per customer sale C = costs of servicing customer V = expected # sales per year Y = expected # years customer will use your services A = cost of acquiring new customer N = # of referrals from customer F = correction factor
[(S-C)*(V*Y)A+(A*N)]*F OR
Lifetime Value of Customer (CLV) =
Margin * # sales cost of acquisition + savings from referrals * correction factor
What are your customers worth?
Customer Lifetime Value = CLV
S = average revenue per customer per sale C = costs of servicing customer V = expected # sales per year Y = expected # years customer will use your services A = cost of acquiring new customer N = # of referrals from customer F = correction factor
S = $20,000 C = $5,000 V=2 Y=5 A = $1500 N=4 F = 1.2
CLV = [($20000-$5000)*(2*5)$1500+(1500*4)]*1.2
CLV = $185,400
Why Customer Sat. is important?
Study by Le Beouf: the reasons why customers no longer dealt with a particular supplier 3% 5%
9%
No reason Other Suppliers
14%
Competitors Product Dissat. Attitude of owner, manager or employee
69%
A customer satisfaction program
Customer-Focused Initiatives
Customer Champion
Create a customer champion Director who is responsible for championing the voice of the customer through the organisation.
Customer Value Attache
Nokia product engineer goes on-site with customer for up to 1 month to learn about challenges and show how Nokia can add value
Everyday Life Observation
To gain deeper understanding of customer, send video crews & TV cameras into 80 households around world to capture customer daily routines
Customer Charter & Advocate
Independent customer advocate whose role is to resolve particularly difficult customer and business problems. Customer charter to improve customer experience with service.
Customer Success Engineer Team
Centralised group that diagnoses root causes of complex customer problems and implements solutions across business
Customer Partner Experience
Organisation-wide customer and partner satisfaction index to provide a holistic view of business health and trigger specific corrective actions where necessary.
The 6 Ps of Marketing
Customer Feedback Program
With a well constructed feedback program you can get key insights into customers to:
Identify key drivers of customer experience Glean insights into health of your company Detect early warnings of any erosion of your relationship or value proposition
Customer Program Activities
1. 1 2. 2 Assess internal root cause for customer perceptions satisfaction drivers Derive action plans to resolve most critical issues set your objectives Implement these actions Track your progress with ongoing customer research Link these customer metrics to your financial results & staff incentives Tell your customers how you used their feedback
3 3. 4. 4
5. 5 6. 6
Case Studies
Rice University Case Study showed customer satisfaction improves customer retention and company profits
Methodology:
50% surveyed (group 1) and 50% not surveyed (group 2) Group 1 were twice as loyal to company
Conclusion?
Customers want to be coddled Surveys increase in auxiliary product sales Surveys create opinions
At Microsoft
Worldwide Survey Apr & Oct Customer Escalation Tool RMTP Response Management Through Partner Feedback forms at events (9 point scale) Tactical Research Qualitative & Quantitative Anecdotal feedback Roundtable sessions
Understand Satisfaction Drivers
Emotional Factor Service Quality
Customer Satisfaction Price Product Quality Access to products & Services
Value Mapping
high
support service
Sales staff
product
value
reputation
Bus expertise Easy to do bus with
Brand
low
satisfaction
high
Example of Value Mapping
high
Service Deployment Time [30%]
Reputation and customer testimonials [25%] Account Managers/ Sales
experience [15%]
After Sales Support [10%] Business Process [10%] Market/Branding [5%] Innovation [3%] Strategic Direction [2%]
low
satisfaction
1 2 3 4 5 6 7 8 9
high
Avoiding the Pitfalls
Listening to the wrong customers Incorrectly identifying customer priorities Failing to consider strategic objectives Failing to align organisation around execution Failing to get paid by customers for new value Losing momentum campaign mentality
Case Study GAP Clothing
Ways to measure customer satisfaction
Different forms of measurement
Annual Customer Satisfaction Surveys Online Questionnaires
Feedback Forms
Online Polls
CRM
Software
Other Surveys
Customer Service Feedback
Focus Groups (Formal/ informal)
(Benchmarking, Employee, Org Alignment)
Phone or Fax Surveys
Partner Program - CSAT Tool
[Link]
Microsoft CSAT Points Awarded
Participation Individual Customer Responses 10-24 25-49 50-99 100+ Net Satisfaction (20+ responses required) NSAT Score 165-174 175-184 185-200 Points 10 15 20 Points 5 10 15 20
Partners may only survey the same individual once every six months. Only the first eight individual responses per customer organisation are eligible toward Partner Points calculations.
Measurement & Reporting
Satisfaction can be measured on a scale Align business functions around a single customer-focused metric
100%
9 8 7 6 5 4 3 2 1
9 Point Scale
90%
4
80% 52% 70% 60% 50% 40% 30% 20% 8% 10% 11% 0%
4 Point Q4 FY01 n=419Scale
NSAT = (VSATDSAT) +100
VSAT = 8+9 DAST = 1 to 4
30%
Very Dissatisfied
Somewhat Dissatisfied
Somewhat Satisfied
Very Satisfied
Food for Thought
The name of the game should be about "giving customers a memory and experience so great that they'll want to repeat it." The game is not all about getting that scorethat darned customer scoreany way possible.
10 Golden Rules
1. 1 Believe customers
2. 2
3 3.
4. 4
5 5.
possess good ideas Gather customer feedback at every opportunity Focus on continual improvement start with top 10 issues bugging your customers Solicit good and bad feedback Seek real time feedback
6. Dont spend vast sums 6 of money 7. Make it easy for 7 customers to provide feedback 8. Leverage technology to 8 aid efforts 9. Share feedback 9 throughout the company 10 10. Use feedback to make quick changes
In Summary
You cant move a mountain in a day, but you can make it easier to climb by clearing a path.
Information Source:
Why track end to end customer experience? TNS Prognostics White paper Driving Customer-Focused Decision Making Marketing Leadership Council USA [Link]
