Question 1
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Why would you want to know what your customers think of you and your company's systems, disciplines, procedures and people?
Question 1
- 1. CUSTOMER SATISFACTION SURVEYS TISFACTION URVEYS QUESTION 1: UESTION WHY Do You Need One? Do You Need One? Info Quest 速 Business Process Review 1
- 2. W hy do so many successful companies employ customer satisfaction survey programmes? Among the reasons are: To Avoid Preventable Losses There are three operating areas in which most customers will openly express displeasure if you fail to perform to expectations - price, quality and on-time delivery. The problem is, there are dozens, sometimes hundreds of additional touch-points in the average business to business relationship in which customers tend to bottle up displeasure. Sales rep performance, tech support, customer service in its many and varied forms, finance administration, all means and manner of communication, placing orders, processing returns - it can be a long list. The Forum Corporation of America analyzed the causes of customer migration in 14 major manufacturing and service companies and found that 15 percent migrated because of quality issues, and another 15 percent changed supplier because of price issues. The remainder, 70 percent, moved on because they didnt like the human side of doing business with the prior provider of the product or service. Tom Peters, The Pursuit of Wow And as if thats not bad enough, they dont just leave. Additional studies have consistently determined that the typical dissatisfied customer will also end up telling 8-10 people about their problem or experience. The good news is, seven of ten complaining customers will do business with you again if you resolve the complaint in their favour. The bad news is, for every customer complaint that you hear, there will be, on average, 27 others that will never be brought to your attention. Stated another way, roughly 96% of customer complaints will never be openly voiced. 2
- 3. W hy do so many successful companies employ customer satisfaction survey programmes? Among the reasons are: To Drive Continuous Improvement An old truism says that its far easier for great service to overcome a second-rate product than it is for a great product to overcome second-rate service. Within that realm is a simple reality that many business operators fail to recognize: Your customers know your companys strengths and weaknesses, and they usually know them better than you do. They know what its like to buy your products and services, from placing an order to having it delivered. They know how well you solve problems. They know how responsive you are to questions or special needs. They know if you make it easy to conduct business with you, or if its a painful process thats riddled with red tape. They know if your employees are competent and courteous. They know if you keep promises or return phone calls. They know if you value their business, and show it to them, or if they are just taken for granted. They know if your products or services represent value for the money, and they know why or why not. And.......if thats not enough..... Customers can be the best source of innovative new ideas. Throughout history, in all sectors, its often customers who come up with new ideas for improving an old product or launching a new one. 3
- 4. W hy do so many successful companies employ customer satisfaction survey programmes? 贈 Among the reasons are: To Build Market Share The economics of customer satisfaction speak for themselves. "Totally Satisfied" customers have a repurchase rate that is 3 to 10 times higher than that of "Somewhat Satisfied" customers. This is documented by research at Xerox and in other in- dustry studies. All or nothing: Customers must be 'Totally Satisfied Steve Lewis, Marketing News. Chicago: Mar 2, 1998. Vol. 32, Iss. 5; pg. 11. Its Totally Satisfied customers were six times more likely to repurchase Xerox products over the next 18 months than its satisfied customers. Why Satisfied Customers Defect. By: Jones, Thomas O.; Sasser Jr., W., Harvard Business Review, Nov/Dec95, Vol. 73 Issue 6, p88, 14p The relationship between satisfaction and actual share-of-wallet in a business-to-business environment is not only a positive relationship but the relationship is nonlinear, with the greatest positive impact occurring at the upper extreme of satisfaction levels. Timothy L Keiningham, Tiffany Perkins-Munn, Heather Evans, Journal of Service Research : JSR. Thousand Oaks: Aug 2003. Vol. 6, Issue. 1; pg. 37 By examining contract renewal rates (Johnson Controls) found a one point increase in the overall satisfaction score was worth a $13 million increase in service contract renewals annually. American Society For Quality, February 2003 IBM Rochester determined that if customer satisfaction levels increased one percentage point, an additional $257 million in additional revenue would be generated over five years. The ratio of revenue growth between very satisfied and satisfied customers was 3:1. American Society For Quality, February 2003 And, of course, the old adage that weve all heard and lived by for years. It costs six times more to attract a new customer than it does to keep an old one. 4
- 5. W hy do so many successful companies employ customer satisfaction survey programmes? Among the reasons are: To Create Checks and Balances Various studies performed over the years, beginning with one conducted by Xerox in the early 90s, have consistently shown that a Totally Satisfied customer is, on average, 3-10 times more likely to buy from you again than a customer who is merely Somewhat Satisfied. Later studies conducted by InfoQuest took those findings a step further with development of a statistical model which determined that the financial relationship between customer satisfaction and revenues is both measurable and predictable. It found that, over time - A Totally Satisfied Customer contributes 2.6 times as much revenue to a company as a Somewhat Satisfied Customer. A Totally Satisfied Customer contributes 14 times as much revenue as a Somewhat Dissatisfied Customer. A Totally Dissatisfied Customer decreases revenue at a rate equal to twice what a Totally Satisfied Customer contributes to a business. That last finding is particularly noteworthy in that it highlights that you can have twice as many satisfied customers as dissatisfied customers and still be losing ground. What it all means in terms of revenue is simple. Maximizing business performance means doing everything possible to: 1. Turn Dissatisfied customers into Somewhat Satisfied customers. 2. Turn Somewhat Satisfied customers into Totally Satisfied customers. 3. Avoid undoing anything with customers who are already Totally Satisfied. And thats where the checks and balances come into play. Do key decision-makers in your company know which of your top accounts is dissatisfied, and why? 5
- 6. Are priorities and initiatives aimed at improving customer satisfaction systemically known, universally pursued and routinely measured? Is everyone in the company, all departments at all levels, hearing and focusing on the same things? When your team looks at your business, do they see the same things your customers see? Do they know what your customers see? Does everyone understand who your top accounts are and what needs to be done to keep them? Fundamental questions, right? Yet in many companies, purely informal means are employed to try to maintain a sense of customer needs. Using a combination of in-house metrics, anecdotal field tales, passive data collection and an abundance of hindsight, they wage a valiant attempt to keep their fingers on the pulse of customer sentiments, often collecting information with one hand and fighting fires with the other. Of course, bad news does not travel up the corporate hierarchy very well, and the vast majority of customer complaints are never openly voiced, which means that informal means are rather like estimating the depth of the ocean by looking at the surface. Add in the effects of preconceived notions, wishful thinking, attitudinal biases and even the occasionally fragile corporate ego and........ ......well, good luck. So customer satisfaction surveys have been developed and adopted to fill the knowledge void. Which leads to the next challenge. Not all customer satisfaction surveys are created equal, so how does one go about finding the one that will best meet your needs? For that discussion, see brochure entitled Question 2 - How? 6
- 7. The InfoQuest Group InfoQuest North America Baltimore, MD Jacksonville, FL Business Synergetics International Nashville, TN Atlanta, GA InfoQuest CRM, Ltd. Huddersfield, UK Rehmann Saginaw, MI InfoQuest Surveys, Ltd. Chesham, UK InfoQuest Affiliated Offices Aalen, Germany Olgiate Molgora, Italy Shenzhen, China Strategic Partners Orange Translations, Manila ______________ World Headquarters InfoQuest International Woodbury, CT For a detailed view and full explanation of our deliverables, a list of our clients and the industries weve worked in, or to simply learn a little more about us, please visit our web site at: www.infoquestcrm.co.uk Info Quest 速 Business Process Review 7