HBR Article: Beating the Market with Customer Satisfaction October 6, 2010
Posted by OnProcess Technology in Customer Care, Customer Experience Management, Customer Understanding Research.Tags: ACSI, Christopher W. Hart, Customer Care, customer satisfaction, HBR, Why Service Matters
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Beating the Market with Customer Satisfaction
If you’re looking to boost customer satisfaction, one of the most promising places to start is customer service. Unfortunately, it’s also a place where long-term goals tend to buckle under short-term financial pressures. Companies try to meet Wall Street’s immediate demands by cutting costs through automation and outsourcing—despite a growing body of research conclusively showing that customers are fed up with lousy service and that increased satisfaction has a positive impact on consumer spending, cash flow, and business performance.
In a groundbreaking 2006 study, University of Michigan business professor Claes Fornell and colleagues showed the relationship between customer satisfaction and financial success by creating a hedge portfolio in which stocks are bought long and sold short in response to changes in the American Customer Satisfaction Index (ACSI). Developed by the University of Michigan’s National Quality Research Center, the ACSI is an indicator of economic success that reflects levels of customer satisfaction with goods and services purchased from about 200 companies in more than 40 industries; it’s based on interviews with more than 65,000 U.S. consumers each year.
Collectively, as the exhibit “Why Service Matters” demonstrates, the companies with high customer-satisfaction scores have blown the S&P 500 out of the water, especially over the last few years. Not only have they produced higher stock returns, but their stock values and cash flows have been less volatile.
How are these results possible, given efficient-market theory, which says you can’t consistently outperform the market? It’s because today’s stock valuation methods fail to incorporate the kind of information that forms the basis for making stock trades in the ACSI portfolio. If they did, the ACSI portfolio would closely track the S&P 500.
Customers’ attitudes improve or deteriorate as people notice consistent quality differences. Changes in companies’ customer satisfaction scores don’t happen overnight; they have to work their way through complex value chains that ultimately affect quarterly profits and stock prices. (This accounts for the modest performance difference between the ACSI portfolio and the S&P 500 in the study’s early years.) As the ACSI companies have attained higher levels of customer satisfaction and the laggards have been sold short, the fund’s performance has significantly improved. A decrease in Home Depot’s ACSI score, for instance, led the fund to sell the DIY retailer’s stock short—and that was consistent with the company’s poor financial performance and downgrades by stock analysts, even before the current housing downturn added to the company’s woes.
business leaders—especially CFOs—have a responsibility to seriously question decision-making criteria that result in stronger short-term earnings but could weaken customer attitudes and relationships. The stakes are high. Leaders who do not actively work to increase customer satisfaction will be responsible for damaging their companies’ future earnings and shareholder value.
The implications of the ACSI study will differ from one company or industry to another. In businesses with long purchasing cycles, like life insurance and durable goods, changes in customer satisfaction will take a while to make a difference in a company’s sales, ability to increase prices, and so on. (After all, how often do you need to replace your dishwasher?) In many service-intensive industries, however, if a company’s customer satisfaction increases, customers will be quick to adjust their behavior and tell other people, whose own purchase behavior is also likely to change quickly.
What’s more, in a recent study of the personal computer industry using data from PlanetFeedback.com, I found that problems with service had a much larger effect than problems with the products themselves on customers’ likelihood to recommend a brand. Since service calls involve direct interaction between companies and their customers—and customers do the work of initiating contact, expressing a strong desire to solve their problems—such calls elicit more immediate and vocal reactions than do the product problems that stimulated them.
Now that this market inefficiency has been exposed, business leaders—especially CFOs—have a responsibility to seriously question decision-making criteria that result in stronger short-term earnings but could weaken customer attitudes and relationships. The stakes are high. Leaders who do not actively work to increase customer satisfaction will be responsible for damaging their companies’ future earnings and shareholder value.
No Easy Answers to Excellence? December 9, 2009
Posted by OnProcess Technology in Customer Care, Customer Experience Management, Customer Understanding Research, OnProcess.Tags: Customer Experience Management, customer satisfaction, customer service, differentiate on service quality, measure customer satisfaction, measuring satisfaction, no easy answers to excellence, real solutions vs. point solutions
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(a.k.a., Real Solutions vs. Point Solutions)
There’s an old saying; “When you sell hammers, every problem is a nail”.
There are companies who will make phone calls for you.
There are companies who have machines that will make automated phone calls for you.
They’ll read what you tell them to say, until you tell them to stop.
And when they’re done, you’ll get your bill: We made X calls, for Y dollars. Net 30.
Check the box. Next.
Lots of activity, some outcomes, but not necessarily a solution to the problem your business really has.
What about the customer? Does anyone care about him or her? What’s the experience like for them? Did you learn anything from all that activity? Did you really educate the customer? Did you truly capture their input? Can you drive action as a result that will measurably improve your business?
There are no easy answers to excellence.
Or maybe there is one – OnProcess Technology®.
Not a software firm, not a call center, not a survey company. OnProcess Technology is in the results business.
OnProcess provides CE360™; a comprehensive customer experience management solution that helps improve your customers’ experience in a number of ways. CE360™ combines process methodology, multi-channel communications services and powerful data analysis to give you the clear insights you need to maximize customer satisfaction.
Increased Understanding Means Increased Usage, Reduced Remorse Returns
You can use CE360™ to increase your customers’ understanding of your current solutions or to help your customers smoothly upgrade to your newest offerings. Your results are a more positive customer experience, increased use of your products and services, and loyalty to your brand.
Identify Service Problems – Maximize ROI
You can also use CE360™ to assess your customers’ install, start-up or upgrade experience, enabling you to find weak points in your customer experience processes. By focusing investment on the most impactful areas, you maximize ROI and lift in satisfaction scores.
Compete on Service, Instead of Price
Ultimately, what this all comes down to is differentiation on service quality. Taking price out of the equation, to whatever extent possible, frees you up to be more profitable; to keep your customers loyal; to recover from occasional service glitches more easily, and to increase share in a competitive marketplace.
You don’t get those kinds of results by just ‘checking the box’.
–sk
Article: Cable Improved J.D. Power TV Scores — But the Competition Did, Too October 9, 2009
Posted by OnProcess Technology in Customer Care, Customer Experience Management, Customer Understanding Research, OnProcess.Tags: Cable, customer satisfaction, J.D. Power, measuring satisfaction
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Original article by Todd Spangler
If you only glanced at the headline from the 2009 J.D. Power and Associates TV service satisfaction survey (see Satellite, Telcos Beat Cable On TV Satisfaction: J.D. Power) you may have missed a key point: Cable customers are happier than they were a year ago.
In fact, cable operators made gains virtually across the board, in each of the four regions measured on J.D. Power’s survey (see table, below).
The problem is, telcos and satellite operators raised the bar, too (with the single exception of AT&T U-verse in the North Central region, where it dropped 15 points vs. 2008 but still placed second behind WOW). Average satisfaction nationwide in 2009, across all TV service providers, was 632 on the 1,000-point scale — up 23 points from 609 last year.
As a result, the relative standings didn’t really change. It’s a “frustrating” situation, one cable executive told me, given the time and effort they’ve spent on this issue.
So the question is, why did nearly all the providers boost their satisfaction scores?
Frank Perazzini, J.D. Power’s director of telecommunications, suggested that after the poor showing in 2008 — the lowest overall scores for pay TV providers in five years — everyone redoubled their efforts “to better position themselves to retain and grow their customer bases.” Fewer TV customers reported outages on the 2009 survey (11% vs. 15% in 2008), and the industry cut time on hold to resolve a customer’s issue by 13% year over year.
Another factor that has surely moved the needle: There’s more competition. With as many as four (or even five) providers in some markets, there’s been a surge of special promotions, pricing deals, expanded HD lineups, more VOD, etc. How could such lagniappes, in tandem with other service improvements, not make you happier?
But try as it might, cable hasn’t won bragging rights on J.D. Power’s TV survey in the last three years (with the exception of overbuilder WideOpenWest), although MSOs like Cox, Cablevision and Insight have performed relatively well.
Is cable really just inferior to the competition? Or do the differences stem from lingering resentment about “the cable company” being the only game in town? Maybe U-verse TV, say, seems better because it’s a clean sheet of paper — and you’re inclined to be happy with the “alternative to cable” because you opted to switch in the first place.
Whatever the reason, cable providers will have to push even harder on the happiness levers, if they want to gain any ground.
OnProcess’ Take:
Now, more than ever, competition and success in the Pay TV market will be based on customers’ perceptions of service, as opposed to price. Understanding what levers to pull to most beneficially affect Customer Satisfaction levels has to be a key factor in achieving this goal. Do Pay TV and Cable MSOs have methodologies and data-driven insights in place to enable this kind of improvement?
–sk
Article: Completely Satisfied July 1, 2009
Posted by OnProcess Technology in Customer Care, Customer Experience Management, Customer Understanding Research, OnProcess.Tags: CE360, customer satisfaction, measuring satisfaction, proactive approach to customer care
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This article describes the beneficial effects of having a continuous, measureable, proactive outreach program to assess satisfaction and enable quick escalations.
While I could openly question the concept of “Completely Satisfied” (I mean, are we EVER completely satisfied?), it does show the beneficial effects of such a program not only to the end user but to the enterprise (no pun intended) and its brand.
See the 1to1 Media article: Completely Satisfied
–sk
Proactive Customer Education: Positive Impact on Recommender Ratings May 8, 2009
Posted by OnProcess Technology in Customer Care, Customer Experience Management, Customer Understanding Research, OnProcess.Tags: Customer Experience Management, customer satisfaction, educate customers, improve customer satisfaction, net recommender, post-service management, proactive customer education, recommender scores
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How do you increase the likelihood of your customers recommending your company’s products or services to others? Proactively educating your customers on the features and benefits of your products and services is one way.
Our research shows that while you are interacting with your customers, providing proactive education at key customer touchpoints, like immediately following an installation or service call, you can increase your customer’s likelihood to recommend your products and services by 8% or more.
Even providing your customer with one proactive education event can yield an increase in the likelihood of your customers recommending your products and services by 5%.
The other benefits of providing proactive customer education are reduced service costs, increase product or service usage, and a reduction in customer churn thus reducing the possibility of your customer switching to a competitor.
Here is an example of our findings:
|
Number of Educations |
N Value |
First Net Recommender Score |
Second Net Recommender Score |
Lift |
|
0 – 3 Educations |
12988 |
53.5% |
58.1% |
4.6% |
|
4 – 6 Educations |
5325 |
50.3% |
55.8% |
5.4% |
|
7+ Educations |
820 |
50.6% |
58.2% |
7.6% |
–Mike Reid
Facts & Figures: 2008 UK Customer Care Survey March 30, 2009
Posted by OnProcess Technology in Customer Care, Customer Experience Management, Customer Understanding Research, OnProcess.Tags: CE360, Customer Care Survey, customer satisfaction, measuring satisfaction, OnProcess, proactive approach to customer care
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http://measuring-satisfaction.com/2009/03/27/facts-figures/
Here’s a nice summary of a recent Customer Care Survey (in the UK, but I suspect not much different here in the US), touching several of our larger vertical markets.
One Big takeaway: When it takes many multiple contacts to resolve problems, it contributes exponentially to dissatisfaction.
Could a more proactive, educative approach to customer care address this problem? Our CE360™ customers certainly are finding it so.
In this tough economic climate, every current customer relationship is even more important to maintaining profitability. By adopting a comprehensive, proactive approach to customer care, you minimize the potential for dissatisfaction, brand erosion and defection.
–sk
Article / Study: Turning Customer Pain Into Customer Gain March 23, 2009
Posted by OnProcess Technology in Customer Experience Management, OnProcess.Tags: better customer analytics and engagement, Customer Experience Management, customer experience ownership, customer retention, customer satisfaction, maintaining customer satisfaction in a downturn
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A recent article in Forbes.com by Donovan Neale-May of the CMO Council is quite germane to our business and that of our most of our clients.
Frequent (or even occasional) visitors to this blog will see a familiar theme, i.e.:
Making sure that even in an economic downturn, you take good care of your customers!
A particularly strong excerpt:
In the current tough economic environment, the care and handling of customers becomes even more important to business success. It is almost always more profitable to keep and grow an existing customer than to acquire a new one, but today that may be even more true. Yet financial pressures will no doubt lead many companies to make cost reductions that may negatively affect the customer experience. Those who have the ability to closely monitor experience, loyalty and satisfaction and who have developed a culture that responds quickly to customer needs and challenges will be in a much better position to weather the downturn.
The article itself (and the study it cites) gives some great suggestions on how to operationalize these issues in a large organization. However, concerns about who in the organization should “own” the Customer Experience remain unanswered, with the predictable “silo” effect of multiple, incomplete and hard-to-act-upon efforts taking place throughout the business.
Obviously, we here at OnProcess Technology can help companies pull all this customer satisfaction effort together, with a combination of expert managed services, proven process management, and reporting that pulls it all together and gives your organization actionable results and insights. It’s all part of our CE360™ offering.
But for now, just read the article and consider its relevance to your company’s current challenges.
We’ll be here when you’re ready to talk.
–sk
360° Visibility: Why Failures Are Important November 11, 2008
Posted by OnProcess Technology in Asset Retrieval, OnProcess.Tags: 360 degree visibilility, Asset Recovery, asset retrieval, customer satisfaction, escalation management, return rates, Tilson Bennett
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How do you increase your return rates while increasing customer satisfaction? Visibility into the entire process is paramount. Often times the main driver for success rates is an increased return rate, which is then assumed to increase the level of customer satisfaction; the rule being the higher the success rates, the better the service being providing to customers. While everyone should be pushing for higher rates of success, in order to have true 360-degree visibility into your processes, you must focus on the small percentage that is unsuccessful.
Drilling down into the reasons why we are not successful in getting a customer to return a part and sharing that experience with your team can expose problematic areas in your company’s process. Being able to pinpoint exact reasons for non-successes will enable you to adjust your process to better serve the customer’s needs and enable even higher rates of return.
Every meeting should start with sharing and highlighting the successes and then the real meat and potatoes should be focused on “escalation management”. Focusing on how to handle records that are not successful and giving your team insight and advice on what to do with these escalations will give your team their own means to improve their process from within. This will not only add value to your program in the eyes of a customer, it will improve return rates as well as open up more opportunities for business and in turn improve overall customer satisfaction.
Focusing on the success rates as well as adding value by establishing a process for handling escalations and pinpointing exact reasons for not getting a successful result will allow true 360 degree visibility into your program, and help provide continuous improvement in financial outcomes as well as customer satisfaction levels.
–Tilson Bennett
Asset Retrieval is Critical in This Difficult Economy October 15, 2008
Posted by OnProcess Technology in Asset Recovery, Asset Retrieval, OnProcess.Tags: Asset Recovery, asset retrieval, customer satisfaction, finding capital, reducing capital expenditure, Steve Kirstein, strategies for managing in economic downturn
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With lending and borrowing tighter, if in fact not available, companies will have to find ways to limit Capital Expenditures without hurting their operations or customer relations. As self-serving as it may be for us to mention, a well-run Asset Retrieval program can make a huge impact on operating expenses and reduction of Cap Ex.
If you can find all of your inventory in the field, and get it back faster, you can dramatically reduce expenditures on replacement goods. Returned items can be repaired, refurbished or otherwise returned to the field more quickly, keeping new equipment inventory needs down. A relatively small percentage improvement in return velocity and return rates can leverage a very large improvement in profitability.
Combining all this increased awareness and control of your warranty and end-of-life equipment with a proactive customer outreach will also mean you can maintain and even improve customer satisfaction, while reaping these very tangible financial benefits.
So, while you’re fervently hunkering down, contemplating cuts in Marketing, Operations, Personnel and so on, which will all impact sales and customer satisfaction, consider reviewing your Asset Retrieval operation as an important alternative that can bring financial improvement AND increased customer satisfaction.
–sk
