Creating a Voice of the Customer Process That Has Impact

Transcription

1 Creating a Voice of the Customer Process That Has Impact Customer Management Conference October 23, 2012 Moscow, Russia John Goodman TARP Worldwide

2 Agenda The Opportunity: How the VOC leads to CE impact Eight factors leading to an effective VOC Critical data sources and integrating them (surveys, contact centers, operations and employee input) Creating the economic imperative for action Myths about service Grade yourself 2

3 About TARP Founded in years of customer experience leadership White House Complaint Studies 1970s-80s (instigated 800#s and GE Answer Center) Assisted 6 Baldrige Winners and 43 Fortune 100 Companies Initiated concept of word of mouth (TARP/Coca-Cola 1978 Study) and word of mouse (ecare and Click & Mortar studies 1999) Credited with developing the approach for quantifying the impact of quality on revenue, cost & WOM for companies like McDonalds, Toyota/Lexus, IBM, Harley Davidson, Cisco Systems, Xerox, 3M, HP, Honda, Hyundai, Pepsi Cola, Apple, Frito-Lay, Coca-Cola, Mercedes- Benz, Merck, Amway, Lexmark, Allstate, Cathay Pacific, Shell Oil and Qualcomm. 3

4 Context of VOC within the Customer Experience DOING THE RIGHT JOB RIGHT THE FIRST TIME EFFECTIVE + CUSTOMER = CONTACT MANAGEMENT MAXIMUM CUSTOMER SATISFACTION & LOYALTY Improved Product & Service Quality Respond to Individual Customers Identify Sources of Dissatisfaction Conduct Root Cause Analysis Customers will: Use again Buy other products Tell others to buy Feedback on Prevention 4

5 Firefighting Mode 5

6 Building an Effective VOC: Six Big Ideas From Strategic Customer Service 1. Staff doesn t cause most customer dissatisfaction sales, products, processes and customers do 2. It is cheaper to give great service than just good service, the revenue payoff is 10-20X the cost 3. People are still paramount make the front line successful with flexibility and clear explanations 4. Deliver technology that customers will enjoy delivering psychic pizza via any channel 5. Sensibly create remarkable delight 6. An effective Voice of the Customer includes all kinds of data describing the overall customer experience 6

7 Recent Survey of CE & Service Strategy Executives Survey Results: Data Collected by VOC Overuse of rearview mirror : Most companies primarily use traditional survey & complaint data Underutilization of early warning devices: Only 25% use operational data Chicago bank Only 30% currently monitoring Social Media for VOC Only 13% are using Speech Analytics Proprietary TARP Worldwide TARP Worldwide (Study Method- N=160, Nov 2011) 7

8 Recent Survey of CE & Service Strategy Executives Survey Results: Analysis & Reporting About 33% produce an end-to-end view of the Customer Experience using data that is integrated into a single picture These 33% of companies were more than twice as likely to have significant improvements in customer satisfaction than those who didn t integrate multiple types of data Over 50%: 3 or more FTE Customer Experience Analysts However, the size of the analytical staff had no correlation with the impact of the VOC! Proprietary TARP Worldwide TARP Worldwide 8

9 Recent Survey of CE & Service Strategy Executives Survey Results: Business Case CFO buy in to business case is critical Where buy-in existed, 40% of VOC processes were very effective in getting things fixed and 55% had significant increases in customer satisfaction Where buy-in did not exist, only 8% of companies were very effective and only 23% had significant increases. Business cases can include four dimensions: Loyalty Margin great experience and innovation Word of mouth Risk reduction (Liability, warranty, regulatory and PR) Proprietary TARP Worldwide TARP Worldwide 9

10 Departments With Interest in an Effective CE 1. Marketing and Sales retention and word of mouth from customers and shelf space from channels 2. Finance higher margin and lower costs 3. Operations reduce costs, more accurate execution 4. Risk better service reduces claims 5. PR, Legal & Regulatory better online reviews and publicity 6. HR less problems leads to happier front line and lower turnover 10

11 Why Most VOC Processes Lack Impact and Are Cost Inefficient No unified picture of the customer experience Does not estimate revenue damage by granular issue Doesn t focus on root causes and why problem occurred or why responses were not effective Requires expensive additional surveys to indicate if action had impact 11

12 Effective Voice of the Customer Process 8. Process supported by company-wide incentives 5. Clear revenue and profit implications 6. Formal processes for translating data into actions and targets 7. Formal systems for tracking impact 1. Well-defined ownership of process and issues 2. Unified data collection across whole lifecycle 3. Integration of multiple data sources 4. Visible, granular, actionable reporting 12

13 Behavioral Basis: Employees Don t Cause Most Dissatisfaction The majority of customer dissatisfaction is NOT caused by employee error or attitude but by products and broken processes* Customer expectations must be set to avoid problems and surprises. Customer Employee 20%-30% 20% - Wrong expectations - Fails -Fails to to follow follow - Customer error policy policy -Attitude At least 30% of contacts are preventable Company 40%-60% - Products and services don t meet expectations - Marketing miscommunication - Broken processes Poorly designed products, processes, and marketing create unmet expectations. *Finding based upon TARP analysis problem cause data in over 200 consumer and B2B environments. 13

14 The Tip of the Iceberg Phenomenon 1%-5% Complain to management Most that complain (5-25%) go to front line person who can not or will not help 75%-95% Encounter a problem but don t complain

15 Understand Impact of Problems Customers I Question/ Problem Experience No problem experience 60% Problem experience 40% Experience suggests three strategies: Prevention, Solicitation of Complaints, and Response II Contact Behavior Complainers 5-50% Non- Complainers 95-50% III Contact Handling Satisfied 1 50% Mollified 2 30% Dissatisfied 3 20% IV Market Impact % Definitely/Probably Recommend/repurchase from same organization 90% 93% 50% 30% 60% 15

16 Economic Model of Service Impact Assume each customer is worth $1,000 Average drop in loyalty 20% For every five customers with a problem, one is at risk $1,000 (5 x.2 = 1) $1,000 $1,000 5 Customers with Unresolved Problems 1 Lost Customer 5 Customers with Problems Solved/ Prevented 1 Retained Customer = = = = - $1,000 + $1,000

17 Customer Expectation: Factors Driving Satisfaction No Unpleasant Surprises If Trouble Encountered Accessibility not average speed of answer, hours of operation Taking ownership, apology Clear, believable explanation Creating an emotional connection rather than just courtesy Money is often not the best solution Timeliness and keeping promises 17

18 Creating A Data Foundation for The VOC Customer surveys Customer contact and interaction data: coded and unstructured key source of why it happened Internal operations process and quality measures Employee input second source of why Surveys of customer satisfaction and loyalty + Customer contact and interaction data + = Total view of the Internal customer process and experience quality data and employee input Take The Role Of Chief Customer Officer 18

19 Estimating Number of Customers Impacted by Issue From Contacts to Different Touch Points 100 Airline customers encountering a rude gate agent 2% to flight attendant 0.8% to consumer affairs/ customers relations** 7% to local supervisor** 5% to social media** 0.2% to executive by ** 1% to frequent flyer 800#** 4% to reservations 800# 1% airline web site 3.5% Other ** For these channels, the consumer may have first complained elsewhere and then escalated their complaint to this channel. 19

20 Integrating Touch Point Data (Airline Example) Source Problem Reports Multiplier Total Estimated Instances Best Estimate # Instances Web Site Social Media & Unstructured Data Reservations Executive Complaint , Consumer Affairs Survey 0.5% 100, # Customers in Month Damage to Loyalty Value of Customer Monthly Revenue Impact 555 x.25 x $2,000 = $277,500 20

21 2. Quantify the Damage of a Poor Customer Experience Demonstrating financial impact with the CFO, CMO and the General Counsel x x 50% Satisfied x Most Repurchasing = 2,500 25% Complain 30% Mollified Some Not Repurchasing = 3, ,000 Customers with Problems 20% Dissatisfied Many Not Repurchasing = 7,000 75% Do Not Complain Some Not Repurchasing = 37,500 Total Customers At Risk = 50,500 At $1000 per customer, $50,500,000 at risk Three strategies: Prevention, Solicitation of Complaints and Improved Response 21

22 Quantify the Payoff of Prevention of 25% of Problems Demonstrating financial impact with the CFO, CMO and the General Counsel x x 50% Satisfied x 90% Repurchasing = 1,875 25% Complain 30% Mollified 80% Repurchasing = 2, ,000 Customers with Problems 20% Dissatisfied 70% Repurchasing = 2,250 75% Do Not Complain 75% Repurchasing = 28,125 Total Customers At Risk At $1000 per customer, $34,500,000 at risk or saving of $15,500,000 = 34,500 Three strategies: Prevention, Solicitation of Complaints and Improved Response 22

23 Set Priorities Based on Revenue Damage & Customers at Risk Overall problem experience Problem freq % Won t recommend (45%) (%) 1 Will not 2 Meeting promised delivery dates Product availability within desired time frame Meeting commitments/follow through Equipment/system fixed right first time Adequate post-sale communications % Customers potentially lost Returning calls Minimum customers at risk 9.4% Proprietary and Confidential TARP Worldwide 1 Based on multiple problem selection 2 Based on will not repurchase only 23

24 Show The CMO That Negative Word Of Mouth Can Trump Marketing Example calculation of potential impact 10,000 customers 10% delighted 70% satisfied Tell two Tell one = = 2,000 7,000 20% dissatisfied Tell six = -12,000-3,000 20% dissatisfaction can counter 80% satisfaction 24

25 Great Service Is A Word of Mouth Management Mechanism 10,000 customers 10% delighted 80% satisfied Tell two Tell one = = 2,000 8,000 10% dissatisfied Tell six = -6,000 4,000 10% decrease in dissatisfaction results in net positive WOM Proprietary and Confidential TARP Worldwide 25

26 Problems Raise Sensitivity to Price, Hindering High Margins Percent of customers dissatisfied with fees rises with number of problems. 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 10% 22% 46% 74% No problems 1 problem 2 to 5 problems 6 problems or more 26

27 Broaden the Range of Solutions to Issues Welcome kits, calls and s Enhance response with empowerment and explanations Create efficient emotional connection Use technology to deliver psychic pizza JIT education Anticipates Simplifies Delight sensibly Create accountability CCO Paper 27

28 Enhancing Report Impact Simplify to three issues to any one audience Eliminate of masses of data requiring interpretation Tailor report to each function Provide action plan and process metrics impacted Humanize data with quotes, stories and recordings Act as consultant suggest lead functional leader 28

29 Practical Exercise: Evaluate Your VOC System Grade 1 to 10, 10 being best VOC Process Owned by One Person Unified Data Collection Plan Understand Non-complaint Rate and Multiplier Integration of Multiple Data Sources Actionable, Visible Reporting Understand Impact of Word of Mouth Revenue and Profit Implications of Issues Calculated Issues Translated Into Targets Tracks Do Issues Get Fixed Grade Tied to Company-Wide Incentives If you rate less than a 75, you re Total Score wasting 20% of your service budget 29

30 Summary Create a unified VOC including operational data to identify best opportunities Understand root cause including customer caused Quantify the revenue and WOM so CFO accepts Take control of the VOC and then become the Chief Customer Officer Proactively educate, connect, explain and deliver psychic pizza Outlined in detail in Strategic Customer Service published by AMACOM on Amazon for <$20. For package of articles - jgoodman@tarp.com or