Customer Satisfaction

Transcription

1 Customer Satisfaction

2 Impact of Retention and Attrition The longer he stays the more he spends (Revenue grows) It is many times cheaper to RETAIN a customer than to WIN one Cost declines Profitability soars Revenue declines Cost per customer increases Businesses tend to lose customers at the rate of 15% to 50% Profits plummet Staff gets de-motivated The only profit centre is the customer

3 Agenda Evolution of Customer Satisfaction The Service Profit Chain Kano Model Differentiating Product Features Customer Satisfaction Research Key Driver Analysis Customer Satisfaction Incentive Schemes

4 The Evolution of Customer Satisfaction Customer Value

5 Evolution of Customer Satisfaction Old Economy New Economy Measurement Management Delivering what we promise Meeting standards Providing what customers want Responding to customers complaints Competitive Analysis Measure key drivers Understand customer retention Creating Value Organization realignment Understand impact on total business Outperform competitors using customer value analysis Conformance to Quality Customer Satisfaction Customer Loyalty Customer Value In the New Economy, conformance to quality remains important, though it no longer differentiates one supplier from another as much as it used to in the Old Economy Source: Managing Customer Value, Dr. Bradley Gale

6 Evolution of Customer Satisfaction at Old Economy New Economy Measurement Management Delivering what we promise Meeting standards Measurement Science: Ensure services meet quality standards. Monitor Providing client what complaints. customers Take want actions Responding based to on feedback customers sourced complaints from customers. Measure drivers of client satisfaction and take actions based on performance on important attributes. Competitive Analysis Measure key drivers Understand customer retention Measure performance and set goals based on value delivered to client (ROI). Where value is derived from the research-based actions taken by customers. Creating Value Organization realignment Understand impact on total business Outperform competitors using customer value analysis Conformance to Quality Customer Satisfaction Customer Loyalty Customer Value In the New Economy, conformance to quality remains important, though it no longer differentiates one supplier from another as much as it used to in the Old Economy Source: Managing Customer Value, Dr. Bradley Gale

7 Nielsen s Powerpages... To communicate to customer s senior management.

8 The Service-Profit Chain Two Voices: Voice of the Employee Voice of the Customer Employee Retention Revenue Growth Employee Satisfaction Customer Satisfaction Shareholder Value Employee Productivity Profitability

9 The Kano Model Differentiating Product Features

10 Kano Model Need Unfulfilled Satisfied Excitement Delighters, Excited Quality Basic Performance Satisfier, Desired Quality Dissatisfiers, Must Be, Expected Quality Need Fulfilled Dissatisfied

11 Examples Basic: Dissatisfier, Hygiene factor Arrive at hotel to find out no room is available despite booking Receive incorrect data from a research company Boarding flight seat not available despite confirmation Performance: Satisfier, improves/erodes satisfaction Check-in time: One minute, 5 minutes, 30 minutes Data delivery in 24 hours 24 days Check in time, Cabin Service, Quality of food Delighter Latent Need Free massage at check-in Integrating new research findings with previous research studies Free upgrade to business class

12 Product features over time Satisfied Excitement Performance Need Unfulfilled Need Fulfilled Basic Dissatisfied

13 Customer Satisfaction Research

14 Tracking Customer Satisfaction and Problem Experiences & Resolution How loyal are our customers? Loyalty measures: Likelihood to Recommend, Likelihood to Continue, Favourite Brand/Company How satisfied are our customers? Overall Satisfaction/Experience. (Ask this question before moving to attribute ratings since the latter will bias the former) Attribute ratings. Rating of company on important product and service features Importance of product features/customer Expectations How do we compare with competition? Competition benchmarking on loyalty measures and key attributes Best of Business Comparisons What problems are customers experiencing? How well are they resolved? What drives customer satisfaction? Key driver analysis to assess impact of product features and problem areas on overall customer satisfaction

15 Defining, Measuring and Segmenting Loyalty Composite Loyalty Measure Willingness to Recommend 40% Willingness to Continue Buying 75% 26 Loyal Top 2 box rating on 5 point scale 28% Favourite Product 45% Sum of rating on all 3 statements Satisfied Neutral 8 10 Dissatisfied Composite of the 3 (or more) attributes pertaining to Attitudinal Loyalty Sum scores to obtain loyalty segments. Composite score (Likert scale) varies from 3 to 15 for a 5 (1-5) point rating scale. (0 to 30 for a 11 point 0-10 Likert scale) Loyalty Index: To obtain a 10 point index, divide intersection 28 by 10 = 2.8. Alternatively base it on the (wtd) average for respondents on all 3 measures

16 Example: Student Loyalty Index Top 2 box rating of the 3 attributes Sum of rating on all 3 attributes Willingness to Recommend 60% 37% Willingness to support school as alumni 77% Loyal Satisfied Top 2 box rating on 5 point scale Likelihood of selecting NUS if starting fresh 55% 28 8 Neutral 8 10 Dissatisfied 3.. 7

17 Transaction Satisfaction Surveys Measure satisfaction at Customer Touchpoints Feedback by customer on firm s employee Linked to staff and management incentives Identify problem areas Process driven: Decomposes customer interaction on a product or service into specific, discrete touchpoints Timing: Satisfaction must be measured soon after the interaction usually within a day or two for low involvement interaction such as purchasing postage stamps. Time frame: Continuous (on-going) Performance Evaluation: Customer satisfaction scores/feedback can directly be related to line staff and management Data collection Short mass market transaction satisfaction surveys conducted online or via interactive voice response (IVR) systems Lengthier surveys executed via computer aided phone interviews Most valued customers face-to-face interviews

18 Bank Products & Services Teller Relationship Manager Credit Card Deposits Unsecured loans Investment Insurance Mortgage Treasury Fixed Deposit Channels Branch i-banking m-banking IVR ATM CDM

19 Transaction Survey Examples of statements that capture different aspects of ATM and Teller (Bank) ATM Overall satisfaction Convenient location Waiting time Sense of safety at location Ease of use Range of facilities Teller Overall satisfaction Friendly staff Personalized service Simple & understandable explanations Thanked you at end of transaction Completed transaction in reasonable time Knowledge of banks products & services Knowledge of market

20 Transaction Survey (ATM) Questions Based on your experience using ABC bank s ATM, on a scale of 1 to 5, where 1 is not at all satisfied and 5 is highly satisfied, how would you rate your overall satisfaction with the bank? Not at all satisfied Dissatisfied Neutral Satisfied Highly Satisfied Based on your experience using ABC bank s ATM, on a scale of 1 to 5, where 1 is not at all satisfied and 5 is highly satisfied, how would you rate your satisfaction on the following areas? Not at all satisfied Dissatisfied Neutral Satisfied Highly Satisfied Convenience of location Waiting time Sense of safety at location Ease of Use Range of facilities

21 Relationship Satisfaction Surveys Measures in detail the relationship between customer and service provider Encompasses perceptions of service/product quality, range and variety, competitiveness of the offering, service culture, service experience and ambience Pertains to satisfaction of products, services and channels Should not be linked to incentive scheme for line management and staff Time frame: Ad hoc annual quarterly

22 Relationship Survey measuring in detail the relationship between customers and the company Accessibility Branch close to home/office Convenient ATM locations ibanking for most of my needs Efficiency Efficient teller counters Low waiting time at ATM Customer hotline - low hold time Customer Service Good customer service Good customer care Personalised service Competency of Manager Knowledge of bank's services Market knowledge/expertise Range of Services Knowledge of bank's services Market knowledge/expertise One stop bank Wide range of credit cards Wide range of mortgage packages Wide variety of insurance plans Attractive range of investment plans Wide variety of loans Competitiveness Lowest mortgage Interest rates Best loan rates High fixed deposits interest rates High return on investments Attractive loyalty/rewards program

23 Key Driver Analysis

24 What s driving Customer Satisfaction?

25 Structure of a Satisfaction Survey example a Bank

26 Drivers of Customer Satisfaction Analytic Techniques To what extent does each individual measure (predictor variable) drive Customer Satisfaction (outcome variable, usually overall satisfaction ): Correlation: Squared correlation coefficient: The proportion of variance shared by the outcome and predictor variable Partial Correlation: Squared Partial Correlation Coefficient: The proportion of variance shared by the outcome and predictor variable, after excluding the effects of remaining variables Multivariate Regression: The magnitude of the coefficients of regression reflect the derived variable importance. (Primary approach in Customer Satisfaction research) Hierarchical Bayes Regression Parameters estimated at the individual and aggregate level Recommended for heterogeneous populations Segmentation of customers

27 Drivers of Customer Satisfaction Multivariate Regression Multivariate Regression: The magnitude of the coefficients of regression reflect the derived variable importance. (Primary approach in Customer Satisfaction research) Overall Satisfaction = f(teller, Relationship Manager, Credit Card, Deposit, Investment, Mortgage, ATM ) = T RM CC D Overall Satisfaction (RM) = f(good Customer Service, Good Customer Care, Personalised Service, Completed transaction in reasonable time, Knowledge of banks products & services, Knowledge of market )

28 Why derive importance? Can we not ask customers to tell us what they consider important?

29 Joka Airlines: Stated Importance Versus Satisfaction Gap Analysis: Positive gap for Cabin Staff. Negative for fares Safety Food & Beverage Competitive Fares Seating Comfort In Flight Entertainment Check-In Efficiency Cabin Staff Satisfaction Stated Importance

30 Joka Airlines: Stated Importance vs. Derived Importance Features such as Cabin Staff, In-flight entertainment and Fares differentiate one airline from another. Safety is a must be factor Safety Food and beverage Competitive fares Seating comfort In-flight entertainment Check-in efficiency In statistics lingo safety does not covary with overall satisfaction. It does not differentiate one airline from another. Cabin staff Stated Importance Derived Importance

31 High Derived Importance Joka Airlines: Satisfaction Versus Derived Importance Features such as Cabin Staff, In-flight entertainment and Fares differentiate one airline from another Competitive Fares Weakness (Primary) In Flight Entertainment Seating Comfort Strengths (Grow) Check-In Cabin Staff Efficiency Food & Beverage Q: Which attributes should Joka improve upon? Weakness (Secondary) Strengths (Maintain) Safety Low Low % Extremely Satisfied/Satisfied Rating High

32 High Derived Importance Low Joka Airlines: Satisfaction Versus Derived Importance Features such as Cabin Staff, In-flight entertainment and Fares differentiate one airline from another Where Joka Airlines (JA) needs Seating to focus Comfort is largely a function of their market strategy, and in particular how JA differentiates from competition. This matrix tells us whether or not 0.60JA is aligned to its stated strategy. If for instance, JA s strategy is to offer a premium service with superior in-flight services, in that case the results suggest the airline is fairly well aligned, though there is scope to improve on in-flight entertainment Competitive Fares In Flight Entertainment Strengths (Grow) Check-In Cabin Staff Efficiency Food & Beverage Safety Weakness (Secondary) Strengths (Maintain) SQ for instance limited domestic market. While the rest of the industry focused on cost cutting, SQ strategic direction was service excellence. Targeted corporate customers, business travellers not students, nor families % Extremely Satisfied/Satisfied Rating High Low Weakness (Primary)

33 Customer Satisfaction Incentive Schemes

34 Management Incentive Schemes Management incentive schemes multiple criteria Customer satisfaction is one of several criteria employed in management incentive schemes. Revenue, profit, employee satisfaction & retention, core business initiatives etc. are some of the most frequently used criteria for incentive schemes The combination of criteria help to get the balance right. For instance, we can t afford improvement in customer satisfaction if it severely impairs profitability as might be the case if sales employees choose to indiscriminately discount to score on customer satisfaction

35 Changing Customer expectations and needs It s observed that parameters such as overall measures of satisfaction and loyalty index are very difficult to move. I believe this is because customers expectations are growing and their needs are continually changing. We know from the Kano model that yesterday s delighter is today s satisfier, and some features that used to be satisfiers are now basic needs. The C-Stores example (next page) underscores the dynamic nature of key drivers. As their reliance on the channel grows, C-Store shoppers are driven more by features pertaining to quality, variety and availability of produce as opposed to basic needs such as comfort, cleanliness and hygiene From the standpoint of target setting, it is important to appreciate that maintaining a relatively high loyalty index is a fairly good achievement and that despite well conceived initiatives, overall measures and indices such as loyalty index are hard to move

36 Example: Changing Customer expectations and needs in C Stores As their reliance on the channel grows, C Store shoppers are driven more by quality than basic needs Most Important Convenience Store: Loyalty Drivers Convenient to get to Staff provide friendly service Ready to eat food and drink is of high quality Better selection of high quality products Wide range of snack food Wide product range and variety Always has products I want in stock Well presented display of products Can find what I need quickly and easily Modern, comfortable store Clean and hygienic store (3) (6) (7) (4) (5) (9) (9) (7) (4) (8) (6) (14) 0.38 (4) (4) 0.18 (9) 0.22 (2) Good value for money Least Important Appealing and interesting promotions Long opening hours Efficient checkout counters Has programs that reward regular purchase Easy to find parking In the past (i.e. before 2004) basic necessities were even more important Source: Nielsen s Shopper Trends, Singapore

37 Changing Customer expectations and needs It s observed that parameters such as overall measures of satisfaction and loyalty index are very difficult to move. I believe this is because consumers expectations are growing and their needs are constantly changing. We know from the Kano model that yesterday s delighter is today s satisfier, and some features that used to be satisfiers are now basic needs. The C-Stores example (prior page) underscores the dynamic nature of key drivers. As their reliance on the channel grows, C-Store shoppers are driven more by features pertaining to quality, variety and availability of produce as opposed to basic needs such as comfort, cleanliness and hygiene From the standpoint of target setting, it is important to appreciate that maintaining a relatively high loyalty index is a fairly good achievement and that despite well conceived initiatives, overall measures and indices such as loyalty index are hard to move

38 Customer Satisfaction Research - Application Empowers Top Management Strategic: Product and Service and people development - Prioritize initiatives CRM (Customer Relationship Management) Competition Benchmarking: Score Card or Dash Board Educates supplier where its offerings provided functionality and performance customer expected and where it fell short Advertising, Marketing and PR Compensation Employee feedback & management incentives Resource allocation Customer Retention Customer Relationship Problem Resolution Developing superior product and service offering

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