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

http://www.microsoft.com/partner/media/csat/

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 www.Marketingprofs.com