Why Invest in Customer Satisfaction Research?

Keeping customers satisfied is essential to building a successful, growing business. While many companies work hard to increase sales, they may overlook the little things that keep customers happy and buying more. It is easier to accelerate your business by cultivating the customers you already have rather than constantly working to attract new customers.

Customer satisfaction research is not an end unto itself. The purpose, of course, in measuring customer satisfaction is to see where a company stands in this regard in the eyes of its customers, thereby enabling service and product improvements which will lead to higher satisfaction levels. The research is just one component in the quest to improve customer satisfaction. Improving customers’ satisfaction with your business translates directly to your bottom line.

Still not sure you’re ready to invest in improving service?

Check out these amazing statistics:

• It costs between five and six times more to attract a new customer than to keep an existing customer.

• Companies can boost profits from 25 percent to 125 percent by retaining 5 percent more existing customers.

• Only one out of 25 dissatisfied customers will express dissatisfaction to you.

• Happy customers tell at least four others of a positive experience. Dissatisfied customers tell as many as 12 about a negative experience.

• Two-thirds of customers do not feel valued by those serving them.

• Acquiring new customers can cost five times more than satisfying and retaining current customers.

• A 2 percent increase in customer retention has the same effect on profits as cutting costs by 10 percent.

• The average company loses 10 percent of its customers each year. * The customer profitability rate tends to increase over the life of a retained customer.

article courtesy of MysteryShoppingLive.com
Sources: Extreme Management, Mark Stevens, 2001; Leading on the Edge of Chaos, Emmett C. Murphy and Mark A. Murphy, 2003

Braintrust Query: Are Mystery Shops ‘Constructively Negative’?

A study published in the November Journal of Marketing attempts to answer two important questions applicable to mystery shopping programs:

1. Are shoppers who expect to evaluate service delivery inclined toward “constructively negative” evaluations regardless of the actual experience?

2. What can be done to reduce the negative bias of survey respondents?

In brief: 1) No. 2) Give them something to think about.

According to the study, when cognitive loading precedes the customer experience it reduces negative bias. We know that when customers expect to complete a survey after visiting a store, they have a natural tendency to focus on negative aspects of the experience in part because those aspects are more easily identified. It’s easier to conclude “My coffee is cold” than it is to conclude “The associate far exceeded the service standard.”

However, when shoppers are asked to pay attention to specific details about an experience beforehand, they are less likely to identify negative aspects of the experience when they occur. Their focus is more positive.

What’s more, the study found that “shoppers do not ‘fabricate’ negative evaluations just to comply with their task. … [T]hey report such evaluations only if they are able to gather supporting evidence during the shopping experience.”

Consider the impact of cognitive loading on:

Shopper training and preparation: Well-trained mystery shoppers should arrive on-site with a high degree of cognitive load that results in a more balanced evaluation. Conversely, poorly trained or unprepared mystery shoppers are more likely to over-report the negative in an effort to fulfill their obligation to report. Thus, ‘constructively negative’ evaluations should be more prevalent among poorly trained shoppers.

Customer experience program goals: Shoppers are more likely to identify negative aspects of the experience if their brains aren’t busy processing shop scenarios and service procedures. If your goal is improved training and employee appreciation (i.e., incrementally positive outcomes), you’ll want shoppers loaded to identify the subtle differences between four-star and five-star service.

Commentary by Kerry Colligan, Integrated Marketing Manager, Second to None

Creating an experience for customers

THINK of good service and you imagine staff who smile and greet customers at the entrance of the shop. Customers take their time to browse, and once they are ready to buy, the staff process their orders and say thank you as they leave.

A recent survey showed Singapore’s standards lag those of neighbouring countries. The score on the latest Customer Satisfaction Index of Singapore was 67.8 out of 100 points in 2008, down from 68.7 in 2007. This has prompted the government to pump $100 million more into the second phase of the Go the Extra Mile for Service campaign, launched in 2005.

The gap in customer service

What are the reasons for Singapore’s relatively poor performance amid a national drive to invest in frontline training and skills upgrading?

One perspective is the high attrition rate in the service industry, causing a lapse in delivery each time someone resigns. The benefit of training is short-lived as the root problem of staff retention erases the opportunity to create a consistent service standard.

As such, employers resort to hiring foreign labour to compensate for the lack of local manpower, and this approach adds on another layer of complexity, with different culture and language. Lack of awareness of cultural and contextual differences may cause communication breakdown.

Another aspect is that Singapore has had an influx of foreigners over the past three years. Service staff unfamiliar with different nationalities may find it a chore to have to explain or assure a green card customer about an issue that is the norm.

An isolated approach to customer service devalues the role of the service staff. For many SMEs, customer service may be perceived as an operational process to complete a transaction. The lack of a strategic approach means that customer care is the responsibility of the service staff, who are at the bottom of the food chain. Customer service becomes a transaction, not an experience.

A good lesson from business-to- business (B2B) companies is the practice of key account management. As customer intimacy is an enduring competitive differentiation, corporations define the rules of pro- active engagement with customers and spell out standards relative to the different categories of customers they have.

An intentional approach to customer engagement, once defined for different customer types, enables the sales force to nurture and develop the account, allocating and optimising resources. Similarly, in the retail sector, service strategy must begin with the customer, not the product or service you are offering. The customer service strategy for retailers needs to be based on engagement so customers can experience dialogue with staff.

Unfortunately, many staff are guilty of one-way communication and fail to engage customers in a meaningful way, often viewing them as troublesome or even difficult.

What can you do to build a sustainable service experience amid rising customer demands?

Start with the customer’s journey. And contrary to popular belief, the best time to develop your service strategy is when you are small and nimble.

So if you are a small SME in the retail sector, here are some valuable tips to kick-start your service strategy:

Develop your company’s value proposition and resonate that with the customer experience. What can you deliver during the service experience to create memorable touch points? Explain to staff how the right customer service approach can create a competitive edge for your store.

Prioritise your customer care initiative alongside your business initiatives. Demonstrate to your staff how strategic the customer experience is, and define how they can make or break the customer relationship permanently with just one wrong move.

Focus on customers’ profiles and buying behaviour, as this will allow you to prepare for special quirks or exceptional situations. By being prepared, you anticipate the customer’s actions and deliver a service that is seamless for the customer and easier for the staff.

Develop a measurement process to keep your staff on their toes. Mystery shopping campaigns, when designed and customised to address the expectations of customers, help you to identify service lapses before a customer sends a complaint letter.

Develop a coaching culture in your organisation. For retailers with a network of branches, train your branch managers to become coaches and hold daily briefings where services issues can be tabled and corrected on the spot.

Reward your staff for achieving positive service experiences with your customers. A realistic measure would be to have a compliment to complaint ratio per X number of transactions to moderate the score.

Finally, beyond training and skills upgrading, develop an articulate service team that can engage customers by building rapport and maintaining tact and diplomacy when handling objections. The customer experience is not a series of events but a two-way dialogue to ensure the customer’s needs are met.

Success stories

Several market leaders have demonstrated how the customer service experience can create a competitive edge.

SingTel Hello shops go the extra mile to create world class multimedia experiences with their award winning retail concept stores. Integrating the new ambience, all staff are put through rigorous training to ensure customers enjoy both the new retail experience and high standard of service engagement.

Miele, a market leader in household appliances, never forgets to focus on the customer’s lifestyle needs. It demonstrates a professional yet passionate belief in its offerings. Customers coming out of the showroom are mesmerised not by the product but by how it can enhance their lifestyle.

Wellness company Beyond Beauty is an up-and-coming brand in Singapore. Realising how important it is to create a consistent customer experience at any of its spa salons, it invested in ISO certification to ensure it maintains the highest standards of personalised services. Retailers should not find it daunting to start a customer service strategy.

Creating memorable service experiences is the ultimate competitive edge that is priceless to any store. Once you begin with the first step, the rest becomes intuitive and obvious to those focused on the customer’s journey.

By Regina Chua – principal consultant and founder of Discipline Dynamics
article first published in The Business Times.

Inside Marketing: Can You Really Measure Customer Experience?

Mystery shopping programs help direct staff training and measure how CUs stack up against competitors

By John Swinburn
Executive Director of MSPA

A senior citizen walked into his Dallas credit union to discuss his soon-to-mature share certificate. Interest rates had dropped, and he was looking for a better way to invest his money.

The teller directed him to a CU member service rep to learn more about his options, noting that possibly an annuity or a conservative mutual fund would better suit his needs.

Unbeknownst to the teller, this senior citizen was more than what met the eye. He was a mystery shopper, evaluating the customer experience. He was taking note of such things as whether the teller introduced him to the MSR, or just pointed and sent him away, and whether the teller restated his inquiry to the consultant, or left him, the valued member, to re-tell his story.

Credit unions are using mystery shoppers right now to monitor and improve everything from customer service and cross-selling techniques to compliance and fair lending practices and how well they measure up to the competition.

Often used as a tool to identify and continually improve customer service, mystery shopping can have a significant impact on every aspect of the customer experience, which ultimately drives the bottom line.

The impact of mystery shopping on credit unions has changed significantly over the years.

“Before, we had to explain mystery shopping,” says Judi Hess, owner of Customer Perspectives(TM) in Hooksett, NH. “Now that the discipline has proven its value to the industry, we need to explain new ideas for maximizing your program.”

Hess explains that an effective mystery shopping program approaches customer service improvement from several angles. The same shopping program can be used to measure and fine-tune training initiatives and highlight specific results with individual employees. Results could also be part of an incentive program on the individual or branch level.

Training and Measurement

$1.6 billion Travis Credit Union in Vacaville, Calif., uses mystery shopping on regularly to monitor all member touch points; including teller shops, loan shops, phone shops and new account shops. Management uses the data to pinpoint specific areas that may need improvement.

Travis CU’s January 2007 mystery shop reports were showing a score of just 62 percent for employees asking questions and listening for cues of how the credit union could better serve members. The CU implemented a training program that taught employees what types of phrases to listen for and what kinds of questions to ask. In a year’s time, the same question received an 82 percent score. During the same time frame, Travis CU had 8,014 direct new members compared to 7,842 in 2006.

“If employees aren’t listening and asking questions, they’re missing opportunities,” said Renee DeSantis, president, Game Film Consultants, a mystery shopping firm in Austin, Texas. “That’s where the value of mystery shopping is very evident. It clearly shows where to focus your training efforts.”

In its shop, $98 million Premier Federal Credit Union in Greensboro, N.C., was looking to improve its cross-selling. It leveraged mystery shopping results to pinpoint specific areas where employees could use additional training.

“Realizing that providing top-level service to members includes offering a variety of products to meet their needs, we began to focus on a ‘needs-based’ selling culture,” says CUES member Lori Thompson, executive vice president of Premier FCU. “Our mystery shopping program was a key factor in being sure employees were on the right track.”

When the mystery shopping program began, Premier FCU employees achieved a 52.8 percent score on closing skills, or asking questions to see where additional products may benefit members. Relying heavily on mystery shopping scores and training provided by its mystery shopping provider (Customer 1st, Greensboro, N.C.), Premier FCU was able to increase its closing score to 95.6 percent in just two years.

Measurements and Morale

Premier FCU also implemented an incentive program for strong shop results by publicly recognizing associates for a job well done. Sometimes associates are rewarded with movie tickets or other small but meaningful giveaways to recognize exceptional evaluations. This step can boost the likelihood of positive results, says Carl Philips, director of Customer-1st.

“It’s about catching them doing it right,” says Phillips. “The old adage, ‘You can’t move what you don’t measure,’ applies here. If associates know a mystery shopping program is in place to measure closing standards, then they will be more likely to meet those standards.”

No matter the type of shop, program or initiative, mystery shopping is an excellent opportunity to boost employee morale.

As Phillips pointed out, the simple fact that employees know they’re being evaluated is often an incentive to do good work. Recognizing employees for a job well done or talking through things that didn’t go so well is a form of hands-on training that gets results.

According to Bob Maietta of Service Evaluation Concepts, a credit union in Massachusetts uses its mystery shopping reports at quarterly meetings with loan officers. Team leaders point out the areas of the mystery shopping program that show weakness, taking out the names of employees and discussing ways to fix the problem. More importantly, they also point out the areas where employees do exceptionally well. That simple task alone helped improve mystery shop scores to the level of the credit union’s service standards.

Frank Aloi of ath Power Consulting in Andover, Mass., says mystery shopping can focus a credit union back on the basics of the industry.

“Credit unions were created to deliver the type of member/customer-focused service that banks want to be known for,” Aloi said. “We’re seeing the trend in the industry that mystery shopping is being used as one of the primary mediums to gather customer experience data. Effective shop programs tell management what really is happening out on the front lines.”

In addition to revealing a credit union’s strengths and weaknesses, mystery shopping can also be used to see how well a credit union is measuring up to its competition. Evaluating the same customer touch points at competitive banks and other credit unions allows significant insight into opportunities to gain new members.

“Using the information for coaching and training truly will create change and improve customer service,” says Brian Caldwell, client services manager for IntelliShop in Perrysburg, Ohio. “It’s a simple equation. Better customer service leads to better member satisfaction which equals a better bottom line.”

How Important Customer Care Really Is

As the world now knows, last year a guitarist named Dave Carroll was sitting in a window seat on a United plane at O’Hare airport in Chicago when he looked out and saw baggage handlers hurling guitar cases through the air. He pointed it out to flight attendants; they responded with indifference. When he arrived in Nebraska, he found that his instrument had been smashed. After months of complaining to the airline and getting no response, he wrote and performed a song, “United Breaks Guitars” and posted it on YouTube. It was viewed more than 3 million times in its first 10 days.

Across the world in China, Wang Jianshuo, a famed blogger, posted about a United flight he took to the U.S. A surly flight attendant refused to help an elderly passenger stow his carry-on luggage. The audio on the movie channels didn’t work. The overhead lights turned off and on the entire trip. His return trip was worse: The plane sat on the tarmac for three hours and then was cancelled until the next day because of a fuel leak.

How does a company perform so badly? United Airlines’ ( UAUA – news – people ) stock price was tottering even before the financial crisis. Now that even stellar airlines like Southwest ( LUV – news – people ) suffering, a weak player like United seems doomed to follow in General Motors’ ( GMGMQ.PK – news – people ) and Circuit City’s ( CC – news – people ) footsteps unless it makes major changes. This week, United announced a quarterly profit of $28 million, but that included fuel hedges and other accounting gains, without which it lost $323 million. It also named a new president. The airline’s missteps over the past decade provide a case study of what not to do when running a company.

Here are three key lessons we all can learn from United.

Create Brand Loyalty, Not Simply Satisfaction

It is doubtful that the millions who have watched Carroll’s video or read Wang’s blog will want to fly United anytime soon, unless they have no choice. That is terrible for the airline. It is fighting for every last passenger dollar, and trying to make inroads into the emerging Chinese travel market. Part of the problem is that the company, like many, makes satisfying customers part of its mission statement but fails to go nearly far enough beyond that.

Winning companies like Apple ( AAPL – news – people ) go past mere satisfaction to try to create true brand loyalty. Not only do loyal customers spend more, they are more likely to become brand ambassadors and bring along other customers. When everyone from the mailroom to the chief executive buys into the mantra of creating brand loyalty, the result is increased profits.

Consumers are more price sensitive in this economy, and they are trading down, but it’s still a great time to capture loyalty. People don’t want to waste money on brands that fail to meet their expectations. They’re buying only what they trust, and they’ll return to trusted brands repeatedly.

Instead of watering down its frequent flyer benefits to save costs, United should be taking the exact opposite tack. It should take a page from hotel stalwarts like Starwood ( HOT – news – people ) and Marriott ( MAR – news – people ), which are offering more goodies than before to their most loyal clients. In consumer studies that my organization, China Market Research Group, has conducted, we’ve found that the No. 1 reason people fly United regularly is because they have racked up points in United’s Star Alliance loyalty program. Why would United want to disenfranchise its most loyal customers?

As consumers think harder about where to spend their money, aiming to satisfy them is not enough. Only striving to create true loyalty will work.

Don’t Forget Why You’re Here

Many companies forget their main purpose and become bogged down in just sustaining their operations. United forgets that it’s not only selling a means of transportation that is faster than trains or cars. For vacationers, who make up most passenger traffic, it’s selling dreams and memories. An airline flight is typically the first and last part of a newlywed couple’s honeymoon, or a family’s overseas trip in planning for years. People remember such journeys forever. I fondly recall my own first flight on TWA when I was six years old, to Italy and Greece with my parents. Likewise, my childhood flights on Delta to see my grandmother in Florida. What United fails to get is that it is selling dreams, not just a form of transportation. Few United employees take pride in their jobs, and it shows.

One company that gets it right is Disney ( DIS – news – people ). A trip to Disney World is not simply an outing to an amusement park like Six Flags ( SIX – news – people ) or Universal Studios. It is a time when families can create memories that last a lifetime. Disney trains its employees, from the monorail drivers to the people selling fast food, to be more than just salespeople. They are weavers of dreams. That is one reason families repeatedly return to Disney World, according to research my firm has conducted with visitors from eight different countries.

Unilever got it right with its Axe deodorant. That company understands that it is not selling a way to stop sweat or to smell a little better. It’s selling a way for young men to be more attractive. Axe put together a TV commercial that shows a dorky guy, who happens to use Axe, getting more glances from attractive women than Ben Affleck, the movie star. The spot uses humor to imply that you, too, can be as appealing as the Hollywood star who dated Gwyneth Paltrow and Jennifer Lopez and is married to Jennifer Garner.

To create real customer loyalty, you have to offer more than just functionality. And you have to train everyone in your organization to have the pride to sell an emotional connection, not just tools.

Don’t Forget Employee Morale

United’s workers have been a beleaguered group for years now. They have had their wages, pensions and benefits cut even as the chief executive officer, Glenn F. Tilton, has been paid nearly $20 million dollars over the last five years (despite United’s stock dropping 43% during his tenure). Does that seem fair?

Employee morale has gone into the gutter. Unhappy workers mean terrible customer service‰¥ãas Dave Carroll and Wang Jianshuo and millions of their followers know. The company may have no choice but to lay off workers and reduce benefits in the downturn, but it has to do so with respect and with effective communication to the rank and file about why such pain is necessary. Every company everywhere must have an effective strategy for ensuring that its remaining employees don’t lose hope or happiness, just as it must maintain its focus on creating brand loyalty.

One thing to do is to make sure that all employees share the pain equally. If there are big cutbacks anywhere, senior management should take substantial pay reductions and limits on its privileges, such as fewer business class flights and trips on private jets. The troops look to senior management for direction. If those troops see the top brass caring for itself at the expense of others, the spirit of the entire organization erodes.

In today’s economy you can’t get by on decent prices or acceptable service. You have to stand out and win the hearts of your customers. To do that you have to go beyond satisfaction to true loyalty. You have to provide a compelling reason, beyond basic service and price, for consumers to choose you. And your organization must be unified in that mission.

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Source:
http://www.forbes.com/2009/07/24/united-airlines-lessons-leadership-managing -mistakes.html