Using the Voice of the Customer to Quantify the Impact of Sales and Marketing Projects in a Manner the CFO Will Accept WCB...
Agenda <ul><li>Key Questions: </li></ul><ul><ul><li>How can VOC drive Six Sigma project selection? </li></ul></ul><ul><ul>...
Who is TARP? The  First  Name in Customer Care <ul><li>Management consulting/customer research firm established 1971 at Ha...
Formula for Maximizing  Customer Satisfaction and Brand Loyalty <ul><li>Customers will: </li></ul><ul><li>Buy again </li><...
Measuring “Do It Right the First Time”
Challenges In Measuring the  Impact of Six Sigma <ul><li>Management don’t recognize that service is different than manufac...
Possible Sources of Data for  Six Sigma Decision-Making This chart illustrates an ideal system of feedback on  quality and...
Customer Behaviors  that Impact the Bottom Line
Causes of Customer Dissatisfaction <ul><li>Employee-Based: 20% </li></ul><ul><ul><li>Failure to follow policy/procedure </...
Impact of Problems on Customer Loyalty Source: TARP Industry-Specific Data % definitely or probably continue
Economic Model of Service Impact  <ul><li>Assume each customer is worth $1,000 </li></ul><ul><li>Average Drop in Loyalty 2...
Calculating the Sales Lost from  Customers Who Encounter Problems = = = = = x = x x x 3,500 15,313 30,625 78,750 128,188 T...
Estimating Revenue Damage to Support Priority-Setting and Project Selection 1  Based on multiple problem selection 2  Base...
The Tip-of-the-Iceberg Phenomenon 1%-5% Complain to Management or HQ 45% Complain to Agent/Branch/ Front-Line Rep (75% for...
Impact of Delight on Loyalty and  Positive Word of Mouth* *All top boxes on five-point scale
Impact of Delightful Experience  on Top-Box Loyalty
Word-of-Mouth Behavior (median persons told of experience)
Personal Interaction Has 20 Times as Much Impact as Advertising and Sponsorships Retail Finance Customers
Quantifying the Impact of Service  and Positive Word of Mouth on Sales Example Calculation of Potential Impact 20% Delight...
Higher Quality Begets Higher Margins % not very or not at all satisfied Problems vs. Dissatisfaction with Price
Quantifying the Revenue and Cost Implications of the Customer Experience from Multiple Touch points
Framework for Analysis of VOC: Eight Factors that Produce Effectiveness <ul><li>Clear ownership  of the VOC process and is...
Customers Complain to Different Touch Points Airline Example **  For these channels, the consumer may have first complaine...
Problems Occurring vs. Problems Articulated Airline Example *Given twice the weight of other data sources
Revenue Impact of Problems Airline Example
Market Opportunity Model   Example Input Data 55% 88% 75% 500,000 Customers Problem Experience 70% No Problem Experience ...
Quantifying Revenue Impact of  Better Quality and Service Sales Lost Due to Problems (Over Period of Loyalty) Sales Lost f...
Sales Lost from Customers with Problems:  Customer Non-Repurchase = = = = = x = x x x 3,500 15,313 30,625 78,750 128,188 T...
Sales Lost from Customers with Problems: Non-Purchase Due to Word of Mouth 25% Dissatisfied 40% Satisfied 35% Mollified 35...
Sales Lost Even if No Problems x = 350,000 Customers With Problems 12% Not Repurchasing (no problems) 42,000 Lost Customer...
Overview of Baseline Calculation - = Sales Lost from Customers with Problems Sales Lost Even If No Problems (Due to Price ...
Profit Lost per Year ÷ = 940,020 Sales Lost Five-Year Period of Loyalty 188,004 Sales Lost Per Year $20 Profit Per Sale 18...
Sensitivity Analysis Results
Identification of Target Using  Analysis of Loyalty by Issue * Transaction that represents biggest opportunity for improve...
Impact of Process Improvement on Performance Insurance Company Example Before  Targeted Service  Initiatives % Completely ...
Estimating the Bottom-Line  Value of Improvements 40% Cost Savings (~$70  Million)  + 6% More Subscribers Retained + 1% Ne...
Broadening the Range of Solutions Considered by Six Sigma
Ensure Appropriate Expectations <ul><li>Time of Sale </li></ul><ul><ul><li>Confirm </li></ul></ul><ul><ul><li>Explain </li...
Impact of 90-Second Educational Intervention  Retail Example   <ul><li>Customers who received care and warranty informatio...
Consider Using a Performance Guarantee The Payout Process The Payout The Promise <ul><li>Proactive </li></ul><ul><li>Immed...
Benefits of a Performance Guarantee Hospitality Example <ul><li>Percentage who say they will definitely return </li></ul>3...
Create Customer Commitment Via “Connection” and Community High-quality product/customer experience is the starting point (...
Respondent Companies <ul><li>AARP </li></ul><ul><li>Airborne Express </li></ul><ul><li>Allstate Insurance Company </li></u...
Summary <ul><li>Include revenue implications and word of mouth </li></ul><ul><li>Vet assumptions with finance </li></ul><u...
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Using the Voice of the Customer to Quantify the impact of Sales and Marketing Projects in a Manner the CFO Will Accept

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  • Using the Voice of the Customer to Quantify the impact of Sales and Marketing Projects in a Manner the CFO Will Accept

    1. 1. Using the Voice of the Customer to Quantify the Impact of Sales and Marketing Projects in a Manner the CFO Will Accept WCBF Six Sigma in Sales & Marketing by John Goodman, President September 8, 2005 New Orleans, LA 1655 North Fort Myer Drive  Suite 200  Arlington, Virginia 22209 Phone: 703-524-1456  www.TARP.com  Fax: 703-524-6374
    2. 2. Agenda <ul><li>Key Questions: </li></ul><ul><ul><li>How can VOC drive Six Sigma project selection? </li></ul></ul><ul><ul><li>How do you integrate data from multiple touch points? </li></ul></ul><ul><ul><li>How do you estimate revenue impact of quality improvement? </li></ul></ul><ul><ul><li>What is a broader range of solutions to Six Sigma problems? </li></ul></ul><ul><li>Who is TARP? </li></ul><ul><li>What are the Pitfalls of Many Six Sigma Programs </li></ul><ul><li>Customer Behavior and Expectations </li></ul><ul><li>Quantifying Revenue Impacts </li></ul><ul><li>Creative Solutions to Sales and Marketing Problems </li></ul>
    3. 3. Who is TARP? The First Name in Customer Care <ul><li>Management consulting/customer research firm established 1971 at Harvard University </li></ul><ul><ul><li>White House complaint-handling/customer service study </li></ul></ul><ul><li>Industry leader in customer experience measurement and management </li></ul><ul><ul><li>Word-of-mouth research </li></ul></ul><ul><ul><li>Optimization of cross-channel experience </li></ul></ul><ul><li>Offices in Washington, D.C., and London </li></ul><ul><li>Assisted hundreds of organizations, including 7 Baldrige Winners and 45 Fortune 100 companies </li></ul>
    4. 4. Formula for Maximizing Customer Satisfaction and Brand Loyalty <ul><li>Customers will: </li></ul><ul><li>Buy again </li></ul><ul><li>Buy more </li></ul><ul><li>Tell others to buy </li></ul><ul><li>Buy your other products and services </li></ul>+ = DOING THE RIGHT JOB RIGHT THE FIRST TIME MAXIMUM CUSTOMER SATISFACTION AND LOYALTY Improved Product and Service Quality Respond to Individual Customers Identify Sources of Dissatisfaction Conduct Root Cause Analysis Feedback on Prevention EFFECTIVE CUSTOMER CONTACT MANAGEMENT
    5. 5. Measuring “Do It Right the First Time”
    6. 6. Challenges In Measuring the Impact of Six Sigma <ul><li>Management don’t recognize that service is different than manufacturing and requires variation </li></ul><ul><li>Cost is narrowly estimated and is emphasized instead of revenue impact </li></ul><ul><li>Revenue impact is discounted and estimates are not vetted with the CFO </li></ul><ul><li>Word of mouth, both positive and negative, is often not considered </li></ul><ul><li>Multiple data sources seem to contradict/don’t fit together </li></ul><ul><li>Causes of problems and solutions are too narrowly defined </li></ul>
    7. 7. Possible Sources of Data for Six Sigma Decision-Making This chart illustrates an ideal system of feedback on quality and service for Six Sigma Voice of the Customer.
    8. 8. Customer Behaviors that Impact the Bottom Line
    9. 9. Causes of Customer Dissatisfaction <ul><li>Employee-Based: 20% </li></ul><ul><ul><li>Failure to follow policy/procedure </li></ul></ul><ul><li>Company-Based: 50–60% </li></ul><ul><ul><li>Products/services don’t meet expectations </li></ul></ul><ul><ul><li>Marketing overpromises </li></ul></ul><ul><ul><li>Broken processes </li></ul></ul><ul><li>Customer-Based: 20–30% </li></ul><ul><ul><li>Incorrect expectations </li></ul></ul><ul><ul><li>Customer error/incompetence </li></ul></ul>* See TARP’s article in Quality Progress , “ It may not be your product!”
    10. 10. Impact of Problems on Customer Loyalty Source: TARP Industry-Specific Data % definitely or probably continue
    11. 11. Economic Model of Service Impact <ul><li>Assume each customer is worth $1,000 </li></ul><ul><li>Average Drop in Loyalty 20% </li></ul><ul><li>For Every 5 Customers With a Problem, 1 is Lost (5 x .2 = 1) </li></ul><ul><li>Can Now Link Handling and Preventing Problem to Revenue </li></ul>5 Customers with Unresolved Problems 1 Lost Customer $1,000 5 Customers with Problems Solved/ Prevented 1 Retained Customer $1,000 $1,000 = = = =
    12. 12. Calculating the Sales Lost from Customers Who Encounter Problems = = = = = x = x x x 3,500 15,313 30,625 78,750 128,188 Total Lost Customers 1,281,880 128,188 Lost Customers 10 Average Sales per Customer During Period of Loyalty 350,000 Customers with Problems 25% Dissatisfied 70% Not Repurchasing 45% Not Repurchasing 40% Satisfied 5% Not Repurchasing 50% Do Not Complain 50% Complain 35% Mollified 25% Not Repurchasing
    13. 13. Estimating Revenue Damage to Support Priority-Setting and Project Selection 1 Based on multiple problem selection 2 Based on will not repurchase only 3 Based on will not repurchase and might/might not
    14. 14. The Tip-of-the-Iceberg Phenomenon 1%-5% Complain to Management or HQ 45% Complain to Agent/Branch/ Front-Line Rep (75% for Business) 50% Encounter a Problem But Don’t Complain (25% for Business)
    15. 15. Impact of Delight on Loyalty and Positive Word of Mouth* *All top boxes on five-point scale
    16. 16. Impact of Delightful Experience on Top-Box Loyalty
    17. 17. Word-of-Mouth Behavior (median persons told of experience)
    18. 18. Personal Interaction Has 20 Times as Much Impact as Advertising and Sponsorships Retail Finance Customers
    19. 19. Quantifying the Impact of Service and Positive Word of Mouth on Sales Example Calculation of Potential Impact 20% Delighted 80% Satisfied x Avg WOM 3.0 Avg WOM 1.0 x = = 6,000 8,000 14,000 10,000 Customers 14,000 Referrals X 1 Actions 30 Referrals = 467 New Customers
    20. 20. Higher Quality Begets Higher Margins % not very or not at all satisfied Problems vs. Dissatisfaction with Price
    21. 21. Quantifying the Revenue and Cost Implications of the Customer Experience from Multiple Touch points
    22. 22. Framework for Analysis of VOC: Eight Factors that Produce Effectiveness <ul><li>Clear ownership of the VOC process and issues identified by the VOC process </li></ul><ul><li>A unified feedback and quality data collection plan </li></ul><ul><li>Integration of multiple data sources provides a more powerful message </li></ul><ul><li>VOC reporting is visible, actionable, and timely </li></ul><ul><li>VOC issues have clear revenue and profit implications </li></ul><ul><li>Formal processes ensure that data are translated into goals and actions </li></ul><ul><li>VOC impact is formally tracked </li></ul><ul><li>The VOC process is supported by company-wide incentives </li></ul>
    23. 23. Customers Complain to Different Touch Points Airline Example ** For these channels, the consumer may have first complained elsewhere and then escalated their complaint to this channel. 80% Don’t Complain 100 Customers Encountering Rude Gate Agent 2% to flight attendant 0.8% to consumer affairs/ customers relations** 7% to supervisor on site** 0.5% to executive by letter** 0.2% to executive by email** 1% to frequent flyer 800#** 4% to reservations 800# 1% airline Web site 3.5% other 20% Complain
    24. 24. Problems Occurring vs. Problems Articulated Airline Example *Given twice the weight of other data sources
    25. 25. Revenue Impact of Problems Airline Example
    26. 26. Market Opportunity Model  Example Input Data 55% 88% 75% 500,000 Customers Problem Experience 70% No Problem Experience 30% 50% Complained 50% Did Not Complain Dissatisfied 25% Satisfied 40% Mollified 35% 95% 2.0 3.0 1.0 30% 6.0 * Top two boxes on 5 point scale ** Median business associates told
    27. 27. Quantifying Revenue Impact of Better Quality and Service Sales Lost Due to Problems (Over Period of Loyalty) Sales Lost from Customers with Problems Sales Lost Even If No Problems (Due to Price and Product Attributes) Customer Non-Repurchase Non-Purchase Due to Word of Mouth - =
    28. 28. Sales Lost from Customers with Problems: Customer Non-Repurchase = = = = = x = x x x 3,500 15,313 30,625 78,750 128,188 Total Lost Customers 1,281,880 128,188 Lost Customers 10 Average Sales per Customer During Period of Loyalty 350,000 Customers with Problems 25% Dissatisfied 70% Not Repurchasing 45% Not Repurchasing 40% Satisfied 5% Not Repurchasing 50% Do Not Complain 50% Complain 35% Mollified 25% Not Repurchasing
    29. 29. Sales Lost from Customers with Problems: Non-Purchase Due to Word of Mouth 25% Dissatisfied 40% Satisfied 35% Mollified 350,000 Customers with Problems 50% Do Not Complain 50% Complain 70% Not Repurchasing 45% Not Repurchasing 5% Not Repurchasing 25% Not Repurchasing Avg WOM 6.0 Avg WOM 2.0 Avg WOM 1.0 Avg WOM 3.0 2% Non-Purchase Due to WOM 2% Non-Purchase Due to WOM 2% Non-Purchase Due to WOM 2% Non-Purchase Due to WOM x x x = = = = = x = x Total Lost Customers 7,814 Lost Customers 10 Average Sales Per Customer During Period of Loyalty 70 919 3,675 3,150 7,814 78,140
    30. 30. Sales Lost Even if No Problems x = 350,000 Customers With Problems 12% Not Repurchasing (no problems) 42,000 Lost Customers 10 Avg Sales per Customer During Period of Loyalty 42,000 Lost Customers 420,000 Lost Sales x =
    31. 31. Overview of Baseline Calculation - = Sales Lost from Customers with Problems Sales Lost Even If No Problems (Due to Price and Product Attributes) Customer Non-Repurchase Non-Purchase Due to Word of Mouth Sales Lost Due to Problems (Over Period of Loyalty) 1,281,880 Sales 78,140 Sales 1,360,020 Sales 420,000 Sales 940,020 Sales
    32. 32. Profit Lost per Year ÷ = 940,020 Sales Lost Five-Year Period of Loyalty 188,004 Sales Lost Per Year $20 Profit Per Sale 188,004 Sales Lost Per Year $3,760,080 Lost Profit x =
    33. 33. Sensitivity Analysis Results
    34. 34. Identification of Target Using Analysis of Loyalty by Issue * Transaction that represents biggest opportunity for improvement
    35. 35. Impact of Process Improvement on Performance Insurance Company Example Before Targeted Service Initiatives % Completely Satisfied with Action Taken After Targeted Service Initiatives
    36. 36. Estimating the Bottom-Line Value of Improvements 40% Cost Savings (~$70 Million) + 6% More Subscribers Retained + 1% New Subscribers from Positive Word of Mouth Operational Costs Customer Base Integrate Survey Results with Operational Metrics
    37. 37. Broadening the Range of Solutions Considered by Six Sigma
    38. 38. Ensure Appropriate Expectations <ul><li>Time of Sale </li></ul><ul><ul><li>Confirm </li></ul></ul><ul><ul><li>Explain </li></ul></ul><ul><li>Welcome Contact </li></ul><ul><ul><li>Reconfirm </li></ul></ul><ul><li>In Line/On Hold </li></ul><ul><li>Interim Follow-up </li></ul><ul><ul><li>Explain and reconfirm </li></ul></ul><ul><li>At Time of Service </li></ul><ul><ul><li>Explain and accommodate </li></ul></ul>Most Preferable Least Preferable
    39. 39. Impact of 90-Second Educational Intervention Retail Example <ul><li>Customers who received care and warranty information </li></ul><ul><ul><li>Were much more loyal </li></ul></ul><ul><ul><li>Had half as many problems (23%) vs. (41%) </li></ul></ul>
    40. 40. Consider Using a Performance Guarantee The Payout Process The Payout The Promise <ul><li>Proactive </li></ul><ul><li>Immediate </li></ul><ul><li>Easy to invoke </li></ul><ul><li>Empathetic </li></ul><ul><li>Relevant </li></ul><ul><li>Easy to understand </li></ul><ul><li>Unconditional </li></ul><ul><li>Meaningful </li></ul><ul><li>Painful </li></ul><ul><li>Shocks competitors </li></ul>
    41. 41. Benefits of a Performance Guarantee Hospitality Example <ul><li>Percentage who say they will definitely return </li></ul>32% and did invoke guarantee Guests Who Had a Problem ... CFO’s conclusion: and did not invoke guarantee Company makes $7 for every $1 of payout. Employees are urged to find dissatisfied guests and force them to accept the guarantee payout. 84%
    42. 42. Create Customer Commitment Via “Connection” and Community High-quality product/customer experience is the starting point (minimum requirement) and has the greatest overall impact on customer commitment Two-way “connection,” creating “community/social interactions,” and managing word of mouth have the second-greatest impact on customer commitment Incentives (e.g., discounts, loyalty programs) have some impact Service Interactions *Source Study of 43 Leading Companies by TARP’s Center for Customer Experience Leadership, 2003
    43. 43. Respondent Companies <ul><li>AARP </li></ul><ul><li>Airborne Express </li></ul><ul><li>Allstate Insurance Company </li></ul><ul><li>American Express </li></ul><ul><li>Anheuser Busch </li></ul><ul><li>Ben & Jerry's </li></ul><ul><li>BGE </li></ul><ul><li>Blue Cross & Blue Shield of Florida </li></ul><ul><li>Blue Cross Blue Shield of Massachusetts </li></ul><ul><li>Boyd Gaming Corporation </li></ul><ul><li>Build-A-Bear Workshop </li></ul><ul><li>Burger King Corporation </li></ul><ul><li>Chick-fil-A, Inc. </li></ul><ul><li>CIBC </li></ul><ul><li>Coach </li></ul><ul><li>Coors Brewing </li></ul><ul><li>DaimlerChrysler Services </li></ul><ul><li>FedEx </li></ul><ul><li>Foresters </li></ul><ul><li>Highmark, Inc. </li></ul>Hewlett-Packard IBM John Deere Kellogg Company Krispy Kreme Levi Strauss MetLife Auto & Home Neiman Marcus Nestle SA O'Reilly & Associates Principal Financial Group Procter & Gamble Saturn Southwest Airlines Taco Bell Corp. The Ritz-Carlton Hotel Company Timberland Toyota Motor Sales USA Verizon Vision Service Plan
    44. 44. Summary <ul><li>Include revenue implications and word of mouth </li></ul><ul><li>Vet assumptions with finance </li></ul><ul><li>Be conservative </li></ul><ul><li>Draw on multiple sources of data </li></ul><ul><li>Include proactive prevention of problem or transaction as possible solution </li></ul>
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