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Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
Developing a Customer Centric Research Program
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Developing a Customer Centric Research Program

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  • 1. Copyright © 2010 Business Over Broadway Developing a Customer- Centric Research Program Applied Research Projects to Improve the Customer Experience and Maximize Customer Loyalty Bob E. Hayes, Ph.D.
  • 2. Copyright © 2010 Business Over Broadway • Uses of Customer Satisfaction Data • Customer Feedback and Customer Surveys • Goals of a Customer Research Program • Data Analysis Approaches • Applied Research Overview
  • 3. Copyright © 2010 Business Over Broadway • Make business decisions – Become a customer-centric organization • Measure product and service quality • Increase understanding of the customer relationship – Understand predictors of and outcomes of customer satisfaction and customer loyalty • Compensate employees • Maximize customer loyalty and financial performance Uses of Customer Satisfaction Data
  • 4. Copyright © 2010 Business Over Broadway • Relationship Satisfaction Surveys – Focused on overall relationship with the customer – Delivery is not time-dependent (done at company discretion) – Includes Business Attribute questions and Loyalty-based questions • Typically have ratings of Satisfaction • Transactional Satisfaction Surveys – Focused on specific customer transaction – Delivery is time-dependent on transaction occurrence – Includes Business Attribute questions and Loyalty-based questions • Typically have ratings of Satisfaction • Both survey types can be used for a given Account/Customer Customer Feedback and Company Surveys
  • 5. Copyright © 2010 Business Over Broadway • Improve the customer experience and maximize customer loyalty • Develop deeper understanding of the customer relationship • Enhance customer-centric culture • Ensure business incorporates customer-centric metrics • Maximize value of customer feedback program Goals of a Customer Research Program
  • 6. Copyright © 2010 Business Over Broadway Data Analysis ApproachesBasicanalyses  Descriptive statistics to summarize information across all customers; used for benchmarking purposes  t-tests to study important segment differences (e.g., Gender, Age, Regions)  correlational analysis to determine drivers of implementation success Advancedanalyses  Regression/Multiple regression analysis to develop predictive models of customer loyalty  ANOVA to understand group/segment differences (e.g., Customer size, Region, Product type)  Factor analysis to build summary metrics, and to understand the basic structure of customers’ attitudes and to develop psychometrically sound measures of customer satisfaction  Structural Equation Modeling to develop statistical models of customer satisfaction
  • 7. Copyright © 2010 Business Over Broadway 1. Validating your customer feedback programs 2. Creating reliable, valid and useful business metrics for executive dashboards 3. Quantifying the impact of customer loyalty on business performance measures (e.g., revenue growth, sales volume, defection rate) 4. Identifying business areas that significantly impact customer loyalty 5. Evaluating the effectiveness of company-wide programs Applied Research Examples
  • 8. Copyright © 2010 Business Over Broadway 6. Identifying the important elements of employee and partner satisfaction that will improve customer loyalty 7. Determining customer satisfaction and loyalty criteria for incentive compensation programs 8. Building customer-centric operational metrics to align employees 9. Benchmarking best practices across the company 10.Developing employee training programs that impact the customer experience Applied Research Examples
  • 9. Copyright © 2010 Business Over Broadway • Must be concerned about the quality of the data from customer feedback systems – Good measurement processes lead to good business decisions • Use of customer feedback systems helps organizations make better customer-centric business decisions – Compensating employees – Allocating company resources – Changing business processes • Survey validation efforts are designed to provide an objective assessment of the quality of the survey program – Ensure survey results reflect reliable, valid and useful customer feedback – Identifies areas needing improvement 1. Validate your customer feedback program – Benchmarking best practices – Developing training programs
  • 10. Copyright © 2010 Business Over Broadway • Reliability reflects the degree to which scores are free from random error – Reliability deals with precision/ consistency – Goal is to have a measurement system that delivers reliable results – Reliability varies from 0 (no reliability) to 1 (perfect reliability) • Validity reflects the degree to which scores are measuring what they are designed to measure – Validity deals with the meaning of the scores from the measurement system – Goal is to have a measurement system that delivers valid results 1. Validate your customer feedback program ValidNot Valid ReliableNotReliable
  • 11. Copyright © 2010 Business Over Broadway • Metrics summarize customer data for easy consumption – Do not overwhelm executives with minutia – Details best suited for managers who need operational-level data • Metrics provide an accurate view of business performance – Metrics consolidate many pieces of information into manageable size • Metrics reflect summary of individual survey questions that assess general areas – Product attributes, Service attributes, Advocacy Loyalty, Purchasing Loyalty, Perceived Value 2. Reliable, valid and useful business metrics for executive dashboards
  • 12. Copyright © 2010 Business Over Broadway • Executives want a picture of the health of their company without sifting through 50 questions • Consolidate 50 questions into fewer metrics that are reliable, valid, and useful – Factor analysis is used to assist in creation of metrics • Metrics could reflect Loyalty Indices, and Satisfaction Indices (Product/Service) 2. Reliable, valid and useful business metrics for executive dashboards Metric 1 Aggregate questions: Q1 Q2 Q27 Q33 Q34 Q3 Q4 Q29 Q30 Q6 Metric 2 Aggregate questions: Q28 Q40 Q48 Q49 Q31 Q32 Q7 Q8 Q9 Q10 Metric 3 Aggregate questions: Q11 Q16 Q20 Q21 Q12 Q39 Q5 Q41 Q22 Q23 Metric 4 Aggregate questions: Q24 Q25 Q17 Q18 Q19 Q44 Q45 Q13 Q26 Q35 Metric 5 Aggregate questions: Q36 Q37 Q38 Q42 Q43 Q14 Q15 Q46 Q47 Q50
  • 13. Copyright © 2010 Business Over Broadway • If I improve customer satisfaction/loyalty scores by X%, what is the corresponding increase in revenue? • Business linkage analysis combines customer feedback data with important business outcomes – Revenue – Sales – License renewal rates – Purchasing behavior • Determine statistical relationships between customer satisfaction/loyalty and business outcomes 3. The impact of customer loyalty/ satisfaction on business metrics
  • 14. Copyright © 2010 Business Over Broadway • Customers who reported higher levels of customer loyalty1 purchased significantly more products 2007 than customers who reported lower levels of customer loyalty 3. The impact of customer loyalty/ satisfaction on business metrics 0% 10% 20% 30% 40% 50% 60% Customers Reporting Disloyalty Customers Reporting Loyalty Customers Reporting Extreme Loyalty PercentofCurrentCustomersPurchasing AdditionalProductsin2007 1 Customer loyalty scores are based on the results of Customer Survey. Customer Satisfaction Survey for customers who made their first purchase from Company in 2006. Correlation between Customer Loyalty and repurchase (N = 322) was r = .13, p < .05. 55% increase
  • 15. Copyright © 2010 Business Over Broadway • Loyalty Index is computed from key loyalty questions • Regression (Correlational) used to quantify the degree to which business attributes directly impact loyalty • Uses – Measure the “derived importance” or “impact” of each attribute on loyalty – To increase customer loyalty, allocate resources to areas that have a large impact on loyalty AND have low “performance” 4. Identify business areas that impact customer loyalty Driver Analysis - Advocacy Loyalty 0.45 0.50 0.55 0.60 0.65 0.70 3.5 3.6 3.7 3.8 3.9 4.0 4.1 4.2 Performance Impact Technical support excellent Tech support reps timely response PC has features I want PC reliable Tech support reps knowledgeable Tech support reps courteous Tech support reps understand needs Tech support reps available
  • 16. Copyright © 2010 Business Over Broadway • Longitudinal design used to study the impact of company-wide program on customer satisfaction 5. Evaluate the effectiveness of company-wide programs Customer Survey September 2007 January 2008 Customer Survey Program Implementation Oct. 2007 July 2007 November 2007 March 2008  Group 1: (Did not receive program) Pre-Program Post-Program  Group 2: (Did receive program) Timeline H2 2007 H1 2008  Two groups compared
  • 17. Copyright © 2010 Business Over Broadway • Customers who received program in H2 2007 were significantly more satisfied with the product after the program compared to customers who did receive the program • Customers who received the program in H2 2007 were significantly more loyal after receiving the program compared to customers who did not receive the program 5. Evaluate the effectiveness of company-wide programs H1 2007 H1 2008 Satisfactionwith BusinessAttribute Did not receive program Received program H1 2007 H1 2008 CustomerLoyalty Did not receive program Received Program 4% difference 7% difference
  • 18. Copyright © 2010 Business Over Broadway • Need to understand the company ecosystem – Employee and Partner variables impact customer satisfaction/loyalty • Business linkage analysis identifies where improvements in partner and employee relationship are needed • A complete CRM solution includes an understanding of partner relationship management and employee relationship management 6. Employee and partner satisfaction impact customer loyalty
  • 19. Copyright © 2010 Business Over Broadway • Employee groups with higher levels of satisfaction with the Executive Staff have customers who report higher levels of loyalty compared to employee groups with lower levels of satisfaction1 6. Employee and partner satisfaction impact customer loyalty 1 Employee group with more than one (1) customer respondent used for this analysis. Sample size = 75. Correlation between Employee Satisfaction with Executive Staff and Customer Loyalty = .30, p < .05. Employee Group w/ low satisfaction Employee Group w/ high satisfaction CustomerLoyalty 19% increase
  • 20. Copyright © 2010 Business Over Broadway • Base incentive compensation on individual and team measurements of customer satisfaction/loyalty • General approach for every business unit – Determine survey questions (loyalty and business attributes) that measure that business unit’s performance – Develop formula to combine question results into single score – Standardized mapping of score to bonus payout %. Example1: 7. Determine customer feedback criteria for incentive compensation programs 0% of goal<7.0 50% of goal>=7.0 and < 7.5 75% of goal>= 7.5 and < 8.0 100% of goal>= 8.0 CLI PayoutCLI Criteria 0% of goal<7.0 50% of goal>=7.0 and < 7.5 75% of goal>= 7.5 and < 8.0 100% of goal>= 8.0 CLI PayoutCLI Criteria 0% of goal<6.0 50% of goal>=6.0 and < 7.0 75% of goal>= 7.0 and < 7.75 125% of goal>= 7.75 and < 8.5 CSI PayoutCSI Criteria 0% of goal<6.0 50% of goal>=6.0 and < 7.0 75% of goal>= 7.0 and < 7.75 125% of goal>= 7.75 and < 8.5 CSI PayoutCSI Criteria 1 CLI is the customer loyalty index and represents a measure of customer loyalty. CSI is the customer satisfaction index and represents a measure of customer satisfaction for a specific group of employees that are responsible for that specific CSI.
  • 21. Copyright © 2010 Business Over Broadway • Need to identify/create operational metrics that are statistically linked to customer satisfaction and loyalty – Linkage analysis using customer feedback data and operational data (e.g., turn-around time, call-handling data) • Operational metrics become the leading indicators of customer satisfaction and loyalty • Customer-centric operational data used to manage the business – Performance feedback meetings – Goal setting – Incentive programs 8. Customer-centric operational metrics
  • 22. Copyright © 2010 Business Over Broadway • Understand different customer segments on key variables1 – Geography (Region) – Service levels • Identify and implement best practices throughout different customer groups 9. Benchmark best practices across the company – Product Releases – Industry Verticals 1 Use Analysis of Variance (ANOVA) to determine if differences across different segments are real or are due to sampling error. Region North South East West Customer Loyalty Product Quality Sales Quality Service Quality vulnerable warning exceptional
  • 23. Copyright © 2010 Business Over Broadway • Training programs are important to ensuring employees have proper knowledge to help satisfy customers • Business linkage analysis combines customer feedback data with important training variables and outcomes – Course content – Training scores • Customer-centric research allows you to identify both the content and criteria necessary to ensuring customers are satisfied – What should be taught? – What level of performance should be attained in training? 10.Develop employee training programs that impact the customer experience
  • 24. Copyright © 2010 Business Over Broadway • Customer reps who pass more training courses have customer who are more satisfied with their performance – Increases in customer satisfaction level off at 5 courses per quarter • Customer reps who receive higher scores on their training receive higher customer satisfaction scores on their performance 10.Develop employee training programs that impact the customer experience Cust Reps with low training scores Cust Reps with medium training scores Cust Reps with high training scores CustomerSatisfactionwith CustomerRepresentative Cust Reps with fewer than 5 courses Cust Reps with 5 courses Cust Reps with more than 5 courses CustomerSatisfactionwith CustomerRepresentative 4% increase 7% increase 4% increase 33% increase
  • 25. Copyright © 2010 Business Over Broadway • Longitudinal study to examine customers throughout the customer lifecycle – Impact of sales phase on service phase satisfaction • Impact of Customer Satisfaction Measurement Strategy on Product Satisfaction, Employee Productivity, and Revenue • Customer segmentation Other Studies
  • 26. Copyright © 2010 Business Over Broadway For More Information Bob E. Hayes, Ph.D. Email: bob@businessoverbroadway.com Web: www.businessoverbroadway.com Blog: www.businessoverbroadway.blogspot.com Twitter: www.twitter.com/bobehayes Business Over Broadway Business growth through customer insight

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