Presented by Terry Vavra, PhD

Terry Vavra, Ph.D. is an world-acknowledged authority in customer satisfaction and loyalty. He works with ICC/DS clients to help them gain the most from their customer experience programs. He has previously served as Chairman Emeritus of Ipsos Loyalty. He was co-founder of Marketing Metrics, which was acquired in 2003 by Ipsos of Paris, France and became Ipsos Loyalty. Terry is credited as being among the first to alert the global business community to the importance of keeping current customers. His message was carried in his 1992 book, Aftermarketing: How to Keep Customers for Life Through Relationship Marketing. In 1997 Terry expressed his unique philosophy of customer satisfaction in his book, Improving Your Measurement of Customer Satisfaction. Four years later, he wrote a companion book, Customer Satisfaction Measurement Simplified: A Step-by-Step Guide for ISO 9001:2000 Certification. Also in 2001, he teamed with Tim Keiningham to write The Customer Delight Principle, urging businesses to goal not to merely satisfy customers, but to delight them. His most recent book is Loyalty Myths (2005) also written with Tim Keiningham. Before founding Marketing Metrics in 1984 with his wife - Linda, Terry worked for the National Broadcasting Company and in the advertising field for Kenyon & Eckhardt; BBD&O and Levine, Huntley, Schmidt & Beaver. He also taught for 15 years in the MBA program of the Lubin School of Business, Pace University. About Your Presenter: Terry G. Vavra

Terry Vavra, Ph.D. is an world-acknowledged authority in customer satisfaction and loyalty. He works with ICC/DS clients to help them gain the most from their customer experience programs. He has previously served as Chairman Emeritus of Ipsos Loyalty. He was co-founder of Marketing Metrics, which was acquired in 2003 by Ipsos of Paris, France and became Ipsos Loyalty.

Terry is credited as being among the first to alert the global business community to the importance of keeping current customers. His message was carried in his 1992 book, Aftermarketing: How to Keep Customers for Life Through Relationship Marketing.

In 1997 Terry expressed his unique philosophy of customer satisfaction in his book, Improving Your Measurement of Customer Satisfaction. Four years later, he wrote a companion book, Customer Satisfaction Measurement Simplified: A Step-by-Step Guide for ISO 9001:2000 Certification. Also in 2001, he teamed with Tim Keiningham to write The Customer Delight Principle, urging businesses to goal not to merely satisfy customers, but to delight them. His most recent book is Loyalty Myths (2005) also written with Tim Keiningham.

Before founding Marketing Metrics in 1984 with his wife - Linda, Terry worked for the National Broadcasting Company and in the advertising field for Kenyon & Eckhardt; BBD&O and Levine, Huntley, Schmidt & Beaver. He also taught for 15 years in the MBA program of the Lubin School of Business, Pace University.

Some of Terry’s Books Include:

We’re committed to Quality. In fact, we guarantee it!

The national ACSI survey conducted by the University of Michigan confirms that despite businesses’ concern over customer delight, Despite the “Talk” Customers Don’t Feel Delighted! Fourth Quarter scores 1994-2007 satisfaction isn’t increasing! ACSI National Score 1994-Q4 2007

The national ACSI survey conducted by the University of Michigan confirms that despite businesses’ concern over customer delight,

The Customer Delight Principle … written to alert businesses to the risks from improperly interpreting customer satisfaction data. … researchers have found that firms that create superior customer satisfaction enjoy superior profits. … provides a “roadmap” for measuring and managing customer satisfaction.

… written to alert businesses to the risks from improperly interpreting customer satisfaction data.

… researchers have found that firms that create superior customer satisfaction enjoy superior profits.

… provides a “roadmap” for measuring and managing customer satisfaction.

We misunderstand how satisfaction works. Why Isn’t Customer Satisfaction Improving?

We misunderstand how satisfaction works.

Why do we Care About Satisfying Our Customers? Satisfaction impacts profits through a series of steps or stages. Each stage influences the next. Performance Satisfaction Customer Loyalty Market Share and Profits

Satisfaction impacts profits through a series of steps or stages. Each stage influences the next.

The Link Between Performance and Satisfaction Source: Keiningham, Timothy L. and Terry G. Vavra (2001) The Customer Delight Principle. Chicago: NTC Contemporary Publishing (American Marketing Association). Performance Satisfaction Overall Satisfaction Issue Performance Unsatisfactory Delightful Merely Satisfying

The Link Between Performance and Satisfaction Most firms’ improvement efforts move customers along the Zone of Mere Satisfaction Source: Keiningham, Timothy L. and Terry G. Vavra (2001) The Customer Delight Principle. New York: McGraw-Hill and the American Marketing Association. Zone of Pain Zone of Delight Overall Satisfaction Issue Performance Unsatisfactory Delightful Merely Satisfying

We misuse our satisfaction measurement tools. Why Isn’t Customer Satisfaction Improving?

We misuse our satisfaction measurement tools.

The Conventional Satisfaction Report It’s possible to settle for satisfaction scores that aren’t really indicative of superior performance. Substantial research and numerous case studies show that settling for modest satisfaction ratings doesn’t translate into increased profitability! Not at all satisfied Pain · Displeasure · Frustration Completely satisfied Delight · Elation · Advocacy Average Sat Score = 7.3 That’s OK, right? 1 2 3 4 5 6 7 8 9 10

It’s possible to settle for satisfaction scores that aren’t really indicative of superior performance.

Substantial research and numerous case studies show that settling for modest satisfaction ratings doesn’t translate into increased profitability!

Today, ‘Mere’ Satisfaction Just Isn’t Enough! Two-thirds of all customers who leave a business would have been classified as “satisfied” using such a lax definition of satisfaction. Further, customers rarely recommend a business they find as merely satisfying. But, extreme satisfaction (delight) can be tracked to higher levels of sales and shares of wallet. Moderate levels of satisfaction do not show similar correlations!

Two-thirds of all customers who leave a business would have been classified as “satisfied” using such a lax definition of satisfaction.

Further, customers rarely recommend a business they find as merely satisfying.

But, extreme satisfaction (delight) can be tracked to higher levels of sales and shares of wallet.

Moderate levels of satisfaction do not show similar correlations!

Delighted Customers are Far More Likely to Return to a Car Dealership for Service Satisfaction with Authorized Dealer’s Service Not at all satisfied Merely satisfied Delighted 91% 71% 39% % who will return to the authorized dealership % who will switch to an independent garage for next service

Delighted Customers Spend More at a Big Box Retailer The results indicate that every five-percent (5%) increase to Delight results in a $87,000 average annual increase per store. Given 720 stores in North America, this corresponds to $62 million for every five-percent (5%) increase to Delight. Customers’ Annual Purchases $A $B $Average Impact of Delight

The results indicate that every five-percent (5%) increase to Delight results in a $87,000 average annual increase per store.

Given 720 stores in North America, this corresponds to $62 million for every five-percent (5%) increase to Delight.

We misallocate our improvement efforts. Why Isn’t Customer Satisfaction Improving?

We misallocate our improvement efforts.

The Conventional Satisfaction Report The trouble with most satisfaction analysis systems is that they leave improvement open to interpretation. How do you efficiently increase a score of 7.3? Delight analysis provides a two-step process. Not at all satisfied Pain · Displeasure · Frustration Completely satisfied Delight · Elation · Advocacy Average Sat Score = 7.3 Now what? 1 2 3 4 5 6 7 8 9 10

The trouble with most satisfaction analysis systems is that they leave improvement open to interpretation.

How do you efficiently increase a score of 7.3?

Delight analysis provides a two-step process.

Delight Analysis Performance issues fall into two general categories: Those that maintain satisfaction; and Those that create delight Findings from a customer satisfaction survey can’t all be dealt with at once . . . You need to prioritize your performance issues according to their specific roles. Step 1 Focus on the Critical Performance Issues Separate Prioritize

Performance issues fall into two general categories:

Those that maintain satisfaction; and

Those that create delight

Satisfaction-Maintaining Issues: Move Customers Out of Pain Satisfaction-Maintaining performance issues are the “tickets to entry” for any category. They define the minimal acceptable quality. But they shouldn’t monopolize our satisfaction surveys. Foundation of Satisfaction-Maintaining Attributes Customers’ “Minimally Acceptable” overall satisfaction level Overall Satisfaction Issue Performance Low High Low High Delight-Creating Satisfaction-Maintaining

Satisfaction-Maintaining performance issues are the “tickets to entry” for any category. They define the minimal acceptable quality. But they shouldn’t monopolize our satisfaction surveys.

Delight-Creating Issues: Elevate Customers to Delight Delight-Creating performance issues offer businesses a unique opportunity to surprise and elate customers differentiating themselves from competitors. But they are only relevant if the basics are satisfied. Customers’ “Minimally Acceptable” satisfaction level before Delight-Creating attributes can impact Customer Delight Overall Satisfaction Issue Performance Low High Low High Delight-Creating Satisfaction-Maintaining

Delight-Creating performance issues offer businesses a unique opportunity to surprise and elate customers differentiating themselves from competitors. But they are only relevant if the basics are satisfied.

How the Two Types of Attributes Contribute Source: Keiningham, Timothy L. and Terry G. Vavra (2001) The Customer Delight Principle. New York: McGraw-Hill (American Marketing Association). Can solve problems in one call/visit Clearly communicates the required information Have confidence in advice given by advisor Makes you feel like a valued customer Provides right amount of information & assistance Impact on achieving Mere Satisfaction Impact on creating Delight 1.5 1.0 0.5 0 0.5 1.0 1.5 Driver Weights

Delight Analysis Those in pain, the ones you’ll lose Those merely satisfied Those delighted, the ones that will increase your business Step 2 Identify your three groups of customers Focus on the Most Critical Customers Identify

Those in pain, the ones you’ll lose

Those merely satisfied

Those delighted, the ones that will increase your business

How do your Customers Feel? With your customer scorecard, prioritize your actions . . . Customers in Pain Merely Satisfied Customers Delighted Customers Firm B 7% 68% 25% Customers in Pain Merely Satisfied Customers Delighted Customers Firm A 25% 55% 20%

With your customer scorecard, prioritize your actions . . .

Customers in Pain

Merely Satisfied Customers

Delighted Customers

Customers in Pain

Merely Satisfied Customers

Delighted Customers

Delighted Customers Predict Sales ICC has used % of customers delighted to predict the change in daily sales of a test panel of retail stores. We were able to correctly predict the store sales changes for 9 of the 13 stores. A correct classification of 70%! 70% Correct Classification % of Customers Delighted Average Daily Sales Increase Less than Average Greater than Average Less than Average 4 stores (31%) 2 stores (15%) 6 Stores Greater than Average 2 stores (15%) 5 stores (39%) 7 Stores 6 Stores 7 Stores

ICC has used % of customers delighted to predict the change in daily sales of a test panel of retail stores. We were able to correctly predict the store sales changes for 9 of the 13 stores. A correct classification of 70%!

The Satisfaction Continuum Using Delight Analysis, we identify areas on the overall satisfaction scale that represent pain and delight. These %’s are then reported to our clients on a periodic basis to guide improvement efforts. Not at all satisfied In Pain Completely satisfied Delighted 1 2 3 4 5 6 7 8 9 10

Using Delight Analysis, we identify areas on the overall satisfaction scale that represent pain and delight. These %’s are then reported to our clients on a periodic basis to guide improvement efforts.

ABC Stores Company YTD Satisfaction Attributes 61.7 -5.9 YTD Overall Satisfaction by Group 61.7 -5.9 Overall Satisfaction by Month Delighted (Company) In Pain (Company) Delighted In Pain

ABC Stores Company Overall Satisfaction by Region Regions Region 11 Region 12 Region 13 Region 21 Region 41 Region 42 Region 51 Region 52 Summaries Daily Scoreboard Ratings Customer Attributes Responses by Store Satisfaction by Month Dissatisfied Customers Customer Suggestions Store Ranking Customer Delight Principle Delighted In Pain

The Customer Experience is the Whole Picture The Deliverables Observation of store ops/procedures The “Service Climate ” Attitudes of the workforce Actuality What the customer saw and felt Customer Satisfaction 33% Mystery Shopping 33% Employee Satisfaction 33%

Thank You For more information please contact: David Rich, President/CEO 800-444-1717 x212 or drich@iccds.com

For more information please contact: David Rich, President/CEO 800-444-1717 x212 or drich@iccds.com