Barriers to service innovation and how to overcome them

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John Goodman of Tarp fame revealing some of the insights from his recent book Strategic Customer Service

John Goodman of Tarp fame revealing some of the insights from his recent book Strategic Customer Service

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  • 1. Barriers to Service Innovation and How to Overcome Them John Goodman, Vice Chairman, TARP Bentley University June 18, 2009 This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
  • 2. About TARP • Founded in 1971—38 years delivering dramatic impact – White House sponsored studies of client service (instigated 800#s) – Malcolm Baldrige (influenced criteria) – Assisted 6 Baldrige winners and 43 Fortune 100 companies – Initiated concept of “word of mouth” (TARP/Coca-Cola 1978 Study) and “word of mouse” (eCare and Click & Mortar studies 1999) • Credited with developing approach for quantification of impact of service and quality on revenue for companies like Neiman Marcus, Mayo HS, IBM, American Express, Qualcomm, Honda, Chick-Fil-A, Toyota/Lexus, USAA, Xerox, and Motorola • New book, Strategic Customer Service, published by American Management Association, May 2009. 2
  • 3. Formula for Satisfaction & Brand Loyalty DOING EFFECTIVE MAXIMUM THE JOB RIGHT THE FIRS T + CUS TOMER CONTACT = CUS TOMER S ATIS FACTION & LOYALTY TIME MANAGEMENT Respond to Individual Customers Customers will: Identify Sources Buy again Improved Product & Service of Dissatisfaction Buy more Quality Tell others to buy Conduct Root Cause Analysis Buy your other products & services Feedback on Prevention This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden. 3
  • 4. Barriers to Service Innovation • Misunderstanding of the causes of dissatisfaction • Assumption that no news is good news • Assumption that everyone is price driven • Demand for interactions that are consistent and delightful • Benchmarking that causes complacency • Single source Voice of the Customer • Financial and Marketing cynicism This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden. 4
  • 5. Causes of Customer Dissatisfaction The majority of dissatisfaction is not caused by employee errors or attitude. Customer Employee 20%-30% 20% - follow - Wrong expectations Fails toFails to follow - - Customer error policy policy -Attitude Company 40%-60% - Products and services - don’t meet expectations Products and services don’t meet expectations - Marketing miscommunication -Marketing miscommunication - Broken processes - System fails - Units fail to coordinate This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden. 5
  • 6. No News Is Not Good News: Health Care I II III IV Question/ Contact Contact Market Problem Behavior Handling Impact Experience % Definitely/Probably Recommend/repurchase from same organization No problem 90% experience Satisfied1 50% 93% 50% Health Care Clients Complainers Mollified2 50% 5-25% 30% Problem Dissatisfied3 experience 30% 20% 50% Experience suggests Non- three strategies: Complainers 60% Prevention, Solicitation 95-75% of Complaints, and Response the intellectual property of TARP Worldwide and for use only to illustrate This presentation is TARP’s methodology. Use of or distribution beyond that purpose is forbidden. 66
  • 7. Problems Raise Sensitivity to Price Problems vs. Dissatisfaction with Price Percent of customer dissatisfied with fees rises with number of problems. 90% % Dissatisfied with price or fees 80% 74% 70% 60% 46% 50% 40% 30% 22% 20% 10% 10% 0% No problems 1 problem 2 to 5 problems 6 problems or more This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden. 7
  • 8. Flexibility and Explanation Trump Consistency, Accessibility and Money • No Unpleasant Surprises • If Trouble Encountered – Accessibility – Taking Ownership – Apology – Tailored action – flexible response – Clear Explanation – so that I believe I have been treated fairly – often more important than money • Handle on First Contact Results in 10% Higher Satisfaction and 50% Lower Cost This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden. 8
  • 9. Impact of Delightful Experience on Top-Box Loyalty by Type of Action Average lift to repurchase or Delight experience recommend (Top Box) Service beyond expectation 12% Assistance during a crisis 14% No unpleasant surprises 22% Friendly interaction with staff 25% Personal relationship over months 26% Tell me of new product or service I 30% can really use Consistently good service 32% Proactively provide information on 32% how to avoid problems or get more out of your product This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden. 9
  • 10. Traditional Views of Benchmarking and Voice of the Customer • Benchmarking of processes is good – benchmarking of performance is problematic – Performance is local – If tied to incentives – can be disheartening • Voice of the customer tends to be only surveys or fragmented – Surveys, contacts, internal operations and employees – Marketing and sales are usually not the focus of feedback This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden. 10
  • 11. Revenue Impact Of Service Can Be 20 X The Cost Impact x x x X% Almost all Satisfied repurchasing = 35 50% Y% Some not Complain Mollified repurchasing = 153 10,000 Customers Z% Many not with Dissatisfied repurchasing = 306 problems 50% Do not Some not complain repurchasing = 1500 Total customers at risk = 1994 This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden. 11
  • 12. Word of Mouth Impact Can be Estimated Example Calculation of Potential Impact x x 20% Tell a few delighted = 600 1,000 clients 80% Tell one satisfied = 800 1,400 1 Actions 1400 Referrals X = 47 New clients 30 Referrals This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden. 12
  • 13. Ten Myths About Service 1. Always exceed customer expectations 2. Answering the phone really fast is the key to success 3. People always prefer talking to people 4. The customer is always right 5. Complaints are down, things are getting better 6. Employees are the cause of most dissatisfaction 7. Price and cost cutting is the key to success 8. We’re at 90% satisfaction – let’s declare victory! 9. Measure Net Promoter and we’re done 10. We have a 100% satisfaction guarantee – everyone is happy. This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden. 13
  • 14. Contact Information for Papers Mentioned John Goodman jgoodman@tarp.com (703) 284-9253 14