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Monday, 30 November 2009

Are you living in a "fool’s paradise"?

All marketers need to know how their offers are appealing to customers, and many use customer satisfaction surveys to get their answers. But the uncomfortable truth is that these surveys often fail to provide actionable data, don’t change much even when market share is dropping and customer defections are rife, and can easily hide rather than reveal the problems that need swift corrective action – so much so that some experts recommend that satisfaction is not the most useful aspect of customer experience to measure (Reichheld, 2003). Measuring recommendation is another approach that may give a better prediction of loyalty – but it does not tell you how to increase loyalty or gain stronger recommendation. None of these approaches give you consistent insight into what problems customers might have with your product or service.

Most now realise they need to benchmark against major competitors, and gain data from potential customers, even from "rusted on" adherents of competitors.

Many already go beyond measuring satisfaction and measure loyalty (share of wallet for that market), purchase intentions and advocacy.

Some replace a performance index based on satisfaction scores with the Net Promoter Score – despite the evidence that there is no "one best number" to sum up customer response to their offer.

And yet, most still have the same problem they started with. All this measurement can help, but does not seem to solve the marketer’s twin problems – to know how their offers are appealing to customers and the wider market in comparison with competitors, and to find ways to improve their competitive position.

Replacing satisfaction surveys with systems to capture and analyse customer complaints is one approach to obtaining much more actionable data. However, this provides no benchmark data about competitor performance. Transforming satisfaction surveys to capture complaints, or product and service failures, and including competitor customers in the samples can give much more actionable data.

Adding items to capture delights – experiences with the product or service that exceed what a customer believes can reasonably be expected – can be even more revealing.

Experience surveys work best when they ask about how often specified things go wrong, how serious the impact was, and obtain at least one "story" about a problem the respondent has experienced, with an account of what happened. Adding a story about outstanding performance can add further actionable insight.

One lesson from studies that have used this approach is that having a single problem often has little impact on satisfaction, even if the outcome was unsatisfactory. Having had two problems has a bit more effect.

Having three or more problems has a quite disproportionate effect. This seems to exceed a general human threshold for dissatisfaction and action. However, the action is often to change supplier rather than to complain.

Another lesson is that outstanding service often hides quality problems. When stories about outstanding service are analysed, they often involve staff making heroic efforts to recover from a failure of the product or the service system. Staff might even have violated rules and gone outside the prescribed system to meet a customer’s requirement. This can produce a very satisfied customer and can explain why some customers who have had even quite severe problems can be very satisfied. However, it can hide the need to change the system so the need for heroic recovery action does not arise in the first place.

Taverner have been working with proven methods for obtaining stories about problems and delights, methods that work even in an online survey, and work well in a CATI survey with well trained interviewers. The type of probing that is often thought to be impossible without highly skilled executive interviewers can in fact be written into CATI and even online survey scripts.

So, to summarise, go beyond measuring satisfaction by designing your customer experience questionnaire to include:

1) A checklist measure of service and product problems.
2) How problems have turned out.
3) Verbatim accounts of problems and what was the response.
4) Verbatim accounts of outstanding service or product experience.
5) Measures of overall satisfaction, loyalty, purchase intentions and recommendation.

posted by Tom Mitchell-Taverner

Monday, 9 November 2009

Are you sure you still know your customer?

The article below was written by Philip Mitchell-Taverner, Managing Director Taverner Research, and is the first thought leadership piece in an ongoing series of articles, stories and general industry information pieces.

So much has been written about the Global Financial Crisis it can be overwhelming and, if you are not careful, confusing. At times like these, carefully selecting reputable organisations, publications and authors to inform you is a smart survival strategy. I hope you see Taverner Research as one of these reputable organisations that can guide you as we emerge from one of the most turbulent eras of recent times.

This is never truer than when the green shoots of recovery first appear. Have we really hit bottom? Perhaps there will be a late frost that will endanger those delicate new shoots. There is little doubt that there will be more “bad news” days, the stock market will continue to yo-yo as investors take profit as the market rallies. Such events unnerve the market and unsettle those who are planning for the recovery.

A big question that I am asked by many of our clients and one we constantly debate internally, is when is the right time to start reinvesting in market research? No doubt budgets have been slashed, especially by those global corporations based in the USA and Europe is little better. With business confidence only slowly returning, one might expect a cautious approach to reinvesting in market research.

However such a cautious approach creates a serious problem for organisations. There is little doubt that your customers will have been significantly altered by the Global Financial Crisis. Maybe they have lost their job, perhaps their pension plan has been decimated. If they are under 35 years old, they have just experienced their first recession since entering the workforce, what has this done to their spending habits and patterns and their approach to risk? How have their spending profile and priorities changed. Has their brand loyalty held up? How have attitudes to work and their employers changed? The list goes on. These are serious and crucial questions. Can you really afford your competition to find out before you?

It has been well documented that some of the biggest fortunes have been made in the worst recessions and it is equally true that those organisations that adapt to the brave, new, post GFC world, will be the first to prosper and win crucial market share. Those organisations that invest now will be those that create competitive advantage, an advantage that once created, may last for many years to come.

Give us a call or drop me a line to discuss your point of view. Perhaps together we can solve these pressing issues.

posted by Tom Mitchell-Taverner

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