Turning Customer Research Into Results
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Turning Customer Research Into Results

The best way to ensure profitable sales growth is to keep building an ever-increasing base of loyal customers. Customer research consistently proves that "loyal" customers are worth much more than merely "satisfied" customers. Only "highly satisfied" customers become loyal customers. They buy more often; they spend more per transaction, and they drive new customers your way with positive word-of-mouth advertising.

Imagine the impact on your business if all of your customers were like your best customers.

To earn customer loyalty, you simply have to provide a great overall customer experience. You know that. So since you can't be in every location to mind the shop, you've collected feedback from your customers to find out how you're doing. Some customers say "You're great!" Some say "You're lousy!" Now what do you do?

Fred Reichheld is right when he claims in his article, "The One Number You Need to Grow" (Harvard Business Review, December, 2003), that the one number on a customer survey that is most likely to correlate with sales growth is the answer to the question, "How likely are you to recommend us as a place to do business?" That's a great indicator of how much, or little, customers are loyal to your company. But what do you do about it?

A fact like, "Only 30% of your customers are highly likely to recommend you," is not actionable information. Don't you really want to know how to increase that number? Or if you have one location with 30% of customers who are highly likely to recommend, and another location with 60% of customers who are likely to recommend, don't you want to know why? And what you can do about it?

There are four requirements to turn customer research into actionable information:
1.) discover and validate the key drivers of customer satisfaction in your business;
2.) create a Customer Satisfaction Index (CSI) by developing a customer survey that quantifies your performance on those key drivers;
3.) provide that customer feedback as soon as possible to managers and employees-at the unit level; and
4.) tie your recognition and rewards systems to your CSI scores

Customer research firms have developed very sophisticated processes to intelligently get customer feedback that can be acted upon to win more loyal customers, and profitable sales, for your business.

Let me give you a very simplified walk-through of the first step: discover and validate the key drivers of customer satisfaction in your business.

Start by developing a test customer survey. Only a finite number of service attributes can yield actionable information. Using industry research and your own experience, identify what those are in your business. For example, attributes such as speed of service or helpfulness of employees or cleanliness of operations-those are controlled by the manager and employees at the unit level.

Next, test the survey on an appropriate sample size of your customers. I recommend using a 5-point scale, where 5 equals "highly satisfied" and 1 equals "highly dissatisfied." Start by asking: "Please rate your overall satisfaction with your most recent experience at this location." Follow that with a question about each of the specific service attributes, such as: "Please rate your satisfaction with the speed of service you received."
Conclude by asking: "Please rate your likelihood of returning to this location" and "Please rate your likelihood to recommend this location to others."

Next, using data from at least 2000 surveys, do an analysis to uncover the strength of the relationship between each of the service attribute ratings and the overall satisfaction rating. This process helps identify the key drivers of customer satisfaction from primary to secondary to marginal.

Now you know, with a high degree of confidence, what really are the most important elements of the service you deliver. You also know how you are doing, from the customer's perspective, on delivering high levels of satisfaction overall AND how well you are performing on each of the service attributes that drive that overall satisfaction.

You have set the table for service improvement actions that will have the most impact on your customer's experience. You, along with unit managers and employees can prioritize your service improvement efforts to give you the most bang for your buck. Customer research at SMG proves that high satisfaction drives loyalty and that loyalty drives sales growth rates. Discover the key drivers of customer satisfaction and you dramatically improve your team's capability to increase your customers' average spend, frequency of visit and likelihood to recommend you as a place to do business.

Jack Mackey is vice president of Service Management Group. You may contact him at jmackey@whysmg.com or 816-448-4556.

Published: January 23rd, 2006

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