What's Wrong With Taking Survey Data at Face Value?

I’ve been designing survey questionnaires and analyzing the data for so long that I often forget that some people may not be doing the deep dive and asking the hard questions of the data they’ve collected and for which our clients hire us (thank you, you know who you are). Maybe a little exploratory analysis, a tad of correlation, a glance at the verbatim comments and we’re done until the next time. Did we do a survey? Check. Did we do anything with it? Sure, sort of. Do we have a deep understanding of what the data means? Well….

What’s worse than not gathering intelligence from customers and employees?

Coming to the wrong conclusions!

I’m reminded of this fact by two articles I read last week: In This Case, Let’s Examine Dissatisfaction in the February issue of Survey magazine and Guest Perceptions on Factors Influencing Customer Loyalty in the current issue of the International Journal of Contemporary Hospitality Management.

In the case of customer dissatisfaction, the article suggests several calls to action:

Understand whether you have a category problem rather than a brand problem. In other words, your competitive space may allow easy switching with or without loyalty programs so make sure you know what your issue is before investing in programs that will not alleviate it.

Your market strategy will drive a customer’s perception of satisfaction. If you are a low cost provider, you have accepted that a lower level of quality and service is part of the equation. The danger zone you could find yourself in is in trying to be low cost while also attracting a customer who looks for a different level of product and service.

Benchmarking. I’ve never been a fan but lots of companies do it and the swirling vortex that you get sucked into is that you compare your performance to companies who target different customer segments.

Dissatisfaction may not arise from what you do but rather what other, similar companies do that you don’t do. Customers constantly evaluate decisions based on alternatives; some amount of dissatisfaction arises with your product and service even if you are executing your strategy perfectly.

My suggestions for arriving at the best conclusions possible from your data analysis:

• Keep your strategy upper most in mind when designing the project and return to it often when analyzing data. This means knowing who your competition is; who the ideal customer is and what your competitive advantages are.

• Design survey questions to be particular rather than general. The more generic the question, the less likely it is that you have actionable data and the more likely you potentially are arriving at the wrong conclusions.

• Don’t confuse happy with satisfied. If you want to meet a customer’s needs, you are aiming for satisfaction. If you want happy, that’s a whole different level of expectations.

• Perform data analysis from several different perspectives. Not all survey questions should be treated equally in reaching conclusions.

I’ll write more about the last topic next week.

Three Big Trends That Will Change the Way You Make Decisions

I attended a seminar this week on predictive analytics, a topic some say would cure insomnia. But, I found the trends important and worth more consideration by anyone who owns a business or runs one or is employed by one – so the majority of us.

I love data, even as a totally right-brained person, because it has a story to tell. The problem is we’ve exhausted the process of using lagging indicators to produce insight about future decisions. Companies should be moving from silos of data hoarded and rarely aggregated to a point where employees collaborate and make real time, fact-based decisions based on modeling organizational data and assessing the power of one choice over others to achieve results.

A few years ago, Thomas Davenport wrote a book titled, Competing on Analytics and cited large companies such as Marriott, Harrah’s and Progressive Insurance as the analytics champions. Not much hope for the rest of us, is that what you’re thinking?

Here’s what I learned from that seminar and I believe it is important for businesses of all sizes to get really clear about the implications of these trends:

Analytics are moving downstream. What was once done by a cube farm full of PhD’s will be done by us regular people who are tasked to come up with hard evidence for what we do (market, train, deploy technology, in short, everything). Technology will make it possible to collaborate with other functions to aggregate data and perform our own statistical and predictive work. On our laptops. In real time. Maybe a lone PhD floating among us.

Analytics are moving into every function. No longer will we be able to get by with a "I -can’t- quantify- the- ROI -of –why- I –need- this- money- from- the- budget-but- trust-me- on- this". Jack Fitz-Enz said it best in his new book The New HR Analytics: if the HR department doesn’t feel up to handling human capital issues in a quantifiable, predictive way; the C-suite will give the responsibility to someone else. That holds true for every function from Marketing to Customer Service.

Predictive analytics are a competitive advantage. At a time when we all are looking for the Holy Grail of business success, if your company isn’t starting now to explore the concept, it could find itself out-maneuvered and shut out by the competition.

• What if your competition could predict which of its customers was likely to defect in 6 months and offer them a sweetheart deal before they are out the door?
• How much money will you spend trying to woo a customer that isn’t interested in moving her business to you because you don’t know which behaviors trigger a purchase?
• What if you could predict which employees had the greatest power to impact customer loyalty and could increase the likelihood of retaining them by customizing their rewards and recognition?

Am I going to turn away from my intuition or sense of what feels right in favor of analytics alone? Heck no, but using both is the right equation: Intuition+ Experience + Analytics = Insight + Results.

How about you?

Hot Customer $ervice in the $ummer Time

We’ve been sweltering through a crispy summer in Atlanta and I finally had to bite the bullet to install a new HVAC system.

Of course in these new days of austerity, it wasn’t a matter of picking the prettiest system; oh no, I had to do my homework. Onto the web sites I went, looking at systems, any deals that could be available and, most importantly, what my friends and neighbors are saying about the two contractors I short-listed.

While I had used a locally well-known provider for 15 years, I had a very disappointing experience with one of the company’s executives last year. However, I decided to give them the opportunity to make a service recovery and quote for my business. And, I added another local contractor that had very positive online reviews. Both quotes were very similar but I couldn’t shake the bad experience I had had with my current vendor.

After dithering for a month (it’s $10,000 after all; not exactly an impulse purchase), I phoned the sales person for the second contractor. We discussed scheduling and the fact that in this Sahara-like summer, I couldn’t do without air conditioning for a day and a half. Without hesitating, he arranged to bring a room air conditioner 5 days before the work was due to start because “there is no reason why you have to be uncomfortable”.

Do I have to tell you who got the business?

Bill was on time and dutifully dragged the unit upstairs and down until we found a window that would accommodate it. He installed it, tested it and ensured there was no escape of precious cold air into the outdoors. And he did it all cheerfully on a day with a 106 -degree heat index.

I’ve told everyone who is even mildly interested about my customer experience and why I didn’t select the first vendor. Of course, if anyone asks me, I’d happily recommend Bill and his company. I’ll also be doing online reviews because I found them very helpful when I was looking for a new HVAC contractor.

Lessons learned?

• It takes only one conversation to lose a long time customer so if you have the words “Customer Service” in your title and you don’t live up to it, be prepared to lose your revenue base over and over again.

• What your web site and marketing materials say had better align with how your employees behave with customers; it’s becoming easier to spot the differences. And, in this economy, people are fed up and aren’t putting up with sub-par service.

• It only takes one small thing, in my case, the offer of a loaner air conditioner several days in advance of the installation, to completely surprise and delight a customer. We are so hardened to expect customer “no service” that when the unexpected happens, it produces multiples of satisfaction versus the actual expenditure of resources.

• Online reviews are routinely part of a customer’s research. Ignore them at your peril. Google never forgets!

• Word-of-mouth referrals and recommendations are incredibly important for any company.

• Going above and beyond, often in small ways that are personal, is the greatest source of satisfaction, which will drive intention to buy, refer and repurchase. When everything else is equal between you and your competitors, this kind of differentiator stands out.

What is your company doing to surprise and delight your customers? Do you monitor what people are saying about you – or do you think customers don’t really take notice of other peoples’ opinions?

What If 24% of Your Customers Said, "I'm Off!"?

That alarming statistic in the title comes from a Satmetrix study of UK customers who left buying relationships in the previous 6 months because of a poor experience.

Here is a breakdown of the customers’ reasons for leaving:

How many of these reasons are beyond the companies’ ability to control them? We don’t know what the 7% "Other" is, so let’s assume the companies were not responsible for those; which leaves us with a whopping 93% of the reasons for defections that could have been anticipated and corrected. While this was a UK study, having lived there for almost 20 years, I can tell you that the British become more Americanized every day; that includes customer expectations and buying experiences.

At a time when every profitable customer is a nugget of gold, what were these companies thinking? Is no one asking why such a large percentage of revenues coming from new customers are going to replace income from those who have defected?

How would your company quantify such recurring losses? In addition to lost revenues that must be replaced, there are acquisition costs and lost opportunity costs when you cannot cross-sell to an existing customer (cheaper than acquiring a new one) and when the defecting customer tells ten people face-to-face and thousands online.

The Satmetrix study also reported that while 49% of respondents trusted referrals from friends and family as their primary source of information, only 2% trusted the company’s advertising; what they labeled the Recommendation Generation. It seems that this might be a budget item that could be revisited in the current economic climate.

So, add it all up, assuming 24% of your customers leave annually or whatever percentage you believe is true for your company:

• Lost revenues
• Lost market share
• Acquisition costs
• Loss of cross/up-selling opportunities
• Lost Customer Lifetime Value
• Negative word-of-mouth
• Ineffective advertising

Now ask your department heads and others:

Why would we spend our budget on advertising instead of improving the customer experience? If you can’t have both, the latter seems to be much more a more effective use of limited resources.

How can we afford to hemorrhage so much money in this economy when most of the reasons for customer defections are within our own ability to change the game? What do you think the cost of a good customer experience is? What is it worth to your company?