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© 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. Puget Sound Research Forum Seattle, WA October 20, 2011 Finbarr.

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Presentation on theme: "© 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. Puget Sound Research Forum Seattle, WA October 20, 2011 Finbarr."— Presentation transcript:

1 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. Puget Sound Research Forum Seattle, WA October 20, 2011 Finbarr O’Neill President J.D. Power and Associates Changing the Way Companies Use Marketing Research

2 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 2 The Business Questions Is my customer attrition negatively impacting my business? How do I improve my customer retention? What is the ROI for good customer service? How should market research professionals help their companies answer these questions?

3 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 3 Start with the Fundamentals

4 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved J.D. Power Customer Service Champions Includes customer feedback on more than 800 companies across 12 industries 40 brands stand out in delivering service excellence Insights and best practices around serving today’s consumers Download for free on businesscenter.jdpower.com Industries include: Automotive, Financial Services, Insurance, Retail, Homebuilding, Telecommunications, Utilities, Healthcare, Rental Car, Hotel, Airline, Airport

5 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 5 Source: J.D. Power and Associates Driving Excellence in Service Industries Service Excellence Product 25% Product 24% Process 21% Process 16% People 23% People 28% Price 14% Price 19% Presentation 16% Presentation 13%

6 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 6 Satisfaction Gap – Service Industries Source: J.D. Power and Associates Data bridged in and 2004 for method difference Year J.D. Power Satisfaction Score (1,000 point scale)

7 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 7 Service Excellence vs. Advocacy and Loyalty Source: J.D. Power and Associates Research

8 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 8 The ROI of Service Excellence among Wireless Customers Source: 2010 J.D. Power and Associates Wireless CSI data and market share estimates Overall Satisfaction (based on a 1,000-point scale) 618K 883K 1.9M 0 1.5M 3.0M Low (< 695)Medium ( )High (720+) Net Subscriber Adds

9 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 9 The ROI of Service Excellence at Hotels Source: 2010 Proprietary Luxury Hotel Research Note: Ancillary spending includes food/beverage, spa services, recreation, phone/internet 7%35%43%15% Ancillary Spending Overall Satisfaction (based on a 1,000-point scale)

10 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 10 Top Three Misconceptions About Satisfaction

11 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 11 Top Three Misconceptions Satisfying your customers is sufficient Simply tracking a score will result in improvements Thinking there is a Silver Bullet 1 1

12 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 12 Misconception : Satisfying your Customers is Sufficient Loyal Behaviors 100% Delighted 0% Displeased Customer Satisfaction Satisfied Satisfaction is Not Enough to Drive Loyalty 1 1

13 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 13 Misconception : Satisfying your Customers is Sufficient Share of Wallet Retention Advocacy Three Important Loyalty Behaviors 1 1

14 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 14 Misconception : Satisfying your Customers is Sufficient % Gain Average Amount Spent on Ancillary Services Per Room 900 Share of Wallet - Higher Incremental Spend Luxury Hotel Example Source: Proprietary Luxury Hotel Guest Satisfaction Study 1 1

15 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 15 Misconception : Satisfying your Customers is Sufficient Higher Retention Auto Insurance Example yrs +26% Gain Source: J.D. Power and Associates 2011 National Auto Insurance Study SM 1 1

16 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 16 Misconception : Satisfying your Customers is Sufficient DissuadersAdvocates # of Advocates # of Dissuaders Advocacy Auto Insurance Example Source: J.D. Power and Associates 2011 National Auto Insurance Study SM 1 1

17 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 17 Top Three Misconceptions 2 2 Satisfying your customers is sufficient Simply tracking a score will result in improvements Thinking there is a Silver Bullet

18 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 18 Misconception : Simply tracking a score will result in improvements Relative position within the market Diagnostics Levers that drive customer delight and ultimately, financial outcomes Need to understand your… 2 2

19 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 19 Overall Utilities Customer Satisfaction Index (1,000-point scale) Source: J.D. Power and Associates 2011 Electric Utility Residential Customer Satisfaction Study SM KPIs include: Number of outages, awareness of conservation programs and good corporate citizenship/community involvement, customer care contact experiences. Overall CSI Improves as More Key Performance Indicators Are Met Misconception : Simply tracking a score will result in improvements 2 2

20 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 20 Top Three Misconceptions 3 3 Satisfying your customers is sufficient Simply tracking a score will result in improvements Thinking there is a Silver Bullet

21 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 21 Misconception : Thinking there is a Silver Bullet Information Value Chain Data Description Interpretation Recommendation Implementation Senior Executives/ High Low Middle ManagementHighLow What’s the Cost: Benefit on improving scores What are my scores How do I improve? High LowHighLow Data Description Interpretation Recommendation Implementation High Low 3 3

22 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 22 Misconception : Thinking there is a Silver Bullet Different measures do in fact predict and explain different business outcomes 3 3

23 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 23 Misconception : Thinking there is a Silver Bullet Note: Findings are adjusted for market concentrations, market share, Industry 5 year growth, Advertising spend, R&D, Firm size Source: The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Business Performance Neil A. Morgan and Lopo L. Rego (2006). Marketing Science Journal, 25 (5), What do Academics Say? Low Future Business Performance 3 3

24 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 24 Misconception : Thinking there is a Silver Bullet Relationship Between the Overall Satisfaction Index and the Likelihood to Recommend Overall Satisfaction (JDPA Index) % Definitely Will Recommend Source: J.D. Power and Associates 2011 National Auto Insurance Study SM USAA NJM Amica Mutual Erie Insurance Auto-Owners Insurance State Farm Ameriprise GEICO American Family Alfa Insurance Progressive Allstate ACSC Safeco Kemper Liberty Mutual The Hartford CSAA Nationwide ACG Esurance Travelers MetLife GMAC Farmers Mercury 21st Century Commerce R 2 = % 30% 40% 50% 60% 70% 80% 90% 100% ACG: Automobile Club Group ACSC: Automobile Club Group of Southern California CSAA: California State Automotive Association NJM: New Jersey Manufacturers

25 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 25 Best Practice Recommendations Financial Services Healthcare: PharmacyInsuranceRetailProductsTelecomTravelUtilities VA Mail-Order Pharmacy 2011 Customer Service Champions

26 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. Best Practices Customer service is in their DNA –Customers are “members” –“Facilitating your financial security” –Continuous improvement All customer-facing positions report to same organization –Breaks down silos –Improves cross-training/sharing skills –Eliminates inefficient hand offs 26

27 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. Best Practices Non-traditional online shoe and apparel retailer Builds brand on platform of core values and culture Hires / fires based on cultural fit –If we get culture right, then everything else falls into place 27

28 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. Best Practices Internet company uses telephone as critical customer touch point –It’s a branding lens; not an efficiency or revenue lens –No up-selling –No scripts –No time limit with customer –Nearly every Zappos.com employee takes customer loyalty training, including two weeks on the phone with customers 28

29 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. Best Practices Product Lexus has been a top-three brand in initial quality in 20 of the past 22 years LS has been the highest-performing model in initial quality in 9 of the past 14 years Service Lexus has ranked in the top five in customer service (CSI) for the past 21 years Clear understanding of customer needs, perceptions, and behaviors Extensive use of independent industry-wide benchmark information to assess strengths/weaknesses 29

30 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 30 “One of the profound lessons I have learned is that customer satisfaction is a moving target. You can never declare victory.” J.D. (Dave) Power – Founder, J.D. Power and Associates

31 © 2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 31 Thank You Questions?


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