The importance of

customer satisfaction
to your business
• Customer focused
organisation
 Goals of Customer Focus:
Creating Offering Building
Better compelling deeper
Products or customer customer
Services experience relationships

End goal of customer focused strategies is the same:

Boosting retention and repurchase =

more sales!!!
 Business Performance Factors
Contribution
86% 83%
to Shareholder Value
90%
75%
71%
80%
62%
70%
60%
50% 47%
40%
30%
20%
10%
0%
Product/Service Customer Sat. Operating Financial Innovation Employee
Quality & Loyalty Efficiency Results Satisfaction

Source: Price Waterhouse Coopers, 2002

 Customer Satisfaction = Profits
• Knowing what drives
• Attracting NEW
customer loyalty is
customer is 4 x cost of
important to your
company’s financial health
retaining existing
customer
• Repeat customers and
new customers from • 5% increase in
referrals  continuous customer retention 
revenue streams 75% in aggregate
• Disloyal customers are lifetime profits from that
expensive to replace customer
 What are your customers worth?
Customer Lifetime Value = CLV
• S = average revenue per
customer sale Lifetime Value of
• C = costs of servicing Customer (CLV)
customer
• V = expected # sales per =
year
• Y = expected # years
[(S-C)*(V*Y)-A+
customer will use your (A*N)]*F
services OR
• A = cost of acquiring new • Margin * # sales – cost of
customer acquisition + savings from
• N = # of referrals from referrals * correction factor
customer
• F = correction factor
 What are your customers worth?
Customer Lifetime Value = CLV
• S = average revenue per – S = 20,000
customer per sale
– C = 5,000
• C = costs of servicing
customer –V=2
• V = expected # sales per –Y=5
year – A = 1500
• Y = expected # years
customer will use your –N=4
services – F = 1.2
• A = cost of acquiring new
customer
• N = # of referrals from CLV = [(20000-5000)*(2*5)-
1500+(1500*4)]*1.2
customer
• F = correction factor CLV = 185,400
 Why Customer Sat. is important?
Study by Le Beouf:
“the reasons why customers no longer dealt with a particular
supplier” 3%
5%

9%

No reason

Other Suppliers

Competitors
14%
Product Dissat.

Attitude of owner,
manager or employee
69%
•A customer
satisfaction
program
 Customer-Focused Initiatives
Customer Champion
Customer Value Attache
Create a customer champion Director who
Nokia product engineer goes on-site with
is responsible for championing the voice of
customer for up to 1 month to learn about
the customer through the organisation.
challenges and show how Nokia can add
value

Everyday Life Observation

To gain deeper understanding of customer,
send video crews & TV cameras into 80 Customer Charter & Advocate
households around world to capture customer Independent customer advocate whose role is
daily routines to resolve particularly difficult customer and
business problems. Customer charter to
improve customer experience with service.

Customer Success Engineer Team

Centralised group that diagnoses root causes
of complex customer problems and
implements solutions across business
Customer Partner Experience
Organisation-wide customer and partner
satisfaction index to provide a holistic view of
business health and trigger specific corrective
actions where necessary.
The 6 Ps of Marketing
Customer Feedback Program
• With a well constructed feedback program
you can get key insights into customers to:
– Identify key drivers of customer experience
– Glean insights into health of your company
– Detect early warnings of any erosion of your
relationship or value proposition
 Customer Satisfaction
Customers-Internal & External

Types of Customers
Type I:- INSIGNIFICANT CUSTOMERS
who knows not what he wants and knows
not that he knows not what he wants

Type II:- HUMBLE CUSTOMERS

Who knows not what he wants and
knows that he knows not what he wants
 Customer Satisfaction
 Type III:- SLEEPING CUSTOMERS who
knows what he wants and knows not
that he knows what he wants

 Type IV:- MASTER CUSTOMER who

knows what he wants and knows that
he knows what he wants .
 Customer Program Activities
1. Assess internal root cause for customer
1
perceptions – satisfaction drivers
2
2. Derive action plans to resolve most critical
issues – set your objectives
3.
3 Implement these actions
4. Track your progress with ongoing customer
4
research
5.
5 Link these customer metrics to your financial
results & staff incentives
6.
6 Tell your customers how you used their
feedback
 Case Studies
Rice University Case • Methodology:
– 50% surveyed (group 1)
Study showed and 50% not surveyed
customer (group 2)
satisfaction – Group 1 were twice as
loyal to company
improves customer • Conclusion?
retention and – Customers want to be
company profits coddled
– Surveys  increase in
auxiliary product sales
– Surveys create opinions
 Microsoft
• Worldwide Survey Apr & Oct
• Customer Escalation Tool
• RMTP – Response Management Through
Partner
• Feedback forms at events (9 point scale)
• Tactical Research – Qualitative & Quantitative
• Anecdotal feedback
• Roundtable sessions
Understand Satisfaction Drivers
Service
Emotional Factor Quality

Customer
Satisfaction
Price

Product
Quality

Access to
products &
Services
 Value Mapping
high

support

Sales staff
service product

reputation
value Bus
expertise

Easy to do
bus with

Brand

low satisfaction high

 Avoiding the Pitfalls
• Listening to the wrong customers
• Incorrectly identifying customer priorities
• Failing to consider strategic objectives
• Failing to align organisation around
execution
• Failing to ‘get paid’ by customers for new
value
• Losing momentum – “campaign mentality”
•Ways to measure
customer
satisfaction
Different forms of measurement
Online
Annual Questionnaires Feedback
Customer Forms
Satisfaction
Surveys
Online
Polls
Customer
Service
CRM Feedback
Other
Software Surveys
(Benchmarking,
Employee, Org
Focus Groups Alignment) Phone or
(Formal/ Fax
informal) Surveys
 10 Golden Rules
1. Believe customers
1 6 Don’t spend vast sums
6.
possess good ideas of money
2
2. Gather customer 7 Make it easy for
7.
feedback at every customers to provide
opportunity feedback
3 8 Leverage technology to
3. Focus on continual 8.
improvement – start with aid efforts
top 10 issues bugging 9
9. Share feedback
your customers throughout the company
4
4. Solicit good and bad 10.
10 Use feedback to make
feedback quick changes
5
5. Seek real time feedback
 •In Summary
•“You can’t move a
mountain in a day, but you
can make it easier to climb
by clearing a path.”
 Benefits of Feed Back
 Customer Dissatisfaction
 Quality Priorities
 Performance Appraisal
 Customer Needs-Requirements in
Design
 Improvements in Every Stage
 Customer Retention
Customer Orientation
This is the idea that everything that is done is driven by a
concern to meet our customer’s needs, whether those
customers are internal or external. It means responding
promptly to customers to ensure their satisfaction.

This competency includes elements of ability in :

􀂖 Focusing on customer’s individual needs
􀂖 Always striving to exceed customer expectations
􀂖 Proactively identifying new ways of delivering customer
service
􀂖 Constantly evaluating performance against customer
satisfaction
􀂖 Identifying customer needs and delivering appropriate
actions in a timely manner
􀂖 Partnering with customers to deliver best value
2
Achieving a Market
Orientation
 Obtain information about customers, competitors,
and markets
 Examine the information from a total business
perspective
 Determine how to deliver superior
customer value
 Implement actions to provide value
to customers
2
Societal Marketing
Orientation
Marketing that preserves or
enhances an individual’s
and society’s long-term
best interests


 Less
Less toxic
toxic products
products
 More
 More durable
durable products
products

 Products
Products with
with reusable
reusable
or
or recyclable
recyclable materials
materials
3 The Organization’s Focus
Key
Key Issues
Issues in
in
Developing
Developing
Competitive
Competitive
Advantage
Advantage

Create
Create Maintain
Maintain
Build
Build Long-Term
Long-Term
Customer
Customer Customer
Customer
Relationships
Relationships
Value
Value Satisfaction
Satisfaction
3 Customer Value

The ratio of benefits

to the sacrifice
necessary to
obtain those benefits
3
Customer Value
Requirements
 Offer products that perform
 Give consumers more than they expect
 Avoid unrealistic pricing
 Give the buyer facts
 Offer organization-wide commitment in
service and after-sales support
3 Customer Satisfaction

The feeling that a product has

met or exceeded the
customer’s expectations.
3
Maintaining Customer
Satisfaction
 Meet or exceed customer’s expectations
 Focus on delighting customers
 Provide solutions to customer’s problems
 Cultivate relationships,
NOT one-time transactions
3
Building Long-Term
Relationships
 Customer-oriented personnel

 Effective training programs

 Empowered employees

 Teamwork
3
Defining a Firm’s
Business
“Benefits” instead of “goods/services”

 Ensures a customer focus

 Encourages innovation

 Stimulates an awareness of changes

in customer preferences
Competitors to Customer Orientation
Orientation Feature
Technology When the excitement of what can be done
comes before the requirements of customers
Product When organisations assume they know that
what they produce or provide is what customers want
Producer When what the staff want comes before
customer’s interests
Financial When making profits or cutting costs in the
short term come before longer-term customers’ interests
Sales When selling higher volumes becomes more
important than customer satisfaction
Managerial When managers’ need to implement the
latest management philosophy takes the emphasis away
from the customer
Professional When professionals in an organisation do
not listen to service users because they believe that they
know best