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Angry and Bored? You Must Be a Customer

Finding out what customers really think is a crucial first step toward an improved bottom line. New technology may help.
Russ Banham, CFO Magazine
July 1, 2006

GE Capital Solutions has high expectations for its customers: it wants them to be so pleased with the company that they sing its praises to others. So the financial-services unit of General Electric sends out a brief survey that asks, ultimately, "Are you likely to recommend us to friends and colleagues?" The difference between the yeas and the nays is a metric dubbed the Net Promoter Score (NPS), and it's something the company takes very seriously.

"We would lose business and never know why," says Trevor Schauenberg, vice president and CFO at GE Capital Solutions. "We had lots of metrics, but we weren't really very good at measuring customers. NPS gives us solid feedback on customer delight and loyalty."

NPS was developed by Fred Reichheld, founder of the customer-loyalty practice at consultancy Bain & Co. and author of the book The Ultimate Question. Although theologians and philosophers may beg to differ, the "ultimate question" turns out to be (with apologies to Sally Field): "Do you like me? Do you really like me?" Reichheld's influence on customer-centrism goes back a decade, when he co-authored (with Thomas Teal) a book titled The Loyalty Effect, which postulated that 10 percent of a company's customers create 50 percent of its profits. Keeping customers satisfied, happy, and loyal suddenly became the essential sentiment of every company's mission statement.

Figuring out how to do it has been a challenge. Traditional telephone and mail surveys are costly, slow, and off-putting. The data may be skewed — the few people with the time and inclination to fill out lengthy surveys or chat with a researcher may not be the best representatives of the customer base.

The Internet has opened up new possibilities, offering customers a quick-click way to register their opinions and giving companies an inexpensive method to extract reliable feedback. A new acronym was born, EFM (Enterprise Feedback Management), and a slew of packaged Web-based survey software and more-in-depth systems with analytical and consultative add-ons has appeared. Priced from about $2,000 a year for simpler services up to $15,000 or more for complex systems, the EFM market has grown 60 to 70 percent in the past two years, according to technology research firm Gartner Inc. "The number of deals signed with major vendors is increasing both in number and revenue," says Esteban Kolsky, the Gartner research director who coined the term EFM. He says a year ago he got a couple of inquiries a month on EFM and now receives two or three a day. Some key vendors include WebSurveyor, Perseus, NetAdvantage, SPSS, and StatMetrics.

Brace Yourself
This boom comes not a moment too soon. "Most [traditional] satisfaction surveys have lulled firms into believing that the majority of their customers are happy," Reichheld asserts. "Unfortunately, they got the wrong data. The truth is that the majority of customers are angry or bored." Bain research indicates that 80 percent of companies are convinced that they provide a superior customer experience, yet only 8 percent of their customers agree. "Most customers of the average firm — more than two-thirds — are either passive about the company or are downright detractors," says Reichheld. "Once you find out who they are and why they're ticked off, you can take action."

Hence the appeal of the online survey as a valuable pulse-taker. "Online surveys make it easier than ever to interact with your customer base," says John Ragsdale, former vice president and research director at Forrester Research and now vice president of research for the Service & Support Professionals Association. "They provide an accurate gauge as to how customers truly feel about the value and convenience of a company's products and services."

Online surveys may take just a few seconds to fill out, and the response rate is substantially higher than traditional mail and phone surveys — 20 to 30 percent compared with less than 10 percent. The responses are fresher and can be quickly aggregated, analyzed, and integrated with other data to produce useful metrics that, at least in theory, aid decision-making. Equally simple, and useful, are follow-up queries to the same customer base to discern whether changes that were made based on the initial round of surveying have improved customers' opinions.

Most EFM products work in a manner similar to that of WebSurveyor: a line manager, or anyone with data-collection needs, creates the survey, usually with the help of templates that are built into the software. Then the survey is added to a Website via a single button click and is ready to go. A target audience is then invited (usually via E-mail) or prompted (via a link or popup window) to take the survey. The survey creator can view the results in real time. Typically, the creator will check the data regularly as it is being collected and begin to analyze it and form some initial conclusions. After viewing some of the initial data, the executive may decide to modify the survey to deal with unforeseen circumstances, such as adding missing response options, adding or clarifying questions, and so on. Eventually, the data collection winds down and the real work of analyzing it begins. Depending on the product, built-in analysis tools may help, and the survey sponsor might also be able to export the raw data or charts for further use in other applications, Websites, or presentations.


Question Authoritatively
Online surveys are not a panacea, however. They may still result in bad data driving poor decisions. Knowing the right questions to ask of the right people at the right time is critical, as is appreciating the suitable number of questions to ask (no more than 10 seems to be the best practice). "The technology is easy, as is administering it," says Susan Piotroski, brand and customer strategy senior executive in the Boston office of Accenture. "Asking the right questions is not."

In drafting questions, Piotroski says the surveyor "must understand the original problem that drove the need for the survey. If the right questions are asked, the answer to the problem is there."

Customer-loyalty guru Reichheld says that companies have to "get to the sane customers, the people who don't waste their time," and convince them that their input has value. That's the key to turning a detractor into a promoter. "If customers are willing to promote you," he says, "that's the clearest indication of loyalty. If they're not going to promote you, follow up with more questions to determine why — build a dialogue that turns them into promoters."

Online surveys alone won't do that, but they provide a useful start. When the business unit of GE Capital Solutions surveyed customers about the experience of applying for credit by telephone, Schauenberg says, "the NPS was a negative 11 percent, which is absolutely terrible."

The company put a Six Sigma team on the case and it managed to reduce the process from 65 minutes to 4. The next survey found that the NPS was a positive 11 percent, which the company says translates to nearly $200 million in incremental value. "Whenever we put the NPS of a business unit on a matrix along with the growth rate of that unit," Schauenberg explains, "there is a definable correlation between the two." Reichheld says this connection between customer satisfaction and growth is not uncommon. "Our research over the past decade reveals that in most industries, the firms with the highest NPS have the strongest profits and the healthiest growth," he comments.

Customer feedback takes many forms. For eBags.com, an online purveyor of luggage, handbags, and computer cases, a sophisticated survey process focuses more on customer reaction to the products than to the service itself. Within 21 days of purchase, customers receive an E-mail asking them to rate the product on four attributes (appearance, durability, utility, and price/value) and assign a 1–10 ranking for each. "Then we ask the key question," says eBags CFO Mark DeOrio: "Would you purchase this product again?"

Customers seem happy to oblige — in fact, nearly a third respond. Popular products have hundreds and even thousands of customer ratings, giving prospective customers a reliable picture of how the product has been received in the marketplace. Additional features, such as customer reviews ("The pockets are comfortable and it holds my gear without becoming too bulky...."), the option of accessing just the negative reviews, and a customer assessment as to whether a given review was helpful to them all help to foster what DeOrio calls "an open and frank approach to shopping that is fundamental to our value proposition."

The company's sales are up 40 percent over the past two years, and DeOrio says customer feedback has a lot to do with that. "People want to feel they're part of the process," he says. "The customers who interact with us have a strong loyalty to the brands we market. Financially, this equates into the highest lifetime value."

If "Do you like me?" is the ultimate question, then EFM vendor WebSurveyor got the ultimate answer when one of its clients, DigitalMailer Inc., decided to resell the product as part of its communications offerings. The company, which provides credit unions with a range of Web-based communications services including E-statements, newsletters, marketing campaigns, and more, used WebSurveyor to get a grip on its customer base and liked it so much that it now helps its customers use the technology to assess their customers.

The business-to-business company pays $1,500 a month to WebSurveyor for a multiuser survey-software license, and then customizes the product for its clients, which pay about $1,500 a year to use the online tool to gauge their customers' satisfaction levels. "They're using the tool to measure branch and staff performance, in terms of how customers are handled, which tells them where they may need to make staff changes, beef up the staff, or move a branch to a different location," says DigitalMailer executive vice president and CFO Greg Crandell.

Apple Federal Credit Union, a DigitalMailer client, purchased the online-survey tool as an adjunct to its more traditional market research. "I needed an inexpensive way to get a timely response from our members," says Chris Cooper, CFO of the Fairfax, Virginia-based credit union. "This is an excellent and low-cost tool to supplement our traditional [and more comprehensive] market-research surveys."

One benefit of online surveys is that their cost and simplicity allow business units to take control. At Apple Federal, for example, department heads identify problems affecting various customer segments and create surveys using the question library that is part of the software. At any given time there may be four or more such surveys under way, which would be prohibitively expensive if handled by mail or phone. Sometimes the results translate into immediate savings; Cooper says that the WebSurveyor tool (used in an online-form capacity) helped Apple facilitate migrating the majority of its online banking members to E-statements, which is expected to save the credit union more than $7,500 per month.


Online surveys offer speed and convenience to both the companies creating them and the customers responding to them. But that power can lead to abuse. Piotroski says companies must respect the patience levels of core customers. "The promise of continuous customer feedback could erode if people are constantly being surveyed," she says. Timing is everything. "Typically, an optimum period is right after a service interaction or a transaction, when the experience is fresh in the customer's mind." But beware the temptation to "use surveys to constantly ask, 'How'm I doin'?'" she says, "because that can easily backfire."

Gartner's Kolsky cites another potential drawback. "You need to avoid data overload, where you've accumulated so much data on the customer that you lose the sense of what it all means." He suggests that clients set up a committee that decides when various customer segments will be surveyed, and agrees with Piotroski that companies have to be judicious in their solicitation of customer feedback. Sometimes the key to boosting customer demand is to make no demands of your own.

Russ Banham is a contributing editor of CFO.


On a Scale of 1 to 5...
Surveying the World of Surveys
Divining how satisfied customers are (or aren't) with your company's product or service is a major driver behind Enterprise Feedback Management, but the technology can provide a useful platform for other kinds of surveys as well, including:

Source: Gartner



Call-center Technologies
Getting a Read on Customers
Online surveys aren't the only way to employ technology in the service of assessing customer attitudes. Vendors including Nice Systems, Verint Systems, and Witness Systems sell tools that monitor — sometimes in very novel ways — the interactions between call-center staff and customers. Asurion Corp., a Nashville-based enhanced-wireless-services company, for example, uses a system from Witness to "listen" to how call-center reps handle customer queries and complaints. The system uses data or screen capture to see what's on a customer-service rep's computer, and then uses that data to check whether the rep is properly processing the claim. "In the old days, we listened to a taped recording," says Paul Hineman, director of financial planning and analysis at Asurion. But that method is laborious and unlikely to show all the detail needed to ensure compliance with the claim process. Nice Systems offers, among other capabilities, "emotion detection" that evaluates the overall tenor of a call, helping companies discover whether a disproportionate number of callers seem to be getting hot under the collar — a marker for impending defection if ever there was one. In short, there seems to be little about customers that companies can't learn, if they ask the right questions and invest in the relevant technologies. "Prior to using this system," says Hineman, "we had a 92 percent claims-resolution rate. It's now 97 percent, a 5 percent increase that generates millions of dollars for us in annual savings." — R.B.




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