Changing the Way Companies
Use Marketing Research
Puget Sound Research Forum
Seattle, WA
October 20, 2011
Finbarr O’Neill
President
J.D. Power and Associates
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
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?
2
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Start with the Fundamentals
3
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
2011 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
4
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Driving Excellence in Service Industries
2003
2010
Product
25%
Product
24%
Process
21%
Service
Excellence
Source: J.D. Power and Associates
5
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
People
23%
Process
16%
People
28%
Presentation
16%
Presentation
13%
Price
14%
Price
19%
Satisfaction Gap – Service Industries
J.D. Power Satisfaction Score
(1,000 point scale)
950
850
750
650
2000
2001
2002
2003
2004
2005
Year
Source: J.D. Power and Associates
Data bridged in 2000-2002 and 2004 for method difference
6
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
2006
2007
2008
2009
2010
Service Excellence vs. Advocacy and Loyalty
Customer Service Champions
All Others
70%
62%
58%
Advocacy and Loyalty
60%
50%
40%
36%
30%
23%
20%
10%
0%
Definitely Would Recommend
Source: J.D. Power and Associates Research
7
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Definitely Would Repurchase
The ROI of Service Excellence among
Wireless Customers
Net Subscriber Adds
3.0M
1.9M
1.5M
883K
618K
0
Low (< 695)
Medium (695 - 719)
Overall Satisfaction
(based on a 1,000-point scale)
Source: 2010 J.D. Power and Associates Wireless CSI data and market share estimates
8
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
High (720+)
The ROI of Service Excellence at Hotels
Ancillary Spending
Ancillary Spend
$65
Evaluated Stay
Next Visit
$58
$46
$45
$38
$48
$40
$32
$27
$26
$25
Dissatisfied (550
and below)
Indifferent (551750)
Pleased (751-900)
7%
35%
43%
Overall Satisfaction
(based on a 1,000-point scale)
Source: 2010 Proprietary Luxury Hotel Research
Note: Ancillary spending includes food/beverage, spa services, recreation, phone/internet
9
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Delighted (901+)
15%
Top Three Misconceptions
About Satisfaction
10
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Top Three Misconceptions
1
Satisfying your
customers is
sufficient
Simply tracking a
score will result in
improvements
Thinking there is a
Silver Bullet
11
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Misconception 1 : Satisfying your Customers is Sufficient
Satisfaction is Not Enough to Drive Loyalty
100%
Loyal
Behaviors
0%
Displeased
Satisfied
Customer Satisfaction
12
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Delighted
Misconception 1 : Satisfying your Customers is Sufficient
Three Important
Loyalty Behaviors
• Share of Wallet
• Retention
• Advocacy
13
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Misconception 1 : Satisfying your Customers is Sufficient
Share of Wallet - Higher Incremental Spend
Luxury Hotel Example
$100
Average Amount Spent on Ancillary Services Per Room
Amount Spent
$80
+ 8.00
+17% Gain
$55
$60
$47
$47
Dissatisfied
Indifferent
Pleased
Delighted
< 550
551-750
750- 900
>900
$41
$40
$20
$0
Source: Proprietary Luxury Hotel Guest Satisfaction Study
14
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Misconception 1 : Satisfying your Customers is Sufficient
Higher Retention
Auto Insurance Example
+ 3 yrs
+26% Gain
< 550
551-750
Source: J.D. Power and Associates 2011 National Auto Insurance StudySM
15
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
750- 900
>900
Misconception 1 : Satisfying your Customers is Sufficient
Advocacy
Auto Insurance Example
Source: J.D. Power and Associates 2011 National Auto Insurance StudySM
16
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Advocates
# of Advocates
# of Dissuaders
Dissuaders
Top Three Misconceptions
Satisfying your
customers is
sufficient
2
Simply tracking a
score will result in
improvements
Thinking there is a
Silver Bullet
17
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Misconception 2 : Simply tracking a score will result in
improvements
Need to understand your…
• Relative position
within the market
• Diagnostics
• Levers that drive
customer delight and
ultimately, financial
outcomes
18
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Misconception 2 : Simply tracking a score will result in
improvements
Overall CSI Improves as More Key Performance Indicators Are Met
Overall Utilities Customer Satisfaction Index (1,000-point scale)
KPIs include: Number of outages, awareness of conservation programs and good corporate
citizenship/community involvement, customer care contact experiences.
Source: J.D. Power and Associates 2011 Electric Utility Residential Customer Satisfaction Study SM
19
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Top Three Misconceptions
Satisfying your
customers is
sufficient
Simply tracking a
score will result in
improvements
3
20
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Thinking there is a
Silver Bullet
Misconception 3 : Thinking there is a Silver Bullet
High
High
Senior
Executives/
Middle
Management
What are my scores
How do I improve?
What’s the Cost: Benefit on
improving scores
Low
Low
Data
Description Interpretation
Recommendation Implementation
Information Value Chain
21
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Misconception 3 : Thinking there is a Silver Bullet
• Different measures do
in fact predict and
explain different
business outcomes
22
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Misconception 3 : Thinking there is a Silver Bullet
What do Academics Say?
Future Business Performance
Low
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), 426-39.
23
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Misconception 3 : Thinking there is a Silver Bullet
100%
Relationship Between the Overall Satisfaction Index
and the Likelihood to Recommend
90%
USAA
% Definitely Will Recommend
80%
NJM
70%
Amica Mutual
60%
Erie Insurance
ACSC
50%
40%
30%
State Farm
CSAA
GEICO
Ameriprise
Liberty Mutual
American
Family
Nationwide
The Hartford
Auto-Owners Insurance
Alfa Insurance
ACG
MetLife Esurance Progressive
Mercury
Allstate
Farmers
Safeco
GMAC
Kemper
21st Century
Travelers
2
R = 0.83
Commerce
20%
700
750
800
850
900
950
Overall Satisfaction (JDPA Index)
Source: J.D. Power and Associates 2011 National Auto Insurance StudySM
24
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
ACG: Automobile Club Group
ACSC: Automobile Club Group of Southern California
CSAA: California State Automotive Association
NJM: New Jersey Manufacturers
Best Practice Recommendations
2011 Customer Service Champions
Financial
Services
Healthcare:
Pharmacy
VA Mail-Order Pharmacy
25
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Insurance
Retail
Products
Telecom
Travel
Utilities
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
© 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
© 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
© 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
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
“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
30
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Thank You
Questions?
31
© 2011 J.D. Power and Associates,
The McGraw-Hill Companies, Inc.
All Rights Reserved.
Download

2011 JD Power Customer Service Champions