© 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

• 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?
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© 2011 J.D. Power and Associates,
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•
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
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Service
Excellence
2003
Product
25%
Process
21%
People
23%
2010
Product
24%
Process
16%
People
28%
Presentation
16%
Price
14%
Presentation
13%
Price
19%
Source: J.D. Power and Associates
5
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950
850
750
650
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Source: J.D. Power and Associates
Data bridged in 2000-2002 and 2004 for method difference
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70%
60%
50%
40%
30%
20%
10%
0%
62%
Customer Service Champions
23%
Definitely Would Recommend
Source: J.D. Power and Associates Research
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All Others
58%
36%
Definitely Would Repurchase

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
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High (720+)

$65
Ancillary Spending
Evaluated Stay
Next Visit $58
$48
$46
$45
$40
$38
$32
$27
$26
$25
Dissatisfied (550 and below)
7%
Indifferent (551-
750)
35%
Pleased (751-900)
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
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Delighted (901+)
15%

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1
Satisfying your customers is sufficient
Simply tracking a score will result in improvements
Thinking there is a
Silver Bullet
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100%
Satisfaction is Not Enough to Drive Loyalty
Loyal
Behaviors
0%
Displeased
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Satisfied
Customer Satisfaction
Delighted

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Three Important
Loyalty Behaviors
• Share of Wallet
• Retention
• Advocacy

$100
Share of Wallet Higher Incremental Spend
Luxury Hotel Example
Average Amount Spent on Ancillary Services Per Room
$80
$60
$47 $47
$41
$40
$20
$0
Dissatisfied Indifferent
< 550
Pleased
551-750 750- 900
Source: Proprietary Luxury Hotel Guest Satisfaction Study
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$55
Delighted
>900
+ 8.00
+17% Gain

Higher Retention
Auto Insurance Example
+ 3 yrs
+26% Gain
< 550 551-750 750- 900
Source: J.D. Power and Associates 2011 National Auto Insurance Study SM
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>900

Dissuaders
Advocacy
Auto Insurance Example
Advocates
Source: J.D. Power and Associates 2011 National Auto Insurance Study SM
16
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All Rights Reserved.

2
Satisfying your customers is sufficient
Simply tracking a score will result in improvements
Thinking there is a
Silver Bullet
17
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The McGraw-Hill Companies, Inc.
All Rights Reserved.

improvements
Need to understand your…
• Relative position within the market
• Diagnostics
• Levers that drive customer delight and ultimately, financial outcomes
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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.

3
Satisfying your customers is sufficient
Simply tracking a score will result in improvements
Thinking there is a
Silver Bullet
20
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The McGraw-Hill Companies, Inc.
All Rights Reserved.

Middle
Management
What are my scores
How do I improve?
What’s the Cost: Benefit on improving scores
Senior
Executives/
Information Value Chain
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• Different measures do in fact predict and explain different business outcomes

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.
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100%
90%
80%
Relationship Between the Overall Satisfaction Index and the Likelihood to Recommend
USAA
NJM
70%
60%
50%
40%
30%
20%
700
Amica Mutual
Erie Insurance
ACSC
State Farm
CSAA GEICO Ameriprise
Liberty Mutual
The Hartford
ACG
MetLife
Mercury
Farmers
GMAC
21st Century
Nationwide
American Family
Alfa Insurance
Auto-Owners Insurance
Progressive
Esurance
Allstate
Safeco
Kemper
Travelers
Commerce
750 800 850
Overall Satisfaction (JDPA Index)
900
R
2
= 0.83
950
ACG: Automobile Club Group
ACSC: Automobile Club Group of Southern California
CSAA: California State Automotive Association
NJM: New Jersey Manufacturers
Source: J.D. Power and Associates 2011 National Auto Insurance Study SM
24
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Best Practice Recommendations
2011 Customer Service Champions
Financial
Services
Healthcare:
Pharmacy Insurance Retail Products Telecom Travel Utilities
VA Mail-Order Pharmacy
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• 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
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• 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
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•
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
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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
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“One of the profound lessons I have learned is that customer satisfaction is a moving target.
You can never declare victory.”
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J.D. (Dave) Power – Founder, J.D. Power and Associates

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