Three changes to your annual customer satisfaction survey can better focus your improvement initiatives
Many organizations conduct comprehensive customer satisfaction surveys this time of year in preparation for their annual planning exercises. Surveys aid decision making for process improvement initiatives and can also be used to test new product and service ideas. But most companies miss easy opportunities to gather valuable information along the way because they fail to do three things: 1.Ask segment identification questions. Surveys typically ask customers for demographic information (age, gender, income, location) or company-specific information (products or services purchased, account size, salesperson) to categorize and compare responses. But these questions tend to be driven by whatever is easy to measure, not by what’s most essential to know. Asking respondents to identify themselves by market segments allows companies to align their products, services, and process improvements with the benefit of greater context. For example, let’s say a travel company identified three distinct segments in their customer base: families vacationing on school holidays, seniors enjoying their retirements, and corporate group travelers celebrating successful sales years. While all may purchase travel services, each customer set values what the company does differently: holiday availability may be more important to families, while low travel cost may be more important to retirees. The company may also determine that some customer segments are more profitable than others or represent opportunities for growth. In this example, the company could ask, “Which statement best describes you?” and offer descriptions of the three segments. When data are analyzed according to cleanly defined segments, suddenly results have far greater strategic impact. Prioritization becomes much easier when improvements can be traced to potential top-line revenue or bottom-line profit by customer segment. 2.Ask what’s important. Many organizations use the same survey questions they’ve always used, which allows them to track customer satisfaction changes over time. This certainly makes sense, but doing so blindly eliminates the chance to verify what’s relevant. The Importance-Satisfaction (I-S) survey technique adds the question “How important is this to you?” along with a rating scale (e.g. 1= not at all important to 5 = extremely important) to track customers’ current and changing tastes. Collecting both importance and satisfaction provides a handy measurement of the gap between the two.
High-performing organizations periodically challenge their understanding of customer preferences. After receiving the prestigious Malcolm Baldrige National Quality Award a second time in 1999, Ritz-Carlton CEO Horst Schulze remarked: “During our implementation of the Baldrige Criteria, I’ve learned that although the sparkle of the chandeliers is important, it is not the only priority of our guests. It doesn’t matter that the petunias are perfect if the valet dents your car or your bill is wrong. We’ve learned to make our customers’ priorities our priorities… We’ve shifted from looking ‘out’ from our own perspective to looking ‘in’ from the customer’s.” 1 Besides asking customers the right questions to determine areas of most concern, eliminating questions deemed unimportant allows organizations to make surveys shorter, which in turn increases survey response rates. 3.Analyze correctly. Most companies use very basic calculations which can lead to the wrong conclusions. Managers typically compare average satisfaction scores from one period to the next or between one group and others. For example, if average satisfaction was 4.3 in 2012 and is 4.4 in 2013, managers often conclude satisfaction has improved 0.1. This may not be true—the determination has not accounted for experimental error, and the difference may actually be due to randomness. Student’s t or Analysis of Variance (ANOVA) is the correct approach when comparing sample means between two or more groups. Technically, if data are not normally distributed (most satisfaction data are skewed, not bell-curve shaped) or respondents select from a set of discrete ratings (e.g. categories 1-5 on a Likert Scale or 1-10 for Net Promoter Scores®), contingency tables with chi-square analysis then becomes the correct approach. To properly separate the “signal” from the “noise,” the analyst must calculate p-values to determine if differences between sample means are statistically significant. Most executives want to understand cause-and-effect relationships and make predictions, not just make comparisons. For example, call center managers may want to know, “Which will have a greater impact on overall customer satisfaction: reducing call hold times or resolving issues on the first call?” In this case, analysts use multi-way cross-tabulation tables, but when evaluating four or more factors, the analyses are more elaborate (correspondence, classification trees, log-linear). The right methods can uncover a wide range of new insights, but managers should ask qualified statisticians for help. Collecting customer feedback is a healthy first step for annual business planning. Adding segment identification, importance-satisfaction questions, and proper statistical analysis can then make a substantial impact on what is decided during business planning. Excel-lens is a publication of Service Excellence Partners. Our unique approach helps founders at early stage companies better scale operations and manage growth. Contact us today. Source:
James Hunt, Elaine Landry, and Jay Rao, 2000. “Case Study: The Ritz-Carlton Hotel Company, 1992 and 1999 Malcolm Baldrige Quality Award Winner,” Journal of Innovative Management, Fall 2000. GOAL/QPC.
Net Promoter Score (NPS) is a registered trademark of Fred Reichheld, Bain & Company, and Satmetrix
Amazon warms up the customer experience One of the hottest Christmas gifts this season is Kindle Fire HDX. It’s a souped-up tablet that includes a new feature garnering a lot of attention. It’s the Mayday button, and it connects you to a live customer service agent over a video link. Press the button, and within fifteen seconds an agent appears on your screen offering help. You can see and hear them, but they can only hear you. The agent has full access to your device, so they can view screens, take control, demonstrate capabilities, or troubleshoot problems. Mayday is available 24/7, 365 days a year, free of charge, and with no time limits on how long you and the adviser chat. Amazon CEO +Jeff Bezos says the company goal with Mayday "is to revolutionize tech support."1
It’s a smart move, and only part of Kindle’s simple three-part strategy.2 Amazon’s first strategy is to sell premium products at non-premium prices, and the second is making money when people spend on Amazon books and videos. In other words, give away the razor but make it up on the razor blades. The third strategy is fostering customer delight with Mayday. It becomes an important differentiator, especially with Kindle’s target buyers—older, less tech-savvy, avid readers. Amazon handles the burden of helping tech-challenged users, so the new Kindle just may be Santa’s perfect gift for an elderly mom or dad.
The devil is in the details But along with innovation comes ironing out operational wrinkles. Generally reviews are very positive, but some customers report technical glitches, while others are suspicious about agents having full access to everything, including passwords (Amazon notes screen sharing can be paused).3 Sharing privacy concerns, many corporate IT departments have disabled Mayday links on company Wi-Fi’s to prevent Amazon agents from seeing potentially sensitive documents.4 A variety of other issues have yet to reveal their consequences and only time will tell. Christmas Day customer service demand will likely be off the charts as new customers unwrap and try their new toys, which means Amazon may be hard-pressed to meet their promised 15-second service level response time. It’s also not clear how Amazon will deal with multiple languages or serving the hearing impaired. Then there’s the issue of creepy customers, although Amazon says agents are trained to terminate sessions that go off track. Will being telegenic become a job requirement for technical support?5 Not all agents have the stunningly good looks of the actors portrayed in Amazon’s TV spot, and unlike call centers, agents’ facial expressions and body language are suddenly under scrutiny on every interaction. How does all this play with labor laws and employee feedback?
Despite the challenges, putting a live, smiling face on customer care is revolutionary. Seeing faces, even those of total strangers, affects us in subtle but profound ways. Neuroscientists have known for years that our first skill as babies is to recognize faces, but they’ve recently discovered that our brains are wired far more extensively for social connection than they previously thought. Experiments show our brains activate reward centers when we see photographs of people who want to chat with us online. Surprisingly, the effect holds true even if the people are total strangers and we’re not that interested in talking to them.6 Experts believe our hunger for human connection is a primary driver in how we think, feel, and act, and simply viewing faces satisfies some of those needs. Tapping this deep psychology and delivering a helpful service experience creates a uniquely positive memory with the device and the brand. Amazon’s step toward replacing impersonal call centers with Mayday’s new paradigm could indeed raise the bar on a key factor that drives customer loyalty.
Mayday catches fire While some techies scoff, saying it is nothing more than a sales gimmick, others think Mayday opens up new frontiers in customer service. They see it as a new era of data integration that will enhance the customer experience.7 Software help desk tool vendors are already buzzing about imitating Mayday-like capabilities in future releases.8 And industry watchers are thinking about Mayday as a method to collect customer feedback, encourage usage, offer advice, and upsell.5 Assuming Amazon can work out the details, making customer care more personal with video can have profound effects on customer loyalty by connecting with our basic human nature. Whatever the outcome, the new Kindle Fire HDX has set the service world ablaze imagining the possibilities. Excel-lens is a publication of Service Excellence Partners. Our unique approach helps founders at early stage companies better scale operations and manage growth. Contact us today. Sources: 1.Dan Seifert on September 25, 2013, “Amazon launches Mayday, a virtual Genius Bar for the Kindle Fire HDX: Amazon is including live tech support with its new tablet, no pants required” The Verge. 2.Todd Bishop on September 25, 2013. “Jeff Bezos explains the next step in Amazon’s strategy — the ‘hardest and coolest’ part” Geekwire. 3.Timothy Stenovec on October 2, 2013. “The Mayday Button May Actually Convince You To Buy The Kindle Fire HDX” Huffington Post. 4.Matt Hamblen on September 26, 2013. “New Kindle Fire HDX's tech support button could push IT to yell 'Mayday!'” Computerworld. 5.Software Advice, December 11, 2013, “Is Amazon’s Mayday Support Model Right for Your Organization?”CSI: Customer Service Investigator. 6.Matthew D. Lieberman (2013). Social: Why our Brains are Wired to Connect, Crown Publishers, New York. ISBN: 978-0-307-88909-6 7.Neal Schact on September 29, 2013. “Did Amazon Just Fire Another Shot Heard 'round the World?” Nojitter. 8.Joe Panettieri on November 26, 2013. “Amazon Kindle MayDay Button: Can MSP Help Desks Respond?” MSPMentor
How an ancient practice keeps entrepreneurs from deluding themselves and their investors Thousands gathered this week in San Francisco at the Lean Startup Conference to hear industry luminaries share their expertise on how to launch successful startups. Conference hosts blogged about how innovative “Lean Startup” methods can reduce risk by rejecting the traditional path of extensive business planning and huge upfront investments. Instead, today’s top entrepreneurs formulate and test hypotheses, adjusting their new offerings quickly and cost-effectively with fast development cycles.
That’s right, the heart of today’s hottest management trend is a 2,500-year-old idea that you first learned in grade school. It’s the scientific method, one of Aristotle’s lasting contributions to humankind. He promoted the radical idea that new knowledge can be gained from empirical study of the natural world. Throughout the ages, Ibn al-Haytham, Roger Bacon, Descartes, and many others went on to perfect the concept. (1) Eventually, a 19th Century scientist and philosopher named William Whewell defined the five-step method commonly used today: formulation of a question, a hypothesis, a prediction, experimentation, and analysis of data to confirm or reject the hypothesis. (2) Lean Startup is the scientific method Today’s Lean Startup approach employs the scientific method to answer essential questions about new products, business models, and early market demand. Rather than generating lengthy market research reports, entrepreneurs list their hypotheses on a one-page “business model canvas.” Then, applying agile development techniques, founders work closely with customers to quickly test hypotheses and refine product features, pricing, marketing, and delivery. Following this path helps entrepreneurs prove that their products, key business processes, and economics all work on a small scale before they seek funding for rapid expansion.
This approach is not just for startups. Big companies General Electric, Toyota, and Comcast all use Lean start-up practices to develop new products and services with small teams, (3) an intrepreneurial practice that helps them avoid the bureaucracy inherent in large organizations. Many leading firms run ongoing, low-cost experiments, and then learn all they can from them, only committing massive money and resources when and if the business ideas demonstrate traction. Jim Collins, author of Good to Great and Great by Choice, calls this “firing bullets, then cannonballs.” He says following this critical discipline can help companies outperform financial benchmarks by a factor of ten or more over the long term. (4) Angel investors and venture capitalists can also benefit from Lean Startup methods. It’s estimated that as many as 90% of new high-tech ventures fail, (5) meaning investors typically waste billions every year on ideas that go nowhere. The new approach limits risk for investors because it helps them methodically validate ideas using someone else’s (the founders’) boot-strapped funds. Financiers then avoid investing in ideas that arise from hopes and dreams alone, and substitute them with scientifically proven models based soundly on “dollars in and dollars out.” Pass the pie in the sky Perhaps the scientific method’s greatest contribution to startups is helping entrepreneurs overcome their own human shortcomings. All people suffer a cornucopia of flawed thinking—Wikipedia lists no less than 92 decision-making, belief, and behavioral biases.
Unfortunately, entrepreneurs tend to be in a class by themselves when it comes to bias. Being an entrepreneur often involves a steadfast belief in an idea that will be bigger than Google, regardless of what anyone else thinks. While that level of confidence is admirable, even infectious, it’s almost always self-deluding. Whether applied in the physical sciences or in business, the scientific method helps minimize bias and errant conclusions through repeated experiments, rigorous peer reviews, and credible evidence. In the end, objective reality always trumps subjective belief.
After a history of bad decisions and so much money wasted on dead ends, entrepreneurial approaches are changing. Increasingly, investor’s say “Prove it” when entrepreneurs claim to have the Next Big Thing. Thanks to the scientific method, the Lean Startup approach can do exactly that. Excel-lens is a publication of Service Excellence Partners. Our unique approach helps founders at early stage companies better scale operations and manage growth. Contact us today. Sources:
De Lacy O'Leary (1949), How Greek Science Passed to the Arabs, London: Routledge & Kegan Paul Ltd., ISBN 0-7100-1903-3
History of Inductive Science (1837), and in Philosophy of Inductive Science (1840)
Jim Collins and Morten T. Hansen (2011), Great by Choice: Uncertainty, Chaos and Luck—Why Some Thrive Despite Them All, USA: HarperCollins Publishers, ISBN 978-0-06-212099-1
Max Marmer, Bjoern Lasse Herrmann, Ertan Dogrultan, Ron Berman. Start-Up Genome Report Extra. s.l. : Stanford University, 2012.
