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Service Excellence – the key to Customer Retention

25 October 2005Royal Commonwealth SocietyLondon

“London Excellence”Dr. Ted Marra

Strategic Partner, Symbia

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Symbia – who we are

Founded in 1994 as an independent professional services company

» Management consulting

» Interim Management

» Technical Services

Primary areas of expertise

» Customer Relationship Management (B2B)

» Performance Management

» Procurement

S-Cat prime contractor for Business & Management Consultancy

Working across public and private sector

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Who we deliver to: Some of our clients

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Who you are

Where you are from

Why you are here

Very Short Introductions

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Group Activity

At your tables, share with your colleagues what you believe best describes your senior management’s beliefs or attitudes about service in your organisation

Group discussion

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Attitude

about

the job

Attitude

about

the company

Employee

behaviour

Merchandise

Value

Service

Helpfulness

Customer

impression

Customer

recommendations

Employee

retentionCustomer

retention

Return on assets

Operating margin

Revenue growth

A COMPELLING PLACE

TO WORK

A COMPELLING

PLACE

TO INVEST

A COMPELLING

PLACE TO SHOP

5 UNIT INCREASEIN EMPLOYEE

ATTITUDE

1.3 UNIT INCREASEIN CUSTOMERIMPRESSION

0.5% INCREASEIN REVENUE

GROWTH

DRIVES DRIVES

The service-profit chain at Sears

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Service Excellence Basic Model

ServiceExcellence

Recovery StrongerRelationships

Prevention

+

Understand

Assess

Negotiate

Be anAdvocate

Prepare

Listen & Learn

Be a Resource

Be anAdvocate

ApplyQuality

Techniques

The SystematicCycles of Customer

Engagement

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Customer Relationship

Strategies Customer “Sensing”Processes

Vision, Business Plan and Key Business Objectives

CRM

Customers

TouchPoints• Sales

•Delivery•Service•Others

Customer Focused Culture

Feedback

The Customer System of an Organisation

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Managing the Customer Relationship: Customer Experience and Touch Points (B2B)

Sales Process Delivery

CustomerPurchaseDecision

CustomerPurchase

Consideration

System Design

Installation Repair Service / Maintenance

FirstInvoice

OrderSubmission

CreditReview

Purchase Cycle

CustomerPurchase

Consideration

Training Technical Support

Account Maintenance

“Telecommunications”

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Group Activity

At your tables, identify the moments of truth or touch points that occur between your customers and your organisation

» Identify the ones where you believe your organisation delivers its best service

» Identify the ones where you customers would say they experience the most pain (highest level of difficulty)

Share these with those at your table

Group discussion

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The Two Costs of Doing Business

Whenever a customer comes to do business with your organisation they always incur two costs. What are they?

1. E_________

2. E_________

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Behavioural Research Data Poor service loses customers

» Problem Experience Impacts Customer Loyalty:

Before the problem 70%-95% and 40%-75% after a problem.

So what is your recovery capability?

» Nearly 67% of the time, the reason a customer reduces or stops doing

business with you and goes to a competitor is because of poor service

(B2C)

» Nearly 70% of the time, business to business customers stop doing

business or reduce purchases is that they perceive your organisation is

“not easy to do business with” (B2B)

“It costs six to twenty times as much to get a new customer as it does to keep

an existing one”

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A “Best Practice” Complaint and Enquiry Management Process

CustomerInitiation

ContactProcess

FulfillmentProcess

ValidationProcess

ManagementProcess

EscalationProcess

Closed Loop

The Recovery System

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Mean

7.96

Problem

experienced?

No

774

Yes

338

Satisfaction Index TM Next financial product or service

1112

Customers answered

the question

Complaint

registered?

No

103

74.7%

Not satisfied

123

Satisfied with complaint handling?

Satisfied – scores of 7 to 10

Dissatisfied – scores of 1 to 4

Yes

235

Satisfied

112

64.7%

54.9%

Mean

6.86

Mean

5.47

Mean

3.46

83.4%

Recovery Process for Bank X

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Understanding your customers

o Basic needs

o Wants

o Sources of value

A Critical Success Factor for Achieving Service Excellence

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Value should be measured in terms of “benefits” perceived by the customer

» Image/reputation/brand strength

» Process

» People

» Product

» Service

» Technology

» Support

The Seven Sources of Value

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Group Activity

At your tables, identify the following

» The 2 most important basic needs of your customers

» The item you believe would be at the top of your customer’s “wish list”

» One key way you could add more value in your customer relationships

Share these with those at your table

Group discussion

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Group Activity

At your tables, identify the following

» The three most critical components of service excellence – the ones which form the base capability of an organisation to be able to deliver excellent service consistently

Discuss them briefly with those at your table

Group discussion

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Service Excellence

Characteristics/ScopeBenefits

Innovation

ServiceExcellence

People

ProcessService

Easy to do business (simple)Responsive/Short cycle time

KnowledgeSkills

BehavioursAttitudes

Capability

HR SystemsAlignment

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Loyalty is the state in which the desired set of customer needs, wants and benefits are provided throughout

the business relationship resulting in being the preferred and

recommended supplier in all relevant product

and service areas

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The Loyalty Hierarchy

Indifferent

Satisfied

Loyal

Secure

Increasingly “Benefits” D

riven

Incr

easi

ngly

“Pr

ice”

Dri

ven

Differentiationfrom

CompetitionThrough Value

LOWERPROFITABILITY

HIGHERPROFITABILITY

To be successful, your organisation must identify the customersit wants, attract them and keep them through building

relationships based upon an appropriate value proposition

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Group Activity

At your tables, discuss the following

» What should be your organisation’s action plan for change if it is serious about achieving service excellence? That is, what do you have to do or do differently to achieve service excellence?

» What are the barriers and how do you overcome them?

Group discussion

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Questions?

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Adjourn and Thank You!

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Reference Materials

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Possible Attitudes or Beliefs of Management Regarding Service (see journal article)

Service is viewed as a cost – not in terms of benefits Oh, but at least we’re the “best of a bad lot” Excellent service is a “nice to have” They don’t see that poor service will cost far more in the end than their

investment in achieving excellent service Lack of education of management e.g., the service-profit chain Service is viewed as operational – not strategic Customer satisfaction measurement often does not include anything

other than the basic needs of customers – and not touching on their wants or value adds

Customer service management are sometimes viewed as second class citizens

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Model of Organisational Performance

EmployeeOrientation

Customer Focus

Excellence

Work Environment/Values

Attitudes

Behaviors

Organisational Performance

Continuous Improvement

Desired Outcomes:• Customer Retention• Employee Retention• Financial Results • Business Excellence

Employee Performance (“Excellence”)

Employee Mindset (“Paradigms”)

Critical SuccessFactors

(“Drivers”)

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Behavioural Research Data

In a business to business environment, you usually do not know there

is a problem until it is too late!

Those customers who do not complain are your least loyal, yet easiest

and least costly to retain.

» You must find a way to invite them to speak with you about their

issue

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The Tip of the Iceberg

5%

60%

35%

Complain to

Field Level/

District/Sales Office/

Plant/Mill/Chain PartnerEncounter a

problem, but

do not

complainNo News is not necessarily good News!

65%

30%

to 50%

Call

Centre

Why do some people

NOT complain?

Complain to

Head Office

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Defining “Basic” Needs

Areas where you must be routinely flawless in delivery (six sigma!)

Failure on a “basic need” results in:

» Disproportionately high levels of dissatisfaction

» Recurring problems of a “basic” nature can quickly lead to customer

disengagement

Customers tend to be more less tolerant to perceived gaps between your performance

and that of a competitor on “basic needs”

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Defining “Wants”

The true “wants” of the customer go to the next level above “needs”.

Meeting “wants” usually results in satisfying the customer or

even delighting them

» It may or may not ensure loyalty

Customers easily articulate their needs

» Determining “wants” requires more effort

You must tap into the customer’s “wish list”

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Defining Value

Value is an intangible or tangible benefit which the customer

perceives that the competition is either unwilling or unable to provide.

It is a true source of differentiation & competitive advantage

Pre-requisite: “routinely perfect in delivering on the basic needs” (zero

defects)

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Service Excellence: People

The People Component

Customer Touch Points with Your Organisation

People & Process

Value Delivery

ValueCreation

People Capability

AttitudesBehavioursK

now

ledg

e

Skill

Support(including

alignment of HR Systems)

Business Strategy

Flow to the

Customer