satisfaccion de cliente y crisis financiera (ingles)

Madrid, February 25, 2009

Customer Satisfactionand

The Financial Crisis

Claes FornellChairman, CFI Group and

The Donald C. Cook Professor, University of Michigan

© 2009 CFI Group. All rights reserved.2

What Caused the Crisis?

Bizarre behavior by

US consumers

• Didn’t save in good times

• Now saving in bad times

US government

• Borrowed in good times (created deficits)

US banks/financial institutions

• Enormous risk taking (until now)

• Zero risk taking (now)

© 2009 CFI Group. All rights reserved.3

Why Is the Rest of the World Affected?

Risky assets were packaged and sold to the rest of the worldCollapse of US consumption of imported goods

World-wide recession

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What Is a Recession?

GDP = Consumer spending + Government spending

+ (Exports – Imports) + Investments

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The Cure: Monetary Policy (Friedman)

Interest rates

Print money

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The Cure:

GDP = Consumer spending + Government Spending

Tax cuts New projects

Fiscal Policy (Keynes)

Household Income

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How Customer Satisfaction Is Critical

Macro

Consumer Spending

CreditAvailability

ConsumerConfidence

DiscretionaryIncome

Customer Satisfaction

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How Customer Satisfaction Is Critical

Loyal customers are the last to leave and the first to come back.

Loyal and satisfied customers are a critical asset, but you will not find this on the balance sheet.

Micro

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Consider the Following

• Global forces

• What to do – What not to do

• Economic returns/Low risk

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Global Forces and Power Shifting

Movement of:1. Information

2. Capital

3. Work (not labor)

© 2009 CFI Group. All rights reserved.11

Who Benefits Most?

Buyers or sellers?

Who is getting more choice?

Who is becoming more replaceable?

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Off-balance sheet assets

Power attracts capital

Customer Asset Management

How to do Business When Buyers Are Getting More Powerful?

© 2009 CFI Group. All rights reserved.

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08

ACSI: American Customer Satisfaction Index1994 – 2008

© 2009 CFI Group. All rights reserved.14

Investment Returns

Where’s the leverage?

What’s the return on customer assets?

Do customers know something

investors don’t?

© 2009 CFI Group. All rights reserved.15

Observations

Information Technology Globalization

More Buyer ChoiceMore Buyer Information

Shift in Balance of PowerBetween Buyers and Sellers

Assets on Balance SheetLess Predictive

Intangible Market-Based Assets

(Customer Satisfaction) More Predictive

© 2009 CFI Group. All rights reserved.16

The Theory

+

+

Capitalizing on the Shift in Balance of Power Between Buyers and Sellers in

Product/Service Markets

Classical Economic Utility (Satisfaction)Theory

Technology for Extracting Value-Relevant Information

© 2009 CFI Group. All rights reserved.17

How Are Markets Supposed to Work?

Seller

Product Markets

Equity Markets

Repeat Buying

More Capital

The Successful Seller

Buyer defection in product markets

Capital withdrawal from equity markets

The Unsuccessful Seller

© 2009 CFI Group. All rights reserved.18

Can You Beat the Market?

Only if you know something that others don’t

© 2009 CFI Group. All rights reserved.19

Customers (in the aggregate) Have Certain Value-Relevant Information

Before Investors Do

The Premise

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“The American Customer Satisfaction Index, the definitive benchmark of how buyers feel about what business is selling them.”

- New York Times, August 8, 2004

Investment Universe: Approx. 200 Large Cap. Consumer Companies Covered by ACSI

© 2009 CFI Group. All rights reserved.2121

Annual Returns: ACSI stock portfolio vs. S&P 500April 2000 (Inception) - 2008

-13%

26%

9%

3%

14%

4%

-9%

11%

-6%

34%

14%

20%

-19%

-12%

-23%

-38%

36%

16%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Yea

rly

Pe

rfo

rman

ce

S&P 500

ACSI Stock Portfolio

2000 2001 2002 2003 2004 2005 2006 2007 2008

© 2009 CFI Group. All rights reserved.22

Effects of Customer Satisfaction: Repeat Buying/LoyaltyPricing PowerHigh Reservation PricesLow Cash Flow Volatility

Investment Implications

Translate Into: Above-Market Returns Low Down-Side Risk Beta Surfing (B < 1 in down markets; B > 1 in

up markets)

© 2009 CFI Group. All rights reserved.23

7.9%

17.6%

14.3%

3.0%

10.7%

8.8%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2003 2004 2005 2006 2007 2008

CSat Market Neutral

CSat Market Neutral: Annual ReturnsAfter Fees

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Implications for Corporate ManagementWhat Losers Do

Buy customer loyalty with price discountsCut costs at the expense of weakening customer relationshipsGet too close to the customerRely on mass production and mass marketingTry to exceed customer expectations

© 2009 CFI Group. All rights reserved.25

Implications for Corporate ManagementWhat Winners Do

Manage customer relationships as true economic assetsCut costs where they have the least impact on customer assetsUnderstand marginal analysisMaximize customer complaintsEarn the loyalty of their customers by satisfying them

© 2009 CFI Group. All rights reserved.26

Marginal AnalysisWhat to Do

Perf

orm

an

ce a

s ju

dg

ed

by o

ur

cust

om

ers

Personal service

Merchandise assortment

Facilities Waiting time

Impact on customer satisfaction

© 2009 CFI Group. All rights reserved.27

Marginal Analysis What to Improve in Good Times

Perf

orm

an

ce a

s ju

dg

ed

by o

ur

cust

om

ers

Personal service

Merchandise assortment

Facilities Waiting time

Impact on customer satisfaction

© 2009 CFI Group. All rights reserved.28

Marginal Analysis What to Cut in Bad Times

Perf

orm

an

ce a

s ju

dg

ed

by o

ur

cust

om

ers

Personal service

Merchandise assortment

Facilities Waiting time

Impact on customer satisfaction

© 2009 CFI Group. All rights reserved.29

The Future:

Some element of Non-rival goods + customer asset management

Customers + InvestorsA New Alliance:

Rising Cost of Time: Buyers will offload work on sellers

Key to Success in:

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Typical Rate of Return

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Rate of Return: Customer Retention

Customer Retention

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Rate of Return: Non-Rival Goods

Degree of Non-Rival Goods