clear 2008 annual conference anchorage, alaska “promoting regulatory excellence through...

CLEAR 2008 Annual Conference

Anchorage, Alaska

“Promoting Regulatory Excellence Through

Surveying”

Bob E. Hayes, Ph.D

President

Business Over Broadway

CLEAR 2008 Annual ConferenceAnchorage, Alaska

Outline

• Customer Loyalty, Profitability and Service Delivery

• Customer Loyalty and Regulatory Agencies

• Web-based Surveys

• Loyalty Management

• CLEAR Survey Results

• Summary


Customer Loyalty and Profitability

• Decreasing customer defections by 5% increases profits from 25% to 85% across a variety of industries1

1 Reichheld, F. F., & Sasser, W. E. Zero defections: Quality comes to service. Harvard Business Review, Sept-Oct. 1990.


Business Models

• Customer variables (loyalty, value) impact company value

BusinessPrograms

MarketingSales

Service

CustomerDevelopment(cross/up-sell)

FirmValue

CustomerLifetime

Value

CustomerAcquisition

CustomerRetention

BusinessPrograms

MarketingSales

Service

CustomerDevelopment(cross/up-sell)

FirmValue

CustomerLifetime

Value

CustomerAcquisition

CustomerRetention

Based on the article by Gupta, et al. (2006). Modeling customer lifetime value. Journal of Service Research, 9(2), 139-155.


Business ModelsEmployee, Partner, and Customer Loyalty Drive Business Results

Based on the book, The Service Profit Chain: How leading Companies Link Profit and Growth to Loyalty, Satisfaction and Value (Heskett, Sasser & Schlesinger, 1997)

Employee Survey

Customer Survey

Partner Survey

Company

Business Strategy

CompanyPerformanceInternal

SystemEmployee

Satisfaction

EmployeeProductivity

PerceivedValue

CustomerSatisfaction

Revenue

Profits

EmployeeLoyalty

CustomerLoyalty

Partner

Advocacy

Purchasing

Retention MarketShare


Customer Loyalty

• Degree to which customers feel/act positively toward the organization

• In business, there are three components of customer loyalty

1. Advocacy – likelihood to recommend or choose again

2. Purchasing – likelihood to buy different/more

3. Retention – likelihood to stay


Regulatory Agencies

• Standard conceptualization of customer loyalty does not work

• Customers do not have a choice; Customers have to use agencies (e.g., licensing for physicians)

• In non-competitive environments, need to redefine what we mean by customer loyalty


Customer Loyalty Measures

• Regulatory agencies can focus on three positive behaviors of customers

1. Expansion – likelihood of increasing level of business

2. Compliance or Influence – likelihood of complying with agency requests or being influenced by the agency in a way that benefits the agency

3. Advocacy – likelihood of speaking favorably/recommending or supporting agency on issues and matters that are important to the agency

Based on the article, Parcenka, C. (2008). Beyond mere customer retention. Quirk’s, March, 42-46.


Expansion Loyalty

• Signing up for programs that help customers do their job more effectively

• Using agency as a consultant when selecting products/services from a third party


Compliance/Influence Loyalty

• Seeking agency’s advice/expertise on issues in my field

• Accepting agency’s advice or referrals to third party contractors

• Complying with/Influenced by agency’s advice or opinion

• Providing personal information (to better serve customers)


Advocacy Loyalty

• Supporting agency’s position or action on licensing-related public issues

• Supporting agency’s issues on changing licensing process (e.g., new tests)

• Providing testimonials about positive experiences with the agency


Desired Customer Behaviors

• What does the agency want from customers?

• How can customers support the agency’s mission?

• What can customers do to help agency better serve them?

• What can customers do to help agency minimize cost of doing business?


Generating Loyalty Questions

• Qualitative approach using cross-functional team– Roundtable discussions– One-on-one interviews

• Qualitative approach using real customers– Panel discussions– One-on-one interviews– Open-ended questions on surveys


Assessing Quality of Questions

• Is the meaning of loyalty clear?

• Is the loyalty behavior something the customer can do?

• How does the behavior benefit the agency?


Customer Loyalty

• 0 to 10 Satisfaction/Likelihood Scale– Respondents indicate satisfaction/likelihood to

behave in a certain way (e.g., recommend, purchase)– Higher scores indicate higher levels of customer

loyalty (0 to 10)

0Not at all Likely

5 10Extremely Likely

6 7 8 91 2 3 4


Potential Loyalty Questions

• How likely are you to sign up for different programs we offer?

• How likely are you to comply with the agency’s advice in regulatory matters in your field?

• How likely are you to support the agency’s position or action on licensing-related public issues?


Customer Experience

• The sum of all experiences a customer has with a supplier of goods/services

• Company treats customers in certain ways that can be positive or negative

• Impacts/drives customer loyalty

• Perception of/Satisfaction with specific characteristics of the customer experience


Customer Satisfaction

• 1 to 5 agreement scale– Respondents indicate the extent of agreement that an

attribute (customer experience element) describes their experience

– Higher score indicates higher quality or better customer experience (1 to 5 rating)

1StronglyDisagree

3Neither Agree

Disagree

5StronglyAgree

4Agree

4Disagree


• Data collection is cost effective

• Survey process is simplified– Fewer data management concerns

• Utilize the capabilities of the Web– Real-time results– Ease of analysis and access to information

• Survey process integrated with IT applications

Web-based Survey


Micro Level Loyalty Management

• Understand the customer relationship for a specific survey respondent

• Identify customers who indicate they are disloyal (rating on loyalty questions)

• Target improvements on disloyal customers to address specific needs immediately– Action plan directed at impacting individual customers


• Use trigger e-mails to identify disloyal customers

Negative responses to loyalty/satisfaction questions trigger notification to pre-determined employees and managers

Trigger email alerts enable employees to take immediate action on important customer issues

Micro Level Approach


Macro Level Loyalty Management

• Understand the customer relationship across all customers

• Identify systemic reasons causing loyalty/disloyalty

• Target company-wide improvement programs directed at all customers

• Help improve the service delivery system– Impacts how the work gets done


CLEAR Survey Content

• Five Customer Loyalty Questions

• Ten Business Attribute Questions

• Membership length

• What are your original reasons for joining CLEAR?

• What is major benefit you are receiving from CLEAR?

• How could CLEAR offer more value?


Customer Loyalty

• Customer Loyalty– Degree to which customers feel/act

positively toward the organization (CLEAR)

1. Overall Satisfaction

2. Recommend

3. Continue Membership

4. Use Different Types of Services

5. Renew Membership

Rated on a scale from 0 (Extremely Dissatisfied/Not at all Likely) to 10 (Extremely Satisfied/Extremely Likely).


Satisfaction with Attributes

• Perception of specific characteristics of the customer experience

1. Services are excellent

2. Provides neededresources

3. Offers training I want

4. Organized events areexcellent

5. Excellent reputation

6. Responsiveness

7. Knowledgeable

8. Courteous

9. Understands needs

10. Membership is a good value

Rated on a scale from 1 (Strongly Disagree) to 5 (Strongly Agree).


CLEAR Survey Method

• Mail list received from CLEAR (347 potential respondents)

• Duplicate email addresses removed

• Email invitation (with hyperlink to Web-based survey) sent to 315 people

• Survey open Sept 10 through 17, 2008


CLEAR Invitation Email


Web-based Survey


Results

Respondents who indicated they were not CLEAR members were excluded from all analyses.

• Received 127 completed responses for a response rate of 40% (127/315)

16%

13%

12%

13%10%

36%

Zero - not amemberLess than oneyearOne to less thanthree yearsThree to less thanfive yearsFive to less thanseven yearsSeven years ormore


Member Loyalty

0%

25%

50%

75%

100%

ContinueMembership

RenewMembership

Recommend OverallSatisfaction

UseDifferentServices

Loyalty Question

Pe

rce

nt*

Lo

ya

l

Key Findings

A high percentage of members (~95%) indicate that they will continue/renew their membership with CLEAR

Members are more likely to continue/renew their membership than advocate (~77%) or use different services (~54%)

Percent of respondents who had a rating of 6 or greater on a 0-10 scale.


Membership Tenure and Loyalty

4

5

6

7

8

9

10

ContinueMembership

RenewMembership

Recommend OverallSatisfaction

Use DifferentServices

Loyalty Question

Sa

tis

fac

tio

n/L

ike

liho

od

Less than 3 years

3 years to less than 7 years

7 or more years

Key Findings

Long-term members report higher levels of loyalty compared new members, especially with respect to renewing their membership and recommending CLEAR


Membership Tenure and Quality

2

3

4

5

Service isexcellent

Resourcesneeded to do job

Offers training Iwant

Organizedevents areexcellent

Reputation isexcellent

Attribute

Ag

ree

me

nt

Less than 3 years


7 or more years

Key Findings

No major difference among member tenure levels. Long-term members report same quality as new members.

Reputation of CLEAR is rated higher for longer-term members.


Membership Tenure and Quality

2

3

4

5

Reps respond intimely manner

Reps areknowledgeable

Reps arecourteous

Reps understandneeds

Membership isgood value

Attribute

Ag

ree

me

nt

Less than 3 years


7 or more years

Key Findings

No major difference among member tenure levels. Long-term members report same quality as new members.



• Goal is to increase customer loyalty

• Target Analysis– Compare agreement ratings of attributes– Low ratings (below a target) = poor

customer experienceATTRIBUTE

1 2 3 4 5 6 7 8 9 10

Performance (Agreement) 4.00 3.77 3.77 4.28 4.28 4.18 4.09 4.48 3.92 4.23

Make improvement here.


• Goal is to increase customer loyalty

• Driver Analysis1. Examine agreement ratings of attributes

2. Correlate agreement ratings of attributes with Likelihood to renew membership

ATTRIBUTE

1 2 3 4 5 6 7 8 9 10

Performance (Agreement)

4.00 3.77 3.77 4.28 4.28 4.18 4.09 4.48 3.92 4.23

Impact (Correlation Coefficient)

.49 .37 .37 .39 .33 .21 .14 .11 .28 .42



Loyalty Matrix - Renew

• Plot performance and impact of each business attribute

Agree Impact

A1 4.00 .49

A2 3.77 .37

A3 3.77 .37

A4 4.28 .39

A5 4.28 .33

A6 4.18 .21

A7 4.09 .14

A8 4.48 .11

A9 3.92 .28

A10 4.23 .42

AVG 4.10 .31

0.00

0.10

0.20

0.30

0.40

0.50

0.60

3.50 3.75 4.00 4.25 4.50 4.75 5.00


Imp

ac

t (C

orr

ela

tio

n C

oe

ffic

ien

t)

A9

A2

A3

A4

A5

A6

A7A8

A1

A10


Loyalty Matrix

Hig

h Im

pact L

ow

Key Drivers

INVEST in these areas. Improvement in these areas are predicted to increase customer loyalty (attract new customers, increase purchasing behavior, retain customers)

Hidden Drivers

LEVERAGE as strengths in order to keep current customers loyalADVERTISE as strengths in marketing collateral and sales presentations in order to attract new customers, increase purchasing behavior and retain customers

CONSIDER as lowest priority for investment. These areas have relatively low impact on improving customer loyalty

Weak Drivers

ADVERTISE as strengths in marketing collateral and sales presentations in order to attract new customersEVALUATE as areas of potential over-investment

Visible Drivers

Low Performance High


0.00

0.10

0.20

0.30

0.40

0.50

0.60

3.50 3.75 4.00 4.25 4.50 4.75 5.00


Imp

ac

t (C

orr

ela

tio

n C

oe

ffic

ien

t)

A9

A2

A3

A4

A5

A6

A7A8

A1

A10

• Weak Drivers:– Lowest priority for

investment is A7 and A9

• Hidden and Visible Drivers:

– In Marketing and Sales, use A4, A5 and A10

– A6 and A8

Loyalty Matrix – Renew

• Key Drivers:– To increase

customer renewal rate, invest in A1, A2, and A3

Key Drivers

Weak Drivers

Hidden Drivers

Visible Drivers


0.00

0.10

0.20

0.30

0.40

0.50

0.60

3.50 3.75 4.00 4.25 4.50 4.75 5.00


Imp

ac

t (C

orr

ela

tio

n C

oe

ffic

ien

t)

A9

A2

A3

A4

A5

A6

A7

A8

A1

A10

• Weak Drivers:– Lowest priority for

investment is A7 and A9

• Hidden and Visible Drivers:

– In Marketing and Sales, use A10

– A4, A5, A6 and A8

Loyalty Matrix – Use Diff Services

• Key Drivers:– To increase

customer loyalty, invest in A1, A2, and A3

Key Drivers

Weak Drivers

Hidden Drivers

Visible Drivers


Summary of CLEAR Survey

• Majority of members will continue/renew their membership

• To increase advocacy and use of different services, focus on improving:– Service– Resources to help members do their jobs– Knowledge sharing – Training targeted on

specific issues and expanded offering


Summary

• Increasing customer loyalty is necessary for business success

• Need to conceptualize customer loyalty in different ways for regulatory agencies

• Need to improve the customer experience in order to improve customer loyalty– Loyalty Management


Summary

• Micro level loyalty management approach– Addresses special causes of disloyalty– Focuses on changing individual issues– Customer-specific improvements/Short-term

• Macro level loyalty management approach– Addresses common causes of disloyalty– Focuses on improving systemic issues– Organization-wide improvements/Long-term


Speaker Contact Information

Bob E. Hayes, Ph.D.

President

206.372.5990

[email protected]

Business Over BroadwayBusiness growth through customer insight

clear 2008 annual conference anchorage, alaska “promoting regulatory excellence through...

Documents

customer loyalty slide

components of customer

alaska customer loyalty

annual conference anchorage

alaska expansion loyalty

customer defections

mere customer retention

party slide