custom research inc

5/20/2018 Custom Research Inc

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CASE STUDY-3

[Document subtitle]

Rusha Saha 13020241109

Somrita Sur 13020241052

Rohit Deshmukh 13020241107

Kanchan Soni 13020241018

Rakesh Ramaswamy13020241039

Anurag Dhandhi 13020241131


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After analyzing the case study, following questionsarises:

How does a company like Custom Research serve its clients and make a profit?

What trends in the industry at the time the case was written are important to

note?

What are the pros and cons of having the same person both selling a research

project to a customer and actually carrying out the research?

Are all their clients equally profitable? Evaluate the procedure used by Jeff Pope

in dividing customers into categories of profitability. What are the problems in

the way the analysis has been done?

Why not keep all clients that cover direct costs? On the other hand, what are theproblems associated with serving clients based on their profitability?

Should Custom Research continue to serve all of its customers? If not, which

customers would you suggest keeping? (How should Customer Research decide

which customers to serve and which to neglect?) What criteria would you use in

making this decision?

In general, how would you deal with customers you don't want to keep?

Learning Objective

To analyze the factors that makes clients profitable.

Custom Research is considering terminating service to many clients to eliminate

unprofitable work and concentrate on the more profitable client projects.


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Choose or LoseJudy Corson and Jeff Pope, cofounders of Custom Research Inc., realized they

could grow their company by cutting their customer base in half.

Custom Research Inc.'s bet-the-company growth strategy: cut its customer base

in half

Judy Corson andJeff Pope stared in disbelief at the chart they had just made. The

numbers in front of them were staggering--staggeringly bad, that is.

The year was 1988. Holed up in a meeting room at the Holiday Inn across the

street from theirMinneapolis office, the cofounders of Custom Research Inc. hadgathered in a high-stakes meeting with consultants and top CRI managers to

figure out why the then 14-year-old marketing -research company had stopped

growing. CRI had more customers than ever, and dozens of them were household

names. The company had a manageable number of employees. But looking at the

chart they had just drawn, Corson and Pope suddenly understood what was

wrong.

CRI had too many customers. Or too few good ones.

At that meeting Corson and Pope and their team had divided CRI's customers into

four categories, based on the companies' perceived value to CRI's bottom line,

and plotted the customers on a chart. Only 10 of CRI's 157 customers fell into the

most desirable category (bringing in a high dollar volume and a high profit

margin). A whopping 101 customers contributed very little to the top or bottom

line. Many, explains Pope, "weren't profitable at all when you factored in the

selling costs." Corson adds, "We looked at this and said, 'Wow!"

In short, CRI was spending much too much time and valuable employee resources

on too many unprofitable customers. And the effect on the company's business

was palpable. Corson and Pope had been so busy tracking the progress of their

top customers--a group of 30 or so large companies--that they had never really

ranked their 127 other customers. After all, those "second tier" companies

included such big names as Texas Instruments, Harcourt Brace, and Young &

Rubicam. Who would turn down business from those household names?
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But the chart they had drawn for themselves made clear in an instant the

problem with their business. And it forced Pope and Corson to make a dramatic

decision. To jump-start CRI's growth, they would have to systematically dump a

large number of their existing customers, and then ruthlessly screen new ones to

make sure they passed muster. In effect, the company's new growth strategy wasto turn away revenues--revenues it had come to count on.

That 1988 meeting marked the beginning of a complete overhaul of CRI's business

model. And the results have been staggering--but this time staggeringly good. In

1987, CRI had 157 customers and nearly $11 million in revenues. By earlier this

year, CRI had reduced its customer base to just 78 but estimates that its revenues

will be boosted by 175%, to $30 million. And perhaps most important, during that

same period, the company has more than doubled its profits.

CRI has spent years perfecting a system that gets to the heart of one-to-one

marketing: the idea that you treat different customers differently. Promising new

customers, like potential employees, are eagerly screened through a series of

interviews before and after they start with CRI. There are individual plans for

customer "promotion," regular reviews, and special perks, and the company takes

great pains to measure and to try to exceed customer expectations. But, after all

that, if customers aren't pulling their weight, they can be effectively "fired," just

as employees can be. In fact, customers even face an informal version of the six-

month review. "We know within six months if it's working," says Corson. "Wewon't follow someone over the cliff."

Slash and burn

Making the decision to dramatically restructure CRI's objectives and customer

base was one thing. Doing it was another matter altogether.Sam Marcus,aNew

York City-based consultant who had helped coach CRI through its revelation at the

Holiday Inn, watched on the sidelines as the partners worked up the courage to

change. "They'd ask, 'Sam, do your other clients get this nervous?" Marcus recalls.

"I reassured them the nervousness was fine."

Until they hit a plateau, Pope, 56, and Corson, 55, who had become partners after

leaving positions at Pillsbury, had watched their business grow without much

difficulty. The plan to turn customers away was a scary leap of faith.
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Handpicking customers was a high-stakes strategy. At the time, CRI had no

guaranteed contracts to cushion the risk. (That's still true today.) What's more, it

seemed as if every day another marketing-research firm was born, ready to

undercut CRI's prices. Did the company have the credibility in the industry to pull

this off?

The founders calculated they'd need to reap about 20% to 30% more business

from some two dozen companies to help make up for the roughly 100 customers

they planned to "let go" within two years.

Anxiety levels rose. For one thing, could CRI replace bad sales with good fast

enough? Pope and Corson believed that their biggest customers "could be even

bigger yet" if the sales staff were freed up to focus on those accounts. "But,"

recalls Pope, "believing in your head is one thing; your heart's another."

And there was a thornier issue: no one wanted to be the one to tell a current or

potential customer "Sorry, we can't do that." Account managers were quick to

make a case for why this or that customer should be excluded from the new

guidelines. "It was greatly uncomfortable to let go of those [marginal] clients,"

recalls Samantha Ball, who was new in sales at the time. Jon Palmquist, a

longtime account manager, explains the ambivalence that prevailed: "When your

job is to bring in new business, you don't want restrictions on what new business

you can bring in."

But little by little, CRI began enforcing its new standards with existing customers.

Small groups of employees rehearsed what they'd say to an old customer who

called with one of those once-in-a-blue-moon projects. Everyone knew CRI made

little or no money on those sporadic contacts. Senior vice-president Ginger Sack

remembers how one General Mills employee routinely called once a year, at

Christmas time. "I had to turn him down," she says.

Paring down the customer list was most difficult on salespeople who had little

experience dealing with major customers. But it was hard on everyone. "It wasscary on the front line," recalls Sack, who notes that everyone was thinking,

"What if my three clients don't pan out?"

More important, what if big customers rejected CRI's bid to get closer? But to

hear customers tell it, they didn't mind the extra attention. "I noticed a stronger

relationship, and that there were more CRI people deployed at us. It was
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impressive," saysRobert Smith,who was then a director of marketing research at

Dow Brands and is now atMaytag Corp.

Such glowing customer reviews began to translate into increased sales and profits

in 1989. By 1992, CRI had successfully overhauled its system, and there was animpressive leap in sales, to $16 million--up 45% over 1987's figure.

Over time, even the salespeople were relieved. Instead of beating the bushes,

they were able to focus on--and be compensated for--how well they developed

the customers CRI had already carefully screened.

The gatekeeper

Forty-six-year-old Beth Rounds doesn't look particularly powerful. A petite, neatlygroomed redhead, Rounds speaks softly and smiles easily. She works in a modest

office near the front doors of CRI's Minneapolis headquarters. But Rounds plays

one of the most important roles in the company: screening new customer leads

and rejecting those that she thinks fall short of CRI's profitability goals. She is the

gatekeeper.

Anxious would-be customers have to pass Rounds's entrance exam to learn

whether CRI will consider taking them on. Her questions are simple, but Rounds is

no pushover. She estimates that she rejects roughly 90% of all potentialcustomers' queries that come in over the transom.

Michael Henderson, a senior marketing-research analyst at American Century

Investments,a mutual-fund company based inKansas City,Mo., was slightly taken

aback by that approach when he first called CRI last summer on the

recommendation of a colleague. "There was a very candid emphasis on taking on

larger business," he recalls. "Many vendors are happy to take on any business."

Rounds, a 20-year veteran of CRI, was appointed to her current position in 1996,after playing an unofficial gatekeeping role--along with Corson, Pope, and others--

for several years. When a new query comes in, Rounds tries to get crucial

information from the prospect right away. It's a delicate balancing act, one that

requires both diplomacy and reporting skills. "I'm trying to get five to six key

questions answered," she explains. "I ballpark the budget for a project and ask if

that sounds right. I'll hear, 'Yes, that sounds right,' or, gulp, 'That's our yearly
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budget!' In the end I know what the customer's story is and if they're buying what

we're selling.

"When I explain CRI and how we do things, many take themselves out of the

running," Rounds continues. "That makes it easy to make referrals." Shemaintains a short list of respected (indirect) competitors to whom she can refer

rejected prospects, making her a de facto "help desk" for the industry. Rounds

estimates that of the 20 to 30 such callers she talks with a month, only 2 or 3 are

bona fide leads. A few dejected callers respond with the question "What's the

matter--don't you need business?" Rounds reports. "But 99% understand what

we're trying to do."

Making the Rounds cut is a big deal for prospective customers. Once they do, they

are fed into a CRI system tailored to serve their individual needs. Welcome to

CRI's freshman class.

The freshman class

Lisa Gudding is the very picture of a rising young sales star. At once enthusiastic

and thoughtful, the 33-year-old account manager possesses the kind of disarming

charm they can't teach at the Dale Carnegie school. "I never knew I could love

work so much," she says.

Gudding is, as they say, a "find"--a loyal employee who over the past eight years

has worked her way up from a position as a research assistant. Today part of her

sales role is to help freshman customers find their way up the organizational

ladder as well. CRI's sales criteria for first-year accounts, notes Gudding, are

"much higher than when I first started in sales four years ago. The hurdle keeps

going up." That means she must be ever more diligent in scoping out which of her

freshmen have the potential to go all the way--to second-year "sophomore"

status and eventually to "core" partner.

Making such assessments is part of everyone's job at CRI, where knowledge about

customers is a currency more highly valued than product knowledge or even

technical expertise. "You learn not only a function but also about the client, the

client's business, and the competitive nature of that business," says Samantha

Ball, who started at CRI in 1980 as a telephone interviewer.
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From the moment Gudding receives a lead from Rounds, she's working on it--

researching the prospective customer's company, its industry, and the

background of the individuals involved. She plays the role of a reporter,

uncovering what was lacking in the customer's dealings with other market-

research firms and thus finding out where the real opportunity lies for CRI. Buteven more, she's a matchmaker. In the earliest face-to-face meetings with a

potential customer, she's already thinking about which combination of CRI people

would be the best fit for the account. "There's a conscious attempt to match

personalities," she says--even if that means taking herself off the account.

Earlier this year Rounds gave Gudding a lead regarding American Century

Investments. Gudding was clearly the right salesperson--her banking-industry

experience allowed her to establish a quick rapport with the financial-services

firm. ACI's Michael Henderson agreed to a meeting in Minneapolis, where he gaveGudding an indication of how much business CRI stood to gain. So far, so good.

That "freshman" looked promising indeed.

A dream team of your own

Once a potential customer has passed muster with Rounds and Gudding (or one

of eight other account managers), it must also be approved by one of CRI's nine

account teams. Each team, typically handling anywhere from one to five majorcustomers, focuses on growing the business from its existing accounts. That way

not only is it less tempting for a team to accept questionable customers, it's

nearly impossible for it to do so. "We're able to say, 'Honestly, I don't think we

can do this," says executive vice-presidentJan Elsesser,who oversees the drive to

grow new and current accounts. The account teams price all projects and put the

kibosh on unprofitable-sounding ones.

But once prospects pass the team test, they are quickly lavished with attention. In

most cases, before the first project even begins, the customer receives a phonecall or visit from one of CRI's four most senior executives. "We do this initial

interview with every new client," says Corson. That meeting is followed by a letter

from a CRI senior executive summing up the customer's stated expectations for

the project.
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Not long ago, Elsesser chatted with several marketing-research analysts at ACI

(which, to date, has given CRI three projects in quick succession).Angela Murray,

one of ACI's senior marketing analysts, was happy to set up the conference call.

"We talked broadly about my relationships with other research firms and how we

can do things differently," says Murray. "Jan explained CRI's philosophy [offocusing on fewer customers], and that was appealing to me. You want to feel as

if you've got some clout."

In turn, the team that is assigned to the new customer uses the interview to form

its own plan for meeting--or even exceeding--expectations for the project, from

designing the study to presenting the results. "Flawless execution" is whatRobert

Anderson,director of marketing research for Pillsbury Brands, calls it.

A variety of team members--not just the account managers and project

managers--spend time visiting new customers to hear about their particular

quirks and needs. "You learn to think like them and to know their culture,"

explains Corson.

Pillsbury--which has stepped up its work with CRI in recent months--has gone so

far as to set up work space for CRI's "platinum team" in a Pillsbury building, and

Anderson is planning to send some of his own staff to CRI to attend training

classes.

Because CRI spends so much time with its freshmen, the staff can quickly tell whowill drop out the first year and who will go on to join the sophomore class. It's a

small group: the company needs only half-dozen or so new customers a year,

each worth an average of about $200,000, to keep the pipeline flowing. "We

don't intentionally rank the freshmen, but we do have a sense of who has the

most potential," explains Elsesser. Top freshmen, she says, have the potential to

double the sales they bring CRI, "and we've talked to them about that."

A sophomore is expected to show real growth in sales and profits by year two. If

not--unless there is some compelling reason to keep the account--CRI prepares tocut bait. If a customer makes it through sophomore year, it is in for the Rolls-

Royce treatment. Today just 36 companies provide 86% of CRI's sales and 96% of

its profits. And CRI employees try to treat those 36 as if their world revolved

around each one of them. Because it does.
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The partner principle

Ginger Sack, a gregarious woman known for holding planning sessions at

amusement parks, is a leader of the "pink team"--the team devoted solely toProcter & Gamble.That's one of the perks of becoming one of CRI's core partners:

you become a really big fish in a small pond.

"Our job as a team is to bring the client forward," explains Sack. "The whole team

is focused on getting new business. Everyone gets the [profit-and-loss

statement]." In 1988, there were three people on the Procter & Gamble team

doing limited work. Today the team has swelled to 12, while sales with P&G have

increased about a hundredfold. CRI is now a P&G "approved vendor," with direct

access to P&G's internal E-mail system and research database.

In fact, some people at P&G say they couldn't function without CRI. "I've been

working with them on everything I do," says Leanne Schimpf, a research

supervisor on thePringles brand. She considers CRI to be on an equal footing with

P&G's own internal research group. "Other suppliers wait for you to call them,"

she says. "[CRI takes] the initiative. That's an added value because we're so busy

around here."

Surprise and delight

How does CRI constantly know when and how to take that initiative with

customers? Through the help of staffers like Jon Palmquist, who is now a senior

vice-president and manager of new-product development. Palmquist isn't

assigned to any particular team. In fact, she worries about allof CRI's customers.

It's her job to find and develop new products for current customers---sometimes

before the customers even know they need the products. Her sales territory:

unlimited.

Palmquist has become the ultimate sales sleuth--combing through project notes,

interviewing customers, sitting in on team planning meetings, and reading

between the lines. "I get ideas from our [core] partners," she explains. "You

understand their business, and you can capitalize on what they need, sometimes

a little ahead of when they need it, sometimes in response to a demand."
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In short, CRI doesn't have "marketing people" or a marketing plan. Instead, the

company has 36 individual "Surprise and Delight" plans, one for each major

customer. The teams prepare the plans, which are reviewed and amended every

quarter, with Palmquist often weighing in. One lucky customer doesn't know it

yet, but it's about to receive some custom software, compliments of CRI. "This is ahuge client, and I know the senior managers will appreciate it," says Corson.

Such perks are all part of the company's strategy for success. "Every quarter CRI

would send us a list of value-added activities they would have charged another

client for that wasn't a partner," recalls Robert Smith, formerly of Dow Brands. "It

was pretty staggering." After one project, he wrote the company, "Thank God for

CRI."

But CRI is always trying to up the ante. At year's end, all Surprise and Delight plans

undergo another revision after the company's ambitious annual review of all its

core partners and a few strategic freshmen. CRI's 17 senior vice-presidents

conduct some 30 to 50 one-on-one interviews with customer contacts. The

review is both CRI's report card and an industry snapshot. "It's our marketing

research, but it's all clients specific--another tenet of one-to-one marketing,"

notes Corson.

Of course, learning about the needs of individual customers is a lot easier, Corson

points out, when you're focusing on 36 major customers "rather than 150."

Jennifer Merrill,vice-president of consumer research for ConAgra Frozen Foods,

laughs as she recalls some of the little perks she enjoys. "I get FedEx packages

with malt balls for my birthday and candy bars slipped into a proposal because

they know I like chocolate," she says.

Still, there have been glitches. Since it has been instituted, the system has not

produced glowing success stories all the time. For example, the "red team" was so

disastrous that it was disbanded after finishing a year in--you guessed it--the red.

Some clients--like Ford Motor Co.--never did make it to partner status despitegreat expectations. Furthermore, the loss of any VIP customer hurts--a lot. For

example, CRI took a sales hit of about $2 million in 1993, Pope says, after

Northwest Airlines grounded its research work with the company. "There's an ebb

and flow to this," notes managerPat Hughes,who recently lost Dow Brands when
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the company was sold. But that hole was soon filled--by a former customer who

came back to CRI.

Now the teams view customers not as a onetime hit or miss but as part of a

continuing cycle. The way Corson looks at it, the lifetime value of her customers is"infinite." Even those customers that don't pan out the first time are never

written off: they could be future prospects.

Pillsbury is a good case in point. One of those questionable accounts 10 years ago,

Pillsbury officially joined CRI's freshman class earlier this year. CRI gave Pillsbury a

brand-new page in the customer book and had the same high hopes for the

account it has for every hot freshman. Both sides spent long hours interviewing

one another before deciding to advance their renewed relationship to the partner

stage. "It's a learning curve we're both on," says Pillsbury's Robert Anderson. He

adds, "They understand they'll get a significant amount of our spending." In

return, CRI employees are contributing to the intellectual capital at Pillsbury,

where CRI team members can be found in the hallways and in research-project

meetings. Anderson attests, "It's already begun paying off."

What has given CRI the confidence to break so many of the old marketing rules?

It's simple: the company understands its customers much better now. And it

should. With 50% fewer customers than it had a decade ago--and with 50% more

employees--CRI can afford to devote more attention to each customer. Ten years

ago, the ratio of employees to customers was about one to two; today, with

approximately 130 employees, that ratio is nearly reversed. At the same time,

revenues per employee have doubled.

It's no wonder CRI does very little advertising anymore.

Every year now, Corson takes delight in a call she knows she will receive. Like

clockwork, a yellow pages salesperson tries to get her to take out a bigger ad.

Corson's reply is always the same. "Now why would I want to do that?" she asks.


13/21

Life on the Quad: The Quadrant Analysis

How CRI did it:In assessing which customers to keep, CRI calculated the profit for

each one by subtracting all direct costs and selling expenses from the total

revenues brought into CRI by that customer for the year. (Think of it this way:What costs would you not incur if this customer went away?) The cutoff points for

"high" and "low" scores were purely subjective--they corresponded to CRI's goals

for profit volume and profit margin.

1987

High Volume

Low Margin

11

customers

High Volume

High Margin

10

customers

Low Volume

Low Margin

101

customers

Low Volume

High Margin

35

customers

HIGH/LOW

About half these customers were new ones that CRI figured would become more

profitable over time. The other half were right on the line--on the verge ofhigh/high.

HIGH/HIGH

At the top: These were customers who had pared down their suppliers and clearly

valued an ongoing relationship with CRI. They accounted for 29% of sales.

LOW/LOW

CRI once believed it could make many of these customers more loyal, but time

revealed that this group wanted to work with various suppliers.

LOW/HIGH

These were small customers who were very profitable. Was there more potential

for sales?


14/21

A Tale of Two Customers

Below is a comparison of two of CRI's "representative customers" in 1987. At first

glance Customer A appears to be more valuable. But during the course of theyear, Customer B racked up far lower direct costs and a third of Customer A's

selling expenses, making it more than twice as profitable as Customer A.

CUSTOMER A CUSTOMER B

Revenues $203,320 $156,000

Direct costs $174,856 $113,162

Selling costs $14,232 $3,120

Profit* $14,232 $39,718

Profit margin 7% 25%

*Also known as "contribution margin," or what's left over to help cover the

company's overhead and contribute to profits.

Resources

1. Identify your customers. Sounds simple--but it's not, if you sell retail or

through distributors, for example. However, customers are often willing to

divulge personal information in return for better service, frequent-buyer

discounts, exclusive product offers, and so forth. Be creative.

2. Differentiate your customers. Not all customers are equal. So you need a

ranking system. Never mind trying to calculate the "net present value of all future

profits." You probably don't have enough data to calculate the "lifetime value" of

each of your customers. Instead, the authors recommend you score yourcustomers on any number of variables--gross margins, repeat business, referrals,

and so forth--that matter to you.

3. Interact with customers one-on-one.Once you've ranked your customers, you

can prioritize your time, spending lots more of it on your most valuable
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customers. In return, customers may be more willing to share their purchasing

plans and make you part of the process.

4. Customize each customer's experience with you. This step takes many

different forms--from writing separate marketing plans for each of your topcustomers (like CRI's "Surprise and Delight" plans) to mass customizing the whole

production line.

Screening Prospects: Six Questions

"You can't just ask the questions," says Beth Rounds,CRI's chief gatekeeper and

reporter-in-residence. "I backtrack a lot. Sometimes I explain why I'm asking thequestion." Nevertheless, for anyone looking for a systematic way to rate over-the-

transom sales prospects, this is a good "script."

1. How did you hear about us?A bad answer: "I found you in the yellow pages."

Unlike many companies, CRI doesn't ask this question so it can decide how to

divvy up the marketing dollars. "If someone finds us in the yellow pages, they

have no reason to use us over anyone else," CRI cofounder Judy Corson explains.

"So it's a crucial question." A good answer: "A colleague of mine worked with you

at another company."

2. What kind of work is it (in terms of industry or scope)?More than anything,

that question reveals whether the caller is trying to price a quick, onetime project

or one that's totally outside CRI's realm. If so, Rounds refers the caller to an

indirect competitor.

3. What's your budget? That's akin to asking someone how much money he or

she makes, but Rounds often makes a ballpark guess on the project--and then

gauges the prospect's response.

4. What are your decision criteria? Rounds knows that CRI doesn't fare well in

blind bidding or in drawn-out, committee-style decisions. She's interested in

callers who have some level of decision-making power. And she assiduously

avoids getting involved in anything that smells like a bidding war.
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5. Whom are we competing against for your business?Rounds is happiest when

she hears the names of CRI's chief rivals, a half-dozen large companies such as the

M/A/R/C Group,Market Facts,and Burke Marketing Research.

6. Why are you thinking of switching? "There's a two-edged sword here,"explains cofounder Jeff Pope. "Clients that are hard to break into are better

because they don't switch too easily. But you need a way to get in--so a legitimate

need for a new supplier is OK."

Rounds reports that each month only 2 or 3 of 20 to 30 callers answer enough

questions correctly to warrant more attention.

So why spend time with the rest? "It fits well with who CRI is," she says. "Do unto

others....You never know where people will go."
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Custom Research Inc.

Custom Research Inc. (CRI), a national marketing research firm, leverages anintensive focus on customer satisfaction, a team- oriented workforce, and

information technology advances to pursue old-fashioned ends: individualized

service and satisfied customers. Since 1988, when CRI adopted its highly focused

customer-as-partner approach, client satisfaction has risen from already high

levels, and gains in productivity, sales volume, and profits have outpaced industry

averages.

CRI's steering committee, composed of partners Judith S. Corson and Jeffrey L.Pope and two executive vice presidents, is responsible for crafting CRI's goals and

strategies and views customer loyalty as the firm's most valuable business asset.

With all CRI employees as members of customer-focused teams, a flat

organizational structure helps make executives immediately accessible to

employees, customers, and suppliers. Well-developed systems are in place for

understanding customer expectations, soliciting customer feedback, and

monitoring each facet of company, team, and individual performance. Together,

these systems help set the course for CRI efforts to meet or exceed customer

expectations that can serve as a model for other professional services firms.

A QUICK LOOK

Founded in 1974 and based in Minneapolis, privately owned CRI conducts survey

marketing research for a wide range of firms. The bulk of its projects assist clients

with new product development in consumer, medical, and service businesses.

Revenues of more than $21 million in 1996 place CRI among the 40 largest firmsin the highly fragmented,$4 billion marketing research industry that is

characterized by low entry costs and tough competition. The firm credits a

reputation for quality for making it one of only a handful of companies that has

remained independent while growing over the past two decades.


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Besides its Minneapolis headquarters, the firm has electronically linked offices in

San Francisco and Ridgewood, N.J., as well as telephone interviewing centers in

St. Paul, Minn., and Madison, Wis. It employs approximately 100 full-time staff

members, most of whom are cross-trained to create the flexibility needed to

accommodate the demands and schedules of research projects.

Choosing in 1988 to concentrate its business on high-volume, repeat customers,

CRI has reduced the number of clients it serves. In 1995, CRI's clients numbered

67, down from 138 clients in 1988; the number of larger clients during this period

increased from 25 to 34. This emphasis on large accounts has paid off with a

doubling in revenues, achieved without increasing staff size.

Surprising & delighting the customers

In recent years, CRI senior management aimed for a new level of consistency and

competence in delivering quality services by organizing, systematizing, and

measuring quality. CRI's steering committee distilled requirements for each

research project to four essentials: accurate, on time, on budget, and meeting or

exceeding client expectations. Before the first survey data are collected, criteria

defining these requirements are determined in consultation with clients when CRI

executives and project team leaders interview clients and they do that

extensively.

The company was reorganized to make maximum use of customer-focused teams

and to merge support departments in order to reduce cycle time a growing client

priority. All CRI teams have the same goal of "surprising and delighting" their

clients. CRI captures the essence of this goal in its Staricon. Quality at CRI is client

driven the center of the Star and is integrated into the company's business system

as captured by the five key business drivers that are the points of the star: people,

processes, requirements, relationships, and results. With extensive employee

involvement, the steering committee annually sets corporate goals for the

company, which then tie to the goals for each work unit. Quarterly, account

teams review with the steering committee the business plans and results for each


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client.

Meeting customer-specified requirements depends on efficient execution of well-

documented, measurable processes. Most professional services firms believe

their services cannot be "standardized." At CRI, while each project is custom-

designed, the process for handling it flows through essentially the same steps

across all projects. CRI developed and heavily uses a project implementation

manual for interviewing. Internal "project quality recap" reports completed for

every study track errors in any step of the project flow. CRI measures the accuracy

of results and the quality of personal and telephone interviewing. For example,

over the last several years ratings for interviewers show sustained average quality

scores of approximately 95 points out of 100, up from 83 points in 1990.

Customers have ample opportunity to advice and critique CRI. At the end of each

project, clients are surveyed to solicit an overall satisfaction rating based on the

customers' expectations. Each month the results of the client feedback are

summarized and distributed to all employees. Internally, end-of-project

evaluations also are conducted for CRI support teams and key suppliers. Personal

interviewing contractors, for example, are evaluated on performance and

contribute ideas for improving the quality of their service.

People Make the Difference

CRI uses a "high tech-high touch" approach to satisfying customers. On the "high

touch" side, CRI uses its flat organizational structure and relatively small size to

assure that information flows freely within the company. Just as importantly, they

view continuous improvement as part of their jobs. Staff members are surveyed

annually, giving CRI senior managers specific feedback.

A variety of recognition programs; bonuses based on achievement of corporate,

team, and individual goals; and a peer-review system for evaluating personal

performance serve to reinforce worker commitment to continuous improvement.


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CRI has a company-wide education plan, used to align individual training with

business and quality goals. Each employee has a development plan, which sets

annual and long-term goals for improvement and helps to identify training needs.

In 1996, the average CRI employee received over 134 hours of training. All new

employees receive company-wide and job-specific training that addresses quality

and service issues. CRI bases company-wide training requirements on client

feedback, performance reviews, CRI's education plan, CRI development plans, on-

the-job reviews, interviewer monitoring, and employee surveys.

A Technology-Driven Approach

The "high tech" component to CRI's business is reflected by its alertness to

technological opportunities to improve its performance or to devise new services

that respond to customer needs. "Managing work through technology-driven

processes" is one of CRI's key business drivers. CRI led, for example, in the use of

computers to assist in telephone interviewing, data collection, and analysis.

Software enables CRI to use technology to integrate all stages of a project:

produce a questionnaire for computer-assisted interviewing, control the sampling

and autodialing for interviewing, edit and then tabulate the answers from the

questionnaires, display them in tabular format, and generate report-ready tables

for the final report and presentation. The use of computers has reduced cycle

time for just one of these steps tabulating data from two weeks to a single day.

CRI views its major software supplier as a key partner. The long-standing

relationship extends to annual planning sessions during which CRI shares its goals

and the two firms determine how the software maker can contribute to meeting

goals.

These and other quality-promoting actions including an unconditional satisfaction

guarantee aim to build client confidence and loyalty, which, in turn, generate a

variety of business benefits. Since 1988, feedback from clients on each of its


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projects shows steadily improved overall project performance. CRI is now

"meeting or exceeding" clients' expectations on 97 percent of its projects.

Seventy percent of its clients say the company exceeds expectations. CRI is rated

by 92 percent of its clients as "better than competition" on the key dimension of

"overall level of service."

custom research inc

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