it’s not just customer satisfaction anymore
TRANSCRIPT
Measuring Customer ValueIt’s Not Just Customer Satisfaction Anymore
Tom MoormannSenior Consultant
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
OUTLINEOUTLINE• Value of a Customer• Customer Satisfaction and Customer Value• Linking to Operational Decisions• Linking to Employee Performance• Measuring Returns on Customer SatisfactionInvestment
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Value of a CustomerValue of a Customer• What is customer value?
• Expected profits from each customer
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
• Revenue Streams - Premium Payments- Purchase More Products- Referral Sales
• Cost Streams - Product Costs- Cost to Attract Customer- Cost to Retain Customer
Value of Customer = Customer Revenue Stream - Customer Cost Stream
Measuring the Value of a CustomerMeasuring the Value of a Customer
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Customer Satisfaction
• Revenue Streams- Premium Payments- Purchase More Products- Referral Sales• Cost Streams- Product Costs- Cost to Attract Customer- Cost to Retain Customer
Satisfied customers generate more revenue and cost less to service.
Increasing Customer ValueIncreasing Customer Value
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Managing Customer ValueManaging Customer Value
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Customer Satisfaction and Customer Value
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Identifying and Measuring Customer ExpectationsIdentifying and Measuring Customer Expectations
• Sources of Information• Types of Expectations
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Identifying customer expectationsIdentifying customer expectations
Customer Contact
Complaints
Primary Research
Secondary Research
Customer Expectations
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
What does the customer expect?What does the customer expect?
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Linking Customer Satisfaction to OperationalLinking Customer Satisfaction to OperationalStandardsStandards
» Which expectations are most critical?
» What is an appropriate performance target?
» Why are there gaps?
» How do you close gaps?
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Which expectations are most critical?
Assurance Gap
Reliability Gap
Empathy Gap
Time Gap
Customer Satisfaction
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
What is an appropriate performance target?—Better than we used to be?
—Better than our best operation?
—Better than others in our industry?
—Better than others in related industries?
—Better than ”world-class‘?
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Why are there gaps?• Performance Deficiencies
—Systemic Causes—Human Error
• Rising Customer Expectations—Competitive Pressures—Prior Experience—Personal Needs
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
How do you close gaps?—Key Operational Performance
Measurements• Service Turnaround Times• Service Reworks• etc.
—Targeted Investments• Most frequently occurring problems• Largest returns
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Your Customers
Your Customer Service
Linking Customer Satisfaction to Linking Customer Satisfaction to Performance StandardsPerformance Standards
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Linking Customer Service to PerformanceLinking Customer Service to PerformanceStandardsStandards
—Measure and reward the behaviors relevant toperformance
—Take Customer÷s perspective, not Company÷s—Provide adequate systems support
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Linking Customer Service to Performance StandardsLinking Customer Service to Performance Standards• Identify Service Quality Gaps• Prioritize Opportunities
• Most Important to Customers• Biggest Gaps
• Invest Where it Makes Sense• Measure Work Unit Performance - From the Customer’s Perspective• Measure Employee Performance - Contribution to Work Unit Performance
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
Returns on Investments to Returns on Investments to Increase Value of a CustomerIncrease Value of a Customer
LOMA/LIMRAStrategic Issues Conference
Measuring Customer Value
ConclusionConclusion• Goal: Select Best Investment Opportunities• Requirements:
• Models linking investment to returns• Measures of key model components• Integration of planning and execution
Measuring Customer ValueIt’s Not Just Customer Satisfaction Anymore
Tom MoormannSenior Consultant