Conducting Research to understand the Voice of the … · Conducting Research to understand the Voice of the Customer ... Performance Model = gap between perceived performance & ideal

Conducting Research to understand the Voice of the Customer

Conducting Research to understand the Voice of the Customer

Presented by:Prof Adré SchreuderPresented by:Prof Adré Schreuder

In partnership with:

Prof Adré SchreuderCEO: Consulta ResearchProf Adré SchreuderCEO: Consulta Research

Measures will never achieve their metaphysical potential when they

are considered only as “controls” — which is how the subject is

taught in most business schools [and applied in most modern

businesses]. Their real power lies in their ability to inspire and

focus learning.

Slide 2

It is only through measures that organizations can learn,…

only through learning that they can create value in an ever-changing

world, …

and only through creating value that they can survive and prosper.

Peter Senge

Science or Opinion?Science or Opinion?

Extract from a popular Customer Experience Blog –source available on request

Slide 3

Customer Experience – A “deep ecological paradigm” shift(Fritjof Capra – The Web of Life, 1996)

Slide 4

Different Metrics used in Organizations

Vision & goals

Customer relationshipmanagement strategy

Balanced

Vision & goals


Vision & goals


Vision & goals


METRICS• Brand Image• Market Position

• Customer acquisition• Value (share of wallet & loyalty)• Retention• Strength of relationship

• Brand experience dimensions

Slide 5

Adapted from: J Kirkby, J. Wecksell, W. Janowski, T. Berg – March 2003 - The Value of Customer Experience Management

Operational customerexperience management

Contact with thecustomer

Balanced Scorecard

Customer valueproposition metrics

Number of Metrics / Volume of Data

Effectivenessreporting

Actionreporting


Contact with thecustomer


• Brand experience dimensions• Key attributes of brand image• Key attributes of product & service• Key service levels• Satisfaction• Complaints

• Individual service levels• Resolution of problems

Gilbert A. Churchill (Professor of Marketing, Unive rsity of Wisconsin-Madison) wrote:

“More stupefying than the sheer number of our measures is

the ease with which they are proposed and the uncriticalthe ease with which they are proposed and the uncritical

manner in which they are accepted. In point of fact, most of

our measures are only measures because someone says they

are, not because they have been shown to satisfy standard

measurement criteria (validity, reliability, and sensitivity).

Slide 6

The Service-Profit Chain

Slide 7

Adapted from : Heskett, Jones, Loveman, Sasser &

Schlesinger (Harvard Business Review, March-April 1994)

Terminology Confusion

Source: Created by Adré Schreuder – reference: < http://www.wordle.net/show/wrdl/1954142/Customer_experience >

Slide 8

CUSTOMER SATISFACTIONCUSTOMER SATISFACTION

A Historic OverviewA Historic Overview

• TQM of Edwards

RelationshipRelationshipQuality EraQuality Era

(1995)(1995)

CRM

CustomerCustomerExperience EraExperience Era

(2003)(2003)

CEM

Service QualityService QualityEra (1984)Era (1984)

SERVQUAL

Product QualityProduct QualityEra (1950’s)Era (1950’s)

TQM

• The Nordic contribution (Grönroos 1984: Technical/Functional • TQM of Edwards Deming - Zero Defect, Six Sigma

• The Nordic contribution (Grönroos 1984: Technical/Functional Model, Lethinen & Lethinen 1988 : Technical, Corporate, Interactive)

• The North American Debate (PZB 1985: SERVQUAL (Gap-based measure, Familiar five quality dimensions, Cronin & Taylor 1992: SERVPERF - Performance only measure, Brown Churchill & Peter 1993: Better/worse than expected scale, Teas 1993: Evaluated Performance Model = gap between perceived performance & ideal amount of feature)• Jagdish Sheth introduced Relationship Management in mid 90’s

• Growth of CRM-systems and popularity• NPS introduced by Reichheld in 2003 – CEM era is born

Slide 9

Customer Experience Customer Experience –– the new “Customer the new “Customer Satisfaction”?Satisfaction”?

• “Yet despite the recognition of the importance of customer

experience by practitioners, the academic marketing literature

investigating this topic has been limited.

• Publications on customer experience are mainly found in

practitioner-oriented journals or management books … tend to

focus more on managerial actions and outcomes…

• The literature in marketing, retailing and service management • The literature in marketing, retailing and service management

historically has NOT considered customer experience as a separate construct. Instead researchers have focused on

measuring customer satisfaction and service quality.”

Source: Verhoef, Peter C., Katherine N. Lemon, A. Parasuraman, Anne Roggeveen, Michael Tsiros and Leonard A. Schlesinger (2009), “Customer Experience Creation: Determinants, Dynamics and Management Strategies,” Journal of Retailing, 85 (1), 31–41.

Slide 10

Customer Experience Customer Experience –– the new “Customer the new “Customer Satisfaction”?Satisfaction”?

• One reason for the apparently weak observed link between satisfaction and future behaviour may lie in the role of emotions

• Previously studies emphasised cognitive aspects of satisfaction –growing body of evidence that affective measures of satisfaction (which incorporate emotions) may be a better predictor of behaviour

• As a cognitive measure, satisfaction is more likely to be distorted • As a cognitive measure, satisfaction is more likely to be distorted over time than a measure that incorporates an affective component (emotions are more deep-seated & more stable over time)

• Satisfaction should thus include a combination of an evaluative (cognitive) and emotion-based (affective) response to a service encounter

Source: Koenig-Lewis, N. and Palmer, A. "Experiential values over time – a comparison of measures of satisfaction and emotion," Journal of Marketing Management (24:1-2), 2008, pp. 69-85.

Slide 11

Putting Customer Experience in Perspective

Slide 12

Putting Putting Customer Experience Customer Experience into into PerspectivePerspective• The term Customer Experience Management is used within the broader context of Customer Relationship Management (CRM) –clearly seen in the view of Kirkby, Wecksell & Janowski (2003) when they say: “CEM is part

of customer relationship management (CRM)

and the natural extension of building brand and the natural extension of building brand

awareness.

• Where brand gives the promise, CEM is the

physical delivery of that promise and is vital

in an economy where a brand is increasingly

built on value delivered rather than product

features”.

Illustration Copyright – Consulta 2010

Slide 13

Construct definition of “Customer Construct definition of “Customer Experience”Experience”

• The customer experience construct is holistic in nature andinvolves the customer’s cognitive, affective, emotional, social andphysical responses to the retailer.

• This experience is created by:

– controllable elements - service interface, retail atmosphere,assortment, price,

– uncontrollable elements - influence of others, purpose of shopping– uncontrollable elements - influence of others, purpose of shopping

• Customer experience encompasses the total experience, includingthe search, purchase, consumption, and after-sale phases of theexperience, and may involve multiple retail channels.

Source: Verhoef, Peter C., Katherine N. Lemon, A. Parasuraman, Anne Roggeveen, Michael Tsiros and Leonard A. Schlesinger (2009), “Customer Experience Creation: Determinants, Dynamics and Management Strategies,” Journal of

Retailing, 85 (1), 31–41.

Slide 14

Customer Experience Management

Your Company (Pty) Ltd

Slide 15

Key Drivers of Loyalty

Slide 16

Outcomes of Improved Customer Experience

Outcomes of Customer Experience

Customer-Related Outcomes

Efficiency-Related Outcomes

Employee-Related Outcomes

Overall Performance-Related Outcomes

Behavioral Intentions

Slide 17

Customer Behaviours

Customer Commitment

Repurchase Intentions

Price Perceptions & Willingness to pay

Customer Loyalty & Repurchase Behaviour

Word-of-Mouth & Complaining Behaviour

Financial Performance

Nonfinancial Performance

Source: Luo, X & Homburg, C. April 2007 Neglected Outcomes of Customer Satisfaction. Journal of Marketing, Vol 71, Apr 2007 (0 133-149)

Behavioral Intentions are determined by how the drivers of Customer Satisfaction are managed <by implication measured>

– this is the essence of Customer Experience Management

Customer Defection

Index = 1

Relative Search Index Jan 2004 – Aug 2010

High interest up to 2005, stabilising trend since 2008 & still growing in South Africa (4th in regional index)!

Normalised Trend data (average of period = 1), Trend line = Polynomial

Slide 18

Index = 1


Sharp growth since 2004 & still growing & South Africa shows high interest (4th in regional index)!


Slide 19

Index = 1



Steady decline till 2007, since then stabilising trend! South Africa still shows high interst (6th in regional index)

Slide 20

Index = 1



Steady interest since 2004, but little interest in South Africa!

Slide 21

The NPS ControversyThe NPS Controversy

• Net Promoter Score Question: Likelihood to recommend on scale 0 to 10 likelihood

• “How likely would you be to recommend ‘Company X’ to friends, colleagues and associates?”

0 1 2 3 4 5 6 7 8 9 10

Not likely at all Extremely likely

Detractor PromoterPassively

Satisfied

Net Promoter Score (NPS) = Promoters - Detractors

Slide 22

Net Promoter Score Net Promoter Score –– single net measuresingle net measure

� NPS adopted by executives:� Swift to survey� Simple to understand and communicate� Top-of-house dashboard metric

� Reichheld (2003): NPS is a more

PositiveNegative

� Little scientific research linkingrecommend intentions to actualintentions2

� Morgan and Rego (2006) assessed sixdifferent metrics over a seven yearReichheld (2003): NPS is a more

accurate predictor of sales growththan the elaborate AmericanConsumer Satisfaction Index1

� General Electrics CEO: “This is the

best customer satisfaction metric I’ve

seen”

1Reichheld, F. (2003). The One Number You Need to Grow. Harvard Business Review, Dec 20032Keiningham, T. et al. (2007). The value of different customer satisfaction and loyalty metrics in predicting customer retention, recommendation, and share-of-wallet,

Managing Service Quality 17(4), 361-384.3Morgan, N. & Rego, L. (2006). The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Business Performance. Marketing Science 25(5), Sep –

Oct.

different metrics over a seven yearperiod and found: “…recentprescriptions to focus customerfeedback systems & metrics solely oncustomers’ recommendation intentionsand behaviours are misguided”3

Slide 23

Adoption of NPSAdoption of NPS

46%

Source : Temkin Group May 2010 Survey (142 US companies with $500+ million annual revenue)

Slide 24

Popularity of Terms Popularity of Terms –– Trends since 2004Trends since 2004

Polynomial Trend – Normalised Trend data (average of period = 1)

Slide 25

Relative Popularity of TermsRelative Popularity of Terms

NPS = 8.1x

Customer Satisfaction= 5xSatisfaction= 5x

Service Quality = 4.8x

Customer Experience = 1

Customer Loyalty = 1.2

Slide 26

Relative Popularity of Relative Popularity of Terms Terms (last 12 months)(last 12 months)

NPS = 6.1xCustomer Customer

Satisfaction= 2.8x

Service Quality = 2.8x

Customer Experience = 1

Customer Loyalty = 0.75x

Slide 27

Intangible experience = Not measurable?Intangible experience = Not measurable?

Photo by Flickr user Memotions, licensed under Creative Commons, Attribution 2.0 Generic

Copyright – Consulta 2010

Slide 28

The GAP never mentioned …The GAP never mentioned …

Slide 29

Effort Score Effort Score –– worth the effort?worth the effort?P

redi

ctiv

eP

ower

* of

Rep

urch

ase

High

Research conducted by Customer Contact Council of t he Corporate Executive Board

NPS®Council Conclusion“Inadequate measure” in theservice channel:• Question inherently positive

(only likelihood to recommend –not criticize)

EffortEffortCouncil Conclusion

Better suited for service channel. Better financial predictor & best indicator of loyalty

Comments :• Directly contrasting scientific

proof of ACSI (American), SCSI (Sweden)

• No scientific foundation• Irresponsible to “recommend”

members against• Effort-score purely developed in

Pre

dict

ive

Pow

er*

ofR

epur

chas

e

Low

Low HighPredictive Power* for Increased Spend

Power* - Linear regression coefficients regressed ag ainst Likelihood to Repurchase & Increase Spend

not criticize)• Captures company-level

sentiment (incl brand, product, pricing)

CSAT Council ConclusionPopular, widely used BUT “notsufficient in predicting financialoutcomes … de-emphasize itsuse in strategic decisions”

• Effort-score purely developed in Contact centre environment

• No published proof of scientific reliability & validity

• Scale is reverse scored – South African research shows low reliability & poor predictive properties to the contrary

Slide 30

Stop trying to Delight your Customers?Stop trying to Delight your Customers?

Slide 31

ERICERIC™™ –– Empathy Rating IndexEmpathy Rating Index

• The ERIC instrument consists of 29 empathy questions measuredon a 10-point rating scale and 11 call process questions that arerelated to how the calls are processed

• The trained researchers (mystery callers) then make 40unscripted(?) calls over three weeks to each company andcomplete an online questionnaire

• The study sample was limited to 28 companies in which ROCE and

Source : Lywood, J., Stone, M. and Ekinci, Y. "Customer experience and profitability: An application of the empathy rating index (ERIC) in UK call centres," Journal of Database Marketing & Customer Strategy Management (16), 2009, pp. 207-214. & Lywood, J., Stone, M. and Hackett, D. Eric Methodology Whitepaper 2005 < http://www.empathy.co.uk/ >

• The study sample was limited to 28 companies in which ROCE and ERIC ratings were both available.

Slide 32

ERIC ERIC –– Testing the claimsTesting the claims

Comments : • No proven scientific grounding• Non rated Journal, 6 rated references

used• Questionable statistics & sample• No longitudinal data or reference to time• Methodology basically mystery caller• Psychometric properties of scale – no

scientific grounding

Claimed at 2008 CS Conference:“At Last –a proven link between a service

related measure and profitability”

scientific grounding• Mixed construct in scale (15 constructs

across 33 statements• Of 5 attributes only one (Empathy) is

an interval scale, all other “Yes/no” or numerical (number of calls)

• Claimed at 2008 CS Conference = False claim

Source : Lywood, J., Stone, M. and Ekinci, Y. "Customer experience and profitability: An application of the empathy rating index (ERIC) in UK call centres," Journal of Database Marketing & Customer Strategy Management (16), 2009, pp. 207-214. & Lywood, J., Stone, M. and Hackett, D. Eric Methodology Whitepaper 2005 < http://www.empathy.co.uk/ >

Slide 33

Emotional SignatureEmotional Signature

3

3.5

4

4.5

5Very stronglyfelt

Stronglyfelt

Moderatelyfelt

Advocacy Recommendation Attention Destroying

Adapted from : Colin Shaw, The DNA of Customer Experience: How emotions drive value. Paper presented at Customer Experience Conference in London 2008

1

1.5

2

2.5

Ha

pp

y

Ple

ase

d

Tru

ste

d

Va

lue

d

Ca

red

for

Safe

Focu

sed

Stim

ula

ted

Inte

rest

ed

En

erg

eti

c

Ind

ulg

en

t

Exp

lora

tory

Dis

sati

sfie

d

Fru

stra

ted

Dis

ap

po

inte

d

Irri

tate

d

Stre

sse

d

Un

ha

pp

y

Ne

gle

cte

d

Hu

rrie

d

felt

Slightlyfelt

Not feltat all

Slide 34

GG--CEM Emotion CurveCEM Emotion Curve

PositiveFeeling

Gratify

Satisfy

1

3

4

6

7

8

9

1013

14

20

Peak-end Analysis

Neutral

Bad

Horrible

NegativeFeeling

2

511

12

15

16

17

18

19

Pleasure-Pain GapAnchoring

Adapted from : Sampson Lee – G-CEM, Effective Experience Framework 2.0, 2010 Whitepaper

Slide 35

Using the PeakUsing the Peak--end rule in CEend rule in CE--measurementmeasurement

• Subjects' retrospective evaluations (remembering self) of both pleasant and unpleasant experiences were well-explained by a peak/end rule. A simple average of the quality of the experience at its most extreme moment and at its end predicted retrospective evaluations with substantial accuracy.substantial accuracy.

• IMPLICATION: Minimize the difference between the Point of Best Experience (PoBx) & the Point of End Experience (PoEx)

Source : Daniel Kahneman and Richard H. Thaler, “Anomalies: Utility Maximization and Experienced Utility”, The Journal of Economic Perspectives, Vol. 20, No. 1 (Winter, 2006), pp. 221-234

Slide 36

Finding the SatisfactionFinding the Satisfaction--Loyalty CurveLoyalty Curve

Slide 37

The The Zone of Delight Zone of Delight ––the the “impossible”“impossible”--zone?zone?

40.0%

50.0%

60.0%

70.0%

Zone ofDelight

Zone ofIndifference

Zone ofDefection

Perc

enta

ge o

f Pro

mote

rs (9/1

0 recom

mend)

0.0%

10.0%

20.0%

30.0%

0 10 20 30 40 50 60 70 80 90 100

Very Poor Excellent

Perc

enta

ge o

f Pro

mote

rs (9/1

0 recom

mend)

Satisfaction scores

Slide 38

Finding the SatisfactionFinding the Satisfaction--Loyalty CurveLoyalty Curve

50.0%

60.0%

70.0%

80.0%

90.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0 10 20 30 40 50 60 70 80 90 100

Very Poor Excellent

Slide 39

The Consulta Customer Experience Measurement Solution

Slide 40

Solution

The CONSULTA The CONSULTA Integrated Customer Experience Integrated Customer Experience Measurement ModelMeasurement Model

Slide 41

The Conceptual Model FlowThe Conceptual Model Flow

Copyright © Consulta Research - 2010

Slide 42

Principle Calculation of Principle Calculation of Modeled Modeled ScoresScores

FAILUREFAILUREDELIGHTDELIGHT

Slide 43

The Disconfirmation Scale used by Consulta Research

To measure attributes of Customer Satisfaction:

vs

0 1 2 3 4 5 6 7 8 9 10

Much worse than expected

Much better than expected

Slide 44

vs

ServiceFailure

ServiceDelight

0 1 2 3 4 5 6 7 8 9 10

Very Poor Excellent

Use an EnterpriseUse an Enterprise--wide Model wide Model –– A Retail Banking A Retail Banking exampleexample

Slide 45

Standardised Customization through A Common Architecture

Slide 46

Example of Findings

Buzz Barometer: Recommend Channel 26.6%Service Problems

16.6%

National for 2008 2009Sample(n) = 367

Failure

Delight

51.2%

48.8%

Delight

SERVICE QUALITY MEASURE

SERVICE QUALITY INDEX

VOICE-OF-CUSTOMER INDEX

Slide 47Slide 47

77.345

Buzz Barometer: Recommend ABC based on Channel

16.3%

Buzz Barometer: Recommend ABC 8.9%

56.3

5616.6%

13.8%

Problem Recovery

5.9%

Failure

Failure

Delight

6.1%

47.5%

7.1%

Failure

RELATIONSHIP QUALITY INDEX

Slide 48

Implementation

Slide 49

Slide 50

Customer Experience Management

Then & Now…

The Future …

Copyright Consulta - 2010Slide 51

Slide 52

CEMJM Level Explanations

•Customer experience is part of the DNA of the company, and maintained throughout

•Customer experience is one of the core tenets of strategy & integrated across all levels

•Customer experience is critical and executives become actively involvedbecome actively involved

•Customer experience is very important and formalised programs are developed/implemented

•Customer experience is seen as important early levels of buy-in are achieved

•Basic level of interest & awareness but understanding of customer experience is weak

Slide 53

Unconvinced but

interested

Formalised& converted

Dedicated& reinventing

Entrenched& Empowered

Engaged & Sustained

Getting involved & buy-in

Change the CE-Horizon to a Journey

Copyright © Consulta - 2010

Slide 54

CEMJM US BenchmarkCEMJM US Benchmark

Source:• 2007: Forrester’s Q4 2007 Customer Experience Peer Research Panel Survey (287 CE decision-makers

from US firms with annual revenues of $500+ million) • 2009: Temkin Group May 2010 Survey (142 US companies with $500+ million annual revenue)

Slide 55

The South African CE Benchmark 2010Benchmark

Figures: May

2010

Consulta

Conference:

August 2010

Score Intervals Level Classification 161

50 and less Level 1 Level 1: Unconvinced but interested 33% 71%

Between 51 and 60 Level 2 Level 2: Getting involved and buy-in 25% 19%

Between 61 and 70 Level 3 Level 3: Formalised and converted 16% 7%

Between 71 and 80 Level 4 Level 4: Dedicated and reinventing 11% 2%

Between 81 and 90 Level 5 Level 5: Entrenched and empowered 13% 1%

Slide 56

Between 81 and 90 Level 5 Level 5: Entrenched and empowered 13% 1%

Between 91 and 100 Level 6 Level 6: Engaged and sustained 3% 0%

The South African CE Benchmark 2010

Slide 57

+ -

Experience-Design Ave

Implementation-Planning St

Concept & Pilot St

Launch St

Map the Implementation Journey

Mobilizing-the-Effort St

Customer-Insight Rd

Desired-State Ave

Design Ave

Slide 58

Copyright Consulta - 2010

ExecutiveStakeholders

ExecutiveSponsor

ProjectTeam

SupportFunctions

Movingbeyond

platitude

Movingbeyond

platitude

Knowing where to

start

Knowing where to

start

Coming to terms with the “Truth”

Coming to terms with the “Truth”

Painting the

“Surface” vs

“Changing-the-Core”

Painting the

“Surface” vs

“Changing-the-Core”

Difficult structuraltradeoffs

Difficult structuraltradeoffs

Prematurely declaring victory

Prematurely declaring victory

Establishing ongoing

Customer Experience

Measurement & Management

Establishing ongoing

Customer Experience

Measurement & Management

Prioritizing experience moments

Prioritizing experience moments

Ideal experience-we-can’t

implement

Ideal experience-we-can’t

implement

Moving from Good to Great designs

Moving from Good to Great designs

Differentiation vs “More-of-the-

same”

Differentiation vs “More-of-the-

same”

Customer vsCompany

Orientation

Customer vsCompany

Orientation

Understanding the journey

Understanding the journey

Structuring & planning the

effort

Structuring & planning the

effort

The experiencemapping swampThe experiencemapping swamp

Searching forSearching for

Be careful of “Roadblocks” & “Potholes”

SupportFunctions(Mktg, Fin, IT, HR)

Regional/LineManagement

FrontlineStaff

Mobilizing-the-

Effort

Customer-Insight

Desired-State

Experience-Design

(Strategy)

Implemen-tation-

Planning

Concept & Pilot

Launch

startstart to Great designsto Great designs

Avoiding non-economic

improvements

Avoiding non-economic

improvements

Changing partner expectations & relationships

Changing partner expectations & relationships

Defining staff experience

changes

Defining staff experience

changesShifting

organizationalbehaviour

Shifting organizational

behaviour

Surfacing unwritten rule

barriers

Surfacing unwritten rule

barriers

We know what the customer

wants

We know what the customer

wants

Surfacing deeper

customer understanding

Surfacing deeper

customer understanding

Searching for“quick fixes”Searching for“quick fixes”

Productively engaging the BU & Partners

Productively engaging the BU & Partners

Slide 59Adapted from: Frank Capek – Overcoming Customer Experience Program Stress Points –http://customerinnovations.wordpress.com/ Posted on August 4, 2009 by Frank Capek

The not-so-far future …?

Slide 60

Documents

Conducting Research to understand the Voice of the … · Conducting Research to understand the Voice of the Customer ... Performance Model = gap between perceived performance & ideal