Customer Insight Volume 1 Issue 1

WWW.CUSTOMER-INSIGHT.CO.UK MARCH 2011

Behavioural Economics...or are we stupid?

COMPANIES IN THIS ISSUE

O2 | The Co-operative | Nominet Plus YourSayPays Latest thinking Customer Service Awards UKCSI

March 2011

6 Case Study

25 Case Study

O2 - Fans and fandom.

Customer satisfaction success at The Co-operative Bank.

12 Latest thinking

30 Case Study

Behavioural economics... or are we stupid?

Nominet - top of the league.

18 YourSayPays

35 Customer Service

I wonder what people think of our brand?

Awards for Customer Excellence.

In this issue...

VOLUME 1 ISSUE 1

20 Customer UKCSI - The national measure of customer satisfaction.

38 Surveys

Darren’s

rant

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Case Study

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What do people really think?

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Nigel Hill editor

Welcome to the first edition of Customer Insight, a magazine for professionals at the leading edge of using customer understanding to build mutually beneficial relationships.

I’ve deliberately avoided phrases like customer satisfaction, customer experience, customer service, customer loyalty to avoid getting hung up on the semantics. It’s not about one of those it’s about all of them.

Let’s face it, they all boil down to the same thing – understanding your customers’ needs and priorities sufficiently well to make things just right for them. Consistently. So that they want to come back for more and tell others how great you are. Not to mention being your fan on Facebook and your follower on Twitter (if that’s what they’re into).

Customer Insight has replaced Stakeholder Satisfaction since our feedback told us that the customer-focused articles were the ones of most interest to readers. All the past articles from Stakeholder Satisfaction are still available and can be found at www.customer-insight.co.uk/articles In this first issue of Customer Insight we start on page 6 with a fascinating case study about O2 – especially its Preston Brook contact

Customer insight is the magazine for people who want their organisation to deliver results to employees, customers and any other stakeholders as part of a coherent strategy to create value for shareholders. We publish serious articles designed to inform, stimulate debate and sometimes to provoke.

We aim to be thought leaders in the field of managing relationships with all stakeholder groups.

Nigel Hill

Editor:

Production Editor: Chris Newbold Rob Ward

Designer:

Creative Director: Rob Egan Charlotte Ratcliffe

Advertising:

centre. Read about ‘fans and fandom’, ‘funsters’, ‘think big’ and other techniques to engage employees and motivate them to deliver flawless service to customers. We also feature two very different businesses that are also very successful with customers. The Co-operative Bank (page 25) achieves very high levels of customer satisfaction and loyalty in the corporate banking sector and Nominet (page 30) probably serves most of the readers of this magazine, at least indirectly. As well as maintaining the register of over nine million .uk domain names, Nominet also runs the technology that enables your computer to find one of them when you type in its address or send it an email. Nominet has B2C and B2B customers, all of them very satisfied.

Spoilt for choice about which article to read? So are your customers when you give them too many options. Check out our latest thinking article on behavioural economics on page 12 to find out what I’m on about.

Printers of Customer Insight Magazine

www.customer-insight.co.uk info@customer-insight.co.uk Customer Insight PO BOX 1426 Huddersfield HD1 9AW Tel: 0845 293 9480 NB: Customer Insight does not accept responsibility for omissions or errors. The points of view expressed in the articles by contributing writers and/or in advertisements included in this magazine do not necessarily represent those of the publisher. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without prior written consent of the publisher.

Copyright © CUSTOMER INSIGHT 2011

ISSN 1749-088X www.customer-insight.co.uk

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Case Study

Most people have a mobile phone or a smartphone (or more than one), so with little new business available, O2 works hard on existing customers. The industry norm is that about 14% of customers switch regularly based on price. It’s difficult (and arguably not desirable) to retain these most price-sensitive customers, as they tend to come and go, opting for whoever seems cheapest at the time. O2 therefore focuses on keeping and nurturing its good customers, but a strategy’s no good if it only exists in the boardroom – it’s got to live, breathe and happen throughout the organisation. For this to happen your people have to understand the strategy, buy into it and want to make it happen. This article is about how O2 achieves that, especially at Preston Brook, one of its four UK contact centres.

O2’s Internal Communications Manager, Sarah Darlington, takes up the story.

Sarah Darlington Internal Communications Manager

Customers and Fans O2’s core strategy is all about making existing customers highly satisfied to build their loyalty. To engage and inspire our people it’s presented and described in terms of ‘fans and fandom’. Customers think but fans feel. A customer will carry out a transaction that’s all logic: ‘I’ll choose this because it’s cheaper.’ It’s a process you go through because your head tells you to. A fan will trust you, forgive you and talk about you to their friends. They’ll try everything you’ve got to offer and they’ll

always choose you first. That’s why we want fans at O2.

Of course, if our people are not fans of the business, they’re not likely to inspire customers to become fans, so it all starts with engaging our people. Preston Brook has over 1,800 people, mainly in customer service, divided into teams of 13 to 15. The building is purpose built, very modern, light and airy. Despite the fact that 1,600 people can be on the phone it’s surprisingly

quiet and calm. The working environment is also extremely tidy because everyone has their own briefcase that they bring out at the start of their shift and pack away at the end. Most briefcases are personalised with photos etc but on the whole, desks are tidy and ready for any chance of desk sharing should O2 need to take on more staff. Preston Brook is an in-bound call centre. There are few outbound calls.

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Fanclub Our people will never be fans unless they’re completely up to date with the company, its products and what’s happening around O2 to improve customer satisfaction. Things like the £1 million a day invested in improving the network, the development of new online self-service benefits and ‘International Favourites’, a friends and families proposition offering deep discounts on international calls. In The Street (see later) there are opportunities for employees to use O2 products.

For our Chief Executive, Ronan Dunn, turning customers into fans is a key corporate target. Consequently, much has been invested in training our people about the how and why of turning customers into fans. There are six steps to turning a customer into a fan: 1. Highly satisfied – customers have to score 80+ on the CSI, which is made up of three elements: · General satisfaction · The

degree to which we meet expectations · C loseness to the ideal operator 2. Loyal – defined as extremely likely to stay with us 3. Would definitely recommend us to friends, family, colleagues 4. Strongly agree that we surprise and delight them 5. Completely trust us to do the right thing by them 6. Would definitely give us a second chance if we made a mistake

According to Ronan Dunn:

FOCUSING ON FANS IS ABSOLUTELY THE RIGHT STRATEGY BUT WHEN IT COMES TO CREATING FANS, WE CAN’T LEAVE ANYTHING OUT. THEY MIGHT BE VERY SATISFIED, LOYAL, SURPRISED AND DELIGHTED; THEY MIGHT RECOMMEND US TO A FRIEND AND GIVE US A SECOND CHANCE. BUT A FAN WHO IS ALL THESE THINGS BUT DOESN’T TRUST US IS LIKE STICKY TOFFEE PUDDING WITHOUT THE STICKY TOFFEE. IT’S JUST NOT THERE YET. KEEP THINKING FANS, FANS, FANS. WE CAN AND WILL REACH OUR GOAL IF WE PULL TOGETHER AND DELIVER THE RIGHT EXPERIENCE FOR OUR CUSTOMERS. Customer Satisfaction This is by far O2’s most visible MI. O2 is not obsessed with typical call centre metrics like number of callers waiting or average call duration. The right people are still monitoring the call duration etc but it’s definitely not given the same attention as customer satisfaction within the operation.

O2 has two measures of customer satisfaction:

(1) See The Signs ‘See the Signs’ is a full-blown annual customer satisfaction telephone survey.

Strategic in focus, these results are for senior managers to understand what’s driving customer satisfaction. This helps

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Case Study

senior management to understand the areas that O2’s people need to focus on.

As a result, overall satisfaction, knowledge of the call handler plus their friendliness and helpfulness are important and continuously tracked through the second survey.

(2) See The Moment The ‘See the Moment’ survey is the most important MI to all teams across the contact centre. This is a short real time text survey that is sent at random to 10% of the callers. The text is sent within 24 hours of the customer’s call (often straight away).

O2 achieves a 25% response rate (which is pretty good for text surveys). This means that each call handler receives about 20 to 30 survey responses each month – sufficient to provide a good indication of how satisfied or dissatisfied they are making their customers feel. Getting top box scores from customers is very important and is given high visibility across the contact centre.

All call handlers, team leaders and customer service managers have access to their ‘See The Moment’ results. Everyone has a ‘See The Moment’ target that is linked to reward. As you would imagine an appeals process needs to be in place for the inevitable problems. For example a call handler can request a response to be removed because they only spoke to a customer for 10 seconds before transferring the call.

that’s a percentage top box, for the team leader to have an average percentage top box and so on for the customer service managers. However, insisting that at least 80% of the call handlers and teams have to meet their target highlights to team leaders and managers every single call handler or team that is below target. This means that poor performance is always addressed on a one-to-one basis rather than making company-wide appeals for all employees to improve an average statistic that individuals don’t really see as their personal responsibility. Consequently, even call handlers with previous good performance can’t take their current month’s customer satisfaction score for granted.

Nor can team leaders or customer service managers take their peoples’ performance for granted. Coaching is extremely important at O2 and the ‘See The Moment’ system is another factor that encourages team leaders to do it. Typically team leaders spend four hours each month in one-to-one coaching. As well as listening to calls and providing immediate feedback and coaching on call handler performance, the one-to-ones also review personal development plans. All team leaders have training in coaching skills.

Balanced Scorecard At O2 we use a balanced scorecard including the following key measures: • ‘ See The Moment’ Survey Results

• Everyone across the business has the same targets/goals and are rewarded if they achieve them.

• A call handler must reach their target to qualify for a bonus • A team leader must have 80% of their team reaching their target to qualify for a bonus • A customer service manager must have 80% of their teams reaching their target to qualify for a bonus.

Coaching The ‘See The Moment’ targets are deliberately focused on the performance of individual call handlers. The alternative would be for a call handler to have a target

• C all Observation.

• H ere a manager listens to and scores 3-4 calls each month (the monitored calls cannot be part of the ‘See The Moment’ results). A person from another team then listens to the call and checks the manager’s scoring, so there is a fair system monitored by peers.

• C ustomer Facing Time.

• A ll call handlers have to spend the majority of their time as ‘talk time’ which is a very high percentage of time on the phone speaking to customers. This has lead to increased call duration but happier customers. There does have to be a balance with managing cost but

importantly call handlers are not worrying about meeting call duration targets but are more focused on looking after customers.

• Leadership Impact Survey.

• Every call handler has a quarterly short questionnaire to complete to say when they last had feedback, coaching etc and this is used as a KPI for team leaders and customer service managers.

Employee Engagement Preston Brook is primarily a contact centre site. By definition therefore, traditional promotion opportunities away from the phones are limited. That means we have to work hard to provide lots of other career and personal development opportunities to engage and retain our people. The starting point is to make sure that the O2 brand is something employees are proud of. This is where fans and fandom come in. As I said before, if our people are not fans of O2, they won’t inspire customers to become fans and they’ll leave sooner, which is costly for the company. We have therefore developed lots of initiatives to engage our people such as ‘The Street’, ‘Think Big’ ‘Funsters’ and ‘Stepping Stones’, and employee engagement is a key metric against which our managers are judged.

Stepping Stones The Stepping Stones website is where employees can identify development opportunities. These include conventional promotion opportunities where a customer service advisor could become a ‘Lead Advisor’, dealing with escalation calls and championing new initiatives. Beyond that a Lead Advisor could become a Team Leader. There are also secondment opportunities within O2 and lots of personal development initiatives. O2 has a strong sense of responsibility towards the community. Called Think Big, O2 encourages its employees to get involved in initiatives that help local communities – the people and / or the environment. Better still for personal development, employees can propose projects, lead them and apply for funding and secondment hours to implement them.

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Think Big The Think Big website encourages people to “think up a big idea, for you, your community or your surroundings”. People can then apply for support, which could include up to £2,500 (paid in stages as project milestones are hit), free O2 broadband for a year, phone credits, a laptop for the project group and other support from O2 helpers. Projects include ‘Youth News and Views’, a newsletter to promote the achievements of local young people and to address relevant issues such as binge drinking or finding work. Other Think Big projects include Environment and Me, Green Streets, Act on Bullying and Homework Club plus many more.

The Funsters At O2 employee engagement isn’t just about work being a place where you can develop it’s geared just as much to work being a place where you have fun.

So much so that Preston Brook has two official ‘funsters’ (another development opportunity) just helping to implement employee engagement ideas, and making sure that they’re aligned with O2 culture and values. Many engagement activities are focused on the team - a pod of 13 to 15 people who become very close.

It’s well established that having good relationships with work colleagues is a key driver of employee engagement and that effective team working drives business performance. Teams therefore have night out budgets and, at Christmas, in addition to everyone getting a hamper, teams have a budget to organise a festive team night out. The funsters help to organise team social events, partly because they have the expertise and time but also to ensure

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that they all have the same O2 look and feel. Much of the funsters’ work, however, involves the whole site, especially activities centred on ‘The Street’.

The Street Running through the middle of the contact centre is an area called The Street – one of the achievements that gives me the most satisfaction. I feel very strongly that a key part of employee engagement is demonstrating to employees that the company really cares for them and that work is about people as well as business.

One of the things we’ve done at Preston Brook is to make sure that commercial messages appear only in work areas and that The Street is all about People and Planet. Work areas are for work. The Street is for our people. It uses visual aids to tell stories about Preston Brook, its people and its Think Big achievements. It includes anything that people have done well, e.g. raising money for charity. There are lots of photos of people and lots of individual stories.

The street is also used as an area to recognise desirable behaviours, so there are public presentations of recognition, such as live ‘Shout Outs’ where people can recognise each other or Head of Site, Gareth Pickles gives public praise for good work or presents official awards such as a cus-

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tomer promise pin badge and certificate for going the extra mile for customers or for specific achievements linked to one of the customer promises. For outstanding performance he might also award prizes like shopping vouchers or tickets for a concert at an O2 arena.

The key thing about The Street is that it’s ‘about the employees for the employees’.

So, for example, local shops can be invited in to display and sell products. Music is popular and encouraged. There are ‘Green Music’ stations where iPods can be docked and employees can listen to and share music. They’re green because they work off vibration not electricity. If the planet as well as the people part of People and Planet can be promoted that’s a winwin. Other recent Street events have been a six-track Scalextric and an Old School Arcade with lots of 70s and 80s generation games machines like space invaders. Funsters also try to source everything locally so it’s good for the community and good for carbon footprint – People and Planet.

Theme Days As sponsor of the O2 Arena and Academies, there are lots of possibilities for employee engagement activities in con-

Case Study

nection to music and other events. Some events, however, are home productions such as the ‘I’m a Celebrity’ event for charity starring senior managers. Halloween saw everyone dressing their pods up. The World Cup was a major themed event last summer. The centre was decorated with flags of the world, there was a prize for the best dressed pod and all the matches were shown on The Street with free pizzas, fresh fruit and ice lollies available. In work areas the plasma screens switched from the normal commercial messages to live pictures during matches. It all contributed to making work a great place to be during the event and ensured that, unlike most organisations, Preston Brook had no increase at all in absenteeism during the tournament.

£1880 bonus

A great place to work

The 1880 weekly target sounds large, but it only equates to each employee creating one new fan per week and there is a prize for employees that have done something great towards to the 1880 target.

Announced every Wednesday by email, the weekly winner is the employee who has received the best ‘applause’ on Fanclub 1880. The prize is £1880 and the winner has three choices.

Making Preston Brook a great place to work is good for our people, good for our customers and good for the business.

With a 5 year average length of service for an advisor, the contact centre has much lower attrition rates than most call centres.

The people focused leadership of Gareth Pickles has played a large part in this. As well as the great retention rates, Preston Brook had the first individual winner on 1880 and the first Team award, which we achieved for volunteer work undertaken through Think Big. In addition, Preston Brook’s balanced scorecard measures are all in the green and we have the best employee engagement survey scores of all four UK contact centre sites. Ci

1880

Most people keep the holiday vouchers, but not all, and it does make people think.

Option 1: £ 1880 worth of holiday vouchers Option 2: £1880 for a team night out.

Option 3: G ive it back to the community via the ‘Big Think’ project.

1880 is a key corporate target. It’s how many customers we must turn into fans each week to reach the ‘1 million fans’ target by the end of 2011. As we saw earlier in the article, there are lots of soft benefits in having fans but there’s also hard business reasoning behind the fans concept.

At O2 we know that: • Fans are three times more likely to stay with us • Fans are extremely likely to recommend O2 • Fans will spend an average of £500 over a lifetime rather than £200

Fanclub This is an online site that allows employees to recognise colleagues that have done something that’s good and shouldn’t go unnoticed for turning customers into fans linked to the six elements of the Customer Promise. It’s O2’s internal equivalent of a social networking site, allowing all employees to log on, see what’s going on and what other employees are doing as well as nominating anyone who deserves recognition. A post is called an ‘applause’. You can’t ‘applaud’ yourself, but an employee who’s done something to delight a customer can be applauded by a collegue.

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Ever heard of the “Jam Experiment”? Conducted by academics from Stanford and Columbia Universities, it provides insight into how we make choices, why we often end up dissatisfied with our choices and how organisations can aim to influence our decision making by getting better at the way they present options to us.

Here’s the experiment in a nutshell. On a promotional counter in the supermarket, shoppers were presented with some new jam flavours to try. Some shoppers saw a display of 6 new flavours. Others were given 30 choices. There was little difference in customers’ propensity to taste the jam at either table.

However, 30% of individuals who visited the 6 jam table purchased jam, but only 3% bought after visiting the table with 30 options. People always say they like having choice (often visiting enormous stores where they find the most choice), and with 5 times as many flavours of jam they were more likely to find one that they really enjoyed, but were ten times less likely to

Jam

buy one. And that’s an incredibly low cost, low risk purchase decision.

To complete the story, a second stage of the experiment offered some students six topic options for a graded essay whilst others were given a list of thirty choices.

Again, I’m sure we would all vote for more choices. Yet more students from the fewer choices group completed the assignment on time and they also wrote papers of higher quality.

The third experiment offered students six or thirty choices of chocolate. Those in the extensive-choice group reported a higher level of satisfaction with the range of choices they were given, but were less satisfied when they consumed the chocolate and more regretful about the choice they made.

on the opposing premise - that we make rational choices designed to generate the greatest ‘utility’ from our available options.

Behavioural economics In recent years, work by behavioural scientists, plus the recent failure of financial markets, has led many people to question economics. This has led to the rise of ‘behavioural economics’ whose proponents attempt to increase the predictive power of economic theory by providing it with more psychologically plausible foundations. Before exploring behavioural economics, let’s step back and outline the assumptions of traditional economists.

Jevons and Bentham Are we stupid?

At face value, the series of attitudes and behaviours described above don’t make sense. Faced with the range of choice we would prefer, we seem incapable of making decisions that will make us happy – suggesting that we are not logical, rational beings. For predicting our behaviour, this is very unfortunate, particularly since the ‘science’ of economics, has been based

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Although Adam Smith with The Wealth of Nations (1776) is regarded as the father of economics, the origins of modern economic theory are generally attributed to the ‘neoclassical’ economists of the mid 19th century. William Stanley Jevons built his theories on ‘hedonic psychology’, according to which individuals seek to maximize pleasure and minimize pain.

In Jevons’ words: “Pleasure and pain are

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undoubtedly the ultimate objects of the Calculus of Economics. To satisfy our wants to the utmost with the least effort ... in other words, to maximize pleasure, is the problem of Economics”. Jevons and other neoclassical economists were inspired by philosopher Jeremy Bentham, who wrote: “Nature has placed mankind under the governance of two sovereign masters, pain and pleasure.... They govern us in all we do, in all we say, in all we think”.

Behavioural economists’ criticisms Critics argue that this standard economic model of human behaviour includes at least four flawed assumptions about peoples’ decision making. It is based on people who are 100% rational, who have unlimited willpower, are completely selfish and have all the information necessary to make the best decisions.

(1) Rational beings There are many well researched examples of people making decisions that are not rational. For example, 401(k) retirement plans in the USA let workers save and invest for retirement on a tax-deferred basis, with many firms matching

Latest thinking

u o i v a h Be

s c i m o n o c E l a r

...or a

? d i p u t s e re w

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employees’ contributions. Based on records of many pension schemes, David Laibson highlighted peoples’ irrational propensity to delay joining in his article, “$100 Bills on the Sidewalk”, thus spurning ‘free money’. “It’s a lot of free money,” says Laibson. “Someone making $50,000 a year who has a company that matches up to 6 percent of his contributions could receive an additional $3,000 per year.”

Conventional economic theory predicts that people will jump at this opportunity.

But they don’t “It turns out that about half of U.S. workers in the older age group, who have this good deal available (ed – extra tax advantages), are not contributing,” says Laibson. “There’s no downside and a huge upside. Still, individuals are procrastinating - they plan to enroll soon, year after year, but don’t do it.” In a typical American firm, it takes a new employee a median time of two to three years to enroll, but because Americans change jobs around every five years, that delay could mean losing half of one’s career opportunity for this ‘free money’.

If people procrastinate about joining a pension plan, it should be possible to increase participation by lowering the ‘psychological’ costs of joining. In most companies, employees who become eligible for the 401(k) plan receive a form inviting them to join, which they have to complete and send back, so the inertia option is not to join. Several firms simply switched the default. Employees were enrolled unless they opted out.

This change produced dramatic increases in savings rates. In a study by Madrian and Shea (2000), employees were 50 percent more likely to participate when the default became opt-out rather than opt-in.

“$100 Bills on the Sidewalk ” Framing

Daniel Kahneman of Princeton and Amos Tversky of Stanford called this ‘framing’ in “Prospect Theory: An Analysis of Decision under Risk,” (1979), which became one of the most cited papers in economics. They argued that how alternatives are ‘framed’, not simply their relative value, heavily influences people’s decisions. This paper has also influenced marketing and theories on customer service and the customer experience. But back to the 2nd problem with classical economics.

(2) Intertemporal choice – or no willpower!

This is the assumption of complete selfcontrol. When people say they want to save for retirement, eat better, start exercising, stop smoking, they mean it but often continue spending more than saving, eating the wrong things and smoking rather than exercising. Since people think they can and will change their habits in the future, they often continue with the bad habits today. David Laibson called this ‘intertemporal choice’, saying “If you ask people ‘Which do you want right now, fruit or chocolate?’ they say, ‘Chocolate!’ But if you ask, ‘Which one a week from now?’ they will say, ‘Fruit.’ Now we want chocolate, cigarettes, and a trashy movie. In the future, we want to eat fruit, to quit smoking, and to watch Bergman films.”

(3) Information Herbert Simon (1955) was an early critic of the idea that people have unlimited

Are we mugs?

Are we mugs?

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information-processing capabilities. He suggested the term “bounded rationality” to describe a more realistic description of human problem-solving ability. An example of this suboptimal behaviour is a study of self-employed New York City taxicab drivers (Camerer et al. 1997). They must decide how long to drive each day. The profit-maximizing strategy is to work longer hours on good days (e.g. rainy days or days with a big convention in town) and to quit early on bad days. In reality, cabbies set a target earnings level for each day and tend to stop working once they reach it even though it means they end up quitting early on good days and working longer on bad days for a lower rate per hour!

(4) Selfish Finally, people are completely selfish.

Although economic theory does not rule out altruism, economists stress selfinterest as people’s primary motive. For example, traditional economic theory suggests that individuals cannot be expected to contribute to the public good unless their private welfare is improved. But people do act selflessly. For example, around two thirds of us regularly give some money to charity.

Are we too stupid for classical economics?

According to behavioural economists we seem to be irrational to the point of stupidity, totally lacking in willpower, lazy and completely unwilling to make any sacrifice right now for very obvious future benefits.

Are we mug

s?

Latest thinking

Famous behavioural economics books like Dan Ariely’s ‘Predictably Irrational’, (see June 2009 review at www.customerinsight.co.uk/article/844) and Pete Lunn’s ‘Basic Instincts’ seem devoted to human irrationality.

Are we mugs?

Lunn describes an experiment where people volunteer for a survey. On arrival they are given a chunky mug as a gift for filling in a long questionnaire. As they leave, they are offered a cash alternative. They could ‘sell back’ their mug, and can name what price they would accept for the mug.

In a second experiment, participants are given the option of buying the very same mug and can state what they’d be willing to pay. The price people accept for selling the mug they already ‘own’ is roughly twice what they’ll pay to buy the same mug. The ‘endowment effect’ means we value possessions more highly than things we don’t already own. Economic theory would say that any product or service has a value to an individual and they would happily buy it for 1p less than that value or sell it for 1p more. In a slight twist, subjects are offered the choice of a mug or chocolate for completing the survey, all happily going away with the gift of their choice. In the follow-up test participants don’t get a choice. Half are given a mug, the remainder chocolate, then offered the choice to give it back and exchange it for the other option. Whether given the mug or the chocolate, 90% choose to keep what they have, even though far more than 10% would have opted for the other gift if they had been asked to choose beforehand.

Doesn’t make sense, but it’s the endowment effect.

The Ultimatum Game Invented by German sociologist, Werner Guth in the 1980s, the simplest form of this game sees person 1 (the proposer) being given a sum of money, e.g. £10, on condition that they share some of it with a stranger (the responder). It’s entirely up to the proposer to decide how much and if the responder accepts the proposal, both parties walk away with their respective amounts. Conversely, if the responder

rejects the proposal, both parties end up with nothing. If you were playing that game, how much would you offer? How much would you accept if you were the responder?

Now think about it rationally. If both parties were to walk away with more money than they had previously and with more than the alternative of zero if the responder rejected the proposal, it would be ‘rational’ for the responder to accept even if the offer was only 1p. Is that what happens?

Not a bit of it. Whilst most proposers offer at least 30% of the sum, and the most common offer is 50%, most responders reject anything below 30% and quite a few reject any offer below 50% - spurning a windfall of up to £4.99 in the £10 example.

This is basically the fair play effect. People are willing to make financial sacrifices (act ‘irrationally’ in economic terms) to punish someone who is not acting fairly.

Actually, one can challenge the conclusions of many of the examples used by behavioural economists. Cases like the Ultimatum Game are effectively laboratory experiments. The decisions made have no serious consequences. Since most subjects in the experiments are students (what market researchers would call a convenience sample), their behaviour probably isn’t representative of the wider population. They may for example have heightened curiosity, making them more likely to experiment with behaviours in lab tests to observe the effects.

Is the cabbies’ behaviour irrational?

Even if we take real life examples such as the pension contributions and the cab drivers’ work schedules, their behaviours are not necessarily irrational. With pensions, money today is worth more than money in the future and people may not expect or want to live to an old age thus not getting ‘value’ from contributions, or they might simply make a choice to have pleasure / utility from the money now even if it does mean less pleasure when they are old. Who says deferred gratification is a good thing, or rational?

since we have only so much brainpower and only so much time, we cannot be expected to always make decisions that are in our best interest. Calling his theory ‘bounded rationality’, he claimed it was eminently rational for people to adopt rules of thumb simply as a cognitive survival strategy. Apart from bounded rationality, there are many reasons why cab drivers could be making sensible decisions when getting what the behavioural economists call a sub-optimal return on their labour.

With today’s often hectic lifestyles, and both parents often working our cabbie may have to collect children from school while his partner works late. He can’t leave them standing at the school gate on rainy days because his income is 15% per hour higher. Alternatively, he may place little value on increased leisure time when hourly earnings were lower if the alternative were less attractive, e.g. at times when there was no family at home or no sport on TV.

Behavioural finance The one field of economics where the four ‘flaws’ of economic theory should matter least must be stock markets, where decisions should be rational and selfish, based on huge amounts of readily accessible information and with willpower having less relevance in this market. Economists coined a phrase, the ‘efficient markets hypothesis’, which states that prices in stock markets are ‘correct’ in the sense that they reflect the true value of a share, at least over a period of time. If investors believe the price of a security to be underor over-valued, they will buy or sell it until the price returns to equilibrium. How-

Moreover, as Herbert Simon said in 1955,

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Latest thinking

ever, apart from the catastrophic failure of the markets in 2008, there have been research projects that have cast doubt on economists’ efficient markets theory.

Smith, who always did see psychology as a part of economic decision-making. On self-interest, for example, Smith wrote in 1759:

News, news, news

“How selfish soever man

An early study by De Bondt and Thaler (1985) was explicitly motivated by the psychological finding that individuals tend to overreact to new information. They hypothesised that if investors behave this way, then stocks that perform quite well over a period of years will eventually have prices that are too high because people overreacting to the good news will drive up prices. Similarly, poor performers will eventually have prices that are too low.

If true, past “winners” ought to underperform, while past “losers” ought to outperform the market. Using New York Stock Exchange data, De Bondt and Thaler found that the thirty-five stocks that had performed the worst over the past five years (the losers) outperformed the market over the next five years, while the thirty-five biggest winners over the past five years subsequently underperformed. Follow-up studies showed that these early results cannot be attributed to risk; by some measures the portfolio of losers was actually less risky than the portfolio of winners.

Admitting defeat Behavioural economists have also hypothesised that investors are reluctant to realise capital losses as it would mean “declaring” the loss to themselves. Shefrin and Statman (1985) dubbed this hypothesis the ‘disposition effect.’ The tax system even encourages just the opposite behaviour but Terrance Odean (1998) found that investors were more likely to sell a stock that had increased in value than one that had decreased. While around 15 percent of all gains were realised, only 10 percent of losses were realised. Moreover, loser stocks that were held underperformed the gainer stocks sold.

Adam Smith Perhaps we should leave the final word to the grandfather of all economists, Adam

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may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.

”

Regarding people’s rationality, Smith wrote: “How many people ruin themselves by laying out money on trinkets of frivolous utility? What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it. All their pockets are stuffed with little conveniences … of which the whole utility is certainly not worth the fatigue of bearing the burden.” Some say economists ignored Smith’s psychological points because it’s easier to build mathematical models if human behaviour is rational and predictable. This is a debate that will no doubt continue in the customer experience as well as the economics field. As we’ve always said, the more emotional elements of the customer experience will often get you ‘wow factor’ brownie points, but ignore the rational, ‘givens’ at your peril. If you don’t keep customers informed, don’t arrive within your service call appointment window, don’t have a spotlessly clean restaurant or deliveries that arrive on time every time, it doesn’t matter how many emotional wow factors you’ve delivered, you’ll lose those customers and they’ll each tell at least five other people how bad you are. Ci

www.customer-insight.co.uk

Nigel Hill Founder of The Leadership Factor and editor of Customer Insight.

Greg Roche Director of The Leadership Factor

European Customer Experience World 2011 24th to 26th May · London

At ECEW 2011, you’ll hear from the most forwardthinking authorities in the field, representing leading companies from across the globe like the Disney Institute, Starbuck’s, Virgin Holidays, Fiat, Zappos, Bank of America, Metro Bank, Cadbury’s, BT and many others.

THE ECEW 2011 CUSTOMER EXPERIENCE

WHO SHOULD ATTEND?

ECEW 2011 is professional yet informal, organised yet comfortable - a program you can tailor to your needs. The ECEW structure encourages substantive conversations among colleagues, led by facilitators who keep the discussion on target and on goal. It’s a hands-on process of experiential learning that engages you in a constant exchange of ideas and insights.

Executives who are, or who want to champion customer experience, such as, Members of Board, Vice President, Directors, Head and Senior Managers involved in:

LEARNING, NOT JUST LISTENING ECEW 2011 is not just listening but learning in a way that brings it to life by hearing from the people who lived the story. They will tell you how to move your customer experience from idea through strategy to selling it and implementation and measurement.

Customer Lifecycle Strategy Customer Experience Client Relationship Development CRM & Loyalty Customer Care and Service Quality Marketing/Sales Retention and Loyalty Programs Customer Insight and Satisfaction

THE FOCUS GROUP LTD

Contact Maggie Wheeler

01933 844466 www.thefocusgroup.org.uk

YourSayPays

I WONDER WHAT PEOPLE THINK OF OUR ?

By utilising online research panels, an increasing number of organisations across all sectors are finding exactly what people across the UK think of, well, anything really. Here we look at exactly what online research panels are, and how organisations are using them for competitive advantage and insight….

What is a research panel?

It is basically an online forum that enables a large number of individuals to sign up to a panel where they are rewarded, financially or through donations to a charity of their choice, for participating in web surveys – some short, some long, with the size of reward varying accordingly. Organisations work with the panel provider to build a questionnaire that will provide the information and insights and results that they wish to find out. Panel research is very quick, so in a matter of days (quicker if necessary) results and insights are available from the answers of several thousand individuals.

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I only want to ask people of a certain demographic – can that be done?

Most definitely. When organisations conduct research of this type, they typically have a target demographic in mind. This can be as general as men aged over 35 or as specific as women living in the south-east with children, who own their own property and have a total household income in excess of £40,000. A clear benefit of research panels is that panellists’ personal information is recorded at sign-up, so organisations can target the exact customer profile they wish with their questionnaire.

What can it do for me?

Online panels can be used for a wide variety of purposes including; Statistics for Company PR – We’ve all read articles or heard stories in the media where ‘Research commissioned by ABC Ltd found that 75% of British women think that….’ This kind of research is car-

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ried out by online panels on behalf of the organisation for PR and brand exposure.

For example, a large travel agent group was looking to increase media exposure for their branches by finding out which songs reminded people most about their holidays. The survey found out there were 5 songs which, above all others, reminded people about going on holiday e.g. Summer Holiday (surprise, surprise) and Good Vibrations. The client ran a tailored PR campaign which included hiring a busker to play these songs outside flagship branches. The campaign generated considerable exposure in the press and on radio.

Advertising Effectiveness – Is an advertising campaign working? Can people recall your marketing messages or campaign? Do people like your promotional campaign? An online panel can help you see if your messages are getting through.

Brand Recognition – Do people know your brands? What do people think of them? Can people identify your brand

YourSayPays

when it’s next to your competitors? What would make them buy? Questions posted to the panel could include visuals to gather views on packaging, logos etc.

Company Reputation & Values – Find out what people really think of your organisation. What company values do they see? Prestige, cheap, honest, expensive, good quality, unethical? An online panel will provide immediate insight into how you are seen. This is particularly useful if things are happening and you want to track changes (positive or negative) in how people perceive you.

Competitive Analysis – Ask your target market whether they prefer you or your competitors. Ask them why. An online panel can help you understand how you compare against other organisations across a variety of criteria such as customer service, product quality, price, availability etc.

Concept Testing – Curious about the potential of a new product or service? Is there really a position in the market for you? Is your new USP as special as you think it is? Online panels are extremely useful as a toe in the water for testing new ideas. Is there really the demand you think there is?

Future Trends – Find out how consumer behaviour may be changing. From the number of holidays families intend to take to when they’ll look to replace their PC at home, online panels can identify trends and changes in behaviour.

Consumer Confidence – With the uncertainty in the economy and most people feeling the squeeze with less disposable income, how may this affect your organisation and demand for your products and services? Online panels can provide an immediate snapshot on consumer confidence or a regular monitor of purchasing and attitudinal trends.

Consumer Attitudes & Perceptions – Find out what values are most important to your target market. Is your brand and messaging aligned to these attitudes and perceptions? Understanding target consumers on a more personal and emotional level, can help shape brand communications and marketing.

Consumer Expectations – A panel is useful to identity expectation levels of customers. Organisations may think their customer service is pretty good, however if customer expectation is to handle their complaint in half the time, perhaps it’s not as hot as you thought!

We’re a B2B company, panels aren’t for us. Are they?

Whilst it’s undoubtedly true that there is a wider range of B2C than B2B applications for panel research, it would be wrong to dismiss online panels as inappropriate for use in a B2B environment.

The YourSayPays panel has small business owners plus managers and directors of larger organisations on its panel, so questionnaires can be targeted at individuals with decision making power. Also B2B organisations can use panels for effective PR generation. A good example is a recent YourSayPays survey for a software and technology company who help businesses become more efficient through delivery of Geography Information Systems. They wanted to discover the level of geographic awareness of people in the UK. It’s not very high! One of the staggering outcomes was that over 75% of British people can’t correctly identify which countries make up Great Britain! The resulting story was covered on Sky News and the Sky News website. This resulted in a significant increase in traffic to the client’s website, and whilst a B2B organisation, it raised their company brand and profile, which had a positive impact on their customers and prospects.

cases of panel saboteurs, they will make up such a minuscule percentage of the sample that they will not affect the results of the survey. 99% of panellists are people who enjoy giving their views and opinions, value the cash incentive and simply answer the questions how they see it.

Think about it – when you take part in a survey, it is much easier to give answers that reflect your views than to think up ones that don’t. Ci

More information For more information on online panels and how they could help your organisation visit www.onlineresearchuk.com or email darrenwake@yoursaypays.co.uk

Alternatively call YourSayPays on 01484 467012.

Are Online Panels accurate?

Whilst an online panel may have the occasional ‘panel saboteur’ who puts down inappropriate comments and scores questions incorrectly, with a professional and well policed panel, these cases are quickly identified and said saboteurs are removed from the panel. In addition, any survey should be answered by a minimum of 1000 respondents, so if there are any

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Customer

THE NATIONAL MEASURE OF CUSTOMER SATISFACTION

Stephen Hampshire Client Manager The Leadership Factor If you have any thoughts about this article you can contact Stephen at stephenhampshire@leadershipfactor.com

UKCSI January 2011

The latest UK Customer Satisfaction Index (UKCSI), which is the National Measure of Customer Satisfaction for UK organisations, has recorded a good increase from 75.6 to 76.7. Based on a representative sample of 26,000 adults surveyed over the internet, the research is conducted by The Leadership Factor on behalf of the Institute of Customer Service. The latest wave is the 8th bi-annual UKCSI survey that has been conducted so we now have enough data to start making reliable comments on trends and one of the most remarkable outcomes of the UKCSI over that period is the consistent upward trend in customer satisfaction.

www.instituteofcustomerservice.com

UKCSI trends As Chart 1 shows, customer satisfaction has grown steadily across the four years of the UKCSI from 65.6 in the first wave to

its current level of 76.7. Since the UK has been in recession for much of that period, it may seem counter-intuitive that customer satisfaction has continued to rise, but I don’t think it is, for several reasons.

Chart 1: Growing UK customer satisfaction 80

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Wave 1

Robert Crawford Executive Director Institute of Customer Service

Wave 2

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Wave 4

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Wave 6

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Customer

I n a recession, companies find it much more difficult to win new business. When they’re feeling the pinch, consumers are more likely to continue with existing spending patterns than to adopt new products or services.

This makes it sensible for companies to switch resources from winning new customers to keeping existing ones.

(We would say it’s always sensible to do that but when customer acquisition is easier, marketing departments tend to focus on it even though evidence shows that on average it’s 5 times more costly to win a new customer than to keep an existing one).

Chart 2: Non-food retail and automotive trends 80

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T o keep existing customers you have to deliver a consistently flawless customer experience. In other words make them very satisfied, not just satisfied.

T his is especially relevant in explaining the increase in the UKCSI in the public and regulated sectors as well as more competitive markets.

Wave 2

Retail - non-food

Wave 3

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Automotive

Chart 3: Customer satisfaction and the product life cycle Customer satisfaction

B odies like the ICS have successfully spread the customer service message, so there are very few organisations in the UK that don’t now appreciate the benefits of high customer satisfaction.

Wave 1

Retail Automotive

s t litie Uti rnmen e v o g al Loc

Trends by sector Customer satisfaction has generally risen across sectors too, albeit not at a uniform rate. Surprisingly, the sectors with the best customer satisfaction have tended to improve more slowly in recent waves. One obvious explanation for this is the simple fact that the higher your customer satisfaction goes, the more difficult it becomes to improve it further.

A related factor, particularly in explaining some of the very good gains made by the public sector and some privatised industries, is the product life cycle of customer satisfaction in the UK, which goes back to the 1980s when the first companies started taking notice of the growing focus on customer service in the USA. During that decade, the auto-

Launch

Growth

motive sector, at least for new car sales, was one of the earliest adopters in the UK, as were retailers. It was well into the 1990s, often after the turn of the Millennium, before customer focus started to make an impact on utilities and the public sector, especially the latter.

During the growth phase of the customer focus life cycle in organisations, significant gains are often made from a low base. It’s well established that when organisations undertake their first two or three customer satisfaction surveys, they usually iden-

Maturity

tify ‘quick wins’ – areas of low customer satisfaction that can be addressed with relatively low difficulty and cost. As this low hanging fruit is picked, further opportunities to improve customer satisfaction tend to be higher up the tree with correspondingly greater difficulty and cost attached to addressing them. Examples of quick wins would be ‘keeping customers informed’ or ‘calling back when promised’, compared with more difficult priorities for improvement such as ‘quality of product’ or ‘lead times’ that are more costly to address and take longer.

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Although it’s had a bumpy ride, and suffered a big drop between the first two waves, local government has improved more than any other sector, especially over the last 7 waves. Its rise from 60.1 to 73.7 over this time is a gain of 13.6 or 23%. Utilities have not improved as much, but their overall sector gain of 15% during the life of the UKCSI still represents an excellent rate of improvement.

Not all sectors have achieved similar levels of improvement. Chart 5 shows that the insurance sector, which was one of the best for customer satisfaction in the early days of the UKCSI, has made a total gain of only 2.6 points (3%) to date. Is this due to the very strong focus on price that prevails within the industry?

Chart 4: Trends in utilities and local government 80

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Utilities

60 Wave 1

Wave 2

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Local government

Wave 7

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Chart 5: Insurance trends 80

The January 2011 results As shown in chart 6, the overall UK customer satisfaction index has improved by 1.1 points this wave to 76.7. All sectors have improved this month. In line with our product life cycle theory, the sectors improving the most are Utilities (by 2.2), Government services (national) by 1.9 and local government by 1.6 points.

The two retail sectors have improved the least – food by 0.6 and non-food by 0.4.

However, both remain over 80 – food at 80.8 and non-food at 80.3. Also on 80.3 is tourism, but at the top of the UKCSI sector league is the services sector with a very good customer satisfaction index of 81.

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Chart 6: January 2011 results 55

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Overall

Across all sectors, 54 named organisations achieved a CSI over 80; eight are over 85. The 10 highest scoring named organisations are:

Services Retail - food Retail - non-food Tourism

John Lewis (89)

Automotive

Waitrose (89)

Leisure

BUPA (88) Marks & Spencer (food) (87) Lloyds Pharmacy (86)

Finance - insurance Finance - banks and building societies Public Services (local)

Marriott (86)

Telecommunications

SAGA Holidays (85)

Transport

Enterprise Rent-A-Car (85) Boots (84)

Public Services Utilities

P&O Cruises (84)

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The top 10

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Jan - 11 Jul - 10

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It is interesting that half of the top ten companies are retailers, three are from tourism, one from insurance and one from services. Non-food retail had the best single company, John Lewis, and the highest number, nine companies, with a customer satisfaction index over 80. By comparison, the best automotive company, Mazda, was just outside the top ten with a CSI of 83.3 and only two other companies (Volvo and BMW) breached 80%. In terms of high performing companies, this is no better than banking, where top company, First Direct, achieved a customer satisfaction index of 83.1 and two more (Bank of Scotland and Nationwide) exceeded 80.

Chart 7: Value for money profiling in food retail 9

Waitrose

8.8

Marks & Spencer (food)

8.6 Average of other 8.4 satisfaction scores

FA I

RV AL UE

8.2

Sainsbury’s

Aldi Lidl

Tesco

7.8

Co-op

7.6 7

By contrast, food retailing manages much more consistency. Apart from Waitrose and Marks & Spencer, who are way out ahead of the pack, all the others are within a five point band just slightly higher than automotive, telling us that customer satisfaction is good, but by no means stellar.

It’s a valid question to ask why the others, who include some of the UK’s largest companies, can’t match Waitrose and M&S. The latter operate at the premium end of the market and are not cheap, but their high levels of customer satisfaction

Morrisons

8

8

7.5

Consistency Where automotive does well, however, is consistency. All the other automotive companies were in a very tight range of 75-80, showing that few customers now feel that they have bad customer experiences with the main car companies. In other sectors, customer service is much more variable. Insurance, for example, ranges from BUPA’s excellent customer satisfaction index of 88.5 down to 69.5 for the poorest performer. Transport also ranges widely from Virgin Atlantic’s 83.6 (with P&O Ferries also over 80) right down to a low of 62.8, with a total of seven companies under 70. Public services (national) also have a 20 point range but this is not as bad as local public services where the range is a massive 28 points.

Why can’t all local services match the levels of customer satisfaction achieved by the fire and ambulance services (both over 80).

Iceland ASDA

8.5

9

Price/Cost

show that you don’t have to be cheap to have satisfied customers who keep coming back.

The effects of price The UKCSI gives us the best single figure representation of how people rate their overall customer experience with organisations in each sector, but the survey has much more depth than any single figure can provide. One example of the potential that UKCSI data offers for insights into customers and markets in the UK is the thorny issue of price and customer satisfaction.

To gain more insight in this area, a useful piece of analysis is to chart customer satisfaction with price against their satisfaction with all other requirements.

This reflects the (somewhat reductionist, but valuable) idea that purchase decisions are based on a value judgement, i.e. “what you get for what you give”. In principle, higher quality suppliers should be able to charge higher prices, but there should be room in the market for a number of different value propositions. Organisations can choose to compete either by offering better products or service than their competitors (differentiation) or by cutting prices (commoditisation). Organisations offering better value should outperform the market in terms of sales.

Using UKCSI data, we can see how customers rate competing suppliers in the food retail sector. In principle, this should enable us to identify potential winners and losers in the market. Chart 7 shows customers’ satisfaction with price on the x axis compared with their average satisfaction scores for all the other requirements excluding price. If customers were highly satisfied with a company and highly satisfied with its prices, the company would appear in the top right hand corner of the box, or in the bottom left if they were less satisfied with both. The closer a company is to the top right hand corner, the better its value for money in customers’ eyes.

Companies above the ‘fair value’ diagonal line can expect to gain market share and to lose if they’re below it.

The profile chart shows that customers do see a spectrum in the market of high cost / high quality providers (such as Waitrose) through to relatively “budget” suppliers such as Aldi and Lidl. Both of these are viable value propositions, offering roughly equivalent value but targeting different types of customer. This analysis suggests that most supermarkets are seen as having achieved a good balance of price versus quality, but that Sainsbury’s and Tesco are seen as slightly behind, with Co-op lagging significantly. Interestingly, the place to be is either premium priced or bargain basement, with the mid-market stores losing out the most.

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Concern over public sector spending

Chart 8: Level of concern about public services

This time we asked people how concerned they were about the impact of the Government’s recent Comprehensive Spending Review on four local services: health services (hospitals, GP surgeries, etc.), policing, local authority services (roads, waste collections, etc.), and education.

People answered on a scale of 1 to 10, where 10 means very concerned and 1 means not at all concerned; so higher scores show more concern. We asked people how concerned they were about the impact on the quality of services, on responsiveness, and on access.

As Chart 8 shows, there is comparatively little distinction between levels of concern across the three aspects of service delivery. There are important differences between the four different services, with Education seeming to be of much less concern. Taking the scores for quality, we can dive into the data in more depth to understand if there are any significant variations according to the type of people responding. In other words, do different types of people have different concerns?

Health services Policing Local Authority services

Education Quality of frontline service delivery?

Responsiveness?

Access to services?

Chart 9: Level of concern by age Health services Policing Local Authority services

Education 18-24

25-34

35-44

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55-64

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Age

Chart 10: Level of concern by gender

There is a clear interaction between the age of respondents and the level of concern they show about the impact on each service. Not surprisingly, education becomes less of a concern with age, whilst other services tend to become more of a concern.

Health services Policing Local Authority services

Education

Female

Women are more concerned than men about all aspects of local service, and this difference is more pronounced for Education and Health services.

Region also makes a difference, with people in Wales the most concerned about the likely impact of spending cuts on public services and the English the least concerned. The order of concern is consistent except for Northern Ireland, where people are much less concerned about the potential impact on Local Authority services. Ci

Male

Gender

Chart 11: Level of concern by region Health services Policing Education Local Authority services

England

Scotland

Region

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Wales

Northern Ireland

Case Study

Success at

With over 300 employees and 20 Corporate Banking Centres around the UK, The Co-operative Bank’s Corporate Banking Division puts much of its success in recent years down to its fanatical focus on customer service. The bank knows from its customer satisfaction survey data that more satisfied customers are more likely to use more of the bank’s products and are more likely to recommend – in fact, 51% have recommended the bank in the last year. In recent years The Co-operative Bank’s revenue and profits have grown along with customer satisfaction. There have also been other business successes. For example, the bank maintained a strong and stable capital position and at a time when many of its competitors have firmly closed the door to companies wanting to borrow, The Co-operative has lifted business borrowing from £6.2bn to £8.7bn. Over the last three years, its network has doubled from 10 to 20 centres and it has won numerous new customers who were dissatisfied with their previous bank. The Co-operative Bank is also well known for its strong ethical stance with both customer and employee satisfaction being key elements of its corporate social responsibility strategy. All of which demonstrate their commitment to support UK businesses.

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Case Study

Relationships

Keith Alderson Managing Director of Corporate and Business Banking

Of course, The Co-operative Bank knows that success in the corporate banking sector isn’t a mass marketing exercise as it may be in retail banking; it’s down to the quality of its relationships with customers. The front cover of its company brochure does highlight the phrase ‘good with money’, but your eye is drawn by the strapline ‘As One – Success built on relationships’. According to Keith Alderson- Managing Director of Corporate and Business Banking, “We treat our customers as individuals – we really get to know them and their businesses. Our success comes from a clear commitment to genuine, long lasting relationships.” To deliver on its ‘relationships’ promise, one of the ways the bank invests in service and customer relationship, is by giving its relationship managers a smaller client base and additional support staff to improve their availability and the customer experience.

Customer satisfaction surveys

Anita Kielty Business Management Team

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With this type of customer focused culture, you would expect the bank to monitor its customers’ satisfaction.

It’s done this for quite a few years, the last three of which have been with The Leadership Factor. The survey is annual since customer bases in corporate banking are quite small and the bank has promised that no-one will be asked to participate in the survey more often than once every 18 months. Contacts are interviewed by telephone, providing a rich vein of customer comments for detailed insight as well as statistical tracking of performance. In keeping with the bank’s customer focused mission, Anita Kielty from the Business Management team, is keen to emphasise that “The survey is not just a tick box exercise – it’s a real tool to help us fully understand how customers feel about their relationship with The Co-operative Bank. In the corporate banking market, the level of service plus the depth and quality of relationships with customers are the main differentiators”.

www.customer-insight.co.uk

The customer experience through the customers’ eyes Anita is conscious that a good customer experience has to be defined and monitored through the customers’ eyes, not based on what the company thinks is good customer service. Consequently, The Cooperative Bank began its Customer Survey Measurement programme with The Leadership Factor by conducting exploratory research (based on face-to-face in-depth interviews with a representative sample of customers) to thoroughly understand what factors were most important to them in their relationship with their corporate banker. The exploratory research confirmed the bank’s belief that at the forefront of customers’ priorities was the expectation that the bank would: 4 Treat them as valued customers 4 Keep them well informed 4 Make a real effort to understand their business 4 Be genuinely interested in their custom.

There’s no denying that The Co-operative Bank’s strong emphasis on customer relationships has enabled it to achieve very high levels of customer satisfaction and loyalty. The bank has improved its customer satisfaction index every year over the last few years and is now well up in the top quartile of The Leadership Factor’s very large database of organisations’ customer satisfaction performance. Other highlights include the fact that 88% of customers feel they are treated fairly by the bank, 91% find it easy to contact their Relationship Manager and 84% would definitely use the bank for any future banking requirements. Moreover, The Co-operative Bank as a whole (including Retail Banking) is consistently near the top of all key measures (customer satisfaction, complaint handling and net promoter score) on the UKCSI.

Internal communications In Corporate Banking Division, the results of the customer satisfaction survey are eagerly awaited and widely communicated internally. As soon as the results are available they are presented to the leadership

Case Study

team plus managers of all departments and teams, regional managers and staff representatives across all touch points of the customer experience. Following this, Keith Alderson sends a short message with high level results to the whole business, but as far as the detail is concerned, corporate banking has an excellent system to ensure that the details from the survey are cascaded to all staff who are involved with corporate customers, with Chris Wilson, Head of Real Estate and Public Sector Development and Richard France, Head of Corporate Relationship Banking presenting findings to their regional teams and ensuring robust action plans are in place addressing the areas of concern raised via the survey. Customer satisfaction is a regular agenda item for the monthly manager meetings with both corporate staff and support areas. To ensure key messages are delivered consistently, every member of the 12,000 staff in CFS receives a monthly face to face briefing which cascades through the organisation, starting with Neville Richardson CEO presenting it to his leadership team. Customer Satisfaction is a key component of this briefing known as “The Understanding”.

Within Corporate Banking dissemination of the survey results is extensive. Anita and her colleagues provide full details of the customer satisfaction survey results to all relevant customer facing teams. As well as results for the Regional Managers, the bank can drill right down to scores and customers’ comments for each individual Relationship Manager (unless the respondent opts for anonymity). This rich stream of information enables all teams and each RM to absorb precise and relevant customer insight. Based on this they all develop their own action plans, sometimes in consultation with their customers to make sure they’re on the right tracks. And that’s another reason for Corporate Banking’s success. They don’t just make what they think are improvements, they make what the customer says are improvements!

Taking action The action plans leave few stones unturned.

The Co-operative Bank’s success isn’t based on a few high profile companywide initiatives - improving customer satisfaction rarely is. It’s based on myriad small changes at team or individual RM level that are highly targeted on what specific customers want. For example, the bank’s Queries Team simplified some forms to make them easier for customers to complete. Another team improved its ability to keep customers informed by finding out exactly when and how they wanted to be updated and then making sure that all customers received precisely the communications they wanted when they expected them. One RM learned that he was going too many extra miles for customers, giving great personal service but doing too much himself with adverse impact on his availability to other customers. He improved customer satisfaction by delegating more to the Customer Support teams.

Richard France Function Leader, Corporate Relationship Banking

In Customer Support actions have included the introduction of new technology to allow call recording and more checks on calls. This has led to more one-to-ones, but with a new twist where instead of the advisor listening whilst the manager gives feedback on the call, the advisor reviews it and outlines to their manager what they see as the good points and the areas for improvement. Then the manager comments and offers help if needed, but often it’s not necessary because the advisors themselves know exactly how a call could have been improved. The customer survey results also feed into staff training programmes for new and existing employees. Based on customer feedback new or amended training modules have covered answering the phone, handling queries, keeping customers informed and delivering on promises.

A further example of the bank’s commitment to improve the customer experience is that they have invested millions of pounds developing their new internet banking platform for business users. They launched the new electronic banking service in 2010 and are gradually rolling out the upgraded internet based version of Financial Director.

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Case Study

Internal benchmarking Every month Anita and her colleagues follow up all the action plans. This isn’t a big stick exercise. The culture is so customer focused that people don’t need monitoring to implement their action plans. It’s more about sharing information because once Anita’s up to date, she can update progress on the intranet so that everyone can see what other teams are doing to improve customer satisfaction. This great cross-communication is further enhanced by joint customer service workshops across the front line and support teams.

Maximising the benefits of internal benchmarking in this way is another key ingredient in Corporate Banking’s success.

Following each survey, The Leadership Factor uploads the results onto a secure interactive web reporting site which team members can access with passwords.

They can compare results across regional teams, Relationship Managers etc, learning from the teams or individual RMs that have the highest customer satisfaction for each question but the internal benchmarking extends beyond Corporate Banking.

For example, the December 2010 issue showcased Co-operative Financial Services’ efforts for National Customer Service Week, including visits to call centres by colleagues from across the business under ‘The Exchange’ scheme, designed to foster mutual understanding across different teams. There were also training sessions, competitions and even fancy dress to get everyone into the customer service spirit.

Feedback to customers This genuine customer service spirit is one of the main factors behind The Cooperative Bank’s success in improving customer satisfaction, but it’s not always enough. Sometimes companies make improvements but customers don’t notice. They have their own agendas, priorities, busy lives and work pressures.

Moreover, human beings have an unfortunate habit of taking good service for granted but noticing and remembering all the things that didn’t go quite right. The Co-operative Bank addresses this risk by providing extensive feedback to customers about the customer survey, its results and the actions they are taking in the light of what customers have told them.

Customer service culture

Customer communications start with a letter before the start of the survey and a thank-you letter from Keith Alderson after they have taken part which also outlines the key results. This is followed by a four page feedback leaflet that provides a detailed account of the survey results and, importantly, the actions that Corporate Banking is taking as a consequence of the survey.

The results and actions are also published on the Corporate Banking website and in its customer magazine, ‘Insight’. A very effective measure is Relationship Managers’ use of the printed leaflet in face-to-face meetings with existing and potential clients or at networking events.

This brings us back to where we started.

The extensive feedback on how Corporate Banking listens to its customers and acts on what it hears helps to reinforce the relationship between the bank and its customers. It nurtures the like-mindedness, the feeling that the relationship isn’t just based on a series of transactions (albeit delivered efficiently and with friendly service) but on a bigger strategic picture that all are working towards that enhances the long term interests of the bank, its customers and society as a whole. Ci

Other businesses within Co-operative Financial Services are very interested in Corporate Banking’s customer satisfaction activities, so in addition to The Understanding, the survey results are published in the in-house magazine, ‘The Know’, as are other customer service features.

Richard Kimber Richard is Client Manager at The Leadership Factor, working with companies such as VW / Audi, The Co-operative Business Banking, Xerox, Hilti, Principality Building Society and Lombard Vehicle Management.

Richard can be contacted on 01484 517575 or email: richardkimber@leadershipfactor.com

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www.customer-insight.co.uk

Case Study

Top of the League Nominet is not a company that everyone will be familiar with but it affects nearly everyone in the country in one way or another. In this article, Juliette Dalitz shares the Nominet philosophy and explains why both customer and staff satisfaction are central to the success of the organisation.

Nominet operates at the heart of e-commerce in the UK, running one of the world’s largest Internet registries and managing over nine million domain names. We maintain the register of .uk domain names.

We run the technology which locates the computer hosting the web site or email system you’re looking for when you type in a web address or send an email to an address that ends in .uk.

need our help with. Our Customer Services team handles around 400 calls a day. We have a Registrar Relations team who liaise with our registrars and provide account management and 27 Customer Service Advisors who support both registrars and registrants with any support issues they have.

year registration period) and we are also closely watching the ICANN process for creating new generic Top Level Domain Names (gTLDS) in case there is an appropriate new market that we can develop for our customers.

Market trends and challenges

We have around 3000 registrars (companies who register domain names for their customers and over eight million individual registrants (domain name holders).

We also have principles enshrined in our Articles of Association which require us to operate in a commercial manner (but to apply any funds raised solely to the objects and not to distribute any profits to members) and in the interests of the general public. Our customers include individuals with personal domain names, schools, charities, clubs, partnerships, sole traders, businesses (of all sizes) and Internet Service Providers.

We understand, like any business, that we will face challenges over the next few years. We are obviously dependent on there being a market for domain names and so future challenges are likely to be linked to any downturn or instability in the economic climate and potentially to changes in consumer behaviour. We are also in a very interesting time for Internet-related legal developments and new approaches will no doubt be needed in order for us to keep the Internet a free, safe and secure space for people to use and do business in.

Nominet is a not for profit organisation. We operate commercially but do not pay dividends to our members (i.e. our members are not shareholders). We invest profits back into the business and give donations to the Nominet Trust which is a charity set up by Nominet to support and fund initiatives that contribute to a safe, accessible Internet used to improve lives and communities. The Nominet Trust supports initiatives which provide

We have strong business relationships with our registrars and are in touch with them almost every month in some form or other. In the main we don’t deal directly with registrants unless they are having an issue with their domain name that they

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In order to face these challenges, we have been researching the needs of our various stakeholders and will be adapting our service offering to better suit their needs.

For example we are working on enabling domain names to be registered for one year periods (currently we operate a two

www.customer-insight.co.uk

Not for profit

(1) web access - providing people with the motivation, skills and tools to get online in a meaningful and sustained way (2) web safety - improving understanding about the risks of being online and reducing Internet crime and abuse (3) web in society - imaginative applications of the Internet to address specific social problems.

Case Study

Within Nominet we have a technical research team which focuses on research and development for new and developing Internet related technologies. We participate in HOSTCOUNT++, the panEuropean research initiative managed by RIPE NCC1 to provide monthly statistics on the number of hosts connected to the Internet in Europe and the surrounding areas. We are also one of the principal authors of OpenDNSSEC2 which enables users to use secure DNS extensions that prevent anyone from trying to spoof or intercept DNS traffic between computers.

Our Board of Directors is now nine strong (six non-executives, two executives & the chair). The Board makeup brings in

a wealth of experience from many different sectors. In-house we have a Senior Management Team (SMT) led by our Chief Executive Lesley Cowley OBE with the executive directors from each business area representing their teams. The SMT is responsible for developing our strategic approach for delivery of the company goals and objectives. We have an Operational Management Team (OMT) led by our Director of Operations, Eleanor Bradley that includes departmental managers representing all areas of the business. The OMT is responsible for managing project delivery within the business and for ensuring that our day-to-day activities support the company goals. We have 120 staff with the majority of these working in the

Operations and Technical departments.

We recruit people with talent and drive who want to contribute to the success of the UK Internet.

Customer satisfaction surveys Customer service is extremely important to us and to support this we use The Leadership Factor to conduct three regular surveys to capture feedback from our customers. For our larger customers who benefit from the services of an account manager, we run the Account Manager survey. These customers are interviewed by telephone. We introduced this survey two years ago and the feedback has been really valuable to us. Our managers find

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March 2011 customerINSIGHT

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Case Study

the verbatim comments particularly useful and our customers also welcome the opportunity to express their views. The conversational nature of the interviews combined with the option of anonymity means we gather information we may not have picked up otherwise. At six monthly intervals, we also conduct a web survey with registrants while simultaneously running a telephone survey with registrars.

For us, this approach works well. For customers with whom we tend to have less interaction the web survey is less intrusive.

It is also extremely cost effective as the survey is emailed to thousands of customers. To telephone this volume of customers would simply be out of our price range.

Our registrars are invited to take part in a telephone survey. From time to time we review our methods of data collection to make sure they are still appropriate for us.

The combination we run at the present time is working well. For instance, we used to survey registrars online but as time moved on, we decided that the verbatim comments gathered during personal interviews would really help us improve and give us that extra bit of insight.

Top of the league Our staff are committed to making sure our customers receive a great standard of service. Since 2008 our registrar survey Customer Satisfaction Index has (with the exception of a one-off blip down to 89.6%) continually been over 90.0%, peaking at over 92.1%. (This places Nominet in the top 2% on The Leadership Factor’s very large league table of customer satisfaction performance across all UK sectors – Ed.) For us, it is not necessarily about improving our score year after year (although it’s great when we do improve) it is about maintaining these high standards and consistently performing well. For registrants, satisfaction is a little lower but still in the top quartile. Generally speaking, we

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Apart from the surveys we also have other initiatives to help us understand customers. We do other qualitative research, host focus groups, run workshops and other events and we have recently set up a .uk Policy Development Process which convenes Issue Groups to discuss policy issues and make consensus based recommendations.

Customer Satisfaction Index Top quartile

Making improvements

Bottom quartile

40%

50%

60%

70%

80%

90%

100%

have consistently improved. We started with a CSI of 80.0% in 2005 and our index has been on an upward trend since then.

Although we do hold a unique position in being the only provider of .uk domain names we believe passionately that we should operate our service to the highest possible standards so that consumers and businesses using the UK Internet space can have the best possible experience.

We measure satisfaction levels so that (a) we can ensure that we are focusing our attention on the things that matter most to our customers and (b) that any improvement activities that we work on will bring the maximum benefit possible to our customers. We carry out our surveys regularly in order to be able to monitor our progress and to measure the impact of any changes that we introduce. We use the results in our company wide balanced scorecard to give an indicator of our performance in the area of Customer Service.

www.customer-insight.co.uk

We put our continuous improvement down to the fact that we maintain a focus on the areas where we need to improve.

We trust in the survey and we trust in the results. Whilst we analyse the findings, we do not spend so much time cutting and slicing the results that we lose the meaning. We trust our judgement and our staff to concentrate on what really matters and ‘keep the faith’. We have had many changes over the years and we understand that, from to time, when we make big changes we may see a temporary change in our results. We are very open about our results and publish the findings on the Nominet website.

Our mission statement makes it clear what we are trying to achieve. Our mission is to make a positive difference to our stakeholders, driven by their needs and to fulfil our public purpose. We will do this by: - Being a driving force in shaping the development of the Internet in the UK and globally - Delivering a safe and secure .uk - Delivering excellence and innovation in our products and services - Creating a company where our people are skilled, talented and engaged.

The survey results play an important part in our organisation. They are used to set improvement targets for our Customer Service and Operational teams. They give

Case Study

us insight into what is wowing our customers and what is not. They enable us to benchmark our performance against other companies that use the Leadership Factor’s satisfaction index scoring mechanism.

Internal feedback We religiously share the results with our people. We do presentations to everyone in Customer Services and share the reports with our manager community, Registrar Relations team, OMT and SMT. We focus on the business-impact matrix provided as part of The Leadership Factor’s analysis which highlights quick wins and areas which will bring the maximum value to our customers. On top of this, we incentivise and reward people based on their work. One of the targets in our performance related pay is based on us achieving a certain minimum score in the annual surveys.

Happy people = happy customers Keeping our people happy is also very important to us. Since Nominet’s inception back in 1996 the company ethos has been to make our business a great place to work in order to attract the best possible employees. We take pride in our low staff turnover rate and feel that you need happy, challenged and focused people in order to be able to offer a consistently high level of service to our customers. It’s a win/win for all of us. In order to do this, we focus on what really makes our people tick. We offer good training and development opportunities, a great employee benefits package, a family-friendly environment, fantastic office space and we try to be as open and transparent as we can be throughout the business.

One of the great benefits of this approach is that if our people feel valued and supported then they can use their skills and potential to the full which in turn ensures

that they deliver the best service they can to our customers. We have an incredibly loyal and hard working team of people here at Nominet who believe in doing the right thing for our customers. We are constantly looking for ways to improve and enhance our service but always try to keep our customers’ needs in mind to ensure we deliver improvements that they benefit from. This results in our high levels of customer satisfaction.

Future goals When it comes to our plans for the future, we want to sustain and develop trust in the UK Internet. We want to make the Internet a safer, more secure place for people to go about their business. We want to provide a best in class service to our customers.

We want to deliver innovative new solutions and services to those that use .uk domain names. As for my role, I want to make Nominet an even stronger service provider and I hope to be able to lead and contribute to developments which will both improve our customers’ experiences of the UK Internet and will highlight us as an example of best practice throughout the world. I really want to continue making a difference; making the UK Internet in particular a better place to be.

References: 1. The RIPE NCC is one of five Regional Internet Registries (RIRs) providing Internet resource allocations, registration services and co-ordination activities that support the operation of the Internet globally 2. O penDNSSEC is software that manages the security of domain names on the Internet. The project intends to drive adoption of Domain Name System Security Extensions (DNSSEC) to further enhance Internet security. Ci

Juliette Dalitz Head of Operations Support

Juliette joined Nominet in 1997, and was appointed Head of Operations Support in May 2010. Previously Juliette worked in Customer Support managing Nominet’s Registrant Services department which provided support and advice to .uk domain name holders and the general public. She is now responsible for supporting the Operational teams to deliver end-toend service excellence with a key focus on project delivery, business continuity and disaster recovery planning. Juliette and her colleagues at Nominet, who are based in Oxford, are extremely keen to meet other Customer Insight readers to benchmark their performance and share best practice. You can contact Juliette on 01865 332211 or by email her at Juliette. Dalitz@nominet.org.uk For more information about Nominet: www.nominet.org.uk

Rachel Allen is the Client Manager for Nominet and works closely with Juliette and the team. You can contact Rachel at The Leadership Factor on 01484 467034 or rachelallen@leadershipfactor.com

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Customer Service

Awards

for Customer

Excellence

By Don Hales, Customer Service Presenter & Author and Awards Guru

Customer service is frequently quoted as being the most important factor in today’s economic climate in the battle to win, retain and grow customers. The importance of customer service cannot be underestimated but Awards International, a company that specialises in award programmes, believes that what really counts for customers in deciding where to spend their money is what it feels like to be a customer rather than what the company has done to provide a service.

The UK Customer Experience Awards Increasingly commentators and practitioners are thinking in terms of “customer experience” rather than service and the UK Customer Experience Awards, first launched in 2010 reflect this trend. The awards are endorsed by a number of leading professional and membership bodies, including the Institute of Customer Service, the Society of Consumer Affairs

International, the International Customer Service Institute and the Customer Experience Foundation. Morris Pentel, principal at the Customer Experience Foundation says that the entries for the 2010 programme played a major role in assisting the Foundation in establishing some best practice case studies and has contributed to the Customer Experience White Paper sent to all 2010 participants and available to all those who take part in 2011.

2010 customer experience awards winners The sector winners in 2010 were: - Telecoms & Digital Retail – Fizzback/T-mobile - Financial Services – Wonga.com - B2B – LeasePlan UK - Travel, Leisure & Tourism – Butlins - Retail – Shop Direct

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Customer Service

2011 customer experience awards categories In 2011 there are more categories covering all sectors of industry and commerce plus a range of individual categories.

Full details can be found at www.uk-ceawards.co.uk, but in brief, this year’s categories are divided into two classes: - UK Customer Experience of the Year (for organisations) - UK Customer Experience Professional of the Year (for individuals).

UK Customer Experience of the Year Mainly divided into sectors, the categories in this class are: - Retail, Travel & Utilities - Contact Centres - Financial Services - Public Sector - IT, Telecommunications & General - Healthcare & Pharmaceutical - Professional Services and Research Agencies - International

In addition there is an overall winner, “The Customer Experience of the Year Award”, which is chosen from the winners of the categories above.

2011 Customer Experience Professional of the Year Categories These awards are for outstanding performance by individuals, and will be awarded in the following categories: - Contact Centres & Financial Services - Public Sector & Not for Profit - IT & Telecommunications & General - Retail, Healthcare & Pharmaceutical - International - Professional Services and Researchers - Rookie of the Year (less than two years in role)

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There is again an overall winner, “The Customer Experience Professional of the Year Award”, chosen from the winners above, plus a “Lifetime Achievement Award”.

From the above, the overall winner will be given “The Customer Service Training Professional of the Year Award”.

Why enter?

The Customer Service Training Awards Running simultaneously with the UK Customer Experience Awards are the Customer Service Training Awards, in association with the Customer Service Training Network, established in 2007. Full details can be found on the website (www. customerservicetrainingawards.com), and like the customer experience awards, the training awards are also divided into two classes as follows.

Customer Service Training Team of the Year The sectors for this award are: - Leisure, Travel & Utilities - Contact Centres - Financial Services - Commercial Training - Public Sector - IT, Telephony & General - Retail, Healthcare & Pharmaceutical - International

As before, there is an overall winner awarded to the best entry from all the above categories and called “The Customer Service Training Team of the Year Award”.

Customer Service Trainer of the Year This is divided into a shorter list of sectors plus rookie and lifetime awards as before.

- Contact Centres & Financial Services - Public Sector & Not for Profit - IT, Telephony & General - Retail, Healthcare & Pharmaceutical - Rookie of the Year - Lifetime Achievement Award

www.customer-insight.co.uk

The question remains however, why enter these awards or any awards in the first place? Neil Skehel, Managing Director of Awards International points to three reasons: 1. E xternal recognition of individuals and teams “ The power of recognition, the fantastic team bonding and the ultimate pride in reaching the final of a national award cannot be underestimated. Compared to money spent on other forms of team building and motivation, the payback on the outlay involved with participation in awards produces the best ROI and in an activity directly focused on the business”.

2. S preading best practice and benchmarking “By definition virtually all award entries are pretty good – why else would anyone enter? That being so, it stands to reason that those progressing to the finals will be exceptional, whilst the winner will often be simply amazing. These awards - perhaps more than any other – through individual feedback and network opportunities to share ideas and success, provide the environment for encouraging all participants to improve still further. In sixteen years of running award programmes, in all sorts of business activities, it never ceases to amaze me how willing award winners are to share their ideas with others”.

Customer Service

3. Customers like to do business with organisations that have won meaningful awards “A recent survey (by Fly Research) of financial service consumers, found that 70% were influenced by awards when trying to decide between similarly priced providers. This reinforced the notion that awards are an asset that is invaluable when customers are grappling for a reason to choose between similar suppliers. How often do you hear people say “I chose this one because it won an award” or “it must be good, it won an award”. To make this happen, the award needs to be relevant in its subject matter and of sound provenance – i.e. backed by the right kind of professional bodies”.

On the last point Chris Robinson of Boost Marketing, an awards consultancy company says “Nowadays the dramatic increase in the interest in winning awards is driven by three strategic imperatives - boosting morale, boosting sales and driving a hunger for excellence and continuous improvement”.

Do awards drive sales?

A survey of 400 buyers conducted by Shape the Future for Boost Marketing produced the following conclusions for individuals: 85.3% are influenced by awards when buying as a consumer for themselves 82.4% are influenced by awards in general when buying products/services for their organisation In addition, on B2B sourcing, the survey found that: 4 72.1% are influenced by awards when choosing financial services

4 74.7% are influenced by awards when choosing call centre related services 4 81.0% are influenced by awards when choosing HR/Training services”

Costs Both the UK Customer Experience Awards and the Customer Service Training Awards are open for nominations until 31 March 2011 and the finals and awards presentation day takes place at Heathrow on Friday 8th July. On this day the finalists in each category make presentations to the judges in the morning and the announcement of winners takes place a few hours later at the awards lunch. Making it a combined judging and presentation day and holding the awards ceremony over lunch rather than dinner reduces the ancillary costs associated with entry such as time off work and overnight accommodation. The fee for entering either the UK Customer Experience Awards or the Customer Service Training Awards, in any of the categories is £245 plus VAT. This includes one ticket for the lunch ceremony. Additional tickets for the lunch can be purchased for £160 plus VAT. Ci

Don Hales After heading Sun Life Unit Services, which he and four colleagues launched and later sold to the Sun Life Group, Don launched the National Customer Service Awards in 1999 and remains involved today as founder and chair of judges. He founded the Customer Service Training Association in 2007 and now also heads Awards International, a company that recognises excellence in many activities, including sales, service, marketing and training.

One big fan of the awards is Ray Harrison, Head of Operational Training & Service Quality, Barclaycard, one of last year’s winners, who commented: “The content of the report has sent a real buzz

next year” and “tells us where we need

Full details of this year’s awards and how to enter can be found for the customer experience awards at:

to do better” have all formed apart

www.uk-ce-awards.co.uk

through the team. Comments like; “didn’t expect this”, “very professional”, “really helps us for

of conversations I have overheard.”

and for the customer service training awards at www.customerservicetrainingawards.com

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March 2011 customerINSIGHT

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Surveys

Darren’s

rant

Q) What’s worse than not finding out what your customers think about you?

A) Not finding out what they think properly.

The sad reality is that many organisations don’t bother to find out what their customers think of them or how satisfied they are. Arguably worse is the fact that many organisations who do make the effort and investment to monitor customer satisfaction do it appallingly badly. This not only wastes time, resources and money, it can also seriously mislead the organisation.

Since the whole point is to have insight into what customers really think of you – warts and all – so you can improve where necessary, getting inaccurate views from customers defeats the whole purpose.

This regular feature, as well as allowing me to rant about things I’m passionate about, will look at common mistakes many organisations make when trying to understand and monitor their customer experience.

‘Having trouble sleeping? Try our guest satisfaction survey’ Staying in quite a number of hotels on

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business means you get to experience all extremes. You become an expert on all the customer journey touch points from online room booking to check-out procedures. Many hotels take guest satisfaction and loyalty extremely seriously, which is exactly what Premier Inn do, in the form of a guest satisfaction web survey. Great, that’s exactly what they should do. Except, the survey itself is the sort of nightmare an uncomfortable bed might give you.

My hearst sinks as the progress bar crawls

After a recent stay (with which I should say that I was very satisfied), I was emailed a link to complete a guest satisfaction survey. Great I thought, my chance to give some feedback. However, I’m sorry to say that I soon found completing the survey very painful. At 118 questions long and taking me 27 minutes to complete (and I started rushing towards the end) I fear this is one survey that will not give Premier Inn an accurate steer on how I, and other guests, feel.

Asking the right questions

www.customer-insight.co.uk

When this ticked slowly from 19 to 20% complete, when I’d already spent about 15 minutes on it and answered about 35 questions, I slowly felt myself losing the will to live. I wondered what percentage of people who start the survey actually complete it? Anyway, I persevered and finally completed all the questions, feeling quite relieved that I’d reached the end.

A fundamental of an accurate measure of customer satisfaction is asking the right questions. Unfortunately it’s the biggest single mistake organisations make. That’s because they approach the task from the inside out, looking at the survey from the organisation’s point of view – asking what’s important to them – rather than through the customer’s eyes – what’s important to the customer. Unfortunately Premier Inn

Surveys

“

A fundamental of an accurate measure of customer satisfaction is asking the right questions. Unfortunately it’s the biggest single mistake organisations make.

The second and more serious problem is that the questionnaire invariably covers issues of importance to the company’s managers rather than those of importance to customers. This is fine if the objective is simply to understand customers’ perceptions of how the organisation is performing in particular areas, but it will not provide a measure of customer satisfaction. For example, the Premier Inn survey asks about potential new products and how likely would a customer be to eat at one of their restaurant brands.

Driving customer loyalty There’s nothing wrong with asking questions like these to gather customer perceptions and insights. They’re invaluable in helping with strategy and direction.

“

have made this mistake. There are two problems with this approach. Firstly, the questionnaire almost always ends up far too long because managers tend to keep thinking of more topics on which customer feedback would be useful or interesting.

At 118 questions covering a whole host of topics, I think it’s fair to say that’s what has happened here.

All essential market research and insight work. However the problem comes when these questions are included in customer satisfaction research since it’s factors that are most important to me that determine whether I’ll choose to book another Premier Inn. Fairly obvious things like how good was the shower, was the bed comfortable, was the internet connection any good, did I have a good night’s sleep and was the room clean and well kept? But only one of these factors was asked about on the survey (a question about room cleanliness). So in 118 questions, I still wasn’t asked to rate my satisfaction with factors of most importance to me as a customer. The very ones that influence whether I’ll book again.

Instead the survey asks about products and services they think are important to customers and I’m sure gathers some useful market insights as to whether there is a demand for these products and services, but it doesn’t give Premier Inn a reliable steer on customer satisfaction and loyalty, or the drivers behind it. With the desire to find out lots of customer and market insights the survey has ballooned to a ridiculous size which brings into ques-

tion the reliability of responses (towards the end I wasn’t reading the questions properly but was just selecting an answer in a bid to get it all over with).

I just hope Premier Inn look at their survey methodology, don’t add further questions which have no importance to guests, but maybe go and ask customers what’s important to them when they stay in that type of hotel and build a shorter, more relevant questionnaire around that. Then use the survey results to effectively improve the customer experience and increase loyalty. Ci

Darren Wake is Business Development Manager at The Leadership Factor.

You can email Darren at darrenwake@leadershipfactor.com or call him on 01484 467012.

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NEW

Breakfast Meetings We know how difficult it can be to spare a full day so we are introducing new breakfast meetings which run between 8am and 11.30am - allowing you plenty of time to be back in your office for the afternoon.

The meetings will give you the opportunity to network whilst sharing your ideas and experiences.

All breakfast meetings cost £145 (ex VAT)

Co-creation: “With customers, not at customers” Thursday 7th April Location: Hosted by VISA Europe in central London Join this new breakfast meeting to hear more about this latest thinking approach to delivering customer service. What is co-creation and how can you apply it to your organisation?

Complaints Briefing Wednesday 18th May Location: Harrington Hall Hotel, London, SW7 An extremely practical event for anyone that needs actionable information to drive improvements in their complaint management process.

Customer Satisfaction versus Net Promoter Score Tuesday 14th June Location: Hosted by Farnell in Leeds Whatever your opinion on it, there’s no doubting Net Promoter Score’s ability to polarise opinion and stimulate debate. Here we’ll take a good hard look at some of the options for surveying customers, comparing the pros and cons of each.

For further information or to book please visit our website –

www.leadershipfactor.com

or call Sandra on 01484 467000