Raising the Bar Beyond Zero Defects Christopher Hart, Ph.D. - - PowerPoint PPT Presentation

Raising the Bar Beyond Zero Defects

EGSA

Christopher Hart, Ph.D. chart@spiregroup.biz www.spiregroup.biz

Every day that goes by in which you have dissatisfied or less-than-very- satisfied clients – you are working hard to put yourself

• ut of business.

You are feeding your competition.

Lowest 1 2 4 3 Neutral 5 Highest

Satisfaction Satisfaction Will Definitely Repurchase Will Give Positive Recommendations

0% 20% 40% 60% 80%

“Zone of Indifference”

Guerillas University of Michigan Research

“Power generation? Who has the best price?”

Apostles! Unpaid Salespeople! Evangelists!

Will Definitely Repurchase Will Give Positive Recommendations

0% 20% 40% 60% 80% Lowest 1 2 4 3 Neutral 5 5 Highest

Concrete Hardened, Defection- Proof Missile Silo

Guerillas University of Michigan Research

Satisfaction

Trust

No matter what you make and sell, you are No matter what you make and sell, you are in business to produce strong trust in business to produce strong trust attitudes in customers attitudes in customers’ ’ minds. minds. Anything that prevents a strong trust Anything that prevents a strong trust attitude from being formed, or that attitude from being formed, or that damages an existing customer attitude, is damages an existing customer attitude, is a a “ “trust defect. trust defect.” ” Like product defects, trust Like product defects, trust defects must be identified and eliminated. defects must be identified and eliminated.

What is Every Company in Business to Produce?

• Externally

Externally, anything that erodes trust , anything that erodes trust in your organization, your people or in your organization, your people or the products and services you provide the products and services you provide

• Internally

Internally, anything that erodes trust , anything that erodes trust among people in your organization among people in your organization

What is a Trust Defect?

9

From a Study by Bain & Company

80% 8%

% of Companies that Believe the Experience they Provide Customers is Superior % of Customers that Believe the Experience they Receive is Superior

N = 362

90% x 60% x 80% x 99% x 32% x 98% x 87% = 30%

Low Hi 100% 0% 100% 0% 100% 0% L H L H L H

100%

x

100%

x

100%

x

100%

Factory Value Chain Customer Experience Value Chain

Trust Attitudes as a Production Process

100% 0%

Zero Defects Zero Defects Zero Defects

Billing adjustments Problems with sales & marketing Delivery problems Inadequate training Outstanding sales responsiveness Billing Salesperson churn “PowerCo? They’re pretty good—but great? No

• way. What’s

their price?”

100 %

=

Defect-free Generation Equipment

Zero Defects Zero Defects Zero Defects Zero Trust Defects Zero Zero Trust Trust Defects Defects

Case Study A B2B Product and Services Company

0% 25% 50% 75% 100% % of Customers Stating High Repurchase Intent

The Starting Point: Analysis of Previous Satisfaction Research

Dissatisfied

(1-6)

Satisfied

(7-8)

Trusting Loyals

(9-10)

86% 86% 70% 70% 52% 52%

Source: Study conducted by Spire Group.

500000 1000000 1500000

Trusting Loyals Satisfied Only Dissatisfied

50000 100000 150000 200000

Trusting Loyals Satisfied Only Dissatisfied

Account Revenue (Mean) Account Gross Margin (Mean)

2x 2.8x

Hard Data from Client’s Accounting Department, Not Customer Opinions

Source: Study conducted by Spire Group.

Client’s Immediate Conclusion “We need to increase the percentage of trusting loyals!”

GAP Forecasted Gross Profit Increase

• Cost of Trusting Loyal Effort
• Taxes

= Profit Improvement Realistic Goal

?

Stretch Goal

FORECASTED GROSS PROFIT INCREASE IF 2% TARGETS REACHED …

X

Stock Price/ Earnings Multiple

=

Increased Shareholder Value

The Bottom Line

2003 2004 2005 2006 Profit Projections

l l l l

Percentage

• f

Customers

0% 25% 50% 75% 100%

Dissatisfied Satisfied Trusting Loyals

42% 42% 45% 45% 13% 13%

CEO: “So, what’s our % of trusting loyals now?”

No idea how much profit they were missing

Increase trusting loyals 2% per year

OPTIONS

• Add innovative features and

functions?

• Eliminate “trust defects” that

corrode customer attitudes?

The Objective

How?

Major Trust Defect Categories

1. 1. Poor account team knowledge of my Poor account team knowledge of my business needs and sensitivity to business needs and sensitivity to meeting them meeting them 2. 2. Inconsistent customer service Inconsistent customer service

Business End-users Speak Out

• “

“Do you forget that you have a customer after the Do you forget that you have a customer after the sale sale --

• - or does it just seem that way?
• r does it just seem that way?”

”

• “

“Focus on your customers Focus on your customers’ ’ business needs, not on business needs, not on what you want to sell. what you want to sell.” ”

• “

“When we send an email, whether to sales or When we send an email, whether to sales or customer service, it would be nice to actually get a customer service, it would be nice to actually get a response! response!” ”

• “

“Your 800 number is absolute hell! Your 800 number is absolute hell!” ”

• “

“The vision statement on your wall looks great, but The vision statement on your wall looks great, but how about developing some vision that is more how about developing some vision that is more than words and creates value for your customer? than words and creates value for your customer?” ”

1: That negatively impact the strength of customer relationships? 2: That negatively impact internal trust? What Examples of Trust Defects Can You Think of?

Summary

• Re-conceptualize your company as an

end-to-end process that produces trust attitudes

• Assess the value of trusting loyal

customers and calculate the profit impact that increasing them would have

• The production standard: zero trust

defects

One Final Lesson

John D. Rockefeller’s secret to success: “Get up early, work late – and find oil when you drill for it.” John D. Rockefeller’s secret to success: “Get up early, work late – and find oil when you drill for it.”

THE END THE END THE END THE END

Christopher Hart, Ph.D. chart@spiregroup.biz cwh38@cornell.edu www.spiregroup.biz