EGSA Raising the Bar Beyond Zero Defects 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 out of business. You are feeding your competition.
University of Michigan Research 80% 60% Will Definitely Repurchase “Power “Zone of 40% generation? Who Will Give Positive Indifference” has the best Recommendations price?” 20% 0% 1 2 4 3 5 Lowest Neutral Highest Satisfaction Satisfaction Guerillas
University of Michigan Research 80% Unpaid Evangelists! Apostles! Salespeople! 60% Will Definitely Concrete Repurchase Hardened, 40% Defection- Will Give Positive Proof Recommendations Missile Silo 20% 0% 2 3 4 5 5 1 Lowest Neutral Highest Guerillas Trust Satisfaction
What is Every Company in Business to Produce? 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’ ’ minds. minds. attitudes in customers 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 “ “trust defect. trust defect.” ” Like product defects, trust Like product defects, trust a defects must be identified and eliminated. defects must be identified and eliminated.
What is a Trust Defect? • 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
9 From a Study by Bain & Company 80% 8% % of Customers % of Companies that Believe the that Believe the Experience they Experience they Receive is Provide Customers N = 362 is Superior Superior
Trust Attitudes as a Production Process Customer Experience Value Chain “PowerCo? They’re pretty Billing Problems with Billing Delivery Inadequate Salesperson Outstanding good—but sales & adjustments problems training churn sales 100% great? No marketing responsiveness way. What’s their price?” 0% x x x x x 99% x 60% 87% = 30% 90% 80% 32% 98% Low Hi L H L H L H Defect-free Generation 100% 100% 100% Zero Defects Zero Defects Zero Defects Equipment = 100 % 0% 0% 0% 100% x 100% x 100% x 100% Factory Value Chain
Zero Defects Zero Defects Zero Defects Zero Trust Trust Defects Defects Zero Trust Defects Zero
Case Study A B2B Product and Services Company
The Starting Point: Analysis of Previous Satisfaction Research 100% 86% 86% 70% 70% 75% % of Customers 52% 52% Stating High 50% Repurchase Intent 25% 0% Dissatisfied Satisfied Trusting Loyals (1-6) (7-8) (9-10) Source: Study conducted by Spire Group.
Hard Data from Client’s Accounting Department, Not Customer Opinions 1500000 Account 1000000 Revenue 2x 500000 (Mean) 0 Dissatisfied Satisfied Only Trusting Loyals 200000 Account 150000 Gross Margin 100000 2.8x 50000 (Mean) 0 Dissatisfied Satisfied Only Trusting Loyals Source: Study conducted by Spire Group.
Client’s Immediate Conclusion “We need to increase the percentage of trusting loyals!”
The Bottom Line FORECASTED GROSS PROFIT IF 2% INCREASE TARGETS REACHED … Stretch Goal ? Profit GAP Projections Realistic Goal l l l l 2003 2004 2005 2006 Forecasted Gross Profit Increase - Cost of Trusting Loyal Effort Increased - Taxes Stock Shareholder Price/ = Profit Improvement X = Earnings Value Multiple
CEO: “So, what’s our % of trusting loyals now?” 100% 75% 42% 42% No idea Percentage how much 50% of profit they Customers 45% 45% were missing 25% 13% 13% 0% Dissatisfied Satisfied Trusting Loyals
The Objective Increase trusting loyals 2% per year How? OPTIONS • Add innovative features and functions? • Eliminate “trust defects” that corrode customer attitudes?
Major Trust Defect Categories 1. Poor account team knowledge of my 1. Poor account team knowledge of my business needs and sensitivity to business needs and sensitivity to meeting them meeting them 2. Inconsistent customer service 2. 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 -- -- or does it just seem that way? or does it just seem that way?” ” sale • “ “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?
What Examples of Trust Defects Can You Think of? 1: That negatively impact the strength of customer relationships? 2: That negatively impact internal trust?
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 John D. Rockefeller’s secret to success: to success: “Get up early, work late – “Get up early, work late – and find oil when you drill and find oil when you drill for it.” for it.”
THE END THE END THE END THE END Christopher Hart, Ph.D. chart@spiregroup.biz cwh38@cornell.edu www.spiregroup.biz
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