ntation is the intellectual property of TARP Worldwide and for use only to illustrate hodology. Use of or distribution beyond that purpose is forbidden. Barriers to Service Barriers to Service Innovation and How to Innovation and How to Overcome Them Overcome Them John Goodman, Vice Chairman, TARP Bentley University June 18, 2009
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This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
Barriers to Service Innovation and Barriers to Service Innovation and How to Overcome Them How to Overcome Them
John Goodman, Vice Chairman, TARP
Bentley University June 18, 2009
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About TARPAbout TARP
• Founded in 1971—38 years delivering dramatic impact– White House sponsored studies of client service (instigated 800#s)– Malcolm Baldrige (influenced criteria)– Assisted 6 Baldrige winners and 43 Fortune 100 companies– Initiated concept of “word of mouth” (TARP/Coca-Cola 1978 Study) and “word of
mouse” (eCare and Click & Mortar studies 1999)
• Credited with developing approach for quantification of impact of service and quality on revenue for companies like Neiman Marcus, Mayo HS, IBM, American Express, Qualcomm, Honda, Chick-Fil-A, Toyota/Lexus, USAA, Xerox, and Motorola
• New book, Strategic Customer Service, published by American Management Association, May 2009.
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Formula for Satisfaction & Brand LoyaltyFormula for Satisfaction & Brand Loyalty
Customers will:
Buy again
Buy more
Tell others to buy
Buy your other products & services
+ =DOING
THE JOBRIGHT THE FIRST
TIME
MAXIMUM CUSTOMER
SATISFACTION & LOYALTY
EFFECTIVECUSTOMERCONTACT
MANAGEMENT
ImprovedProduct & Service
Quality
Respond toIndividual Customers
Identify Sourcesof Dissatisfaction
Conduct RootCause Analysis
Feedback onPrevention
This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
4
Barriers to Service InnovationBarriers to Service Innovation
• Misunderstanding of the causes of dissatisfaction
• Assumption that no news is good news
• Assumption that everyone is price driven
• Demand for interactions that are consistent and delightful
• Benchmarking that causes complacency
• Single source Voice of the Customer
• Financial and Marketing cynicism
This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
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Causes of Customer DissatisfactionCauses of Customer Dissatisfaction
- Products and services don’t meet expectations-Marketing miscommunication- System fails- Units fail to coordinate
- Fails to follow policy
The majority of dissatisfaction is not caused by employee errors or attitude.
This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
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No News Is Not Good News: Health CareNo News Is Not Good News: Health Care
Mollified2
30%
Mollified2
30%
IQuestion/Problem
Experience
II ContactBehavior
IIIContact Handling
HealthCare Clients
HealthCare Clients Complainers
5-25%
Complainers5-25%
No problem
experience50%
No problem
experience50%
Problemexperience
50%
Problemexperience
50%
Experience suggests three strategies:Prevention, Solicitation of Complaints, and Response
IVMarketImpact
% Definitely/Probably
Recommend/repurchasefrom same organization
Dissatisfied3
20%
Dissatisfied3
20%
Satisfied1
50%
Satisfied1
50%
90%
93%
30%
60%
50%
Non-Complainers
95-75%
Non-Complainers
95-75%
6This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
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Problems Raise Sensitivity to PriceProblems Raise Sensitivity to PriceProblems vs. Dissatisfaction with PriceProblems vs. Dissatisfaction with Price
10%
22%
46%
74%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
No problems 1 problem 2 to 5 problems 6 problems ormore
% D
i ss
ati s
fied
wit
h p
r ice
or
f ees
Percent of customer dissatisfied with fees rises with number of problems.
This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
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Flexibility and Explanation Trump Consistency, Flexibility and Explanation Trump Consistency, Accessibility and MoneyAccessibility and Money• No Unpleasant Surprises• If Trouble Encountered
– Accessibility
– Taking Ownership
– Apology
– Tailored action – flexible response
– Clear Explanation – so that I believe I have been treated fairly – often more important than money
• Handle on First Contact Results in 10% Higher Satisfaction and 50% Lower Cost
This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
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Impact of Delightful Experience on Top-Box Impact of Delightful Experience on Top-Box Loyalty by Type of ActionLoyalty by Type of Action
Delight experience Average lift to repurchase or recommend (Top Box)
Service beyond expectation 12%
Assistance during a crisis 14%
No unpleasant surprises 22%
Friendly interaction with staff 25%
Personal relationship over months 26%
Tell me of new product or service I can really use
30%
Consistently good service 32%
Proactively provide information on how to avoid problems or get more out of your product
32%
This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
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Traditional Views of Benchmarking and Voice of the Traditional Views of Benchmarking and Voice of the CustomerCustomer
• Benchmarking of processes is good – benchmarking of performance is problematic– Performance is local
– If tied to incentives – can be disheartening
• Voice of the customer tends to be only surveys or fragmented– Surveys, contacts, internal operations and employees
– Marketing and sales are usually not the focus of feedback
This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
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=
=
=
=
x xx
=
35
153
306
1500
1994Total customers at risk
10,000Customers
withproblems
Z%Dissatisfied
Many notrepurchasing
Some notrepurchasing
X%Satisfied
Almost allrepurchasing
50% Do notcomplain
50%Complain
Y%Mollified
Some notrepurchasing
Revenue Impact Of Service Can Be 20 X The Cost ImpactRevenue Impact Of Service Can Be 20 X The Cost Impact
This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
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Word of Mouth Impact Can be EstimatedWord of Mouth Impact Can be Estimated
20%delighted
80%satisfied
x
Tell a few
Tell one
x
=
=
600
800
1,400
1,000clients
1400 Referrals X1 Actions30 Referrals
= 47 New clients
Example Calculation of Potential Impact
This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
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Ten Myths About ServiceTen Myths About Service
1. Always exceed customer expectations2. Answering the phone really fast is the key to success3. People always prefer talking to people4. The customer is always right5. Complaints are down, things are getting better6. Employees are the cause of most dissatisfaction7. Price and cost cutting is the key to success8. We’re at 90% satisfaction – let’s declare victory!9. Measure Net Promoter and we’re done10. We have a 100% satisfaction guarantee – everyone is
happy.
This presentation is the intellectual property of TARP Worldwide and for use only to illustrate TARP’s methodology. Use of or distribution beyond that purpose is forbidden.
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Contact Information for Papers MentionedContact Information for Papers Mentioned