All Posts Tagged With: "customer loyalty"
MEDRAD: Win with Your People
“We fight with our products, but we win with our people.”
The quote from Jeff Owoc, senior VP of Operations for MEDRAD, captures a competitive advantage of this two-time Baldrige Award winner, which is featured in “Continuous Improvement Sets Stage for Success” (Adrienne Selko, IndustryWeek, December 22, 2010).
MEDRAD sandwiched its Baldrige Award victories in 2003 and 2010 around recognition as an IW Best Plant in 2007. I worked with MEDRAD on the applications for these awards and saw firsthand how the alignment of its people with its goals and strategies along with its culture of involvement and empowerment drive continuous improvement and market leadership.
MEDRAD manufactures medical devices for diagnosing and treating diseases including fluid injection systems for radiology and cardiology and equipment for visualization procedures such as magnetic resonance imaging and computed tomography. When I started working with the company it was independent but is now part of Bayer HealthCare, yet it has maintained its commitment to continuous improvement throughout.
It is the market leader in the U.S. and Europe for most of its products. In many cases, it has more than twice the market share of its leading competitor. Its revenues have grown from $120 million in 1997 to $625 million in…
22Dec2010 | Steve George | 0 comments | ContinuedBest Practice in Measuring Customer Satisfaction
This is a best practice in the measurement of customer satisfaction courtesy of CDW, one of America’s largest private companies with technology sales of more than eight billion dollars in its most recent fiscal year.
CDW had been using Net Promoter to measure customer satisfaction and brand health. You get a Net Promoter Score by asking one question of your customers—How likely is it that you would recommend your company to a friend or colleague?—and then grouping the responses by promoters (those who answer the question with a 9 or 10), passives (7-8), and detractors (0-6). You subtract the percentage of detractors from the percentage of promoters to get your Net Promoter score.
This has been a leading edge measure for many companies because it helps them identify opportunities to improve customer satisfaction. CDW decided that Net Promoter was too one-dimensional so, with the help of the person who developed Net Promoter, it went to a three-question approach that, according to Calvin Vass, CDW’s senior manager of research, looks at “different dimensions of the relationship; what the customer plans to purchase with us, if they are committed, and what they would do if we went away.” Vass is quoted in “Is Net…
21Oct2010 | Steve George | 0 comments | ContinuedPlaying to Win Customers
It’s an old question—“What will help us attract and retain customers?”—with a very new answer: gaming. In “Play to win: The game-based economy” (Fortune, September 3, 2010), JP Mangalindan describes companies that “study and identify natural human tendencies and employ game-like mechanisms to give customers a sense that they’re having fun while working towards a rewards-based goal.” Companies don’t do this because they want their customers to have fun; they do it because it helps them attract and retain customers, which increases their revenues.
If you’re wondering how “gamification” might apply to your company, consider Mangalindan’s examples:
- Mint.com made personal finance a game. You can set a financial goal online and track your performance toward achieving it. You can check out your total financial score, which encourages financially responsible behavior. You can even compete with other members who have similar goals. If you think that sounds lame, think again: Mint.com claims more than 1.5 million active users.
- Nike sells a pedometer (Nike +) that you put in your sneakers. It monitors distance, pace, and calories burned and transmits the data to your iPod. The Nike software on your iPod “rewards” you if you reach a milestone. For example, if you run and you best…
The Post-Industrial Marketplace
If your organization is interested in serving the post-industrial marketplace (if it’s not, you’re in trouble), Seth Godin is as good a guide as you’re going to find. Not only does he know what’s going on, he understands the impact of rapid technological change on business. As he writes, “the world is being remade again and again, and the agents of change are the winners.”
The quote comes from “A post-industrial A to Z digital battledore,” which lists his 26 favorite neologisms (even though most are not newly-invented words). Several thought-provoking definitions relate to meeting customer requirements including:
- C is for Choice: “Digital commerce enables niches” because “given the choice, people will take the choice.”
- F is for the Free Prize: “People often don’t buy the obvious or measured solution to their problem, they buy the extra, the bonus, the feeling and the story.”
- I is for Ideavirus: “Ideas that spread win, and you can architect and arrange and manipulate your ideas to make them more likely to spread.”
- K is for kindle: Not the ebook reader. “The internet responds better to bonfires that are kindled over time, to ideas that spread because the idea itself is the engine, not the hype or the promotion.”
- O is for…
Think Like Your Buyers
In the 1980s, four out of five American car buyers were loyal to the company that manufactured their brand. I remember growing up in a Chevy family and we had friends who were Ford people and we were as loyal to our car brand as we were to our religion.
In 2009, only one in five Americans was loyal to the same car brand.
In “The Manufacturer’s World Has Changed Forever” (IndustryWeek, July 14, 2010), Robert Bloom provides this contrast in customer loyalty to point out that the purchasing behavior of customers has changed, which is old news to any company that’s managed to keep its head above water the last two years, but his case study is interesting. Italy’s Fiat Auto reported a net loss of nearly two billion euros in 2002 and experts thought it would not survive. In 2008, it reported a trading profit of more than 1.1 billion euros—a three billion euro turnaround in six years.
How did Fiat Auto do it? Bloom lists several key actions:
- Terminated a failing venture with General Motors to gain full decision-making autonomy
- Eliminated an entire floor of executives to reduce costs and bureaucracy
- Cut Fiat’s product development time in half to get products to market quickly
- Reorganized…
Fast Food Customer Focus
When Pal’s Sudden Service, a small fast-food chain in Tennessee, won the Baldrige Award in 2001, its president, Thom Crosby, suddenly realized that winning prohibited them from reapplying for five years. “I called up the head of the program and asked if we could decline the award and stay in the system. He didn’t want to hear that.”
Pal’s continues to conduct annual internal assessments because, as Crosby states, “I’m a real big believer.” Like other world-class companies, Pal’s benefits from asking and answering key questions that reveal how the organization works. The snapshot produced by this exercise becomes the engine for change, improvement, and success.
The questions explore all areas that are critical to an effective management system. Many of the questions have never been asked, which means many of the areas they address have never been evaluated. And therein lays their power.
A few years ago I asked these questions of senior leaders at an organization that dominated market share in its industry. One question in particular solicited a variety of responses. The question was: How do you determine key customer requirements and expectations?
Many of the leaders talked about how they interacted with their customers daily. Others mentioned customer surveys, complaints,…
16Jun2010 | Steve George | 0 comments | ContinuedRecommendability Boosts Revenues
Net promoter score (NPS) is a measure of customer loyalty that many companies are using instead of customer satisfaction surveys. You determine your NPS by asking customers a single question: “How likely is it that you would recommend our company to a friend or colleague?” Customers use a 0 to 10 rating scale, and their responses are categorized as Promoters (9-10 rating), Passives (7-8 rating), and Detractors (0-6 rating).
You determine your NPS by subtracting the percent of Detractors from the percent of Promoters. Scores of 75% or higher are considered very good.
Church of the Customer Blog recently reported on the 2010 NPS Industry Benchmark reports released by Satmetrix. The NPS leaders by industry are:
- Airlines: Jet Blue (64%)
- Auto Insurance: USAA (78%)
- Banking: USAA (81%)
- Brokerage & Investments: Charles Schwab (46%)
- Cable & Satellite TV: DIRECTV (27%)
- Cellular Phone Service: Verizon (41%)
- Computer Hardware: Apple (78%)
- Consumer Software: Adobe Systems (37%)
- Credit Cards: American Express (27%)
- Department, Wholesale & Specialty Stores: Costco (66%)
- Grocery & Supermarkets: Trader Joe’s (69%)
- Health Insurance: BlueCross BlueShield of Illinois (5%)
- Homeowners Insurance: USAA (69%)
- Internet Service: Road Runner/Time Warner (21%)
- Life Insurance: State Farm (34%)
- Online Search & Information: Facebook (65%)
- Online Shopping: Amazon.com (71%)
A few things jump out of this list. First, health insurance companies stink. If 5% is the best…
14Apr2010 | Steve George | 0 comments | Continued
