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March 2004 Volume 3.02
Measure for measure
by Rodger Gallagher
 Rating
performance
As an Olympic diver plunges into the pool, the diving judges score
the performance on a 10-point scale where 1 is Poor and 10 is is
Excellent. We use the same 10-point scale when we develop a customer
value survey and get customers to rate their supplier on the Value
they deliver to their customers. In the early days of customer satisfaction
surveys it was common to use 3-point or 4-point scales and just
look at whether expectations had been met or users had been satisfied.
When companies like Xerox found their customers rated them at 100%
satisfied and Telecom New Zealand found that 95% of customers said
they were satisfied, it was clear that this type of scale was too
granular. Especially when in Telecom New Zealand's case, customers
were stampeding out the front door to the competition.
What we found was that there were degrees of satisfaction and that
it was only when customers gave a highly satisfied or an excellent
rating that they could be regarded as anywhere near loyal. It became
clear that just having satisfied customers achieved nothing.
The next development in measuring customer satisfaction saw the
development of 4-point and 5-point scales, with a focus on the top
box of Excellent, instead of adding the Goods and the Excellents
together. This worked fine for a few years, until leading companies
found that as they improved, they were able to get large percentage
ratings for Excellent. On the launch of its competing long distance
service in New Zealand, Clear Communications found that 75% of its
customers were saying it was excellent. Obviously there was a need
to break the Excellent category down into finer detail, so businesses
could determine just how Excellent their customers thought they
were.
While it is possible in a telephone survey to read out response
categories for a 3-point or 4-point scale, any increase in the scale
range above this makes questions clumsy and lengthens the time needed
to complete the questionnaire. So what is needed is a scale with
a greater range that people are used to using. What we have found
is that most people in many countries around the world are familiar
with the 10-point scale. It's the same rating out of 10 that they
had their spelling tests marked out of at school. Although we anchor
the scale end points by saying that 1 is Poor and 10 is Excellent,
people have an inbuilt understanding of what each number on the
scale means. Thinking back to their spelling tests, they know that
if they got a 1 perhaps all they had right was the way they had
spelled their name, and if they got a 10 it meant that they had
everything right. In the middle of the scale a 5 meant that they
had just passed, or as one friend told me it meant that he had a
good day for spelling.
As well as these practical reasons for using the 10-point scale,
my colleagues who undertake econometric modelling tell me that a
10-point scale provides the information needed to build robust models
to determine what drives value.
Achieving a 10
Decision-making customers have a good idea of what each number on
the 10-point scale means. What do businesses need to do to get a
10 on Value? If you are Peter Jackson you know that with an average
score of 8.9 on the Internet Movie Data Base, that about half of
your customers thought that the Lord of the Rings: The Return of
the King was worth a 10. But what do you need to do if you are a
courier company?
I was walking home from my office to my home one evening last month
when a CourierPost van pulled up alongside me. Did I want a lift
home? I said yes and hopped in. The courier driver said he was going
my way anyway. He had been trying to deliver a signature-required
parcel to our home during the day, but nobody had been home. He
was now making another delivery attempt and rather than go there
and find nobody home again, he had stopped to take me along to accept
the courier package. Just think about it. It made good sense to
the courier company as another missed delivery was avoided and their
operating costs were reduced. It made sense to me as I got the package
when I needed it and I had a lift home. And now if CourierPost phone
me up to ask how they are going, then I'll give them a 10 out of
10.
When we look the relationship between loyalty and repurchase behaviour
as shown in the above graph, we know that when customers are prepared
to give their suppliers at 10, then nearly 100% of those customers
will stick with the supplier. It does pay off when businesses deliver
a 10 to their customers.
Dining in Leeds
 Most
of the restaurants in central Leeds seem to belong to chains and
serve fairly standard fare, although I did find an interesting pub
tucked away behind the town hall. But the restaurant I returned
to a few times was the Da Mario Ristorante. It has been around in
Leeds since 1976 run by the same Italian family. Just through front
door, your progress is blocked by a giant delicatessen counter,
but one of the family soon guides you past the counter to one of
the few free tables. The restaurant is full of people from the nearby
offices as well as university staff and students. While the menu
includes a good selection of pizzas, the speciality of the house
is whole fish, oven cooked in foil. I selected the Ocean Trout,
but first up was a selection of pizza bread. After nibbling on the
bread for a while the fish was ready and was brought to the table
for defoiling and deboning. The waiter soon had the trout ready
and I could make a start on the fish, lightly cooked in lemon juice
and herbs. The wine list included a good selection of everyday wines,
but I found the house wines were just right for the style of food.
Did I want dessert? The menu listed strawberries in season. It was
the middle of the English winter, but I supposed that strawberries
might be in season somewhere in the world. Sure enough in the middle
of the delicatessen counter there was bowl of fresh strawberries,
so I finished my meal with strawberries and then a cappuccino. While
they take credit cards, they are handled with one of those old zip
zap machines.
Da Mario has a style all its own. The food and the service are great,
and the prices moderate. It's an 8 out of 10 for value.
You can find Da Mario at 105/107 The Headrow, Leeds England. (Phone
(0113) 246 0390
Regards,
Rodger Gallagher
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