|
May 2003 Volume 3.01
Why Should I have confidence in this Information?
by Rodger Gallagher
 "Confidence
in the Customer Value Added (CVA) process means I can have confidence
in using the results information"
Often when managers are first introduced to CVA information and
see how it can be used to guide business decision making, they need
assurance that the information provided is reliable and accurate.
In the words of one manager, "I place great importance on an
accurate customer survey process because it is the basis for our
business improvement priorities. If the results are inaccurate this
may cause us to invest in and focus on the wrong improvements.
What I need is for someone to 'teach' me how the CVA improvement
recommendations are accurately derived from the customer survey
process.
When I have confidence in the accuracy of the process I can have
confidence in using the results to their best advantage and will
support the ongoing customer survey process whole heartedly."
That seems quite a reasonable request doesn't it? The points raised
cover many of the important issues for undertaking and applying
the findings from customer research.
With the Customer Value Added approach we use a set of tools and
techniques that used together and applied well, have been found
to provide reliable business information. The approach works in
diverse cultures including Australia, Brazil, Fiji, Korea, and the
United Kingdom and has been used for improving washing machines
and support services, packaging products sales and service, and
medical laboratory support services.
The ultimate test for confidence in customer information must be
whether implemented business recommendations made on the basis of
the CVA information flow through into market results. This proof
has been established in multiple markets around the world. But many
managers want to understand the data analysis and modelling process,
rather than accept a black box overall proof.
CVM clients need to be able to say, "The most important things
to our customers are X and Y, and we know this because they told
CVM how well we are doing, and the econometric models reveal what
impacts their purchasing"
This simple statement encapsulates what managers need to understand
about CVA data analysis and econometric models. In establishing
confidence in the information they are concerned that 'an error
in the formula will deliver the wrong answer', so they need to understand
the formula not the answer. How do they know that all the things
that are important to customers have been captured, and accurate
weightings of their relative level of importance in the customers'
loyalty decision have been determined?
Simple regressions on customer satisfaction are sometimes used
as a way of determining if a subattribute has a high impact on overall
satisfaction. With this approach it is often difficult to determine
importance weightings, as usually the correlation coefficients come
out very similar. You are also faced with the question of do you
consider the correlation to customer satisfaction or the correlation
to loyalty.
The inherent weaknesses in these techniques are the reasons why
we do not use them. Instead what we do is develop a customer value
tree and use multiple regression techniques within each branch of
the tree to determine the impact weights for that branch of the
tree. From the multiple regression correlation coefficients we calculate
elasticities and from these we calculate the impact weights.
Within each branch of the tree, sometimes the impact weights are
similar. e.g. Two items both at 20%. If this is the case then the
importance order for the two items is determined by the client's
performance level and the client's performance relative to the competition.
The regression modelling also provides a metric which measures 'model
fit'. Essentially this is a built in safety check which tells us
whether we have captured all the things that are important to the
customer for each branch of the customer value tree.
As Customer Satisfaction only has a weak link to loyalty and purchasing,
we do not ask a customer satisfaction question. Instead we ask a
series of questions on the key purchase criteria, and overall questions
on Products & Services, and Costs Benefits & Price, followed
by overall Value Received and Loyalty questions. It is Value, which
has the highest link to future purchase behaviour.
The Answer
So the answer to the question is:
"The most important things to customers in their buying decisions
and for loyalty, are Key Purchase Criteria X, Y, and Z. We know
this, because the people we surveyed rated how well the client and
their competition are doing on each Purchase Criteria and the Value
Drivers of each criteria. We have weighted their responses by undertaking
econometric multiple regression modelling on each branch of the
Customer Value Tree, from the Value Drivers through the Key Purchase
Criteria to overall value and loyalty.
When the buying decision factors are ranked in order of importance
to the customer, and the client's performance is ranked alongside
each one, we can easily see the priority performance perception
gaps we must focus on."
Melbourne Reflections
"Meet me at the baths". It's a long time since anybody
said that to me and it was a bit chilly for a swim. But these were
the Middle Brighton Baths on the beach of Port Phillip Bay just
out of Melbourne, and we were heading for the restaurant. Sometimes
architects get buildings just right for a superb site and this is
one of those buildings. It just has a great feel from the time you
start up the stairs to the first floor restaurant, until you are
seated and admire the view from Williamstown in the west across
the city skyline of Melbourne's CBD with the yachts of Middle Brighton's
Marina in the foreground. The noise of chatter from a full restaurant
of happy people completes the ambience.
And now of course to the serious business of the menu. Naturally,
a restaurant by the sea has to have seafood. With Brighton Middle
Baths' menu packed with many choices it was hard to choose, but
I settled for an entrée of seared scallops with mashed potato
and lemon chilli jus. Keeping with the seafood theme I followed
this with a main of barramundi accompanied by brussel sprouts, lardons
and wild mushrooms.
The waiter then twists my arm gently and I select a dessert of
white chocolate and griottine crème brulee. It is finished
with a thin layer of flambéed toffee. The whole meal is perfect
in terms of cooking, presentation and delivery.
An ideal meal in an ideal setting.
The baths themselves first opened in 1881 and were a centre for
recreation for many years. After being extensively damaged in a
storm in 1934, they reopened in 1936. If you can't make it to the
baths then you can find them on the internet at http://www.middlebrightonbaths.com.au/
Regards,
Rodger Gallagher
|
