|
August 2001 Volume 2.08
The Benefits of CVA (Part Four)
by Rodger Gallagher
 Knowing
why customers don't buy from us, is just as important as knowing
why customers buy from us.
Customers buy our products when they believe that we are supplying
products and service with the high quality attributes, which they
require. An earlier article covered how econometric modelling allowed
us to work out with elasticities what factors drive purchasing,
and the degree to which each of these value drivers impacts purchasing.
The elasticities are usually converted into impact weights, which
are easier to work with.
In the survey we will have asked customers to rate our performance
on all of the various value drivers and the overall key purchase
criteria for each service delivery area where there is an interaction
with customers. By considering performance information along with
the impact weights we can determine if customers believe we are
performing well on the criteria that matter most to them. High impact
and high performance indicates a criteria strongly influencing customer
purchasing behaviour.
In the above example, if customers rated us 8.5 out of 10 on Excellence
for our Customer Service people being Interested And Helpful, and
the Impact Weight was 66%, then we would know that this was an important
driver of why customers purchase from us. We could reinforce this
strength with a marketing campaign.
Why customers don't buy from us
Conversely if our customers indicate through the ratings that our
performance on a particular purchase criteria, is only fair (4 to
5 out of 10), and the modelling tells us that this purchase criteria
has a high impact on purchasing, then we have found a reason why
customers don't buy from us. If in the above Customer Services example,
our customers had only rated us 5.5 out of 10 for Interested And
Helpful, but the Impact Weight was still 66% then we have found
one reason why customers might not be buying from us. When customers
give us a rating of 5.5 out of 10 they are telling us that our performance
on this purchase criteria is only just satisfactory. If we were
any worse we would have failed on this criteria. We need to investigate
what is the underlying cause of why our customers rate us so low
on Interested And Helpful. Is there a shortage of people to answer
phones in our call centre? Are we measuring and rewarding the Customer
Services people for keeping all conversation with customers under
300 seconds in length?
Once we know the cause, we then need to decide if this is an area
where we need to improve. It may be that we are performing so well
in some other area of product & service delivery, that we do
not need to be Interested And Helpful. Or perhaps our company's
value proposition is based on providing basic service and selling
products at a low price. If this is the case we may not be overly
concerned that our Customer Services people are not Interested And
Helpful. But if our value proposition is based around customer service
then we need to find a cost effective way to improve performance
on Interested And Helpful.
When customers don't buy from us because the competition is better
than us
What if our performance on a particular purchase criteria, is satisfactory
or good (6 to 7 out of 10), but our competition's performance is
also good? Many businesses regard a satisfactory product or service
as good enough. A Web search with the Google search engine found
532,000 companies offering a 100% satisfaction guarantee. Is this
very basic level of service good enough?
Looking once more at our customer services example, consider the
case when our performance for Interested And Helpful on is 6.5 and
our competition's performance is 6.9. In the CVA approach, the way
used to track performance relative to the competition is to compare
our performance relative to the competition with a ratio. We divide
our absolute performance by the competition's absolute performance
and multiply the result by 100. So our relative performance for
Interested And Helpful is:
100 X 6.5 (Our Performance) = 94
6.9 (Competition's Performance)
If we had been equal to the competition, the result would
have been 100 or parity. If we had been better than the competition
then our relative result would have been over a 100. Clearly with
a relative result of 94 our performance is inferior to the competitions.
And with the Impact Weight for Interested And Helpful at 66%, we
have revealed another reason why customers why customer don't buy
from us. So there are degrees of satisfaction. Even though a customer
is 100% satisfied with your products, services and price it doesn't
mean that they will be loyal. The only thing that counts in the
customer's eyes is when you are better than the competition.
So here we have another three benefits coming from the information
provided by the CVA approach:
* Knowing why customers buy from you.
* Knowing why customers don't buy from you.
* Knowing why customers buy from the competition instead of you.
A New Zealand Pub
 Perhaps
the phrase New Zealand pub is an oxymoron. A year or so ago I got
excited that perhaps the Clyde Tavern in Hamilton East had the right
mix of regulars to sort of qualify as a pub. Hamilton readers of
CVM Update told me I was wrong and the publican at the Clyde changed,
service went down hill and customers stayed away. So my quest for
the New Zealand pub continues. There is a Web site that claims to
list New Zealand pubs www.nzpubs.com, but it is only a list of all
New Zealand bars, taverns and hotels. The statement is made that
the local pub is a kiwi icon - you could have fooled me! In many
New Zealand towns night life centres around the licensed club rather
than a pub. Books have been published on the subject of New Zealand
pub. The most recent one, called Pubs of New Zealand by Malcolm
Somerville, is well presented with a good write up and great photos
on many of the old hotels along New Zealand's main roads. The Rangiriri
tavern on the way from Hamilton to Auckland is included. I've stopped
there a few times, and this seems to qualify as pub. There are locals
enjoying themselves or perhaps huddled in a corner having a meeting
of a local club.
But one pub that isn't covered in the book is the Harbour View at
Raglan. Opened in 1866, records indicate that the publican George
Moon had a Bush license with unrestricted opening hours. The present
striking colonial style building was built in 1903, after the original
one was damaged by fire. While the bush disappeared from Raglan
long ago, the locals still congregate in the bars with hosts Jeff
and Kerry Holloway, amongst the walls covered with historical artefacts
such as the giant snapper caught many years ago and the song sheet
for 'Raglan by the Sea'. The Raglan Sport Fishing Club provides
community involvement with its meetings at the hotel. A good range
of food is available ranging from Café style in the Sports bar to
extensive meals in the Verandah bar. The staff is friendly and ready
to help with suggestions. One of my favourites is Lamb Shanks on
a bed of Kumara assisted with a bottle of the local lager - Raglan
Gold.
Regards,
Rodger Gallagher
|
