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September 1998 Volume 3.00
What Is Your Customers Idea of
Heaven?
A Mission For Your Customers
1.0 Project Planning and Alignment With Stakeholders ----->
Saturday at 9 am - the sun glimmered atop Oriental Bay in Wellington
New Zealand, as I strolled into the office on a Spring morning.
Upon meeting Ray Kordupleski, we reviewed a key customer request.
Our customer was the Managing Director who had asked us on Thursday
afternoon, “…tell me what heaven looks like and how will we know
when we have achieved it?”
No, the Managing Director was not planning a religious revival
meeting. We needed to outline the process to implement CVA.
Thus, we developed the 11 step process for making Customer Value
Added work.
This blueprint on ‘how to implement CVA’ has been used to successfully
implement CVA in many countries including Australia, Brazil,
Canada and the United States. Companies that compete in industries
from financial services, telecommunications, building, and entertainment,
have used the 11 step approach. All of the steps are
required to make CVA a business driver. So, how does an organisation
begin?
1.1 Review Current Progress & Senior Management Needs
For achieving buy-in for the organisation, there has to be a review
with the key decision makers to agree on their needs. It involves
educating the Senior Management on how the CVA information can assist
them to make business decisions.
Just as we plan vacations with our family, the Senior Management
needs to know the itinerary for “making CVA work” in their organisation.
Naturally, most organisations are focused on the financial quarterly
results of the business. Additionally, the Senior Management
needs to be shown how CVA can be linked into the financial results
of the business after the base trend of customer information is
established. This initial step is analogous to that of an
initial audit. It involves understanding the goals of Senior
Management and showing them what lies ahead on the CVA journey.
Watch the following newsletters for more information about the next
10 steps…
Susan Moore
Next Step...
Making the link
The Link from a Company’s People
For some CEOs like Fred Smith at Federal Express it is just a basic
belief that People Satisfaction must come first if you are to have
satisfied employees and shareholders. Other CEOs are a little
more sceptical and say, “I’ll believe it when I see a proven link.”
For many years researchers struggled to prove that a linkage existed.
Well, while it seemed intuitive that when employee satisfaction
increased so would customer satisfaction, by the early 1990s the
best that could be proven was only a very weak linkage. Over
the last few years a strong linkage from people satisfaction though
to customer satisfaction, has been established by a few United States
based companies. One of the first companies to announce their
success was telecommunication equipment manufacturer Nortel. Peter
Donovan from Nortel’s Enterprise Networks Division worked with Ray
Kordupleski from Customer Value Management Inc. to build a model
that linked the various critical aspects of Employee Satisfaction
through to Customer Satisfaction.
The work involved a new data mining technique known as causal pathway
modelling. Using unstructured data from the company’s existing surveys
they found an elasticity of 0.64 between Job Satisfaction and Employee
Satisfaction. i.e. When Job Satisfaction went up by 5 points,
Customer Satisfaction went up by 3.2 points. In addition to
this they found that the relationship wasn’t quite linear.
Why has it now been possible to prove a linkage when one wasn’t
found earlier? Well the availability of low cost computing
power certainly helped. The new data mining techniques would
have had to been run on super computers just a few years ago!
But the main reason was that it was found critical to ask the right
questions in the People Satisfaction research. Another finding
has been that at companies with very low Job Satisfaction there
probably is only a small relationship between Job Satisfaction and
Customer Satisfaction. Nortel found that when Job Satisfaction
is at very low levels it has to be improved quite a bit before it
impacts on Customer Satisfaction. Customers strongly disliked
the departments with low Job Satisfaction.
Since the early research with Nortel, other companies have now
released their findings. The Jan-Feb 1998 issue of the Harvard
Business Review reported how the Sears, Roebuck Company had built
a linkage right along the employee-customer-profit chain.
Sears found that only 10 of the questions in their 70 question employee
survey had any impact on customer satisfaction. Sears found
an elasticity of 0.26 between changes in employee attitudes and
changes in customer impressions. i.e. A 5 unit increase in
employee attitude drives a 1.3 until increase in customer impressions.
At the June 1998 American Marketing Association Customer Satisfaction
Congress, United States phone company AT&T released research
on People Satisfaction and Customer Value. Researchers Randy
Zeese and Judith Anderson revealed a very comprehensive set of linkages
across all aspects of Customer Value and Employee Satisfaction that
established the link between People Value Added, Customer Value
Added, and Employee Value Added with their True Moments Measurement
Platform.
Customer Value
The above chart shows the typical findings emerging from this research.
As Job Satisfaction goes up, so does Customer Satisfaction and Value.
Customers dislike the departments with low job satisfaction.
Job Satisfaction has to increase substantially before it impacts
Customer Satisfaction. Will these findings hold in other countries?
I expect so. In any case we will know quite soon as a few
leading New Zealand companies deploy the new approach.
Float the Boat
As a teenager in the ‘60s I grew up on a mixture of folk singing
from Simon & Garfunkel, Joan Baez, Julie Felix, and Arlo Guthrie,
and I still have the vinyl discs. You can read our daughter’s
views on them at http://www.secret-passage.com/disco/records.html
Saturday nights from 1963 to 1967 started with viewing Oscar Brand
visiting Canadian Universities for the folk singing show, “Let’s
Sing Out”. So I am quite keen on folk music.
Imagine my delight when I went to the Cantando Choir Garden Party
at the Woodlands Estate near Hamilton and heard Float the Boat.
This Jazz Trio specialises in folk jazz with Gaye Jurisich as vocalist,
Wayne Melville on bass guitar, and Phil Sheppard on guitar.
They perform on Thursday nights at Hamilton’s Museum Café.
Regards,
Rodger Gallagher
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