By Cinda Daly
Everyone knows that J.D. Power and Associates has all the inside skinny on the automotive industry. However, in recent years, the firm has expanded to serve a number of other industries as well: telecommunications, travel and hotels, marine, utilities, healthcare, homebuilder, consumer electronics, and financial services. J.D. Power conducts research and offers consulting and performance improvement services to help companies improve product quality and customer satisfaction. Most people would agree that product quality and customer satisfaction are inextricably intertwined—but true success begins with customer expectations.
“All too often, companies rush to measure the outcome and don’t spend enough time trying to understand what customers really expect from the outset,” says Steve Goodall, president of J.D. Power and Associates.
“Companies that consistently deliver excellent service, and score highly with their customers year over year, have figured out what their customers are expecting and deliver to that—or beyond.”
Steve talks candidly about customer satisfaction, the primary factors you need to understand about your customers’ experiences, and what to do with what you learn about your customers.
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Daly. J.D. Power and Associates has established clear leadership in market research. People rely on the quality and consistency of information. They trust it. To what do you attribute that success?
Goodall. Aside from good luck, our success comes from three equally important things. First, we understand and can uncover the real voice of the customer. Most companies today have reached the understanding that how customers feel about their products and services has a real impact on their success. And, we all know that there is a strong relationship between word of mouth—both positive and negative—and business success. If the customer’s experience isn’t what the customer expected, the company will have a tough time garnering repeat or new customers in the future. If the experience matched expectations, people are much more inclined to purchase again.
Second, we have a proven methodology for measuring true customer satisfaction. And, based upon the
public release of some of the information from our syndicated studies, we can accelerate understanding and the transparency of the data so that all constituencies understand how different companies are performing.
Daly. Most everyone measures customer satisfaction in one way or another. What makes the J.D. Power methodology so unique and effective?
Goodall. Our methodology has two key features. Most companies rely on one question or a couple of questions. We inquire about the full buying experience, asking questions about various aspects of the product, how the product was presented, how the product was serviced, about the perception between the price paid and the value received.
Then, in the syndicated studies, we interview customers across the full competitive set of products or services, focusing on the unique features. That’s how we are able to rank products, services, and companies. We use the exact same methodology and questions for everything. So, if there are differences in the findings, those differences are coming from the customers’ perspective, not J.D. Power’s.
Daly. What are some universal components of customer satisfaction that led J. D. Power and Associates to broaden its research beyond the automotive industry and into other industries?
Goodall. We recognized the trend, back in the 90s, when companies realized that customer satisfaction was actually important, beyond lip service. At J.D. Power, we already had quantitative ways of measuring satisfaction that worked in a balanced scorecard, metrics-focused management environment, and that applied to many industries. We refer to the universal components that impact customer satisfaction as the five Ps: product, process, people, presentation, and price.
Daly. Let’s break those down a bit. First, there are those questions about product quality, features, and functions. Clearly those vary from industry to industry. What is the universal angle?
Goodall. It’s critical to go beyond the product, per se, its features and functions, and assess the involvement and satisfaction that the customer has with that product or service. Examine the other elements that contribute to the overall impressions that the customer has. Try to measure that in a quantitative way and in a way that relates directly to behavior that businesses try to influence and affect. The key is to understand what drives behavior.
You get at that underlying motivation by asking about the process around the product or service that helps customers, the second “P."
Daly. What do you focus on with regard to measuring the people side of customer satisfaction?
Goodall. Sales and service people, particularly in the technology world, play a key role in overall satisfaction. Call centers have a direct and measurable impact on how a customer thinks about the product and services. And, even in today’s online world, people still like the human touch.
Daly. What does your research indicate in general about how satisfied customers are with self-support and support service channels? What is it that customers like or dislike about these service strategies?
Goodall. The banking industry has very few customer complaints and high satisfaction with the automated services for cash retrieval and basic transactions out of an ATM and online account review on a Web site. However, the ability for most customers to go into a branch to talk to someone about a problem is very reassuring.
Certain types of customer support can certainly be automated with 24x7 Web access. The caveat is that the automated support has to be for very simple, routine functions. When people have problems, it is very difficult to anticipate all of the variables, construct a logical way of asking questions, and give answers that deliver a resolution. Thus, we have a lot of call centers.
It is accentuated in the technology industry because, from the customer’s point of view, most technology is over-engineered. Apple® and iPod® have put it together so that it just works. Overall, though, we could easily pick over-engineered examples from every industry; customers are looking to manufacturers to make the products easier and more intuitive. And when it’s not, and customers try to compensate when they have a problem or try to get some support from a very sterile help function, the situation causes angst.
What customers really want is for someone to get inside their heads to help them figure it out. “I have technology. I love it, but I’m frustrated.” Essentially, companies need to invest the money in in those areas of the people interface where the product really needs it and invest in the more routine aspects of support. Use automation for what it can really do, not for what it can’t do very well.
Daly. Your last point—product interface brings us back to the five “Ps” of customer satisfaction. What do you focus on when it comes to presentation and price?
Goodall. Presentation is pretty straight forward. In the case of a retail environment—Starbucks® Coffee Shop or Marriott® Hotel Lobby—and even in the Web world, we ask questions about how the environment looks and feels; how that environment presents the product. With price, it comes down to understanding how the customer feels about price-to-value. Whether it is a product at the very high end or one at the very highly discounted low end, we want to understand if the customers perceive that they got value from the purchase.
Daly. What best practice guidance would you offer technology service providers for surveying and measuring customer satisfaction?
Goodall. Report cards and satisfaction rankings in and of themselves are a “so what.” The purpose of measuring satisfaction is to understand what action you can take to improve performance in the future. You have to get more granular and understand more than the what.
Daly. It follows, then, that when the report card statistics show up, someone in the organization needs to contact the dissatisfied customers and get to the bottom of the problem. What questions help uncover those things you need to change to improve customer satisfaction?
Goodall. Without trying to get to the exact questions, there are three areas you should focus on. Did the service delivered match the customer’s expectation? If there was a difference, positive or negative, how did that difference make the customer feel? And, finally, why did those differences make the customer feel that way.
In the customer satisfaction measurement business, it’s all about the expectation. Were they met, exceeded, or did they fall below expectation? Too often, companies rush to measure the outcome and don’t spend enough time trying to understand what their customers really expect from the outset. Companies that consistently deliver excellent service, and score highly with their customers year over year, have figured out what their customers are expecting and deliver to that—or beyond.
If you don’t know what you’re shooting for, you can’t measure it. You can measure efficiency; it’s a good indicator and it is important. But, what do customers expect? If you deliver a five-second response and customers expect one in two seconds, you have a problem.
Once you uncover a difference, then get at the customer’s state of mind. How did that difference make them feel? If the service experience was much better than expected—“I was delighted”—chances are that they will tell friends and relatives about the experience; they may purchase again, and they may pay at a premium the next time. Conversely, if the customer didn’t have expectations met and falls into the “dissatisfied” category, then you will get all of the negative consequences in return. Customers who believe they have been mistreated will find a way to retaliate.
Daly. So much customer feedback falls into the black hole. Or, perhaps worse, customers with bad experiences don’t ever tell you they are unhappy.
Goodall. Customers that don’t provide the negative feedback don’t do so because they have already given up on the company. It doesn’t mean that they don’t talk. Our research is pretty consistent: unhappy customers are a much more active group. And, it’s no longer just whom you tell at a party. Customers now have a broader world to reach, and if they’re so inclined, can start banging away at the keyboard.
Daly. How can companies keep the negative spiral from happening?
Goodall. It sounds trite, but it’s so true. First and foremost, the CEO has to believe that these customers—the ones they don’t know about—are a big issue and pay attention to it. Some of them put incentives on it. Companies that pay attention to problems and address this negative customer—and do it well—want to know if they have problems before they ever manifest themselves with the customer and put in systems internally that identify those beforehand.
Daly. How does a company reconcile the common disconnect between product satisfaction and negative customer experiences? Over the long haul, will product satisfaction win out?
Goodall. If there is a long-term advantage due to real and/or perceived superiority with the technology, product satisfaction will win out in many industries. In the computer and communications technology worlds, however, those technical advantages are often temporary. Consequently, service is a major and distinguishing factor.
A good example of this has been played out in the satellite TV and cable TV industry, which J.D. Powers has been measuring for several years. Cable TV began with a superior product. The quality of the transmissions was better, and the service offered a wider range of channel selection. Then, the satellite providers responded with the triple play offering: TV, high speed internet, and phone service through one pipe to the home. So, the technical advantage, which cable TV had, diminished.
Cable companies are in a battle to retain their position and market share. They no longer have the technical superiority; so they have to learn to do it with service. According to customer evaluations, the satellite installers are a notch above where the cable companies were. What used to be purely a technology play is now more about having the service technician come to the house, be there on time, have some ability to create rapport with the customer, and be technically competent enough to the do work.
Daly. What industry, across the body of J.D. Power and Associates research, has the highest overall customer satisfaction?
Goodall. The automotive industry tends to do pretty well year-in and year-out. Automobiles are a high customer involvement category. Cars are one of the most expensive purchases people make, and expectations are generally higher than any other product category. For decades, the automotive industry has understood that to meet or exceed those expectations, they have to know what those are going in.
Daly. There is something to be said about the strong emotional aspect of the car investment, which this industry has played to very well, particularly in its advertising. What industry is at the bottom of the barrel?
Goodall. Airlines and airports are at the bottom, along with some of the folks in the cable industry. And in some cases, industries that tend not to have very much competition and where customer choice is limited find themselves at the bottom. There is something to be said about the free enterprise system and competition.
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In his keynote speech “Customer Satisfaction: The Road to ROI” at HDI 2007, Steve Goodall will explore how the shift in power created by the ability to instantly access both good and bad reviews of any company’s performance over the Internet has irrevocably raised the bar of customer expectation. In this new reality, he will illustrate why investing in the delivery of customer satisfaction has to be viewed as a business imperative, not a “nice-to-do” afterthought.
The Daly InterviewTM is a publication of Focus Events, Inc. This interview was written exclusively for
ThinkService, Inc. by HDI 2007 Program Chair, Cinda Daly, CindaLDaly@windstream.net.
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[Phil Gerbyshak is the HDI Midwest Regional Director (elect), the President of Brew City (Milwaukee) HDI and the Community Leader here at the HDI Blog. If you'd like to contact Phil, please send an e-mail to blog@thinkhdi.com and he'll get right back to you or find someone else who can faster and better!]
