The market research industry and its clients love surveys. There is nothing wrong in this – intelligence is at the root of all good marketing. However, as market researchers, we sometimes feel a little guilty about the 20 minute customer satisfaction survey interview which has become the norm in customer satisfaction surveys now-a-days. Do we really need to explore the importance and satisfaction of myriad issues?
The following article by Stefan Stern is a story that we know too well and yet so often we ignore. It is about doing simple things well. It is a story about the huge success of Enterprise, the rent-a-car company. The car rental business is highly competitive and almost entirely dependent on customer satisfaction if it is to encourage customers to return again and again.
Enterprise has grown to become a $9 billion company in just 50 years and has been built on the back of customer satisfaction with surveys of all its customers in which they are asked just two questions – "Were you completely satisfied with the service provided, and are you coming back?".
Of course, any low score on either of these questions begs the question "why?" and this should uncover any issue that needs correction. There is no need to ask 39 detailed questions and irritate the satisfied customer or bore them to death.
As we move into 2009, a year in which we should be examining areas of excess and where we can cut down, why don’t we bear in mind the success factors for Enterprise? Keep it simple, keep it focussed.
Revealed: the secret to survival in 2009 (pass it on)
By Stefan Stern
Financial Times: December 23 2008
Usually I would hesitate before taking issue with Larry Summers, the former Financial Times columnist and soon-to-be chair of the National Economic Council for Barack Obama, US president-elect. I feel certain that his grasp of economics is firmer than mine.
But on one specific point I find I must challenge him. Prof Summers once observed that: "In the history of the world, no one has ever washed a rented car." The remark has always been seen, rightly, as a telling insight into the nature of ownership.
But on Saturday July 3 2004, at a self-service car wash on the outskirts of the Italian city of Pisa, my wife and I shattered Summers’ first law of rented cars. Reader, we washed one.
Our grey Nissan Micra was covered in two weeks’ worth of Tuscan and Umbrian topsoil. It was in a shocking state. Perhaps our behaviour that day should be seen as a British corollary to Summers’ law. Fear of financial penalty, and shame at the thought of handing back such a filthy vehicle, spurred us on.
But really, what could be more boring and predictable than the car hire business? Talk about "commoditisation": a car is a car is a car. It is designed to get you, as the cliché has it, from A to B. Hiring a car is a more or less impersonal transaction. It is all about price. How many management lessons could you ever hope to draw from that?
Well – several, actually. But I have only come to realise this after finding out a bit more about Enterprise Rent-A-Car, the St Louis, Missouri-based business, the market leader in the US and a growing force around the world.
The company was founded 51 years ago by Jack Taylor. Mr Taylor, then 34, had been a US navy pilot during the war. A decade later he was working as a salesman at a Cadillac dealership in St Louis.
Hiring (or leasing) a car was not a new idea. But Mr Taylor backed his hunch that there was a growing market for hire cars, not only at airports where travelling executives or holidaymakers might want to pick one up, but also in towns. With the backing of his boss, he took a 50 per cent pay cut to start the business.
Enterprise (or "executive leasing", as it was originally known) developed strong links with insurance companies. It recognised that customers often needed a car urgently – after an accident, if repairs to their existing car had not been completed on time, or when a car had been stolen.
Enterprise grew from being a tiny company in the Midwest to one that, half a century later, has sales of more than $9bn, generated in 6,000 offices by 64,000 employees internationally. So how has the company taken the seemingly dreary business of car hire and made such a vast fortune out of it, earning the Taylor family, which still owns it, the number 18 slot in Forbes magazine’s list of richest Americans?
The short answer is: by focusing obsessively on customers. Enterprise has developed what it calls its ESQi (Enterprise Service Quality index), a measurement of customer satisfaction. The data are generated by asking customers two simple questions over the phone, as Donna Miller, European head of human resources, told me: "Were you completely satisfied with the service provided, and are you coming back?" That’s all there is to it.
"I’m always interested to see those customer satisfaction questionnaires you find in some hotels," Ms Miller says. "The ones with 39 questions on it – ‘how did you like the pillow?’, and so on." Enterprise keeps it simple. (Hertz, by contrast, asks four questions, and conducts surveys via e-mail rather than on the phone.) Enterprise’s growth has been as steady and simple as its approach to researching its customers’ views. Even now, it operates in just five countries: the US, Canada, the UK, Ireland and Germany.
ESQi figures drive the business. They also get the employees’ attention. If the numbers at your branch are not good enough, no promotion. Being innovative and entrepreneurial should help to get the numbers up – Enterprise was the first major car hire business to offer to pick up customers from wherever they were to take them to their vehicle. And if customer feedback is bad? "We call it going to ESQi jail," Ms Miller says. "Until the numbers start to improve you’re going nowhere."
Enterprise has a policy of hiring only graduates. So even humble front-of-house staff have been educated to a relatively high level. "Unless you’ve seen the business from the bottom up you won’t be able to run a branch yourself," Ms Miller says. Several members of the Taylor family work for the company. All started out washing cars and performing basic tasks.
Jack’s son Andy has been chief executive since 1991. But, he says, his father, now 85, is still the "minister of culture", checking up on customer satisfaction and what the staff are doing about it.
Because, in the end, this is all about culture. "Today, corporate culture is the strongest driver of radical innovation," according to Jaideep Prabhu, a fellow of the UK’s Advanced Institute of Management Research. Getting through 2009 is going to require cultivating a strong culture of customer service – and quickly.