Archive for the ‘Julia Cupman’ Category
In this week’s Business Surgery, Julia Cupman highlights that customers in loyalty programs are not necessarily loyal. Although it is relatively easy to reward the advocates of a brand, the big challenge comes with addressing the detractors, especially before they can cause damage.
On a flight to Chicago last week, a colleague moaned to me, asking “Why do we always have to fly United?” Of course, there are lots of other airlines that will get us to Chicago and back, but United has certainly locked me in with its loyalty program, in that I’ll take almost any opportunity to add miles to my MileagePlus account.
While this might seem a contradiction, customers in loyalty programs are not necessarily loyal. True loyalty should reflect only customers who are strong advocates of a brand, which is certainly not the case for all loyalty card holders. In spite of my frequent flying with United and apparent loyalty to the airline, many of my colleagues and family know only too well about my negative views on United, especially during its merger with Continental. I – like millions of other customers – won’t forget the negative experiences for some time yet, irrespective of United having improved its customer service in the past few months.
When a company grows so large that customers are mere numbers in a database, it’s possible to lose sight of the importance each customer plays. Indeed, United flies over 140 million scheduled passengers a year, so why bother about a particular disgruntled customer?
Companies are, however, increasingly receiving a harsh wake-up call as the web has made it easy for negative word of mouth to spread like wildfire. Every day, 400 million Tweets, 534 million Facebook updates and 2 million blog posts are generated worldwide. This gives a dissatisfied customer every opportunity to communicate a negative experience to the masses – and frighteningly quickly.
Back in 2009, Canadian musician Dave Carroll trusted his $3,500 guitar with United baggage handlers, only to arrive in Chicago to find the instrument of his career smashed into smithereens. Furious at United’s denial of responsibility, Carroll created a song about his experience, singing that he “alerted three employees who showed complete indifference”. The song was uploaded onto the internet, received one million hits in just four days, and has been viewed more than 12 million times to date. Clearly the impact of one seemingly small negative customer experience should not be underestimated.
While companies must continue to acknowledge and reward the customers who are truly loyal, they should also make every effort to address the detractors out there who are spreading negative word of mouth. Interestingly, and as proven in market research, successful problem resolution is one of the biggest drivers of overall satisfaction and loyalty, but disgruntled customers require speedy treatment in order to prevent their dissatisfaction from going viral.
To learn about B2B International’s real time promoter and detractor alert service (a part of our customer satisfaction and loyalty research offering), please call to speak to one of our customer loyalty experts.
In this week’s Business Surgery, Julia Cupman discusses the risk to customer satisfaction through badly managed M&A
The repercussions of the merger of United and Continental airlines are continually impacting on the B2B International team. Many of us here at B2B travel with Continental (sorry, “United Airlines”) domestically as well as across the Atlantic between our North American and European offices, and it is shocking how badly the company is managing the merger. Over the past six months alone, we have experienced canceled and delayed flights with inadequate notifications, call wait times exceeding one hour, uncomfortable flying conditions such as freezing cabin temperatures, and soaring prices.
Continental and United were among many companies in the post-recession period–including Microsoft and Skype, Sanofi-Aventis and Genzyme, and Intel and McAfee–that turned to M&A for growth, through investing the significant cash reserves they had built during the financial crisis. Both airline CEOs promised “improved profitability and sustainable long-term value for shareholders”, and the $3.17billion merger of the two companies propelled the new United to the top of the industry, with 21% of domestic capacity. The company has less competition and increased monopolistic power, and can therefore charge higher prices–music to the ears of shareholders.
However, as per our experience, delivering value to shareholders is not synonymous with an improved customer value proposition post-merger/acquisition. An article in McKinsey Quarterly points out that the more successful mergers and acquisitions create value, and do so through at least one of the following five archetypes:
• Improving the performance of the target company;
• Removing excess capacity from an industry;
• Creating market access for products;
• Acquiring skills or technologies more quickly or at lower cost than they could be built in-house;
• Picking winners early and helping them develop their businesses.
One could assume that United and Continental’s goal fell within the first of these archetypes, but over a year after the merger, the unified airline is failing to satisfy its customers on a range of critical success factors. Although the company has pleased shareholders in growing market share and achieving economies of scale, United runs the risk of decreasing customer satisfaction levels to the point that more and more passengers will start switching to other airlines.
Customers are often neglected while companies pursue M&A as the focus is inevitably on the huge changes occurring internally, from restructuring through to changes in IT infrastructures and brand rationalization. Not surprisingly, the internal chaos results in confusion in the marketplace and disgruntled customers. Indeed a BusinessWeek study reported a 50% reduction in satisfied customers, even two years after a merger. In the case of Continental, decreasing customer satisfaction is reflected in the customer satisfaction scores published by the American Customer Satisfaction Index. The company has never been at the level of South West Airlines, but since the merger with United, Continental’s customer satisfaction scores have plummeted.
please click on the image to enlarge
As the North American economy stabilizes, more companies are considering M&A to grow. It is critical that these companies incorporate initiatives driving customer satisfaction and loyalty into their change management programs throughout the M&A process. Successful M&A is not just about investing in companies; it’s also about investing in customers.
Julia Cupman this week discusses how to drive excellence in companies.
I am always intrigued by what people think drives excellence in companies. The common thread in everything that we are asked to do in our search for market intelligence is to find the nuggets and insights that show how companies can improve – how they can beat the competition.
The search for excellence has attracted many authors and ex-McKinsey consultant, Tom Peters, has written widely on the subject. In his book "In Search Of Excellence" (1982), Peters nominated GM (among others) as a model of distinction. A lot has happened since then and as we know, foreign competition and a lack of focus, perhaps tinged with some arrogance, have seen many of the paradigms of excellence fall from grace.
In his original work, Peters suggested eight themes result in excellence:
Like all good business gurus, Peters has developed his thinking, and authored an article recently in the Financial Times (29th August 2011), adding four further "obsessions" which he believes drive excellence.
Understanding what drives excellence in business is the Holy Grail. Market research is not carried out to provide an elegant description of markets. Rather it is the strategic listening that Peters refers to. It is about understanding and spotting meanings; in particular, the opportunities that can provide a comparative advantage or help avoid a disaster.
I would like to add a fifth theme that will drive excellence: an obsession with intelligence – knowing more than the competition and using this knowledge more effectively than the competition.
During a recent global branding study for PPG Industries Inc., B2B International developed a set of questions and a unique algorithm, which led to the creation of a new tool providing the market’s perception of benefits and price on brand. PPG Industries – the multibillion-dollar supplier of paints, coatings, chemicals, glass and fibre glass – found the tool so useful, that B2B International branded it the Net Value Score (NVS), and has since used it in a number of studies carried out for the company’s other Fortune 500 clients.
The NVS is a metric that provides the market’s view on the perceived value offered by each company supplying a market. It can also provide the perceived value of a company’s different business units, indicating where the company’s value proposition is seen as the strongest and weakest.
The NVS is based on a calculation that is arrived at through asking just three questions in a market research survey. For each supplier, questions are asked about how the supplier compares relative to other suppliers in the market on (i) its product and service benefits, (ii) its pricing, and (iii) its total value. The data are then run through the algorithm to result in the Net Value Scores.
The tool illustrates the strength of a company’s brand relative to competitors, and indicates where more work is required to improve the level of perceived value – be it through better communicating certain benefits to specific market segments; better differentiating benefits so that they more strongly stand apart from those of competitors; or adjusting pricing so that prices are more in tune with the benefits offered. A company with an NVS which is significantly higher than others with which it competes will be one which enjoys a rising market share.
The NVS can also change the way a company thinks. A supplier is very aware of the benefits offered by its products or services, but these benefits only resonate with the market if people recognise them. In other words, perceptions are shaped by communications. Companies can therefore increase the level of perceived value they are seen to offer by selling on value (such as lifetime cost) as opposed to price. This in particular refers to the sales force and distributors who frequently talk price instead of value.
Patrick Kenny, Vice President of Corporate Marketing for PPG, states, “PPG Industries is fully committed to providing our customers with compelling value and so the NVS is a new metric that provides an ideal way to measure customer-experienced value. It is an excellent, adjacent metric to other popular customer advocacy scores that companies should embrace.”
B2B International is currently building a comprehensive databank of industry-specific Net Value Scores for benchmarking clients against other companies (in both similar and different industries), so that learnings can be shared from those who are performing strongly on perceived value.
Director Julia Cupman, Head of the company’s North American operations, states, “The Net Value Score is an example of our commitment to thought leadership. We hope more companies will recognise the importance of measuring perceived value and that they start benchmarking their performance with the NVS. One should not underestimate the power of this simple tool in providing critical metrics and research findings, which if acted on effectively, can lead to significant business success.”
To learn more about B2B International’s Net Value Score, please visit:
Net Value Score Website www.netvaluescore.com
Net Value Score White Paper: The Metric For Judging A Company’s Success
In this week’s Thursday Night Insight, Julia Cupman draws the link between the simple act of apologizing, and increasing customer loyalty.
Have you ever been upset or angry by the words or actions of someone, but been ready to forgive and forget if only they could say sorry? As Elton John has sung numerous times, sorry seems to be the hardest word.
A couple of months ago, I returned to my apartment building to find 3 fire engines, 2 police cars, and an ambulance outside, and a lobby that was totally flooded with water. I later found out that a major water pipe had burst on the second floor, leaking 250,000 gallons of 180 degree water (the equivalent to a quarter of the amount of water in an Olympic sized swimming pool, but boiling)!
As you can imagine, this flood caused extensive damage to the building, in that it destroyed walls and flooring, and ruined the electrics – including the fire alarm system and all 5 elevators. As I live two thirds of the way up this 35 floor building, I was one of the many people who had to take the seemingly never-ending stairs for weeks, while our incompetent building management couldn’t arrange for the elevators to be fixed quickly.
In traipsing up and down the stairs each day, I noticed a common theme to the complaints of the residents around me: the building management hadn’t written to say sorry for the inconvenience caused. It occurred to me that anger was surmounting, not so much at the problem the building faced, but at management’s apparent inability to effectively resolve the problem.
As a market researcher, problem resolution is an issue I come across in virtually every customer satisfaction project I work on. There is always an angry respondent bitterly recounting how a problem was inadequately resolved by their supplier. It’s inevitable that in any company, problems will occur, but I have yet to come across an organization that has a procedure in place to respond to problems effectively. Indeed, it has been estimated that most companies spend around 98 percent of their time reacting to problems and less than 2 percent of their time preventing them.
Why do these companies struggle saying sorry? It’s probably because we live in a litigious society in which apologizing for an error or incident is synonymous with admitting liability. Rather than face expensive lawsuits, companies choose to deny, deflect, or defer responsibility. Anything but say sorry!
What these companies don’t realize is that an apology is actually a powerful relationship-building tool, for studies have shown that customers develop greater loyalty to a company if they have experienced problems that were satisfactorily resolved, than if they had never experienced a problem at all.
Of course resolving problems entails far more than simply apologizing. However, key drivers of customer satisfaction and loyalty are so often these smaller, softer things which seem so inconsequential and yet are so impactful. As for the management of my apartment building, it wouldn’t have cost them anything to send an apologetic e-mail to residents. Words are indeed cheap, but when it comes to illustrating the importance and value of your customers, saying sorry is priceless.