CLEAR 2008 Annual Conference
Anchorage, Alaska
“Promoting Regulatory Excellence Through
Surveying”
Bob E. Hayes, Ph.D
President
Business Over Broadway
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Outline
• Customer Loyalty, Profitability and Service Delivery
• Customer Loyalty and Regulatory Agencies
• Web-based Surveys
• Loyalty Management
• CLEAR Survey Results
• Summary
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Customer Loyalty and Profitability
• Decreasing customer defections by 5% increases profits from 25% to 85% across a variety of industries1
1 Reichheld, F. F., & Sasser, W. E. Zero defections: Quality comes to service. Harvard Business Review, Sept-Oct. 1990.
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Business Models
• Customer variables (loyalty, value) impact company value
BusinessPrograms
MarketingSales
Service
CustomerDevelopment(cross/up-sell)
FirmValue
CustomerLifetime
Value
CustomerAcquisition
CustomerRetention
BusinessPrograms
MarketingSales
Service
CustomerDevelopment(cross/up-sell)
FirmValue
CustomerLifetime
Value
CustomerAcquisition
CustomerRetention
Based on the article by Gupta, et al. (2006). Modeling customer lifetime value. Journal of Service Research, 9(2), 139-155.
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Business ModelsEmployee, Partner, and Customer Loyalty Drive Business Results
Based on the book, The Service Profit Chain: How leading Companies Link Profit and Growth to Loyalty, Satisfaction and Value (Heskett, Sasser & Schlesinger, 1997)
Employee Survey
Customer Survey
Partner Survey
Company
Business Strategy
CompanyPerformanceInternal
SystemEmployee
Satisfaction
EmployeeProductivity
PerceivedValue
CustomerSatisfaction
Revenue
Profits
EmployeeLoyalty
CustomerLoyalty
Partner
Advocacy
Purchasing
Retention MarketShare
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Customer Loyalty
• Degree to which customers feel/act positively toward the organization
• In business, there are three components of customer loyalty
1. Advocacy – likelihood to recommend or choose again
2. Purchasing – likelihood to buy different/more
3. Retention – likelihood to stay
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Regulatory Agencies
• Standard conceptualization of customer loyalty does not work
• Customers do not have a choice; Customers have to use agencies (e.g., licensing for physicians)
• In non-competitive environments, need to redefine what we mean by customer loyalty
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Customer Loyalty Measures
• Regulatory agencies can focus on three positive behaviors of customers
1. Expansion – likelihood of increasing level of business
2. Compliance or Influence – likelihood of complying with agency requests or being influenced by the agency in a way that benefits the agency
3. Advocacy – likelihood of speaking favorably/recommending or supporting agency on issues and matters that are important to the agency
Based on the article, Parcenka, C. (2008). Beyond mere customer retention. Quirk’s, March, 42-46.
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Expansion Loyalty
• Signing up for programs that help customers do their job more effectively
• Using agency as a consultant when selecting products/services from a third party
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Compliance/Influence Loyalty
• Seeking agency’s advice/expertise on issues in my field
• Accepting agency’s advice or referrals to third party contractors
• Complying with/Influenced by agency’s advice or opinion
• Providing personal information (to better serve customers)
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Advocacy Loyalty
• Supporting agency’s position or action on licensing-related public issues
• Supporting agency’s issues on changing licensing process (e.g., new tests)
• Providing testimonials about positive experiences with the agency
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Desired Customer Behaviors
• What does the agency want from customers?
• How can customers support the agency’s mission?
• What can customers do to help agency better serve them?
• What can customers do to help agency minimize cost of doing business?
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Generating Loyalty Questions
• Qualitative approach using cross-functional team– Roundtable discussions– One-on-one interviews
• Qualitative approach using real customers– Panel discussions– One-on-one interviews– Open-ended questions on surveys
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Assessing Quality of Questions
• Is the meaning of loyalty clear?
• Is the loyalty behavior something the customer can do?
• How does the behavior benefit the agency?
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Customer Loyalty
• 0 to 10 Satisfaction/Likelihood Scale– Respondents indicate satisfaction/likelihood to
behave in a certain way (e.g., recommend, purchase)– Higher scores indicate higher levels of customer
loyalty (0 to 10)
0Not at all Likely
5 10Extremely Likely
6 7 8 91 2 3 4
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Potential Loyalty Questions
• How likely are you to sign up for different programs we offer?
• How likely are you to comply with the agency’s advice in regulatory matters in your field?
• How likely are you to support the agency’s position or action on licensing-related public issues?
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Customer Experience
• The sum of all experiences a customer has with a supplier of goods/services
• Company treats customers in certain ways that can be positive or negative
• Impacts/drives customer loyalty
• Perception of/Satisfaction with specific characteristics of the customer experience
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Customer Satisfaction
• 1 to 5 agreement scale– Respondents indicate the extent of agreement that an
attribute (customer experience element) describes their experience
– Higher score indicates higher quality or better customer experience (1 to 5 rating)
1StronglyDisagree
3Neither Agree
Disagree
5StronglyAgree
4Agree
4Disagree
CLEAR 2008 Annual ConferenceAnchorage, Alaska
• Data collection is cost effective
• Survey process is simplified– Fewer data management concerns
• Utilize the capabilities of the Web– Real-time results– Ease of analysis and access to information
• Survey process integrated with IT applications
Web-based Survey
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Micro Level Loyalty Management
• Understand the customer relationship for a specific survey respondent
• Identify customers who indicate they are disloyal (rating on loyalty questions)
• Target improvements on disloyal customers to address specific needs immediately– Action plan directed at impacting individual customers
CLEAR 2008 Annual ConferenceAnchorage, Alaska
• Use trigger e-mails to identify disloyal customers
Negative responses to loyalty/satisfaction questions trigger notification to pre-determined employees and managers
Trigger email alerts enable employees to take immediate action on important customer issues
Micro Level Approach
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Macro Level Loyalty Management
• Understand the customer relationship across all customers
• Identify systemic reasons causing loyalty/disloyalty
• Target company-wide improvement programs directed at all customers
• Help improve the service delivery system– Impacts how the work gets done
CLEAR 2008 Annual ConferenceAnchorage, Alaska
CLEAR Survey Content
• Five Customer Loyalty Questions
• Ten Business Attribute Questions
• Membership length
• What are your original reasons for joining CLEAR?
• What is major benefit you are receiving from CLEAR?
• How could CLEAR offer more value?
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Customer Loyalty
• Customer Loyalty– Degree to which customers feel/act
positively toward the organization (CLEAR)
1. Overall Satisfaction
2. Recommend
3. Continue Membership
4. Use Different Types of Services
5. Renew Membership
Rated on a scale from 0 (Extremely Dissatisfied/Not at all Likely) to 10 (Extremely Satisfied/Extremely Likely).
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Satisfaction with Attributes
• Perception of specific characteristics of the customer experience
1. Services are excellent
2. Provides neededresources
3. Offers training I want
4. Organized events areexcellent
5. Excellent reputation
6. Responsiveness
7. Knowledgeable
8. Courteous
9. Understands needs
10. Membership is a good value
Rated on a scale from 1 (Strongly Disagree) to 5 (Strongly Agree).
CLEAR 2008 Annual ConferenceAnchorage, Alaska
CLEAR Survey Method
• Mail list received from CLEAR (347 potential respondents)
• Duplicate email addresses removed
• Email invitation (with hyperlink to Web-based survey) sent to 315 people
• Survey open Sept 10 through 17, 2008
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Results
Respondents who indicated they were not CLEAR members were excluded from all analyses.
• Received 127 completed responses for a response rate of 40% (127/315)
16%
13%
12%
13%10%
36%
Zero - not amemberLess than oneyearOne to less thanthree yearsThree to less thanfive yearsFive to less thanseven yearsSeven years ormore
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Member Loyalty
0%
25%
50%
75%
100%
ContinueMembership
RenewMembership
Recommend OverallSatisfaction
UseDifferentServices
Loyalty Question
Pe
rce
nt*
Lo
ya
l
Key Findings
A high percentage of members (~95%) indicate that they will continue/renew their membership with CLEAR
Members are more likely to continue/renew their membership than advocate (~77%) or use different services (~54%)
Percent of respondents who had a rating of 6 or greater on a 0-10 scale.
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Membership Tenure and Loyalty
4
5
6
7
8
9
10
ContinueMembership
RenewMembership
Recommend OverallSatisfaction
Use DifferentServices
Loyalty Question
Sa
tis
fac
tio
n/L
ike
liho
od
Less than 3 years
3 years to less than 7 years
7 or more years
Key Findings
Long-term members report higher levels of loyalty compared new members, especially with respect to renewing their membership and recommending CLEAR
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Membership Tenure and Quality
2
3
4
5
Service isexcellent
Resourcesneeded to do job
Offers training Iwant
Organizedevents areexcellent
Reputation isexcellent
Attribute
Ag
ree
me
nt
Less than 3 years
3 years to less than 7 years
7 or more years
Key Findings
No major difference among member tenure levels. Long-term members report same quality as new members.
Reputation of CLEAR is rated higher for longer-term members.
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Membership Tenure and Quality
2
3
4
5
Reps respond intimely manner
Reps areknowledgeable
Reps arecourteous
Reps understandneeds
Membership isgood value
Attribute
Ag
ree
me
nt
Less than 3 years
3 years to less than 7 years
7 or more years
Key Findings
No major difference among member tenure levels. Long-term members report same quality as new members.
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Macro Level Loyalty Management
• Goal is to increase customer loyalty
• Target Analysis– Compare agreement ratings of attributes– Low ratings (below a target) = poor
customer experienceATTRIBUTE
1 2 3 4 5 6 7 8 9 10
Performance (Agreement) 4.00 3.77 3.77 4.28 4.28 4.18 4.09 4.48 3.92 4.23
Make improvement here.
CLEAR 2008 Annual ConferenceAnchorage, Alaska
• Goal is to increase customer loyalty
• Driver Analysis1. Examine agreement ratings of attributes
2. Correlate agreement ratings of attributes with Likelihood to renew membership
ATTRIBUTE
1 2 3 4 5 6 7 8 9 10
Performance (Agreement)
4.00 3.77 3.77 4.28 4.28 4.18 4.09 4.48 3.92 4.23
Impact (Correlation Coefficient)
.49 .37 .37 .39 .33 .21 .14 .11 .28 .42
Macro Level Loyalty Management
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Loyalty Matrix - Renew
• Plot performance and impact of each business attribute
Agree Impact
A1 4.00 .49
A2 3.77 .37
A3 3.77 .37
A4 4.28 .39
A5 4.28 .33
A6 4.18 .21
A7 4.09 .14
A8 4.48 .11
A9 3.92 .28
A10 4.23 .42
AVG 4.10 .31
0.00
0.10
0.20
0.30
0.40
0.50
0.60
3.50 3.75 4.00 4.25 4.50 4.75 5.00
Performance (Agreement)
Imp
ac
t (C
orr
ela
tio
n C
oe
ffic
ien
t)
A9
A2
A3
A4
A5
A6
A7A8
A1
A10
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Loyalty Matrix
Hig
h Im
pact L
ow
Key Drivers
INVEST in these areas. Improvement in these areas are predicted to increase customer loyalty (attract new customers, increase purchasing behavior, retain customers)
Hidden Drivers
LEVERAGE as strengths in order to keep current customers loyalADVERTISE as strengths in marketing collateral and sales presentations in order to attract new customers, increase purchasing behavior and retain customers
CONSIDER as lowest priority for investment. These areas have relatively low impact on improving customer loyalty
Weak Drivers
ADVERTISE as strengths in marketing collateral and sales presentations in order to attract new customersEVALUATE as areas of potential over-investment
Visible Drivers
Low Performance High
CLEAR 2008 Annual ConferenceAnchorage, Alaska
0.00
0.10
0.20
0.30
0.40
0.50
0.60
3.50 3.75 4.00 4.25 4.50 4.75 5.00
Performance (Agreement)
Imp
ac
t (C
orr
ela
tio
n C
oe
ffic
ien
t)
A9
A2
A3
A4
A5
A6
A7A8
A1
A10
• Weak Drivers:– Lowest priority for
investment is A7 and A9
• Hidden and Visible Drivers:
– In Marketing and Sales, use A4, A5 and A10
– A6 and A8
Loyalty Matrix – Renew
• Key Drivers:– To increase
customer renewal rate, invest in A1, A2, and A3
Key Drivers
Weak Drivers
Hidden Drivers
Visible Drivers
CLEAR 2008 Annual ConferenceAnchorage, Alaska
0.00
0.10
0.20
0.30
0.40
0.50
0.60
3.50 3.75 4.00 4.25 4.50 4.75 5.00
Performance (Agreement)
Imp
ac
t (C
orr
ela
tio
n C
oe
ffic
ien
t)
A9
A2
A3
A4
A5
A6
A7
A8
A1
A10
• Weak Drivers:– Lowest priority for
investment is A7 and A9
• Hidden and Visible Drivers:
– In Marketing and Sales, use A10
– A4, A5, A6 and A8
Loyalty Matrix – Use Diff Services
• Key Drivers:– To increase
customer loyalty, invest in A1, A2, and A3
Key Drivers
Weak Drivers
Hidden Drivers
Visible Drivers
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Summary of CLEAR Survey
• Majority of members will continue/renew their membership
• To increase advocacy and use of different services, focus on improving:– Service– Resources to help members do their jobs– Knowledge sharing – Training targeted on
specific issues and expanded offering
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Summary
• Increasing customer loyalty is necessary for business success
• Need to conceptualize customer loyalty in different ways for regulatory agencies
• Need to improve the customer experience in order to improve customer loyalty– Loyalty Management
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Summary
• Micro level loyalty management approach– Addresses special causes of disloyalty– Focuses on changing individual issues– Customer-specific improvements/Short-term
• Macro level loyalty management approach– Addresses common causes of disloyalty– Focuses on improving systemic issues– Organization-wide improvements/Long-term
CLEAR 2008 Annual ConferenceAnchorage, Alaska
Speaker Contact Information
Bob E. Hayes, Ph.D.
President
206.372.5990
Business Over BroadwayBusiness growth through customer insight