How To Measure Customer Satisfaction More Effectively

How to measure customer satisfaction more effectively

Bill Gates once said, ‘your most unhappy customers are your greatest source of learning.’ However LEAP’s John Raftery, who works closely with SMEs, explains why measuring customer complaints can be problematic and unreliable. Although he acknowledges the value of customer feedback, he suggests another way to measure customer satisfaction that is both cost effective and powerful in its impact on the business.

John, what is an effective way to measure customer satisfaction?
One of the issues that come up regularly when working with clients in the SME sector is that managers don’t have a handle on how satisfied their customers are. And if they are trying to measure customer satisfaction they usually go about it the wrong way. Sometimes they measure complaints, which is absolutely the worst way to measure customer satisfaction. Measuring complaints does not give you any real sense of customer satisfaction. Another thing they do is carry out surveys, and they can be complex and expensive and often difficult to interpret.

Net Promoter Score
What I always recommend to customers to use is a very simple, very effective and inexpensive methodology known as the Net Promoter Score (NPS). It’s being used more and more in business. The beauty of it is the simplicity; you are only asking the customer one question. ‘How likely is it that you would recommend this product, service or company to a friend or colleague?’ And you get them to rate it on a scale of 1 to 10. The people who score anywhere from 1 to 6 we regard as detractors, that is people who have had a bad experience and are likely to relay that bad experience to others.

What the higher scores mean
The people who score between 6 and 8 are passive or neutral customers, they are happy to buy your product or service, but if a better deal comes along they will go with it; they are not loyal customers. Then we have the people at the top end who score a 9 or 10, these are the promoters and they are vital to your business. Obviously businesses need to increase the number of promoters of their business.

How to calculate your Net Promoter Score
The net promoters score is calculated very simply; you take the percentage of detractors away from the percentage of promoters and you get your net promoters score. So you are actually measuring your customer’s satisfaction by using just one number. That number is easily calculated at very little expense. You can carry out NPS surveys continuously or periodically and watch the number increase as you carry out customer satisfaction improvements in the business.

How to measure customer satisfaction more effectively

Other advantages of the NPS
Another advantage of the NPS is that it is fast becoming an industry standard score so you can measure yourself against other companies in your industry. Apple computers, for example, have a high score at 67{aa1e4c34c9c0f46e0a1f04e30c2eb1b9efaea7a47ed6ca6f324476e114da37f4}. Compare that to Sony who have an NPS of around 30{aa1e4c34c9c0f46e0a1f04e30c2eb1b9efaea7a47ed6ca6f324476e114da37f4} in computer hardware. So you can begin to benchmark yourself against other similar companies. So the NPS is very simple, inexpensive and easy to analyse but very effective in giving you one single score regarding the level of customer satisfaction.

Why is it unhelpful to analyse customer complaints?
For two reasons; one is because it’s too late in the process. You’re dealing with an event after it has occurred. Secondly the people who are gathering the information on customer complaints will sometimes supress information, and what is regarded as a customer complaint can become subject to a lot of debate, that is whether it’s a genuine complaint or not. You can end up with a lot of messy data that you can’t trust. And besides, most customers don’t complain anyway, they simply go away, they vote with their feet.

Take for example a restaurant. You get a customer complaint. That customer is seen as the problem in some peoples’ eyes. You could be serving bad food all night and no one will say anything, but they won’t come back to your restaurant again. If someone complains they are seen as awkward or disruptive, and if the boss doesn’t welcome complaints and he comes down hard on the staff, then they won’t tell him about complaints.

How to measure customer satisfaction more effectively

Customer complaints – an opportunity for improvement
People look at a reduction of customer complaints as progress, but I always get suspicious of that. I think an increase in customer complaints is progress, because it means staff are engaging more with customers. People often feel uncomfortable about customer complaints when they should welcome it, because it gives the business an opportunity to find out where they’re going wrong. Customer complaints can be an opportunity for improvement.

However, in some sectors like the hotel industry for example, companies can often become overwhelmed by the volume of survey data. There can be information overload from customer feedback. And if the senior managers, or the owner, sits on that information and doesn’t share it with the rest of the staff then they don’t know what’s going on. They can’t figure out what actions to take.

Set Clear Objectives and Measure Performance
The NPS cuts through all that and identifies where the business is now and where you want to be; it’s a clear starting point. Once that score is established you can then decide what you are going to do to improve it. With a clear set of objectives and a new set of KPIs centred on actions and accountability, you can measure performance and see if you’re objectives are helping to increase your NPS.

In interview with Des Kirby

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Visual strategic management is driving company success

Visual strategic management is driving company success

Visual mapping strategies are at the heart of the business model known as futureSME, a methodology that extracts the best practices and disciplines in strategic management used by successful companies, and applies them to small and medium enterprises. LEAP is the licenced provider of futureSME in Ireland. Here LEAP’s managing director Mike Gaffney reveals why this model is working for business owners.

What is the Management Team Programme?
The Management Team Programme is a government supported business development programme as part of the Action Plan for Jobs, funded through ManagementWorks, to allow companies to focus on both implementing their strategy and developing their management team simultaneously.

Who is the programme for?
It’s for management teams, including the managing director, and as many of the managers that are critical to the decision-making process in the organisation should participate in the programme.

What areas of training and development does the programme focus on?
It focuses on helping companies build the business through a clear strategy, and also to ensure that operationally, the company is being run as a tight ship.

What are the methods used on the programme?
LEAP has been on the go for 14 years and our biggest challenge is finding the methodologies and developing disciplines that companies can work with long after LEAP have moved on. We use visual strategies and visual management tools that are at the cutting edge of strategy development, not just in the multinational sector, but in any sized business that wants to be highly successful and effective.

It’s well documented that we remember 10{aa1e4c34c9c0f46e0a1f04e30c2eb1b9efaea7a47ed6ca6f324476e114da37f4} of what we write. We remember 50{aa1e4c34c9c0f46e0a1f04e30c2eb1b9efaea7a47ed6ca6f324476e114da37f4} of what we see. However, we remember 90{aa1e4c34c9c0f46e0a1f04e30c2eb1b9efaea7a47ed6ca6f324476e114da37f4} of what we interact with. So the use of a visual strategy by key team members who interact, develop and validate the content of that strategy, is 9 times more effective than the normal approach to developing business plans.

Also the extended team in the organisation can clearly see through visual representation, where the business is going and where each of them is having a direct impact in developing the business.

Why should a business consider doing the Management Team Programme?
The simple answer is: “because it works.” Irish businesses are poor at thinking and acting strategically. Whatever chance they have of creating a strategic plan, their execution of it is very poor. The Management Team Programme takes away any requirement to have the expertise in-house in strategic thinking and strategic execution. FutureSME is a visual methodology that if applied, will change the functioning of your organisation, improving it incrementally on a continuous basis.

What feedback have you gotten from participants on the Management Team Programme?
The message is keep going. Keep engaging with our company and doing what you’re doing because it’s working. This programme would normally cost €7200, but with the governments support through the Action Plan for Jobs under ManagementWorks, the cost per participating company is €3500. That’s all in, for as many members of the management team as they require to attend the programme. It’s run in-house and it’s sharp and snappy: 6 workshops, typically delivered over a 12 week period.

Interview by Des Kirby

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How does futureSME come alive in a business?

LEAP’s Tricia Cunningham explains the advantages for small and mediumTricia Cunningham
enterprises (SME)
participating in development programmes using the futureSME methodology. This business framework was the result of an €8 million EU research project that was successfully carried out by the University of Strathclyde and tried and tested on SMEs across Europe.

Tricia, how does futureSME come alive in a business?
One of the critical tools that we explore in the programme workshops is ‘thinking as one brain.’ We try to get the leaders and managers to understand what they need to put in place to ensure the team are in sync, and implement this in the workplace. So the teams work through how they can develop the team to think as one brain, and understand what the guidelines are for managing team meetings effectively.  That way they can work through information quickly, succinctly and cohesively.

Meetings become productive and employees walk away from the meetings with a clear understanding of what has been discussed, what has been decided, and they are clear about any actions that need to be taken.

We also explore any issues of dissent; when you are trying to implement the visual strategy there are times when the team will encounter road blocks i.e. challenges that have to be overcome. We explore what you can do to ensure that those obstacles can be overcome.  

Implementation is Critical
Many times in the SME sector you are working with small teams because there aren’t that many layers in the organisation. You have the business owner and key employees as opposed to a team of managers. But it’s still vitally important that these key people make it happen.

So the leader and the key people have to decide how they are going to work effectively together, to ensure the visual strategy comes alive and achieves the desired results. Having the visual strategy alone will not ensure success. Having the visual strategy, and working together as one brain, will ensure that you make progress in achieving your business goals.

How many workshops are on the programme?
There are 6 workshops on the programme; the first 4 are focused on developing the visual strategy, and also examining the leader’s role to ensure he/she is functioning properly as a leader in their business. Then we look at the roles of the rest of the team in terms of implementation. So the first half of the programme develops the visual strategy; the second half looks at getting the team on board and moving them along that strategy.

Is there any support system on the programme for participating companies?
Mentoring is an important element on the programme, so at the start of the programme we do a capability diagnostic to assess where the business is today, and that’s completed with the mentor. There are 6 mentoring sessions in total.

On the Business Leadership Programme  they are 6 mentoring sessions for each business owner, and on the Management Team Development Programme there are team mentoring sessions.  So you might have three people from one business and they will have one mentoring session after each workshop.

Why would you recommend this programme over others Tricia?
It’s based on intensive research on large successful corporations by the EU Framework 7 project . These programmes have been proven to work, they’ve been validated. They have been used by large organisations to succeed, and they have been translated in a way that is workable and practical in an SME environment.

It’s also different from other programmes because it comes with qualified mentors. They fully understand the futureSME process, they understand small and medium businesses, and they know what it’s like for a leader trying to transform their business.

They work closely with the participating companies. So you have that individual element in the workshops where people can exchange ideas, share their understanding, and then the individual can apply what they learn to their own company. That’s what makes the difference, and that’s what makes it so successful.

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Interviewed by Des Kirby
Are the issues mentioned by Tricia currently affecting your management teams? Feel free to share your thoughts in the comment box below.

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Management Matters

ManagementWorks Programmes 2014

The latest Management Matters! newsletter from ManagementWorks outlines a range of subsidised, tailored programmes which are supported by professional business mentors:

  • Building Financial Capabilities in SMEs
  • Business Growth
  • Business Leadership
  • Lean Business
  • Management Team Development
  • Postgraduate IMI Diploma in Management
  • Postgraduate IMI Diploma in Strategy and Innovation

futureSME business modelLEAP deliver the Management Team Development Programme to help business owners and managers create a shared vision of success for the company, and embed disciplines across the team.

To learn more about these dynamic programmes, their providers and how they can benefit your company, click the following link.

 

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International Best Practice to support Irish SME success

   New subsidised Business Management programme to transform Irish SMEs 

The heartbeat of the Irish economy relies on the success of the indigenous SME sector. While the focus in recent years has been on ensuring businesses remain viable, there is a need to shift focus on growth. A new practical and impactful business management programme being delivered by LEAP, a Galway-based training and coaching organisation, uses the best practices and tools from the most successful international companies and demonstrates how these can be applied to any business, regardless of size or sector.

The Business Leadership Programme, which is heavily subsidised by ManagementWorks, a Skillnets initiative, commences in Shannon on 18th February and is open for sign-ups. Spaces on the programme are limited so anyone interested in growing their business in 2014 is urged to register.

The programme utilises futureSME methodology, a transformational business strategy that has been developed over a four-year period through an EU Framework 7 Project. FutureSME focuses on the key management capabilities that are essential in driving a business forward and applies them to any organisation. The programme is fully accredited and exclusively delivered in Ireland by LEAP.

Mike Gaffney MD at LEAP
Mike Gaffney MD at LEAP

“Over the six-month period, we work with organisations through a combination of in-house mentoring with facilitated group workshops. The programme aims to transform the entire business, on every level. Using this innovative methodology we will work to build and implement a visual strategy and provide the support necessary for its development and completion. We also review the progress, ensuring its success.”

Speaking about its involvement in the programme, Brian Colleran of ManagementWorks said: “This is a fantastic business leadership programme that should be of huge interest to SMEs operating in very competitive markets. Given it is heavily subsidised and supported by the Government’s Action Plan for Jobs, we are expecting a lot of interest”.

Business owners and managers interested in the Business Leadership Programme in Shannon or futureSME, should contact Sonja Stevens at LEAP by calling 091-755736 or emailing Sonja@leapleadership.ie.  

For more information on ManagementWorks Programmes visit www.managementworks.ie