Are your customers up for grabs?

Keeping customers happy is the key to survival in today's competitive telecommunications industry. But first, a company has to know what makes them happy.

Most companies have an idea about what should make their customers happy-an array of dazzling new services, exciting incentives and rebates, and savings plans that never stop turning pennies into dollars.

But are these the things that really make customers happy? Two recent surveys paint a picture of the typical telecommunications customer that's quite at odds with much of the industry's marketing strategies.

A survey of 500 residential customers conducted by C/J Research (Telephony, March 18, page 38), found that most customers are satisfied with their current service and dislike pressure to switch carriers. Yet customers said they'd seriously consider changing if they could get all their bills and troubleshooting from a single source.

Similarly, a recent TeleSight survey of 1000 cable TV customers found that customers place a high premium on hassle-free quality service. The survey found that the top customer priorities were: receiving a clear picture, being charged only for programs they wanted, experiencing little or no service disruption, getting quick response to disruptions, and receiving accurate and understandable bills (Table 1). Far less important were the quality of the programming and the availability of pay-per-view.

The message of these surveys to telecommunications management is blunt: Find out what customers value most because it might be very different from what the carrier is promoting. Instead of spending millions on dazzling new services, it might make more sense to spend a more modest amount to ensure that customers don't get a busy signal when they call the service department.

When it comes to losing touch with the human element, telecommunications companies are especially at risk. After all, they've invested billions to create systems that require a minimum amount of human intervention.

For example, telephone companies have conventionally used outage time as a measure of customer satisfaction. Such measurements provide useful data, but to maximize their value, management must know how important outage time is to customers, how high it ranks on their list of concerns and how customers compare outage time with other concerns.

To provide quicker response to customer telephone calls, many service providers have installed equipment to measure the length of busy signals and the time customers attempting to reach the service department are left on hold. Using this equipment to monitor performance, companies can set and maintain tolerance standards.

To be valid, however, such standards must reflect the customers' perceptions. A company may think leaving customers on hold for 60 seconds is reasonable, but if the customers' patience wears thin after 30 seconds, then the company has to shoot for a 30-second limit.

Sometimes customers can be far more reasonable than a company realizes. One such company, which manufactures electrical components for telecommunications and other industries, had created a multimillion-dollar incentive program for its nationwide network of distributors and was ready to roll. As an afterthought, the company's management decided it might make sense to ask the distributors how happy they were with the current product.

A survey found that distributors were highly satisfied-far more satisfied than management ever imagined. The only complaint was slow service by the order department. An 800 number and an equipment upgrade solved the problem. The company scrapped the incentive program and added the savings to its profits.

Gauging satisfaction How do you find out what makes customers happy and, conversely, what bugs them? Most companies already have a general idea of what's on their customers' minds from customer service calls and complaints. But service calls and complaints aren't enough. They don't give management the precise numbers it needs to develop a strategy and set priorities.

It isn't enough, for instance, to know that customers would like faster restoration of service after disruptions. Management has to know what level of reliability will satisfy the most customers for the dollars invested. It also has to consider whether other investments will have an even greater effect on customer satisfaction and balance the budget accordingly.

Here are six basic steps that can get a company started on this process.

Learn what's important. Thinking you have a sense of what's on customers' minds isn't enough. Companies have to test these pre- conceptions. A quick way to do this is to prepare a list of 20 or 30 things that customers seem to consider highly important and then call a random sample of customers to see how much importance they actually assign to the items on the list.

During the calls, interviewers can also ask the customers to rate the company's performance. With these findings and its own sense of priorities, management typically can narrow the list down to between seven and 10 important items. These become the basis for a customer satisfaction survey.

Get it verbatim. Conducting customer satisfaction surveys by phone typically gets close to a 100% response from the sample called, and it also gets findings that are statistically reliable. By contrast, mail surveys typically get about a 20% response, mostly customers who either love or hate the company. For speed and reliability, phone surveys win hands down.

To get the maximum benefit, companies have to ensure that the interviewers are trained to ask probing questions and to report customer concerns in detail- preferably, in the customer's own words. An added benefit of this verbatim interview process is insight into opportunities for service recovery.

When customers give a company an opportunity to rectify a bad service, the company should seize it. The chances that arise in the course of a survey for making a heroic service recovery may not seem to amount to much, but they provide the anecdotes and "war stories" that show how seriously the company takes its customer commitment.

Discover what customers value most. Before management can set its own priorities, it has to learn its customers' priorities. Knowing that being on time for service appointments is important isn't specific enough. Management has to know how customers rank that in comparison with such things as prompt and courteous customer service, knowledgeable service people, accurate billing and good value for their money.

When TeleSight surveyed CATV customers, many people thought the findings would reveal important directions for product enhancement. What the survey actually revealed was that the CATV providers in the cities surveyed had serious problems with their core business. The customers wanted a clear picture and minimal disruptions. They had little or no interest in enhanced features or new products.

See how well you satisfy. One goal of a satisfaction survey is to provide management with accurate data on how satisfied customers are with particular services. But coming up with useful numbers is just a first step.

Whenever customers express a degree of concern or dissatisfaction, interviewers must keep probing until they can describe the problem and perhaps point to a solution. This is not aimless probing but rather a carefully calculated system for arriving at a predetermined level of detail.

For instance, if customers cite contacting the service department as a source of frustration, the interviewer must learn the specifics: if they're getting busy signals, being left on hold, being switched from person to person or being otherwise stymied in their efforts to get help.

This process also turns up unexpected glitches such as service reps who continually irritate customers by underestimating the time services will take. Once identified, such glitches can quickly be corrected.

Find and measure the gaps. If a discrepancy exists between the impor- tance customers place on a service and their satisfaction with the way the company is providing that service, that discrepancy creates a "gap" through which competitors can steal customers. The larger the gap, the more opportunity for the competition.

Narrow the gaps. Once a company has identified and measured the gaps in its performance, it can start making the specific improvements that customers have said are the most important to them.

To get the best value, the company can focus on improvements that will cause the greatest increase in customer satisfaction for each dollar invested.

In TeleSight's CATV survey, customers ranked providing a clear picture and charging only for the programs they wanted as most important. Yet when concerns were ranked by the size of the customer/satisfaction gap, "providing a clear picture" and "charging only for programs they wanted" slipped to fifth and sixth place.

The areas of greatest dissatisfaction turned out to be the frequency of disruptions and the speed with which they were corrected, the value customers were getting for their money, and difficulties in dealing with the service department (Figure 1). A CATV company that simply targeted its budget toward the items of greatest importance to customers would be misdirecting its efforts and failing to recognize and close the most serious gaps in its service.

The rewards What if a telecommunications company has been polling its customers for years and has found that more than 90% are satisfied with the service they are receiving? The company's management should take those findings with a grain of salt.

Researchers have found that companies with monopolies or quasi- monopolies tend to get significantly higher customer satisfaction scores than companies in competitive businesses. But once the monopoly franchise goes away, the high customer satisfaction scores quickly drop to the level of other competitive businesses.

A study by Xerox found that customers who are merely "satisfied" aren't particularly loyal and are easily lured away by competitors. But "completely satisfied" customers are fiercely loyal and serve as advocates for the company. These findings have been verified by subsequent studies of a number of competitive industries. The more competitive the industry, the more important it is to convert "satisfied" customers into "completely satisfied" customers.

Turning ordinary customers into "completely satisfied" customers doesn't necessarily involve an enormous investment. To a great extent, it's a matter of identifying the glitches that keep customers from being totally satisfied and eliminating them.

This is the opposite of flying by the seat of your pants-it's flying with your customer as your co-pilot and navigator.

Cliff Knowles is President of TeleSight, Chicago.