Beyond the ultimate question a systematic approach to improve customer loyalty

Beyond the Ultimate Question H1371_Hayes.indd i 7/2/09 1:37:37 PM Also available from ASQ Quality Press: Measuring Customer Satisfaction and Loyalty: Survey Design, Use, and Statistical Analysis Methods, Third Edition Bob E Hayes Managing the Customer Experience: A Measurement-Based Approach Morris Wilburn Customer Satisfaction Research Management Derek Allen Competing for Customers and Winning with Value: Breakthrough Strategies for Market Dominance R Eric Reidenbach and Reginald W Goeke Analysis of Customer Satisfaction Data Derek Allen and Tanniru R Rao Six Sigma Marketing: From Cutting Costs to Growing Market Share R Eric Reidenbach ANSI/ISO/ASQ Q10002-2004: Quality management—Customer satisfaction—Guidelines for complaints handling in organizations ANSI/ISO/ASQ The Certified Manager of Quality/Organizational Excellence Handbook, Third Edition Russell T Westcott, editor The Quality Toolbox, Second Edition Nancy R Tague Making Change Work: Practical Tools for Overcoming Human Resistance to Change Brien Palmer Innovation Generation: Creating an Innovation Process and an Innovative Culture Peter Merrill To request a complimentary catalog of ASQ Quality Press publications, call 800-248-1946, or visit our Web site at www.asq.org/quality-press H1371_Hayes.indd ii 7/2/09 1:37:38 PM Beyond the Ultimate Question A Systematic Approach to Improve Customer Loyalty Bob E Hayes ASQ Quality Press Milwaukee, Wisconsin H1371_Hayes.indd iii 7/2/09 1:37:38 PM American Society for Quality, Quality Press, Milwaukee 53203 © 2010 by Bob E Hayes All rights reserved Published 2009 Printed in the United States of America 15 14 13 12 11 10 09 Library of Congress Cataloging-in-Publication Data Hayes, Bob E., 1963– Beyond the ultimate question : a systematic approach to improve customer loyalty / Bob E Hayes p cm Includes bibliographical references and index ISBN 978-0-87389-772-3 (alk paper) Customer loyalty Consumer satisfaction Customer services I Title HF5415.525.H39 2009 658.8’343—dc22 2009023442 No part of this book may be reproduced in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher Publisher: William A Tony Acquisitions Editor: Matt Meinholz Project Editor: Paul O’Mara Production Administrator: Randall Benson ASQ Mission: The American Society for Quality advances individual, organizational, and community excellence worldwide through learning, quality improvement, and knowledge exchange Attention Bookstores, Wholesalers, Schools, and Corporations: ASQ Quality Press books, videotapes, audiotapes, and software are available at quantity discounts with bulk purchases for business, educational, or instructional use For information, please contact ASQ Quality Press at 800-248-1946, or write to ASQ Quality Press, P.O Box 3005, Milwaukee, WI 53201-3005 To place orders or to request a free copy of the ASQ Quality Press Publications Catalog, including ASQ membership information, call 800-248-1946 Visit our Web site at www.asq.org or http://www.asq.org/quality-press Printed on acid-free paper H1371_Hayes.indd iv 7/2/09 1:37:38 PM As always, this book is dedicated to my daughter, Marissa You have grown into a great person with decent values and a sense of fun that is matched only by your sense of responsibility You bring me joy beyond what words can express You will probably never know how much your loving, supportive words mean to me, but I hope you know that I will always be here for you H1371_Hayes.indd v 7/2/09 1:37:39 PM H1371_Hayes.indd vi 7/2/09 1:37:39 PM Contents List of Figures and Tables xvii Preface xxv PART I Chapter INTRODUCTION TO CUSTOMER FEEDBACK PROGRAMS Beyond the Ultimate Question, and Measurement and Meaning of Customer Loyalty The Myth about the NPS as the Ultimate Question Potential Loss of Revenue When Using the NPS: An Example Objective Measures of Customer Loyalty and Financial Growth Customer Loyalty Surveys Measurement of Customer Loyalty Objective vs Subjective Measures of Loyalty and Measurement Error What Loyalty Questions Are Measuring: A Factor Analytic View NPS vs Satisfaction vs Purchase Same 10 11 11 12 14 15 vii H1371_Hayes.indd vii 7/2/09 1:37:39 PM viii Contents Single-Item Measures or Aggregated Metrics Customer Loyalty 2.0 and Beyond the Ultimate Question Customer Loyalty Management Development of the Advocacy, Purchasing, and Retention Loyalty Indices Advocacy, Purchasing, and Retention Loyalty Descriptive Statistics, Correlations, and Reliabilities of Loyalty Indices Impact of Customer Experience on Customer Loyalty Differs across Components of Customer Loyalty Customer Loyalty and Amount of Spend Ranking Companies on Loyalty ALI, PLI, and RLI Predict Business Growth Specificity vs Generality of Measurement Hayes Loyalty Grid Summary Chapter H1371_Hayes.indd viii The Structure of Customer Feedback Programs Elements of CFPs Model of CFPs Strategy/Governance Integrated Business Processes Method Reporting Research Summary 15 16 16 21 27 28 29 30 31 32 36 39 41 43 43 43 45 49 50 51 52 56 7/2/09 1:37:39 PM Contents Chapter PART II Chapter Chapter H1371_Hayes.indd ix ix Customer Feedback Programs and Best Practices Study Best Practices Best Practices Survey Survey Results Typical CFPs Identifying CFP Best Practices 59 59 60 62 65 70 BEST PRACTICES OF CUSTOMER FEEDBACK PROGRAMS— MANAGEMENT PROCESSES 73 Strategy and Corporate Governance Adoption Rates for Strategy/GovernanceRelated Business Practices Strategy/Governance-Related CFP Business Practices that Impact Customer Loyalty and Satisfaction with the CFP Strategy and Governance Drive a Customer-Centric Culture Building a Customer-Centric Culture: An Example Incentive Programs Customer Loyalty and Goal Setting Example of Incentive Compensation Program for Professional Technical Support Summary Business Process Integration Adoption Rates for Process-Related Business Practices 75 75 77 80 81 83 85 91 96 99 99 7/2/09 1:37:39 PM x Contents Process-Related CFP Business Practices that Impact Customer Loyalty and Satisfaction with the CFP Customer Feedback in Executive Dashboards CRM and CFPs Communication of CFP Process and Goals Summary PART III Chapter H1371_Hayes.indd x BEST PRACTICES OF CUSTOMER FEEDBACK PROGRAMS— OPERATIONAL PROCESSES Survey Method Adoption Rates for Method-Related Business Practices Method-Related CFP Business Practices that Impact Customer Loyalty and Satisfaction with the CFP Multiple Survey Methods Web-Based Customer Surveys Measuring Customer Loyalty What Do Customer Feedback Professionals Think about the NPS? Surveys and Customer Loyalty Standardized Loyalty Questions Customer Surveys and Customer Loyalty Reliability of Loyalty Indices Single-Item Measures or Aggregated Metrics Customer Loyalty Questions for Monopolies Web-Based Surveys 100 103 104 109 110 113 115 115 117 120 121 123 124 126 127 127 129 129 130 132 7/2/09 1:37:39 PM 384 Bibliography Dillman, D A., R D Tortora, and D Bowker 1998 “Principles for Constructing Web Surveys.” http://survey.sesrc.wsu.edu/dillman/ papers/websurveyppr.pdf (accessed February 14, 2008) Edwards, A L., and K C Kenny 1946 “A Comparison of the Thurstone and Likert Techniques to Attitude Scale Construction.” Journal of Applied Psychology 30:72–83 Fishbein, M 1967 Readings in Attitude Theory and Measurement New York: John Wiley & Sons Fornell, C., S Mithas, F V Morgensen, and M S Krishan 2006 “Customer Satisfaction and Stock Prices: High Returns, Low Risk Journal of Marketing 70 (January): 1–14 Gruca, T S., and L L Rego 2005 “Customer Satisfaction, Cash Flow, and Shareholder Value.” Journal of Marketing 69 (July): 115–130 Gupta, S., D Hanssens, B Hardie, W Khan, V Kumar, N Lin, N Ravishanker, and S Sriram 2006 “Modeling Customer Lifetime Value.” Journal of Service Research (2): 139–155 Hayes, B E 2008a “Customer Loyalty 2.0: The Net Promoter Score Debate and the Meaning of Customer Loyalty.” Quirk’s Marketing Research Review, October, 54–62 ——— 2008b Measuring Customer Satisfaction and Loyalty: Survey Design, Use and Statistical Analysis Methods 3rd ed Milwaukee, WI: ASQ Quality Press ——— 2008c “The True Test of Loyalty.” ASQ Quality Progress, June, 20–26 Heskett, J L., W E Sasser, and L A Schlesinger 1997 The Service Profit Chain New York: The Free Press Keiningham, T L., B Cooil, T W Andreassen, and L Aksoy 2007 “A Longitudinal Examination of Net Promoter and Firm Revenue Growth.” Journal of Marketing 71 (July): 39–51 Kerlinger, F N 1973 Foundations of Behavioral Research 2nd ed New York: Holt, Rinehart, and Winston Likert, R A 1932 “A Technique for the Measurement of Attitudes.” Archives of Psychology 140:1–55 Lissitz, R W., and S B Green 1975 “Effect of the Number of Scale Points on Reliability: A Monte Carlo Approach.” Journal of Applied Psychology 60:10–13 Morgan, N A., and L L Rego 2006 “The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Business Performance.” Marketing Science 25 (5): 426–439 H1371_Hayes_BIB.indd 384 7/2/09 1:04:49 PM Bibliography 385 Net Promoter 2007 http://www.netpromoter.com Nunnally, J M 1978 Psychometric Theory 2nd ed New York: McGraw-Hill Reckase, M D 1990 Scaling Techniques Handbook of Psychological Assessment New York: Pergamon Press Reichheld, F F 2003 “The One Number You Need to Grow.” Harvard Business Review 81 (December): 46–54 ——— 2006 The Ultimate Question: Driving Good Profits and True Growth Boston: Harvard Business School Press Reichheld, F F., and W E Sasser 1990 “Zero Defections: Quality Comes to Service.” Harvard Business Review, 68 (September– October): 105–111 Reinartz, W., M Krafft, and W Hoyer 2004 “The Customer Relationship Management Process: Its Measurement and Impact on Performance.” Journal of Marketing Research 41:293–305 Thurstone, L L 1929 “Theory of Attitude Measurement.” Psychological Bulletin 36:224–241 H1371_Hayes_BIB.indd 385 7/2/09 1:04:49 PM H1371_Hayes_BIB.indd 386 7/2/09 1:04:49 PM Index Page numbers followed by f or t refer to figures or tables, respectively Akamai Technologies, Inc., 247–261 business areas covered in customer surveys at, 255t business process integration at, 251–253 communication of customer feedback at, 251, 252 Customer Champion Award at, 250–251 customer feedback program at, 248–251 “customer first” initiative at, 249, 250f Customer Leadership Council at, 250 customer loyalty questions employed at, 256 customer research at, 260–261 customer surveys at, 248 pillars of success at, 247–248, 248f reliability and validity of survey process at, 256–257 reporting structure for customer feedback results at, 257–260 sample questions for business areas in customer surveys at, 255t strategy and governance at, 249–251 types of customer surveys used at, 253–257 A abscissa (X axis), 164, 322 actual factor analysis, 376–377 Adams, Craig, 252, 256 adoption rates of CFP business practices, 99–100 for customer feedback programs, 99–100 for method-related CFP business practices, 115–117, 116f for reporting-related business practices, 151–153, 152t for research-related business practices, 181–183, 182f for strategy/governance-related business practices, 75–77 advocacy loyalty, 21, 27–28, 38, 130–131 See also purchasing loyalty; retention loyalty driver analysis of, 165f impact of customer experience on, 29–30 Advocacy Loyalty Index (ALI), 28–29, 128 as predictor of business growth, 32–36 aggregated metrics, 129–130 387 H1371_Hayes_IND.indd 387 7/2/09 1:03:39 PM 388 Index ALI See Advocacy Loyalty Index (ALI) alternative hypothesis (HA), 343, 344f American Express Business Travel, 204–205 analysis of variance (ANOVA), 172, 192, 355 calculating, 356–358 example of, 358–362 testing, 357 ANOVA See analysis of variance (ANOVA) applied research See also research examples of, 186, 204–207 forms of, 53–54 at Oracle, 233–238 questions addressed by, 55–56 regularly conducted, 185–187 automobile industry, critical incidents for, 280, 281f B backward elimination method, 369–370 banking industry, critical incidents for, 278–280, 279f bell-shaped distributions, 324 benchmarking, 171–172 best practices, CFP, 59–60 See also customer feedback programs (CFPs) identifying, 70–71 summary of method-based, 150t summary of process-related, 110–111, 111t summary of reporting-related, 177t summary of research-related, 208t summary of strategy/governancerelated, 97f best practice surveys, 60–62 results of, 62–65 business growth, customer loyalty and, 41–42 business growth, loyalty indices as predictors of, 32–36 H1371_Hayes_IND.indd 388 business intelligence (BI), 52 business models, customer-centric, 3–4, 4f C CEM See customer experience management (CEM) central tendency, measures of, 170, 170t, 329–330 CFP See customer feedback programs (CFPs) checklist formats, 292–293 example questionnaire using, 293f class intervals, 321 CLI See Customer Loyalty Index (CLI) CLV See customer lifetime value (CLV) confirmatory factor analysis, 375 constituency attitudes, linking customer feedback data to, 203 construct-related validity, 192–193 constructs, 13, 13f content-related validity, 191–192 correlations, item-total, 299–300 criterion-related validity, 192 critical incidents for automobile industry, 280, 281f for banking industry, 278–280, 279f categorizing, 274–277, 276f defined, 272–273 generating, 273–274 interviews for, 273–274 for statistical support department, 282–283f critical incidents approach, 137–138, 271–276 CRM See customer relationship management (CRM) Cronbach’s alpha estimate, 191 CSI See Customer Satisfaction Index (CSI) customer-centric business models, 3–4, 4f 7/2/09 1:03:39 PM Index 389 customer-centric culture building, example of, 81–82 strategy/governance-related best practices and, 80–81 customer-centric operational metrics, 198–199 customer experience, impact of, on customer loyalty, 29–30 customer experience management (CEM), customer relationship management and, 311–312 customer feedback external distribution of results of, 174–175 incorporating, into executive dashboards, 103–104 internal distribution of results of, 173–174 segmenting, 203–204 Web-based reporting tools for results of, 175–176 customer feedback data linking, to operational metrics, 196–199 linking constituency attitudes to, 203 understanding, 156–158 customer feedback metrics, linking financial metrics and, 195–196 customer feedback programs (CFPs), 4–5, 42, 100f See also Akamai Technologies, Inc.; best practices, CFP; Oracle Corporation adoption rates for, 99–100 communicating process and goals of, 109–110 company satisfaction with, 77–79 customer relationship management and, 104–108 data collection methods for, 50–51 elements of, 43, 44f governance of, 46–48 for improving customer loyalty, 20–21 incentive programs and, 83–85 H1371_Hayes_IND.indd 389 model of, 43–45 operational steps of, 178f reporting results and, 51–52 research and, 52–56 satisfaction and loyalty research and, 52–56 strategy and corporate governance of, 75 typical, 65–70 customer feedback vendors, customer issues, resolving, 105–108 customer life cycle, 19, 19f customer lifetime value (CLV) defined, 17 elements of, 17–18 methods for increasing, 18–21 customer loyalty See also advocacy loyalty; loyalty; purchasing loyalty; retention loyalty amount of spending and, 30–31 business and growth and, 41–42 commonly used questions for, 14–15 components of, 41 customer feedback collection methods and, 214 customer feedback programs for improving, 20–21 customer surveys and, 127–128, 311 financial performance and, 193–194, 309–310 goal setting and, 85–91 impact of customer experience on, 29–30 impact of method-related CFP business practices on, 117–120, 118f impact of process-related CFP business practices on, 100–102 impact of reporting-related business practices on, 153–156, 154t, 184f impact of research-related CFP business practices on, 183–185 7/2/09 1:03:39 PM 390 Index customer loyalty (continued ) impact of strategy/governancerelated CFP business practices on, 77–79 improvements in data collection and, 16 maximizing, 157 measurement error and, 13 measurement of, 11–12, 309–311 measuring, 123–124 objective measures of, 10 objective vs subjective measures of, 12–13 process-related roadblocks to, 212–213 questions for, 310 questions on, for monopolies, 130–132 reporting process roadblocks to, 213 roadblocks to increasing, 209–210, 210–211t standardized questions for, 127, 311 strategy/governance-related roadblocks to, 212 surveys and, 126–127 surveys of, 11 Customer Loyalty Index (CLI), 92–96 customer loyalty management, 16–21 defined, 17 developing measures for, 21–27 macro approach to, 160–163, 162t, 163t micro approach to, 158–160, 161t, 162, 163t studies of reliability of surveys measuring components of, 21–27 customer loyalty scores, 197 customer relationship management (CRM), customer experience management and, 311–312 incorporating CFP into, 104–108 at Oracle, 232 customer relationships, improving, H1371_Hayes_IND.indd 390 customer requirements comprehensiveness of, 277–278 critical incident approach for, 271–276 determining, 265–285 procedures for developing, 284–285f quality dimension development approach for, 266–271 customers distribution results of customer feedback to, 174 using existing customer information to segment, 203–204 customer satisfaction impact of method-related CFP business practices on, 117–120, 119f impact of process-related CFP business practices on, 100–103 impact of reporting-related business practices on, 153–156, 155t, 185f impact of research-related CFP business practices on, 183–185 measurement scales in, 316 tracking, over time, 172 Customer Satisfaction Index (CSI), 92–96 customer satisfaction questionnaires characteristics of good questions or items for, 290–292 determining questions or items for, 287–290 example of hospital, 316, 317f guidelines for developing, 305f introductions to, 296–298 item selection for, 298–304 response formats for, 290–296 customer survey program validation, 187–188 procedure for, 188–193 customer surveys, customer loyalty and, 127–128, 311 See also surveys 7/2/09 1:03:39 PM Index 391 D Dasteel, Jeb, 200, 220, 226, 230 data, summarizing of, 169–171, 172t decision making in hypothesis testing, 342–344 process of, 342 reality and, 341–342 declarative statements, for quality dimensions, 267–268, 269f degree of fit, determining, 365–366 derived importance, defined, 163 descriptive statistics, 28–29, 170–171, 329–334 distribution of scores, 324 distributions, 324 determining probabilities from, 324–326 Doyle, Doug, 187 drivers hidden, 166 key, 165–166 visible, 167–169 weak, 166–167 E Ekins-Parnell, Stephanie, 80–81, 103 e-mail invitations, for Web-based surveys, 139–145, 141f sample of, 306f e-mails, trigger, 159–160 employee groups, distributing customer feedback results to, 173–174 errors measurement, customer loyalty and, 13 Type I, 342, 342f Type II, 342, 342f executive dashboards incorporating customer feedback into, 103–104 F face-to-face surveys, 122 factor analysis, 22–23, 302, 373–375 example of, 377–379 H1371_Hayes_IND.indd 391 exploratory and confirmatory uses of, 375 hypothetical, 375–376 principle, 376 factor loadings, 23 factor pattern matrix, 375, 376f feedback See customer feedback financial growth, objective measures of, 10 financial metrics, linking customer feedback metrics and, 195–196 financial performance, customer loyalty and, 193–194, 309–310 forward selection method, 369 frequencies, 319–320, 321t, 325–326f frequency distributions, 169, 170t, 322–323 F value, 357 G Global Relationship Survey (Oracle), 228–230, 231, 232, 239–241 goals characteristics of, 85–88 setting appropriate, 89–91 goal setting customer loyalty and, 85–91 performance and, 197–198 tenets of, 199 Godwin, Cliff, 222 governance, of customer feedback programs, 46–48 growth business, customer loyalty and, 41–42 loyalty indices as predictors of, 32–36 H Harris Stratex Networks, 80–81, 103 Hayes Loyalty Grid, 39–40 for PC industry, 39–40, 39f for wireless industry, 40, 40f Henley, Jeff, 221 hidden drivers, 166 7/2/09 1:03:39 PM 392 Index histograms, 169, 170t, 322–323, 323f, 326f hyperlinks, for Web-based surveys, 304, 307f hypothesis testing, 342–347 steps in, 346–347, 347f hypothetical factor analysis, 375–376 I incentive compensation program, example of, 91–96 incentive programs customer feedback programs and, 83–85 structure of, 92–93 integrated business procedures, 49–50 inter-contact reliability, 190 internal consistency reliability, 191 interval scales, 315 interviews, for generating critical incidents, 273–274 introductions, to customer satisfaction questionnaires, 296–298 invitations, for Web-based surveys, 139–145, 141f sample of, 306f item selection for customer satisfaction questionnaires, 298–304 judgmental, 298–299 mathematical, 299–303 item-total correlations, 299–300 J judgmental item selection, 298–299 K key drivers, 165–166 L Likert-type formats, 293–294 advantages of, 294–295 example questionnaire using, 294f, 295f, 297f linkage analysis, conducting, 194–196 H1371_Hayes_IND.indd 392 loyalty See also customer loyalty advocacy, 21, 27–28, 130–131 operative, 130–131 purchasing, 21, 27–28 ranking companies on, 31–32 retention, 21, 27–28 loyalty and satisfaction research, 52–56 loyalty driver analysis, 161, 163–169 loyalty indices, reliability of, 129 Loyalty Laggers adoption rates for method-related CFP business practices, 115–117, 116f adoption rates for reportingrelated business practices, 151–153, 152t adoption rates for researchrelated business practices, 181–183, 182f adoption rates for strategy/ governance-related business practices, 75–77 adoption rates of CFP business practices and, 99–100 Loyalty Leaders adoption rates for method-related CFP business practices, 115–117, 116f adoption rates for reportingrelated business practices, 151–153, 152t adoption rates for researchrelated business practices, 181–183, 182f adoption rates for strategy/ governance-related business practices, 75–77 adoption rates of CFP business practices and, 99–100 loyalty matrix, 163–165, 164f loyalty questions, 130–132 M mathematical item selection, 299–303 mean, 170, 171t, 330 7/2/09 1:03:39 PM Index 393 mean, standard error of, 336–339 measurement, specificity vs generality of, 36–38 measurement error, customer loyalty and, 13 measurement scales in customer satisfaction, 316 interval scales, 315 nominal scales, 313–314 ordinal scales, 314–315 ratio scales, 315 median, 170t, 330 method-related CFP business practices adoption rates for, 115–117 impact of, on customer loyalty, 118f impact of, on customer loyalty and satisfaction with CFP, 117–120 Microsoft, 186–187 Miranda, Steven, 239 mission statements, 45–46 mode, 170t, 330 monopolies, customer loyalty questions for, 130–132 multiple regression analysis, 368–372 example of, 370–372 methods of, 369–370 multiple survey methods, 120 advantages/disadvantages of, 122t N Net Promoter Score (NPS), 41 aggregated metrics of, 15–16 claims about, methodology, myth about, as ultimate question, 5–7 opinions of customer feedback professions of, 124–126 potential loss of revenue when using, 7–10 problems with research and, 8–10 purchase same vs., 15 recent scientific challenges to claims of, 6–7 H1371_Hayes_IND.indd 393 research problems with, 8–10 satisfaction vs., 15 single-item measures of, 15–16 nominal scales, 313–314 normal distributions, 324 NPS See Net Promoter Score (NPS) null hypothesis (HO), 343, 344f O online surveys See Web-based customer surveys operational metrics customer-centric, 198–199 customer relationship management and, 197–199 linking, 199–202 linking customer feedback data to, 196–199 operative loyalty, 130–131 Oracle Corporation, 51–52, 120, 193, 199–202 ability to evolve at, 242, 243 applied research and, 206–207, 233–238 best practice customer programs at, 223–224 CFP model of, 228f closed-loop feedback process at, 224 communication and education program at, 242, 244 customer feedback collection channels at, 225 customer feedback program of, 219–245 customer relationship management at, 232 customer service at, 239–241 data analysis at, 225–226 defined governance model at, 241, 243 embedded compensation structures at, 242, 243 employee commitment at, 241, 242 executive sponsorship at, 241–242 formalized strategy at, 241, 243 7/2/09 1:03:39 PM 394 Index Oracle Corporation (continued ) forums and feedback programs at, 220–221, 221f Global Relationship Survey at, 239–241 integrated business processes at, 242, 243–244 integration of surveys at, 232 relationship surveys at, 227, 228–230 research at, 232–233 service value model of, 233–238, 234f survey program of, 226–232 targeted surveys at, 227, 230–232, 231t tracking, monitoring, and trending results at, 226 transactional surveys at, 227, 230 usability studies at, 238–239 ordinal scales, 314–315 ordinate (Y axis), 32, 164 P paper-and-pencil surveys, 122t PC industry, Hayes Loyalty Grid for, 39–40, 39f Pearson r, 366–367 testing significance of, 367 percentages, 321–322, 325f–326f performance defined, 163 goal setting and, 197–198 post-hoc testing, 358 power, defined, 352 predictability of loyalty indices, 32–36 specificity and, 36–38 principle factor analysis, 376 probabilities, determining, from distributions, 324–326 purchasing loyalty, 21, 27–28 See also advocacy loyalty; retention loyalty impact of customer experience on, 29–30 H1371_Hayes_IND.indd 394 purchasing loyalty index (PLI), 28–29, 128 as predictor of business growth, 32–36 Q qualitative questions, 139 quality dimension development approach, 266–271 quality dimensions, 265 See also customer requirements establishing specific examples of, 267–268 of hospital industry, 265 identification of, 266–267 methods for identifying important, 265 of service organizations, 265 for software industry, 270f for support staff, 267f quantitative questions, 138–139 question development, for Web-based surveys, 138–139 questionnaires See customer satisfaction questionnaires; customer surveys; surveys R random numbers, table of, 381–382 ratio scales, 315 regression analysis, 363–365 degree of fit and, 365–366 Reichheld, Fred, 5, relationship surveys, 50, 227 at Oracle, 228–230 reliability, 28–29, 189, 190–191 inter-contact, 190 internal consistency reliability, 191 of loyalty indices, 129 test-retest, 190–191 reporting-related business practices adoption rates for, 151–153 impact of, on customer loyalty and satisfaction with CFP, 153–156, 154t, 155t summary of best practices for, 177t 7/2/09 1:03:39 PM Index 395 research See also applied research customer feedback programs and, 52–56 satisfaction and loyalty, 52–56 research-related CFP business practices adoption rates for, 181–183 impact of, on customer loyalty and satisfaction with CFP, 183–185 response formats, for customer satisfaction questionnaires, 290–296 results external communication of, 174–175 internal communication of, 173–174 reporting, 51–52 Web-based reporting tools for, 175–176 retention loyalty, 21, 27–28 See also advocacy loyalty; purchasing loyalty impact of customer experience on, 29–30 retention loyalty index (RLI), 28–29, 128 as predictor of business growth, 32–36 rotation, 374, 376–377 S sample size, 337–339, 337f sampling distribution, 336–337, 337f sampling error, 335–337, 337f, 338f, 339t satisfaction and loyalty research, 52–56 scatterplots, 363, 364f, 367f service delivery model, 156–158, 157f service quality, dimensions of, 266 service requests (SRs), 200–202 Siebel Systems, 82 H1371_Hayes_IND.indd 395 significance of fit, 367 significance testing See t-tests Singh, Sanjay, 249, 250–251, 261 single-item measures, 129–130 software industry, quality dimensions for, 268, 270f specificity, predictability and, 36–38 spending, amount of, customer loyalty and, 30–31 standard deviation, 170t, 332–333 standard error of the mean, 336–339 standardized loyalty questions, 127 statements, for quality dimensions, 267–268, 269f stepwise selection method, 370 strategy, 45 strategy/governance-related best practices adoption rates for, 75–77 customer-centric culture and, 80–81 impact of, 77–79 summary of, 97t subject matter experts, 136–137 summary scores, 344–345 support staff, quality dimensions for, 267–268 surveys See also Web-based customer surveys advantages and disadvantages of different methods of, 122t customer loyalty, 11 customer loyalty and, 126–127 face-to-face, 122t methods, 121–123 paper-and-pencil, 122t relationship, 50, 227 studies measuring reliability of, for customer loyalty, 21–27 targeted, 227 telephone, 122t transactional, 50–51, 144, 227 T targeted surveys, 227 at Oracle, 230–232 7/2/09 1:03:39 PM 396 Index telephone surveys advantages/disadvantages of, 122t test-retest reliability, 190–191 Thompson, Dian, 221 T-Mobile USA, 8, 9f transactional surveys, 50–51, 144, 227 at Oracle, 230 trigger e-mails, 159–160 t statistic, 352, 353t t-tests, 172, 349–350 calculating, 350–352 example of, 352 Type I errors, 342, 342f Type II errors, 342, 342f U usability studies, at Oracle, 238–239 V validity, 189–190, 191–193 construct-related, 192–193 content-related, 191–192 criterion-related, 192 value, 157 variability, 330 variance, 170t, 331–332 varimax rotation, 376–377 Venn diagrams, 368–369, 369f visible drivers, 167–169 Web-based customer surveys, 120, 121–123, 132–133, 304 See also surveys advantages/disadvantages of, 122t benefits of, 306–307 best practices in designing, 133–147 determining customer requirements for, 136–138 determining customer target to, 135–136 determining objectives and goals of, 134–135 developing questions for, 138–139 e-mail invitations for, 139–140 item selection and testing for, 145–147 for micro loyalty management, 158–159 principles for designing, 147–148, 308 tips for conducting, 308–309 Web-based reporting tools, 175–176 Whyte, Jeremy, 206, 231 wireless industry, Hayes Loyalty Grid for, 40, 40f X X axis (abscissa), 164, 322 W Y weak drivers, 166–167 Y axis (ordinate), 164, 322 H1371_Hayes_IND.indd 396 7/2/09 1:03:39 PM Belong to the Quality Community! Established in 1946, ASQ is a global community of quality experts in all fields and industries ASQ is dedicated to the promotion and advancement of quality tools, principles, and practices in the workplace and in the community ASQ is… The Society also serves as an advocate for quality Its members have informed and advised the U.S Congress, government agencies, state legislatures, and other groups and individuals worldwide on quality-related topics • A community of professionals striving to bring quality to their work and their lives Vision By making quality a global priority, an organizational imperative, and a personal ethic, ASQ becomes the community of choice for everyone who seeks quality technology, concepts, or tools to improve themselves and their world • More than 90,000 individuals and 700 companies in more than 100 countries • The world’s largest organization dedicated to promoting quality • The administrator of the Malcolm Baldrige National Quality Award • A supporter of quality in all sectors including manufacturing, service, healthcare, government, and education • YOU Visit www.asq.org for more information H1371_Hayes_IND.indd 397 7/2/09 1:03:39 PM ASQ Membership Research shows that people who join associations experience increased job satisfaction, earn more, and are generally happier* ASQ membership can help you achieve this while providing the tools you need to be successful in your industry and to distinguish yourself from your competition So why wouldn’t you want to be a part of ASQ? Networking Have the opportunity to meet, communicate, and collaborate with your peers within the quality community through conferences and local ASQ section meetings, ASQ forums or divisions, ASQ Communities of Quality discussion boards, and more Professional Development Access a wide variety of professional development tools such as books, training, and certifications at a discounted price Also, ASQ certifications and the ASQ Career Center help enhance your quality knowledge and take your career to the next level Solutions Find answers to all your quality problems, big and small, with ASQ’s Knowledge Center, mentoring program, various e-newsletters, Quality Progress magazine, and industry-specific products Access to Information Learn classic and current quality principles and theories in ASQ’s Quality Information Center (QIC), ASQ Weekly e-newsletter, and product offerings Advocacy Programs ASQ helps create a better community, government, and world through initiatives that include social responsibility, Washington advocacy, and Community Good Works Visit www.asq.org/membership for more information on ASQ membership *2008, The William E Smith Institute for Association Research H1371_Hayes_IND.indd 398 7/2/09 1:03:40 PM ... Reporting-Related CFP Business Practices that Impact Customer Loyalty and Satisfaction with the CFP Understanding Customer Feedback Data Customer Loyalty Management Loyalty Driver Analysis... organized, and disseminated throughout the company Toward that end, Chapter presents best practices around the reporting of customer feedback data To help analyze customer feedback data, a data... improve the customer experience and maximize customer loyalty Customer feedback professionals were asked to list the major roadblocks that prevent them from improving customer loyalty Chapter summarizes