C-1©1995ArthurAndersen&Co.S.C.,Allrightsreserved.CustomerNeedsAnalysisForBusinessProcessReengineeringManagementBriefingARTHURANDERSENWhatdoIreallyneed?C-2©1995ArthurAndersen&Co.S.C.,Allrightsreserved.ArthurAndersen’sresearchintoBestPracticesInCustomerSatisfactionprovidesinsightintohowleadingcompaniesarebuildingloyalandprofitablecustomerrelationships.Today,wewilldiscusshowthesecompaniesaregainingamorecompetitiveunderstandingoftheircustomer’sprioritiesandwherethecompanyshouldfocusonimprovingperformance.ArthurAndersen’sresearchintoBestPracticesInCustomerSatisfactionprovidesinsightintohowleadingcompaniesarebuildingloyalandprofitablecustomerrelationships.Today,wewilldiscusshowthesecompaniesaregainingamorecompetitiveunderstandingoftheircustomer’sprioritiesandwherethecompanyshouldfocusonimprovingperformance.Today’sObjectivesC-3©1995ArthurAndersen&Co.S.C.,Allrightsreserved.TopicalOutline⇒WhyAssessCustomerNeeds?⇒SegmentingTheMarket⇒CustomerInterviews⇒TheCustomerSurvey⇒BreakthroughWorkshops⇒FocusingChangeInitiativesC-4©1995ArthurAndersen&Co.S.C.,Allrightsreserved.BottomLineImpactOfCustomerSatisfaction■IBMDivision:ForEach1%IncreaseInCustomerSatisfaction=$257MillionRevenueOpportunity■Chrysler:HighSatisfactionDealersSpend1/4OnAdvertisingPerCarSold■AmericanExpress:RetainingExistingCustomersCost1/15ofReplacementC-5©1995ArthurAndersen&Co.S.C.,Allrightsreserved.ExistingCustomersBecomeMoreProfitableEachYearSource:HarvardBusinessReview,Sept/Oct1990,Reichheld&SasserProfitGeneratedByAverageCustomerOver5YearsIndustrialDistributionYear12345$4599121144168C-6©1995ArthurAndersen&Co.S.C.,Allrightsreserved.ReducingCustomerDefectionsBy5%IncreasesProfitabilityFrom35to95%Source:FortuneMagazine,Aut/Winter1993,Bain&Co.*Calculatedbycomparingthenetpresentvaluesoftheprofitstreamsfortheaveragecustomerlifeatcurrentdefectionrateswiththenetpresentvaluesoftheprofitstreamsfortheaveragecustomerlifeat5%lowerdefectionrates.AdvertisingBranchPublishingHome/AutoAutoCreditInsuranceOfficeBldg.SoftwaredepositsinsuranceservicecardbrokerageManagement818575504035958584IndustryGroup%IncreaseInCustomerValue*C-7©1995ArthurAndersen&Co.S.C.,Allrightsreserved.WhyCustomersBecomeMoreProfitableOverTimeIncreasedPurchases:AmericanExpressfoundthat43%ofhighlysatisfiedcustomerswouldusetheircreditcardmoreoftenbasedupontheirpositiveexperience.AcquisitionCost:TheU.S.OfficeofConsumerAffairsestimatesitcostsfivetimesmoretoattractnewcustomersthantoretainaoldcustomers.PricePremium:PIMSstudyfoundhighcustomersatisfactioncompaniescharge9percentmorethanpoorcustomersatisfactioncompanies.Referrals:OneleadingU.S.homebuilderfoundover60%ofitssalesresultfromreferrals.Conversely,aTARPstudyfoundthattheaveragedissatisfiedcustomerwilltell9to10othersabouttheexperience.ReducedOperatingCosts:Intheinsuranceindustry,a5%increaseincustomerretentionlowersthecostperpolicyby18%.CustomerExperienceCycleFirstTimeRepeatAdvocateC-8©1995ArthurAndersen&Co.S.C.,Allrightsreserved.CaveatEmptor:KnowThePointOfDiminishingReturnsDisneyResorts:“MakeTheCustomer’sDreamsComeTrue”•Traditionofexceedingcustomer’sexpectations•Waschangingbedlinenseverynight•Conductedin-roomsurveyaskingifeverythirdnightok?•After22,000guest-nights,only2requestedeverynight•$Millionssavedplusreducedenvironmentalimpact•Traditionofexceedingcustomer’sexpectations•Waschangingbedlin...
