CustomerNeedsAssessment1.IntroductionToCustomerNeedsAssessment1.1TheConsultingOpportunityMostreengineeringeffortsfocusoncostreductionwhich,takentotheextreme,leadstoaliquidationstrategy.And,atbest,placesaceilingonbusinessimprovementopportunity.Wehaveobserved,however,agrowingmomentumtofocusreengineeringeffortsonincreasingrevenuesandprofitability.Customerneedsassessmenthelpstoenhancethisfocusbyaligningthecompany’sprocesseswiththebenefitscustomersvaluemost.Thereisevidencethatcustomer-drivenreengineeringcanbeakeydifferentiatorfortheFirm’sbusinessconsultingservices:·AreviewofTQMinitiativesconductedbyTheConferenceBoardshowed91%rankingcustomersatisfactionasthegreatestexpectedresultofqualityprograms.·InarecentpollbyInc.Magazine,81%ofexecutivescitedcustomersatisfactiontobetheirsinglemostcompetitiveadvantage.·SurveysbyArthurAndersenofCEOsinBoston,ChicagoandHartfordcitecustomersatisfactionastheirmostimportanttopicofconcern.·AChiefExecutivemagazinesurveyrevealedcustomerserviceasthenumberoneissueamongCEOs.·InterviewsbyArthurAndersenof306corporateexecutivesshowedcustomersatisfactiontobethenumberonegoalofallcategoriesofbusinessimprovementinitiatives.Thereengineeringmarketplaceispoisedforamajortransition.Whiletherecontinuestobesignificantopportunityincostreduction,companiesarelookingtobuildloyal,profitablecustomerbasesasthemajorengineforrevenuegrowthandprofitability.ThepurposeofthisGuideistoprovidethereengineeringconsultantwiththeknowledgeandtoolstocapitalizeonthismarketshiftandtoassistourclientsinachievingthesegoals.ExecutivesCitedOutstandingCustomerSatisfactionasBiggestCompetitiveAdvantageWhatIsYourSingleBiggestCompetitiveAdvantage?CustomerSatisfactionQualityPersonnelProductPerformancePrice81%48%44%31%Source:Inc.MagazineFaxpoll,March1994©1995ArthurAndersen&Co.S.C.,Allrightsreserved.1-1CustomerNeedsAssessment©1995ArthurAndersen&Co.S.C.,Allrightsreserved.1-2CustomerNeedsAssessment1.2WhyAreSatisfiedCustomersImportant?Simplyput,satisfiedcustomersareamajorsourceofprofitabilityforacompany.Recentstudiesdemonstratethisbottom-lineimpact:·Inasurveyof2,400customers,oneIBMdivisionfounda1percentincreaseincustomersatisfactionwasworth$257millioninrevenueopportunity.·AT&Tfounda1%increaseincustomersatisfactionwasassociatedwitha$40millionincreaseinrevenues.Thefinancialbenefitsofsatisfiedcustomersderivesfromthelong-termrelationshipssatisfiedcustomersmaintainwithacompany.Satisfiedcustomersareloyalcustomers-whopurchaserepeatedlyandrecommendthecompanytoothers:·MBNAcreditfounda5%increaseincustomerretentiongrowscompany’sprofitsby60%inthefifthyear.·Anineindustrystudyindicatesevena5%increaseincustomerretentioncanincreasesprofitabilitybetween25and85%.·Inasurveyof10,000customers,72%ofsatisfiedcustomersboughtanotherChryslerand80%boughtfromthesamedealer.·IBMfoundthat84%ofsatisfiedcustomerswouldpurchaseagain,91percentwouldrecommendthecompany.WhyAreExistingCustomersMoreProfitable?01234567ProfitfrompricepremiumProfitfromreferralsProfitfromreducedoperatingcostsProfitfromincreasedpurchasesBaseprofitYearCustomerAcquisitionCostSource:HarvardBusinessReview,Sept/Oct1990,Reichheld&SasserAnumberoffactorscontributetotheincreasedprofitabilityofloyalcustomers:LowerCustomerAcquisitionCost:TheU.S.OfficeofConsumerAffairsestimatesthatitisfivetimesmorecostlytoattractanewcustomerthantoretainanexistingcustomer.ProfitFr...
