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Differentiate a satisfied customer from a loyal one

Diebold, a provider of ATMs and security systems, undertook a revamped loyalty program and turned loyalty into revenue.

A satisfied customer is not necessarily a loyal one. That realization inspired Diebold, a provider of ATMs and...

security systems, to focus as much on its customers' voices as it does on their fingers.

Until 2003 the customer surveys Diebold used gleaned insights on satisfaction with products and product features. Today the company has incorporated a systematic approaching to measuring and managing customer loyalty into its top-level strategy, says Cassie Metzger, Diebold's director of strategic development and global marketing. Executives, including CEO Wally O'Dell, receive reports on customer interactions stemming from the customer surveys the company conducts, prioritize their projects according to survey results and sometimes participate in improvement plans designed to convert "reluctant" customers into "truly loyal" ones.

The shift is significant. Transforming the primary gauge of measuring customer relationships from product satisfaction to customer loyalty required new data, a fresh method of interpreting that data, and a new way to parlay that information into action. Diebold believes that customer loyalty relates to how customers feel about the service they receive and whether their investments with Diebold live up to their expectations. In late 2002 Diebold conducted a baseline survey of its customers. A year later the company conducted the survey again -- translating the questions into 14 languages to reach more than 18,000 customers in 30 countries. Twenty-two percent responded. Diebold enlisted Walker Information's Smart Loyalty tool to store, analyze, and generate reports from the customer loyalty data. The company also sent separate, more focused follow-up surveys to subsets of the customer base to help narrow in on which specific factors influence satisfaction levels, which Diebold has identified as one of the top determinants of customer loyalty. Diebold postponed its 2004 loyalty survey until this spring to avoid adding to the flurry of late-year activity many organizations endure.

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Walker's loyalty questionnaire contains criteria that Diebold used to place customers in one of four loyalty quadrants: truly loyal, reluctant, high-risk, and accessible. Rather than "reluctant," Walker Information uses the less cuddly but more descriptive term "trapped," which describes customers whose commitment to the company is weak but who are likely to remain customers. Walker Information defines "accessible" as customers who may not continue doing business with the supplier despite being satisfied with the relationship, and "high risk" as customers with a low commitment and little intention of continuing the relationship.

"We want our customers to be truly loyal," Metzger says. "If they are accessible, high risk, or reluctant, they are automatically flagged for follow-up."

Follow-up is a hallmark of Diebold's loyalty program -- truly loyal customers receive a call thanking them for taking the time to complete the survey. Customers who fall into the other three loyalty quadrants receive follow-up through a formal improvement plan contained in a Web-based Smart Loyalty module. When a customer's survey response places him in one of the three non–truly loyal groupings, that customer is automatically flagged for follow-up, which includes several steps:

  1. 1. An alert goes to the sales or service rep responsible for following up with the customer.
  2. 2. The rep reviews the customer information, including the survey results and service contract, and then contacts the customer to discuss the issue.
  3. 3. The rep enters a "root cause" into the Smart Loyalty system, which categorizes them. Root causes are regularly analyzed to determine if an issue is unique or widespread.
  4. 4. The issue is resolved and the rep enters that resolution into the system. The module also generates reports used to monitor the improvement plan.

"We can categorize and then analyze the issues our customers are experiencing," Metzger says. "Was it specific to that customer? Or, is it something that represents a regional or global issue that we need to look at from a higher level?"

One survey respondent, for example, gave Diebold a low grade for executive involvement. The ensuing improvement plan included an in-person customer call lead by the country's top sales executive, the local manager, and the local sales rep. The plan succeeded: The customer bought another product as a result of the meeting. The surveys have also generated results that point to widespread adjustments, such as the need for additional training. Diebold developed a program designed to help sales reps view relationships through the eyes of the customer. As part of the training, sales and service reps participated in brainstorming sessions to identify small ways to make a positive difference with customers.

The improvement plans also help expose misperceptions that Diebold can correct. "Level of responsiveness to a service call" sometimes crops up as a problem among customers who do not occupy the truly loyal quadrant. According to Metzger, in follow-up contacts with customers, Diebold service reps often discover that a customer's perception of the appropriate service level differs from the service level defined in the actual agreement. That "a-ha" corrects the customer's (incorrect) impression of poor service and, Metzger says, has often resulted in customers purchasing a higher level of service.

There are strategic benefits, too. Diebold executives now rely on the loyalty data to prioritize projects.

"We might have 50 projects in the works," Metzger says. "By listening to the voice of the customer, we have a better grasp of which of those 50 represent the five most important projects."

Metzger expects to begin correlating loyalty to bottom-line metrics later this year. The company, a Six Sigma devotee, will also begin mining the data to identify customer relationship best practices throughout the organization that can be used to fuel process improvements.

Copyright © 2005 Carlson Marketing Group, Inc. All rights reserved. Peppers & Rogers Group is a Carlson Marketing Group Company.

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