Recently I was reading satisfaction survey results from Plan Sponsor Magazine, one of the "must read" periodicals in the Retirement Benefits industry. Every year, Plan Sponsor publishes an annual survey of customer satisfaction of providers of retirement service. Service Providers are given scores and "trophy" cups for top marks. These scores are highly publicized in the Retirement industry, with top scorers using them in their sales and marketing literature. Conversely, poor results have to be explained in sales presentations and client meetings.
All in all, a useful annual satisfaction benchmark.....right? Well, not exactly.
When one reviews the results, you are struck by the top scorers. They are not the firms one would expect, not the companies who are generally viewed by experts as the leaders in service. Also, in the categories one would expect certain companies to excel in, scores are lower than other competitors.
So what is going on here? Read about the methodology, and you can figure out what is happening. From Plan Sponsor's website (bold emphasis is mine):
Between late June and late August 2009, approximately 35,000 survey questionnaires were sent to defined contribution (DC) plan sponsors from the PLANSPONSOR magazine database, as well as to client lists supplied by DC providers; 5,635 total usable responses were received by the close of the survey on September 1, 2009.....Quartiles for participant services and sponsor services were calculated in each asset category in which a provider qualified for a rating. The score for participant services in each provider’s listing comprises the cumulative average of 13 categories, and sponsor services comprises 10 categories. The percentage score next to the quartile for each provider in each asset category represents the cumulative score out of 100%. For example, an average score of 6.82 out of a possible 7.00 for participant services in the small market would translate to 97.4%.
There are a couple of problems with this methodology, and an astute few companies who understand the process are taking advantage.
1. There is an appearance of randomness to the surveys but that is not the case. Surveys are sent out to both magazine subscribers (the names of which Plan Sponsor communicates to providers) and lists of other sponsors supplied by the providers themselves.
It is not hard to understand how this can be manipulated. By directly targeting communications to those providers receiving surveys, providers can somewhat sway results. Since the subscription base likely doesn't change much over the years, the pool of respondents is pretty much known.
Where the providers can truly impact the results is in providing Plan Sponsor survey names and addresses of clients. What clients do you think providers are supplying? Only happy clients, of course! And those clients can also be the target of communications alerting them to the survey, so they are more likely to respond.
Those providers that don't work the survey in this way are at a complete disadvantage. Those that do get better scores.
2. The aggregate category ratings, on a scale from 1 to 7, are then turned into a "score." This score is then ranked with other firms from high to low, and then categorized into quartiles. The major problem with this is that it does nothing to tell you how well the provider is satisfying the customer. If all scores are in the 90% satisfaction range, they will still be sorted into quartiles, giving the impression that the 3rd and 4th quartile are failing, when they are mostly satisfying.
3. When compiling overall scores, each category is weighed similarly. There is no attempt to determine the "value" of the category to the company or the industry as a whole. For example, if the key reason to select a provider is for their consulting capabilities, there is no way to give that category additional weight, resulting in an average score that may not represent the company's true feeling about their service provider.
It is telling that one of the "satisfaction leaders" in the survey is also a cost leader in the industry. This is counter-intuitive since the level of services provided is clearly not at the par of other providers. However, if companies don't expect premium service, they will be completely satisfied with adequate service, as long as it comes with a low pricetag. Think satisfaction of WalMart loyal customers versus Bloomingdales customers.
My View
Plan Sponsor Magazine surveys are very important in the Retirement industry. Yet the methodology is not tight enough to use as a measure of true satisfaction....cannot be viewed as Perfect Knowledge. Companies need to determine other ways to secure objective data that provide real insight; they need to understand what is important to their clients, measure how they are doing in those areas, and improve those results.
Is there an indictment of those firms who understand the Plan Sponsor process, and takes advantage of it to improve their standing? No way. They are smart companies who are seeking out any advantage they can get.
But are they also the companies who satisfy their customers best, as Plan Sponsor declares? There are enough holes in the process to clearly doubt that conclusion.
Tuesday, March 23, 2010
Tuesday, March 16, 2010
Health Insurance Companies Need To Pay Attention To Service
A recent study showed that Healthcare Benefit providers were scored as the industry with the worst satisfaction record for the third straight year. Average satisfaction scores were a mere 51%, the same as the previous year.
You can find a summary of the report and the individual companies surveyed in the link http://www.forrester.com/rb/Research/customer_experience_index_2010_health_insurance_plans/q/id/56386/t/2
My response to the survey follows.
My View
In the financial benefits industry, I used to tell my troops:
“When customers feel good about your service, they will engage more. When they engage more, they make better decisions. When they make better decisions, they will have more money at retirement. So by providing excellent service on each phonecall, people will have a better retirement.”
But also: “when people have more money in their accounts, our company also makes more money.” So there are only winners!
The healthcare industry needs to understand that providing good service leads to more engaged people. This leads to healthier choices. This leads to fewer future claims. This leads to more profits.
If the providers of health insurance do not get this dynamic, they will never see the sense in providing good service.
The Opportunity
There is no larger challenge that to turn the customer experience in the healthcare industry to the positive. There are no winners here, but the industry is begging some firm to step out and set a standard.
You can find a summary of the report and the individual companies surveyed in the link http://www.forrester.com/rb/Research/customer_experience_index_2010_health_insurance_plans/q/id/56386/t/2
My response to the survey follows.
My View
In the financial benefits industry, I used to tell my troops:
“When customers feel good about your service, they will engage more. When they engage more, they make better decisions. When they make better decisions, they will have more money at retirement. So by providing excellent service on each phonecall, people will have a better retirement.”
But also: “when people have more money in their accounts, our company also makes more money.” So there are only winners!
The healthcare industry needs to understand that providing good service leads to more engaged people. This leads to healthier choices. This leads to fewer future claims. This leads to more profits.
If the providers of health insurance do not get this dynamic, they will never see the sense in providing good service.
The Opportunity
There is no larger challenge that to turn the customer experience in the healthcare industry to the positive. There are no winners here, but the industry is begging some firm to step out and set a standard.
Monday, March 15, 2010
Local Business Gets It Right! Giving Top Service At Premium Prices
My son swam this weekend at Wesleyan University in a state competition. Near the pool is a small establishment named the "Neon Deli," a small business obviously catering to the local college population.
This swim meet is for kids (8-18) from all around the state, and for three days the rafters were filled with parents and grandparents, while the pool deck was covered with all sorts of swimmers and coaches and officials. Probably a thousand total people.
After each day's session, my son needed a sandwich--a simple ham and cheese on a roll.
On Day One, I notice the "Welcome Swimmers" sign on the door, and despite the dozens of people streaming in and out of the door at any moment, the proprietor at the register asked my son what stroke he swam (breastroke) and how he did (very well).
On Day Two, the proprietor asked my son how his breastroke went...he remembered!
On Day Three, by the time he got to the counter to order his sandwich (the line was six deep), his sandwich was already made....the sandwich maker remembered! And then she took the time to tell an old-fashined joke about sandwiches
While my son will likely remember this meet for a very long time, he is already telling his friends about his deli experience.
My View:
In an age when McDonald's cannot get a simple order correct (we experience a 50% failure rate whenever we order a "double hamburger, ketchup only"), here is a proprietor who obviously cares about his customers, and his establishment becomes legendary on the swimming circuit.
What did it take? Nothing but the leader showing his staff what is important (caring about his customers....), permitting his staff the leverage to act on that caring (making the sandwich ahead of time), and being aware of the extraordinary event going on from normal business (swim meet with lots of hungry people during normally slow weekend at college).
Did I even notice that I probably paid twice the amount that it would have cost me elsewhere?
Nope.
Did I care that all this chatting took a couple of extra minutes?
Nope.
Successful business?
You bet.
This swim meet is for kids (8-18) from all around the state, and for three days the rafters were filled with parents and grandparents, while the pool deck was covered with all sorts of swimmers and coaches and officials. Probably a thousand total people.
After each day's session, my son needed a sandwich--a simple ham and cheese on a roll.
On Day One, I notice the "Welcome Swimmers" sign on the door, and despite the dozens of people streaming in and out of the door at any moment, the proprietor at the register asked my son what stroke he swam (breastroke) and how he did (very well).
On Day Two, the proprietor asked my son how his breastroke went...he remembered!
On Day Three, by the time he got to the counter to order his sandwich (the line was six deep), his sandwich was already made....the sandwich maker remembered! And then she took the time to tell an old-fashined joke about sandwiches
While my son will likely remember this meet for a very long time, he is already telling his friends about his deli experience.
My View:
In an age when McDonald's cannot get a simple order correct (we experience a 50% failure rate whenever we order a "double hamburger, ketchup only"), here is a proprietor who obviously cares about his customers, and his establishment becomes legendary on the swimming circuit.
What did it take? Nothing but the leader showing his staff what is important (caring about his customers....), permitting his staff the leverage to act on that caring (making the sandwich ahead of time), and being aware of the extraordinary event going on from normal business (swim meet with lots of hungry people during normally slow weekend at college).
Did I even notice that I probably paid twice the amount that it would have cost me elsewhere?
Nope.
Did I care that all this chatting took a couple of extra minutes?
Nope.
Successful business?
You bet.
Thursday, March 11, 2010
Businesses Need "Perfect Service"
I was forced to take a few months off from blogging in order to work on a number of consulting assignments (that unfortunately were more strategic and M&A related than focused on service delivery). Yet, even after just a couple of months, I find a growing gap between companies that say they want to excel in service and those who are transforming their firms to do it!
Another of a series of excellent reports from Forrester Research illustrates this point:
The Good News
Another of a series of excellent reports from Forrester Research illustrates this point:
The Good News
- 90% of respondents think that customer experience is very important or critical to their 2010 strategy.
- 80% want to use customer experience as a form of differentiation.
The Bad News
- Only 11% have a very disciplined approach to the customer experience.
- Only 62% even have some form of "Voice of the Customer" program in place.
- Lack of "customer experience strategy" was cited as the number one issue.
The link to Bruce Temkin's blog is http://experiencematters.wordpress.com/2010/02/26/the-state-of-customer-experience-2010/.
My View
Having talked to senior management throughout many service industries about their competitive strategies, many believe that differentiating based on service is a viable strategy. After all, there are usually clearly identifiable competitors who are winning at price competitiveness or feature-rich product competitiveness. It feels like the only competitive space left is the ambiguous premier service segment.
It takes great discipline to align your company's vision, strategy and tactics to become a leader in any segment. In the Mutual Fund world, Vanguard's approach is perfectly aligned with its strategy for being a cost leader. Fidelity, on the other hand, has great product and technological features that it markets brilliantly. Both companies are built to succeed in that space.
Yet when it comes to the service space, all competitors claim victory. Price competitors can show the lowest prices; product competitors can show rich features and performance. Service competitors show a list of happy competitors. The troublesome aspect to this is that all companies in this industry have a list of happy competitors...premier service providers as well as Vanguard and Fidelity. Why? Because they are delivering on the promise they made to their customers....and customer bought them for that promise.
So having a "Differentiated Strategy" based on service has to be different than other competitors, both in design and delivery. It must align all aspects of the company, not just the operations or call centers. And it must yield results that are demonstrably different and better than others who dabble.
The Opportunity
With so many companies thinking and promoting service in their marketing literature, a company that is able to truly design and execute a premier customer experience will be able to find a receptive audience. I believe that "Perfect Service" approach is a great first step toward winning.
Wednesday, June 10, 2009
New "Loyalty Metric" Tries To Change The Conversation But Adds Nothing New
Last week, an article caught my eye claims that exceeding customer expectations (which 89% of executives believe creates positive impact to business results) actually has little effect on bottom line. Rather, that service interactions are four-times more likely to result in a negative outcome than a positive one.
The authors, the Corporate Executive Board’s Customer Contact Council, believes that exceeding customer expectation results in virtually no gain in customer loyalty. Further, that service and support centers have little stake in building customer loyalty at all. The Council believes that instead of Customer Satisfaction, one should ask a single question to determine the Customer Effort Score, a proprietary metric. This metric, the authors believe, more accurately measures the customer's reaction to a service event, by measuring the customer's effort during the event.
My View:
My reaction here is pretty blunt. I think this research is garbage, from professional and personal experience. Somehow this magic question (that the Council doesn't reveal presumably unless you buy the research) will unlock the driver of dissatisfaction. Good answers yield good results; bad answers get bad results.
I believe companies that position themselves as premier service organizations need to establish ways to measure all drivers of satisfaction...finding "Perfect Knowledge" of their customers needs. Effort put forth by the customer can be just one measure. If a company delivers well across all drivers, then the customer is loyal--resulting in retention, references for others, and cross-sell opportunities. If you fall flat on that one measure, the customer will be unhappy.
Personal example today: two of my home computers had to have some work done, and the settings for the wireless network were deleted. I called my cable operator that also maintains our internet access and told them my issue. He said he would walk me through the process. So instead of fixing it on his end, he walked me through the multi-step process and within 10 minutes both computers were operational. My effort--full participation which I wasn't expecting. My satisfaction? Complete.
At the end of the day, service providers need to understand their customers needs, deliver to those needs, measure how they are doing meeting those needs, and fix anything that is broken. The result from exceeding customer expectations is a multiplier of benefit...customers stay, tell others, and buy more!
To link to my response to the posting on another blog, go to http://experiencematters.wordpress.com/2009/05/29/meeting-expectations-is-not-the-goal/
The authors, the Corporate Executive Board’s Customer Contact Council, believes that exceeding customer expectation results in virtually no gain in customer loyalty. Further, that service and support centers have little stake in building customer loyalty at all. The Council believes that instead of Customer Satisfaction, one should ask a single question to determine the Customer Effort Score, a proprietary metric. This metric, the authors believe, more accurately measures the customer's reaction to a service event, by measuring the customer's effort during the event.
My View:
My reaction here is pretty blunt. I think this research is garbage, from professional and personal experience. Somehow this magic question (that the Council doesn't reveal presumably unless you buy the research) will unlock the driver of dissatisfaction. Good answers yield good results; bad answers get bad results.
I believe companies that position themselves as premier service organizations need to establish ways to measure all drivers of satisfaction...finding "Perfect Knowledge" of their customers needs. Effort put forth by the customer can be just one measure. If a company delivers well across all drivers, then the customer is loyal--resulting in retention, references for others, and cross-sell opportunities. If you fall flat on that one measure, the customer will be unhappy.
Personal example today: two of my home computers had to have some work done, and the settings for the wireless network were deleted. I called my cable operator that also maintains our internet access and told them my issue. He said he would walk me through the process. So instead of fixing it on his end, he walked me through the multi-step process and within 10 minutes both computers were operational. My effort--full participation which I wasn't expecting. My satisfaction? Complete.
At the end of the day, service providers need to understand their customers needs, deliver to those needs, measure how they are doing meeting those needs, and fix anything that is broken. The result from exceeding customer expectations is a multiplier of benefit...customers stay, tell others, and buy more!
To link to my response to the posting on another blog, go to http://experiencematters.wordpress.com/2009/05/29/meeting-expectations-is-not-the-goal/
Monday, June 8, 2009
Healthcare Company Objectives: To Be Prettiest Pig On The Truck
A bit of disturbing research was recently published by Forrester showing that customer satisfaction of the health plan industry is poor and heading lower. Should that surprise anyone? No...not with prices rising, co-pays and deductibles increasing, and coverages more restrictive than ever. Here are some of the results from the Forrester research from Bruce Temkin in his blog "Customer Experience Matters":
In Forrester’s 2008 Customer Experience Index (CxPi), we ranked 113 companies across 12 industries. I recently published a snapshot of the health plan industry looking at the results from the eight plans on the list (Aetna, Anthem (BCBS), CIGNA, Kaiser, Medicaid, Medicare, TriCare, and United Healthcare). Here’s some of what we found:
--Experiences are “very poor” and getting worse. As a group, the eight health plans ended up with a “very poor” rating of 51%; the lowest score of any of the 12 industries we examined. Making matters worse, the industry dropped three percentage points from the 2007 CxPi results.
--Kaiser led the pack. With an “okay” score of 70%, Kaiser led all health plans. All of the other plans ended up with ratings of either “poor” or “very poor.”
--Medicaid is as bad as it gets. With a terrible rating of 38%, Medicaid was the lowest scoring plan. It also ended up in next to last place across all 113 organizations in our rankings.
--Only Kaiser improved. When we compared the 2008 results with those from 2007, only Kaiser showed an improvement. CIGNA and Medicaid, on the other hand, declined the most.
Some big shifts in CxPi components. There were five double-digit changes in the scores for the three underlying elements of the CxPi: Kaiser’s improvement in being easy to work with and enjoyability, Anthem’s decline in enjoyability, and both CIGNA’s and Medicaid’s drop in being easy to work with.
My view:
The Health Benefit industry is headed toward a cliff, with people paying a lot of money and not feeling like they are getting the service they are paying for. There are lots of reasons for dissatisfaction, many of which are not related to the service itself, but many are--such as the "easy to work with" category."
Service has not been a priority for these firms in the past. Controlling costs has been. I have heard management at healthcare companies say that their goal is to provide service that is just good enough, but not great, thinking it will be too expensive to provide service that makes clients/employees happy. The phrase "prettiest pig on the trust" describes their goal...not a lofty objective.
Further, health plans are viewed as marquee benefits for companies. Can you imagine spending millions on a "benefit" that no one is happy with? Companies will soon see that the money spent is not worth the aggravation, and look for other ways to provide coverage...like cheaper Consumer Directed Health Plans....or no coverage at all.
That is, unless a company, like Kaiser, steps up and shows you can provide service at a satisfactory way, and make the case that it benefits the company to have good service for its helathplans. There is clear opportunity for health benefit companies to step up here....and differentiate based on service....Perfect Service!
In Forrester’s 2008 Customer Experience Index (CxPi), we ranked 113 companies across 12 industries. I recently published a snapshot of the health plan industry looking at the results from the eight plans on the list (Aetna, Anthem (BCBS), CIGNA, Kaiser, Medicaid, Medicare, TriCare, and United Healthcare). Here’s some of what we found:
--Experiences are “very poor” and getting worse. As a group, the eight health plans ended up with a “very poor” rating of 51%; the lowest score of any of the 12 industries we examined. Making matters worse, the industry dropped three percentage points from the 2007 CxPi results.
--Kaiser led the pack. With an “okay” score of 70%, Kaiser led all health plans. All of the other plans ended up with ratings of either “poor” or “very poor.”
--Medicaid is as bad as it gets. With a terrible rating of 38%, Medicaid was the lowest scoring plan. It also ended up in next to last place across all 113 organizations in our rankings.
--Only Kaiser improved. When we compared the 2008 results with those from 2007, only Kaiser showed an improvement. CIGNA and Medicaid, on the other hand, declined the most.
Some big shifts in CxPi components. There were five double-digit changes in the scores for the three underlying elements of the CxPi: Kaiser’s improvement in being easy to work with and enjoyability, Anthem’s decline in enjoyability, and both CIGNA’s and Medicaid’s drop in being easy to work with.
My view:
The Health Benefit industry is headed toward a cliff, with people paying a lot of money and not feeling like they are getting the service they are paying for. There are lots of reasons for dissatisfaction, many of which are not related to the service itself, but many are--such as the "easy to work with" category."
Service has not been a priority for these firms in the past. Controlling costs has been. I have heard management at healthcare companies say that their goal is to provide service that is just good enough, but not great, thinking it will be too expensive to provide service that makes clients/employees happy. The phrase "prettiest pig on the trust" describes their goal...not a lofty objective.
Further, health plans are viewed as marquee benefits for companies. Can you imagine spending millions on a "benefit" that no one is happy with? Companies will soon see that the money spent is not worth the aggravation, and look for other ways to provide coverage...like cheaper Consumer Directed Health Plans....or no coverage at all.
That is, unless a company, like Kaiser, steps up and shows you can provide service at a satisfactory way, and make the case that it benefits the company to have good service for its helathplans. There is clear opportunity for health benefit companies to step up here....and differentiate based on service....Perfect Service!
Wednesday, June 3, 2009
Customer Service Reputation Can Be Tarnished/Enhanced In So Many Ways
I have been reading a couple of items recently about the customer service delivery of several companies written by users of the services--
First the good: Apple
Karn Bulsuk in his Full Speed Ahead blog http://karnbulsuk.blogspot.com/2009/05/lessons-from-apple-on-customer-service.html has written about his experiences with his new I-Touch which when ordered was special delivered to him ahead of promised date, and when it broke unexpectedly overseas, he was able to get it fixed with no questions asked. He was very impressed and summarized his experiences--
Apple has shown us that good customer service involves:
First the good: Apple
Karn Bulsuk in his Full Speed Ahead blog http://karnbulsuk.blogspot.com/2009/05/lessons-from-apple-on-customer-service.html has written about his experiences with his new I-Touch which when ordered was special delivered to him ahead of promised date, and when it broke unexpectedly overseas, he was able to get it fixed with no questions asked. He was very impressed and summarized his experiences--
Apple has shown us that good customer service involves:
- Under promise and over deliver: Apple told me 3-4 days, but managed to get it done in less that time, which was a pleasant surprise because I didn’t expect it to be done so soon.
- Accepting the product as defective, without arguing with the customer or making them feel if you are cross-examining them.
- Have conveniently located offices, and design them well to make sure your customer feels comfortable.
- Listen to your customers: if you say something will happen or you will do something, make it happen.
- Smile.
Seems pretty basic, but now Karn's experience will be told to thousands of others. The result: Apple's reputation will continue to shine and people will continue to pay premium dollars for its products.
Now the bad: NationwideIt appears that for whatever reason--purely for information or for sales lead generation--people ask questions on networking sites about experiences with different companies. The responses tend to be negative, since it is human nature to complain rather than to praise.
On LinkedIn, the networking site for businesspeople, a recent question was posted in one of the group discussion sections:
401k Platform Provider Issues: Who is having problems in the 401k market place ?
401k Platform Providers have issues from time to time. Whether its poor service, dropping or changing product lines, client neglect, or raising fees, employers can get poor treatment and seek to find a new 401k platform provider. Has anyone come accross a pattern of plan outflow from a particular 401k provider ?
There is no question about the intent of the questioner...who happens to be a broker from SmithBarney...although his motives are not clearly stated. He is prospecting.
In the first day of the question, he has three leads with more undoubtedly coming. Here is one response:
I find the Nationwide call center to be extremely unhelpful. I have heard they are taking steps to change it, but I've had many complaints from clients and participants.
Ouch...while the broker has gotten a lead, Nationwide has gotten a blackeye. Left unresponded, the perception from readers is that Nationwide delivers inferior service.
There are other examples which I will post upcoming....
My View: Companies that compete on services for competitive differentiation should care about what people are saying about their services, and deliver in such a way that leads to unsolicited compliments. Further, companies should encourage their clients to talk. And if one hears about any issues, companies need to address them forcefully. Nationwide management should address the comment with the LinkedIn poster directly (take care of the situation) and then post a rebuttal. This will muddy the "unanimous" feeling of the complaint while the company determines the root cause of the call center issue.
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