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Thermo Fisher
Scientific
Adopting a Loyalty Index
Can Fuel
Customer Satisfaction, Revenues, Growth
Improve quality. Cut
costs. Go global. Management trends have evolved over the decades.
But after implementing these measures and more, enterprises still face
pressures like globalization, a highly competitive marketplace, and the
perceived commoditization of many products and services. CEOs wonder where
they can safely drive out unnecessary costs without eroding customer
satisfaction and loyalty. How do they discover what’s important to their
customers?
The answer is hearing and
responding to the Voice of the Customer. Customer satisfaction is not
only the primary driver of higher revenues, profit margins and growth,
it’s directly related to customer loyalty and retention. This intimate
relationship explains why so much attention is now focused on loyalty
models like Net Promoter and the Apostle Model.
Once an enterprise recognizes the power and
importance of customer satisfaction, the question becomes What’s the
best way to measure and build on it? For many enterprises, like Thermo
Electron, the answer is selecting a loyalty index and implementing an
accompanying loyalty program that emphasizes action.
Thermo Electron, a
world leader in analytical instrumentation laboratory equipment,
measurement and control solutions, software and services, launched its
customer loyalty initiative in early 2005. Thermo, which recently
merged with Fisher Scientific to form a new global entity, Thermo
Fisher Scientific, Inc., has long been recognized as an industry leader.
Their world-class products have set the standard in the life, laboratory
and health sciences industry. But times — and customer preferences —
change. Thermo leadership wanted to be sure their legacy business
processes still met their customers’ needs and wants. They wanted to
reexamine their service delivery and reevaluate business processes
(especially customer-facing ones) with an ear to the Voice of the
Customer, to ensure they’re as customer-oriented as possible.
In early 2005, a cross-divisional Practical Process
Improvement (PPI) team was created, charged with finding the best way to
measure and improve customer loyalty. After reviewing their options,
Thermo’s Six Sigma Black Belts — experts in all aspects of process
measurement and improvement — recommended Net Promoter as their loyalty
index.
Embracing a Loyalty Index
Net Promoter measures
customer loyalty by posing one simple question: Would you recommend
us to others? A company’s Net Promoter Score (NPS) is the percentage
difference between its “promoters” (i.e., the customers most likely to
recommend) and its “detractors” (those least likely to recommend).
“We want to understand how our customers see things,”
explained Dan Shine, Vice President of Elemental Analysis in the
Scientific Instruments Division. “Our goal is to empower our people to
improve our processes so that we give our customers practical, perceivable
benefits.” In late 2005, Shine was named to lead the NPS implementation
team.
Thermo’s rollout included
the following key steps, developed with CustomerSat. In brief, the
company:
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Embraced a loyalty
index and re-branded it as their own
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Adapted it to their
needs by choosing a partner with the kind of extensive market
research and best practices skills that would provide objective guidance
to complement Thermo’s in-house talent
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Made it the foundation
of a comprehensive enterprise-wide customer feedback solution
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Used customer feedback
to drive action and process improvement
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Tied the results to
employee and management incentives.
To infuse NPS into the
corporate culture, they re-branded it as the Thermo Customer
Allegiance Score (TCAS). More than a simple name change, the
re-branding reflected and reinforced Thermo’s serious commitment to
include the customer perspective in its daily processes. “TCAS is now one
of our key business standards,” Shine said.
Next, they looked for a partner with the market
research skills and experience to help them implement it most effectively.
After carefully considering potential partners, Thermo concluded that
CustomerSat offered the best value proposition by far. “CustomerSat was
clearly superior in 8 out of 10 categories we assessed,” Shine said.
To adapt NPS to their
specific requirements, Thermo worked closely with CustomerSat
Professional Services consultants. They recognized that Net Promoter’s
sole “recommend” question is only a starting point. “To really know what
your customers want, you must ask (additional) questions,” Shine said.
“Whether it’s ten, 20 or 50 additional questions depends on your business.
But you absolutely must ask for (more) feedback.”
CustomerSat Professional
Services ensured that Thermo’s feedback solution measured all customer
touchpoints. Additional questions were developed to yield a more
comprehensive view of customer loyalty. “Their Professional Services team
sat down with us and showed us the many ways we could use all this data,”
Shine said. “CustomerSat’s people, and the solution itself, really made
the difference."
Today TCAS is the foundation of an enterprise-wide
customer feedback system. It’s a unifying factor in this diverse global
enterprise, providing a common methodology and vocabulary for customer
interactions and improvements.
Taking the Pulse of Customers
CustomerSat surveys
measure customer satisfaction at important touchpoints, including
Thermo’s corporate accounts program, technical support, and order
fulfillment.
A relationship survey
is distributed to 3000–9000 customers per quarter. Each survey contains
20–30 key questions probing overall satisfaction, loyalty, willingness
to recommend, and details of various interactions. CustomerSat’s solutions
automatically alter survey questions depending on the customer, size,
line of business, region, etc. This keeps surveys brief and relevant.
Customer responses, displayed in easy-to-read driver
charts, pinpoint specific areas driving likelihood to recommend, as well
as threats, opportunities and advantages. Managers can instantly see
issues affecting loyalty for each NPS-defined customer segment
(Promoters, Passively Satisfied, and Detractors). All non-promoters —
anyone giving a score of 8 or below — are asked an open-ended, follow-up
question:
“What can we do in the
future to ensure that you would definitely recommend us to a friend or
colleague?”
This gives customers a voice to articulate their
experiences, priorities and suggestions.
Automated, intuitive and
easy to use, CustomerSat solutions make it easy for employees at every
level to find and interpret data in depth. “CustomerSat Enterprise, and
especially the key-driver charts, tell us which areas are most important
to our customers,” Shine said. “They drive TCAS scores and help us focus
on their hot buttons.
Action is Imperative
By combining NPS with
CustomerSat’s key-driver charts and in-depth online analytics, Thermo
developed a comprehensive set of prioritized actions based on facts — not
hunches — about what their customers really want. Customer feedback is
useful only if it’s actionable. Actions, not scores, drive revenues and
growth.
Surprisingly, although most global enterprises survey
their customers, Gartner reports only about 5% actually take corrective
action based on that feedback. At Thermo, continuous improvement through
PPI is a top priority. Their Global Action Management program focuses on
action. Taking effective action is made easier by Action Management™, a
key component of CustomerSat Enterprise’s automated solutions.
For example, in each survey customers are asked if
they’d like a Thermo representative to contact them. Each “yes” triggers
an automated action alert sent to Thermo and routed to the appropriate
account rep. The customer receives a follow-up call, usually within hours.
“It's really about
empowerment,” Shine explained. “Our customers are empowered to
identify their wants and needs. Our employees are empowered to make
improvements based on that feedback.”
Thermo divisions monitor TCAS scores during the
quarterly relationship survey, and reports monthly on activities that
address them. After updating its scorecard, each division applies that
information in its investment and process decisions. Quarterly reviews
explore cross-divisional synergies, with results reported to the CEO.
Thermo closes the loop
with each customer. Reviewing survey results and follow-up actions
boosts a customer’s satisfaction and loyalty. Unhappy customers can be
converted to happy ones very quickly, depending on your follow-up. “They
can go from ‘worst to first’ very quickly,” Shine smiled.
TCAS has made a profound
impact on Thermo. It’s transformed their corporate culture and made it
much more customer-centric. TCAS is now an important factor in their
incentive systems, and part of the goal tree for each business. At the
corporate level, TCAS has taken its place beside key financial measures
like revenues, cash flow and profit.
“It’s quickly become one of our key business
metrics,” Shine said, “along with things like on-time delivery and
out-of-box quality.”
Thermo’s top management appreciates how TCAS
benchmarks performance across the entire enterprise, measuring the
customer experience in multiple divisions. Adopting it enterprise-wide
keeps everyone customer-focused, and speaking the same language. The
steering committee, which includes a high-level business unit leader
representing each division and geographic region, meets monthly to share
issues, successes and best practices.
Because employee engagement is another important
driver of customer satisfaction, Thermo has extended TCAS to include
employees, too. A companion program, Thermo Talent Allegiance Score
(TTAS), now measures employee loyalty and commitment.
“One of our main goals is to make our entire company
more customer-focused,” Shine concluded. “We want everything we work so
hard to improve to have a tangible benefit for our customers. We feel that
TCAS will ultimately get us there.”
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