Customer Relationship Auditing launches new website

One of the founding principles of our company has been to create a dialogue between our clients (suppliers) and their customers. Too often companies are being overwhelmed with innovation, the speed of changes, the size of customer bases, and the complexity of relationships. As a result communication is recognised as important, but is not as urgent as other issues, so it takes a back seat. We want to help that communication: identify areas our clients should talk to their customers so communication is focused, relevant, and adds value as well as deepening the relationship and customer loyalty.

One of the technologies we will use on our new website is articles and blogs about relationships in the B2B environment to keep you informed about changes and trends. This is our area of expertise and we want to share that knowledge. We aim to write weekly blogs and occasional white papers on topics of interest. With this knowledge we aim to make your relationships stronger and with your key clients.

However communication is a two-way street, so if you have any opinions (both good and bad) about our blogs or articles please write your opinion at the bottom of the blog or article. Or even comment on other people’s comments. Get a dialogue going where we can share ideas and best practices.

If you think these blogs and articles will benefit your colleagues and friends, ask them to sign up. If you do not want to receive our blogs please unsubscribe. Our intent is to educate, not irritate. Also if there is an area you wish to know more or where you are having problems, let us know and we will write articles or blogs around those topics.

So have a look at our website  - www.cra.co.za - and tell me what you think of it. Give both criticism and praise. We will not be censuring comments but posts with rude or offensive language will not be tolerated and will be deleted. A hint: only write what you would say in front of your very wealthy grandmother who has not yet finalised her will!

Douglas MacGregor

This is always a difficult question to quantify. The Customer Relationship Auditing process focuses on our clients' most important customers - customers who theoretically should be receiving the best possible service. Yet, on average, we have found 46% of our clients' top customers are dissatisfied with our client (below the Zone of Tolerance). The indicator is that if a better supplier exists, it is easy to switch. By focusing on upset customers we reduce the probability of customer churn or defections to the competition. Measure the cost of one lost customer because you do not give them what they want and you will find the Customer Relationship Auditing process is a fraction of that cost.

2. How will the Customer Relationship Auditing process affect the bottom line?

There is a direct relationship between customer satisfaction, customer retention, and customer profitability. If a customer is happy with you, they will be more profitable than a customer that is not happy. The costs associated with managing an unhappy customer are generally much greater.

3. How would the Customer Relationship Auditing process help with our key accounts?

Typically, we interview all the decision makers and influencers in a company. Your account manager can then get a 360-degree view of the customer's needs and develop an appropriate tailor-made account strategy.

4. We have just bought another company, how will the Customer Relationship Auditing process benefit us?

Many companies buy other companies for one of their greatest assets - their customer base. This asset needs to be protected. By conducting a Customer Relationship Auditing survey you are sending a strong message that customers and their attitudes are very important.

5. How would a survey of this type affect the value of our company?

It will add value in two ways. First, the relationship between your account manager and your customers is documented and progress can be measured. Second, this vital information becomes your intellectual capital, that you retain regardless of personnel changes.

6. We are about to sell our company, why should we use the Customer Relationship Auditing process?

To show the value of one of your greatest assets - your customers. When selling your company, you justify your price by showing your tangible assets, etc. But what about your intangible assets like your customers and their goodwill? By doing an audit on their perceptions of your company you are showing which customers are most likely to continue doing business with you.

Yes, an individual report contains information about every specific person interviewed. The final report is a summary of all the interviews. The final report allows you to drill down by market segment to the actual individual surveyed.

2. What is the advantage of an individual report?

Most surveys compile results, thus making it very difficult to identify specific, dissatisfied customers. A 95% satisfied customer base sounds great, but what if you lose the 5% that are dissatisfied? What if that small group includes your biggest client? By having an individual report around each and every person interviewed, you can determine exactly who is happy and who is not. You can determine to what degree the customer is happy or unhappy with you and why and come up with appropriate strategies.

3. What is the advantage of a 48-hour turnaround from interview to report?

If a customer is dissatisfied, you need to know immediately. By acting promptly (two days after an interview is prompt for any survey), the customer will be impressed that you are listening and willing to take action. Loyalty is enhanced. And, possibly even more business could result. Also, the things they said in the interview are fresh in their minds. When you visit your customer to discuss their concerns, they will remember what they said and will be impressed with your desire to quickly and accurately remedy the deficiencies.

4. Does the Customer Relationship Auditing process give information about different customer groups?

Yes, it does. We segment the summary information around your existing customer segments (e.g., geographical location, type of product used, and account managers). A profile for each sub-segment is created. By looking at the different profiles one can determine, for example, whether some segments should be merged. The profiles also disclose those who are dissatisfied. Strategic intervention can take place immediately.

No, only the most important ones. All the decision makers or deal influencers in those companies must be interviewed to ensure that you understand exactly what it is about your company that excites or disappoints them. These facts enable you to act immediately to enhance the relationship.

2. Other than our most important customers, which other customers should we survey?

Those that are the most dissatisfied with you and you don't know why; companies whose revenue is declining (they most likely have alternate suppliers); or companies where you don't have majority market share and you want to increase it at the expense of a competitor.

3. Can we conduct a survey on only one customer?

Most certainly, depending on the size of that customer. We have conducted a few surveys in which we have interviewed everyone within only one company. Your key account manager is then able to orchestrate a solution that satisfies the individuals and management levels within that account. This is extremely powerful at another level because that customer understands you are serious about the relationship and are more open to you than they were before.

4. What if we have just lost a customer?

Those must be immediately interviewed for two reasons. First, to discover the reason they left. Second, to determine if there is a possibility of getting them back. A saved customer becomes your most loyal customer as they know you are willing to go to extreme limits for them.

5. We sell consumer goods - would we need the Customer Relationship Auditing process?

Even if your market is a mass audience, chances are you have a channel strategy - different vendors that distribute your products to the public. These channel partners are sought out by your competition as well. You need to ensure you understand them and their exact needs so they sell your product, not the competitor's.

6. We only deal with end consumers - would the Customer Relationship Auditing process be worthwhile?

If you have many consumers and they don't have specific accounts with you, then Customer Relationship Auditing would not be the ideal client intelligence service.

7. We are distributors for a lot of different companies. How could we benefit?

The Customer Relationship Auditing process works both ways in the value chain. You can interview your suppliers to find out how you could be a better customer to them. By understanding what they are looking for, you can choose to change the relationship.

8. Can we use the Customer Relationship Auditing process internally within our company?

Customer Relationship Auditing is not a staff attitude survey. However, it is helpful when used between units that want to improve interdepartmental dialogue.

2. How will the Customer Relationship Auditing process affect the bottom line?

There is a direct relationship between customer satisfaction, customer retention, and customer profitability. If a customer is happy with you, they will be more profitable than a customer that is not happy. The costs associated with managing an unhappy customer are generally much greater.

3. How would the Customer Relationship Auditing process help with our key accounts?

This depends on many factors; how much change occurs in your industry, your company and/or your customer base, or in your current client customer satisfaction level. If there are substantial changes then you would need to conduct interviews often to ascertain client perceptions within the changing environment. Most companies use Customer Relationship Auditing at least on an annual basis.

4. We have just bought another company, how will the Customer Relationship Auditing process benefit us?

Many companies buy other companies for one of their greatest assets - their customer base. This asset needs to be protected. By conducting a Customer Relationship Auditing survey you are sending a strong message that customers and their attitudes are very important.

5. How would a survey of this type affect the value of our company?

It will add value in two ways. First, the relationship between your account manager and your customers is documented and progress can be measured. Second, this vital information becomes your intellectual capital, that you retain regardless of personnel changes.

6. We are about to sell our company, why should we use the Customer Relationship Auditing process?

To show the value of one of your greatest assets - your customers. When selling your company, you justify your price by showing your tangible assets, etc. But what about your intangible assets like your customers and their goodwill? By doing an audit on their perceptions of your company you are showing which customers are most likely to continue doing business with you.

7. Would we use the Customer Relationship Auditing process on all our customers?

No, only the most important ones. All the decision makers or deal influencers in those companies must be interviewed to ensure that you understand exactly what it is about your company that excites or disappoints them. These facts enable you to act immediately to enhance the relationship.

8. Other than our most important customers, which other customers should we survey?

Those that are the most dissatisfied with you and you don't know why; companies whose revenue is declining (they most likely have alternate suppliers); or companies where you don't have majority market share and you want to increase it at the expense of a competitor.

9. Can we conduct a survey on only one customer?

Most certainly, depending on the size of that customer. We have conducted a few surveys in which we have interviewed everyone within only one company. Your key account manager is then able to orchestrate a solution that satisfies the individuals and management levels within that account. This is extremely powerful at another level because that customer understands you are serious about the relationship and are more open to you than they were before.

10. What if we have just lost a customer?

Those must be immediately interviewed for two reasons. First, to discover the reason they left. Second, to determine if there is a possibility of getting them back. A saved customer becomes your most loyal customer as they know you are willing to go to extreme limits for them.

11. We sell consumer goods - would we need the Customer Relationship Auditing process?

Even if your market is a mass audience, chances are you have a channel strategy - different vendors that distribute your products to the public. These channel partners are sought out by your competition as well. You need to ensure you understand them and their exact needs so they sell your product, not the competitor's.

12. We only deal with end consumers - would the Customer Relationship Auditing process be worthwhile?

If you have many consumers and they don't have specific accounts with you, then Customer Relationship Auditing would not be the ideal client intelligence service.

13. We are distributors for a lot of different companies. How could we benefit?

The Customer Relationship Auditing process works both ways in the value chain. You can interview your suppliers to find out how you could be a better customer to them. By understanding what they are looking for, you can choose to change the relationship.

14. Can we use the Customer Relationship Auditing process internally within our company?

Customer Relationship Auditing is not a staff attitude survey. However, it is helpful when used between units that want to improve interdepartmental dialogue.

15. Are the final report and the individual reports different?

Yes, an individual report contains information about every specific person interviewed. The final report is a summary of all the interviews. The final report allows you to drill down by market segment to the actual individual surveyed.

16. What is the advantage of an individual report?

Most surveys compile results, thus making it very difficult to identify specific, dissatisfied customers. A 95% satisfied customer base sounds great, but what if you lose the 5% that are dissatisfied? What if that small group includes your biggest client? By having an individual report around each and every person interviewed, you can determine exactly who is happy and who is not. You can determine to what degree the customer is happy or unhappy with you and why and come up with appropriate strategies.

17. What is the advantage of a 48-hour turnaround from interview to report?

If a customer is dissatisfied, you need to know immediately. By acting promptly (two days after an interview is prompt for any survey), the customer will be impressed that you are listening and willing to take action. Loyalty is enhanced. And, possibly even more business could result. Also, the things they said in the interview are fresh in their minds. When you visit your customer to discuss their concerns, they will remember what they said and will be impressed with your desire to quickly and accurately remedy the deficiencies.

18. Does the Customer Relationship Auditing process give information about different customer groups?

Yes, it does. We segment the summary information around your existing customer segments (e.g., geographical location, type of product used, and account managers). A profile for each sub-segment is created. By looking at the different profiles one can determine, for example, whether some segments should be merged. The profiles also disclose those who are dissatisfied. Strategic intervention can take place immediately.

19. Why should we use the Customer Relationship Auditing process?

The Customer Relationship Auditing process reveals exactly what a customer wants from you in terms of service and measures how well you are meeting their needs. The process is a face-to-face interview series using skilled and trained professionals. Customers interact with an unbiased interviewer to precisely define their wants and needs from suppliers.

20. What type of company would benefit the most from the Customer Relationship Auditing process?

Any company that deals in the B2B environment and has customers they deal with often. Also, companies that have significant competition, or that have a select, valuable customer base that provides them with the majority of their business.

21. How often should we use the Customer Relationship Auditing process?

This depends on many factors; how much change occurs in your industry, your company and/or your customer base, or in your current client customer satisfaction level. If there are substantial changes then you would need to conduct interviews often to ascertain client perceptions within the changing environment. Most companies use Customer Relationship Auditing at least on an annual basis.

22. What is important about a Customer Satisfaction Index (CSI) and why should we measure it?

As they are often beyond your control, it is very important that your customers are pleased with your service. By using the Customer Relationship Auditing process you can identify your strengths and weaknesses from the customer's perspective. You can rectify problem areas ensuring existing customers remain - while at the same time attracting new customers.

23. What are the dangers of simply having a Customer Satisfaction Index?

Just having one measurement like a CSI means nothing on its own. A CSI without a benchmark or a goal lets management define that benchmark or goal with the associated risks - if the survey results are bad, they will lower the benchmark to make themselves look good.

24. How does Customer Relationship Auditing get around the dangers of only getting a CSI?

The Customer Relationship Auditing process gets around that specific problem by asking customers what their "desired" service level is (that which they would like to have), and then immediately asks what their "adequate" service level is (the lowest level they are willing to put up with before looking for an alternate supplier). We then ask what our client's (their supplier's) performance level is.

25. What are the advantages of a face-to-face versus a telephone or Internet survey?

The interviewers are specially chosen and trained to be able to professionally handle face-to-face interaction and pick up any nuances and subtleties that would be missed in a telephone interview. Phone interviews and Internet-based questionnaires are usually highly structured. This limits what the customer can talk about, which is often risky and results in misleading errors.

26. Will the Customer Relationship Auditing process help me with my sales force?

Yes. You will receive a report for each person interviewed so you can quickly discern client-service trends from many different members of your sales force. Some of your account managers may be good on the relationship side while others may be better at helping clients with problems. In the Customer Relationship Auditing Final Report we can segment the customers around your account managers or business units, depending on your company structure.

27. Our staff morale is bad - should we do a customer satisfaction survey?

Yes, often staff morale will affect customer satisfaction, as they are not willing to go the extra mile. This can be upsetting to your customer. The interviews would identify areas from the customer's perspective that need attention, enabling management to prioritise staff intervention.

28. How would the Customer Relationship Auditing survey affect our company structure?

Often company structures are created to ensure the most efficient workflow and utilization of resources, all intended to keep costs down. This structure could alienate customers if they feel they have to fit into their supplier's structure with no consideration given to their business needs.

The Customer Relationship Auditing process reveals exactly what a customer wants from you in terms of service and measures how well you are meeting their needs. The process is a face-to-face interview series using skilled and trained professionals. Customers interact with an unbiased interviewer to precisely define their wants and needs from suppliers.

2. What type of company would benefit the most from the Customer Relationship Auditing process?

Any company that deals in the B2B environment and has customers they deal with often. Also, companies that have significant competition, or that have a select, valuable customer base that provides them with the majority of their business.

3. How often should we use the Customer Relationship Auditing process?

This depends on many factors; how much change occurs in your industry, your company and/or your customer base, or in your current client customer satisfaction level. If there are substantial changes then you would need to conduct interviews often to ascertain client perceptions within the changing environment. Most companies use Customer Relationship Auditing at least on an annual basis.

4. What is important about a Customer Satisfaction Index (CSI) and why should we measure it?

As they are often beyond your control, it is very important that your customers are pleased with your service. By using the Customer Relationship Auditing process you can identify your strengths and weaknesses from the customer's perspective. You can rectify problem areas ensuring existing customers remain - while at the same time attracting new customers.

5. What are the dangers of simply having a Customer Satisfaction Index?

Just having one measurement like a CSI means nothing on its own. A CSI without a benchmark or a goal lets management define that benchmark or goal with the associated risks - if the survey results are bad, they will lower the benchmark to make themselves look good.

6. How does Customer Relationship Auditing get around the dangers of only getting a CSI?

The Customer Relationship Auditing process gets around that specific problem by asking customers what their "desired" service level is (that which they would like to have), and then immediately asks what their "adequate" service level is (the lowest level they are willing to put up with before looking for an alternate supplier). We then ask what our client's (their supplier's) performance level is.

7. What are the advantages of a face-to-face versus a telephone or Internet survey?

The interviewers are specially chosen and trained to be able to professionally handle face-to-face interaction and pick up any nuances and subtleties that would be missed in a telephone interview. Phone interviews and Internet-based questionnaires are usually highly structured. This limits what the customer can talk about, which is often risky and results in misleading errors.

8. Will the Customer Relationship Auditing process help me with my sales force?

Yes. You will receive a report for each person interviewed so you can quickly discern client-service trends from many different members of your sales force. Some of your account managers may be good on the relationship side while others may be better at helping clients with problems. In the Customer Relationship Auditing Final Report we can segment the customers around your account managers or business units, depending on your company structure.

9. Our staff morale is bad - should we do a customer satisfaction survey?

Yes, often staff morale will affect customer satisfaction, as they are not willing to go the extra mile. This can be upsetting to your customer. The interviews would identify areas from the customer's perspective that need attention, enabling management to prioritise staff intervention.

10. How would the Customer Relationship Auditing survey affect our company structure?

Often company structures are created to ensure the most efficient workflow and utilization of resources, all intended to keep costs down. This structure could alienate customers if they feel they have to fit into their supplier's structure with no consideration given to their business needs.

• Profitability depends on building trust, goodwill and ultimately loyalty.
• Loyalty is not a sense of gratitude, but because it is more convenient to deal with you.
• One customer, well taken care of, could be more valuable than $100,000 worth of advertising.
• The marketing paradigm is “Making and Selling”. The CRM paradigm is “Learning and Doing”.
• Research tells us that Boards give 9 times more attention to spending and cash flows than to wondering where it comes from and how it can be increased.
• By reducing your defection rate from 15% to 10%, you can increase your profit by as much as 50%.
• The goal of CRM is to improve organizational efficiency.
• Companies lose up to 50% of their customer every 5 years through poor sales and service interactions.
• The more you are product focused; the more you commoditise your products.
• If you want to know what your future cash flow will look like, investigate where it comes from – the market.
• What if a company’s core competencies have no relevance to the customer?
• What if the company’s differentiators are not understood or appreciated by the customer?
• 64% of the difference between average- and high-performing companies is attributable to CRM.
• Get out of product-first mode and into customer-first mode.
• The deeper meaning of being customer focused is the ability to create superior customer value.
• Customer satisfaction has a direct impact on the primary source of future revenue streams.
• Key customer attraction drivers provide insights into what really drives customer decisions on whether to continue (or discontinue) dealing with their supplier
• Concentrate on the different kinds of customers who buy from you rather than the different types of products you sell.
• The marketing function never has been and never will be effective in an organization with a technical, production, operations, financial, or functional orientation. Such enterprises adopted the vocabulary of marketing and applied a veneer of marketing techniques.
• Value migrates from providers who produce less value to providers who produce more value.
• Companies that show the highest profitability are those that have invested in developing a very specific set of CRM capabilities.
• The long-term value of a company is largely determined by the value of the company’s customer relationships.
• Manufacturers that are customer-centric are 60% more profitable than non customer-centric manufacturers.
• To say the marketing department is responsible for marketing is like saying one family member is responsible for love.

Results - This Customer Relationship Auditing project highlighted suspected issues with nearly 40% of the people interviewed. Only 25% of identified business processes were deemed satisfactory.

Client Overview - Our client is one of three television broadcasters in South Africa, and one of two private channels. They offer broadcast services throughout Africa and link up with satellite services from around the world. Our client also runs a pay-television channel using satellite technology to reach subscribers via encryption technology.

Reasons for using the Customer Relationship Auditing process – This client was on a performance management drive and recognized the need for a customer-focused approach. There were problems with staff morale and contractors, as well as the realization that a fresh approach was needed. We interviewed department heads and external customers to determine the existing level of internal service between departments.

Customer Relationship Auditing Impact – The project triggered several events over the next year. Most importantly, it made the executive team realize that a big improvement was needed. They incorporated customer service objectives in every department with bonuses dependent on customer satisfaction. The consultation process gives a numerical value of customer satisfaction (Customer Satisfaction Index) that can be determined overall by department and by market segment, and this measure is used in part to determine the company bonuses.

Emphasis was placed on understanding customer needs. Customers now see a difference in the executive team’s attitude toward them. This can only mean more business as word-of-mouth spreads and customers refer even more business.

Results - Half of our client’s customers were pleased with the services provided. Surveys found that their managers were exceptional, but some customers felt their account people did not visit with them often enough.

While our client’s brand was very good, there was a perception that their credit card was expensive to the merchant. Merchants were more inclined to accept competitors’ cards, and too few merchants accepted the card outside the region.

Client Overview - Our client, established in South Africa in the 1960s, is the leading business expense management organization in the country. Our client delivers cost-effective, flexible systems for capturing and managing travel and entertainment expenses.

Reasons for using the Customer Relationship Auditing process – Our client needed to:

• Identify the gap between their vision and corporate and travel agents’ perceptions
• Determine the market’s perception of our client’s departmental and sales service levels
• Identify the service/delivery level shortcomings
• Identify competitor’s offerings to corporations and travel agents

Customer Relationship Auditing Findings - Forty-five interviews were conducted with many of our client’s top customers. They were chosen based on their value to the company; whether revenue was declining; or if there were known problems within the account. The interviews highlighted our client’s strengths, their account managers. However, the account managers were spending too little direct contact time with customers. Our client quickly implemented a restructuring within its account management team and gave them backup support. This immediately enabled them to see more clients more often.

Customer Relationship Auditing Impact – In one interview alone, it was discovered one key customer was in the process of switching to our client’s major competitor. Due to our fast turnaround time, our client was informed within twenty-four hours of the interview and the account was saved. This interview alone paid for the total engagement. Another interview showed situations where our client could enhance their services. This specific deliverable also justified the cost of the project.

Results - Our client had misunderstood what their customers wanted from them, and as a result of our survey restructured their service offering to be more aligned with what their customers were wanting. This has lead to a year-on-year growth of 30% for the last four years.

Client Overview - Our client is a listed IT Value Added Reseller with multiple large customers in the Government, Parastatal, and Private sectors. IT projects are long-term worth millions of Rand per project. Our client commissioned us to conduct 90 interviews across all sectors to determine how to improve and what differences there are between the different sectors.

Reasons for using the Customer Relationship Auditing process – For the last four years we have been conducting surveys for our client as a way to determine how well they are meeting their customer’s changing needs. We also do a competitor survey so our client can determine how well they are doing against the competition. Our client also uses the results as a way of determining how well the account managers are performing to ensure best practices between account managers is maintained.

Customer Relationship Auditing Findings – Of the 90 individuals interviewed, 5% were ecstatic about the level of service they were receiving (ideal reference sites), 61% were satisfied, and 34% were dissatisfied, however our client now knew which individuals were dissatisfied and received focused attention to ensure they did not defect. When looking at their business processes, their customers were satisfied with all twelve business processes. They were better than the competition for ten of the twelve business processes, one of the highest we have encountered in the IT industry. When looking at the market segments, of the fourteen sub segments, only three sub segments were dissatisfied, however by being able to drill down and see the reasons why, these sub segments were not thought as a defection risk.

Customer Relationship Auditing Impact – The annual surveys have allowed our client to be more confident in their dealings with their customers as they not only know with certainly what their customers want, but have documented proof of what their client’s needs are, how well they are performing against those needs, and where they need to improve. Their customers do not resent our interviewing them every year, as they know they are going to gain benefits of a more focused attention from our client. When our client acquired another IT company we immediately interviewed their existing customers to show them their new supplier had their interests at heart, resulting in no large customers defected. After all, one of the main reasons for acquiring another company is for their customer base.