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Article Synopsis: The High Price of Customer Satisfaction

MIT Sloan Management Review

March 18, 2014   Magazine: Spring 2014

Timothy Keiningham, Sunil Gupta, Lerzan Aksoy and Alexander Buoye

Highly satisfied customers = revenue dollars. Or do they?  Some data has shown that the relationship between customer satisfaction and customer spending behavior is surprisingly weak. 1 In this article, the authors share their analysis of the relationship between satisfaction and business outcomes, gathering data from more than 100,000 consumers covering more than 300 brands.   This data came from two sources, the American Satisfaction Index data (2000-2009) which are measures of stock returns, appended with market shares of these companies, and consumer satisfaction ratings and customer spending levels across 315 brands.2

This analysis revealed three critical issues that have an impact on correlating customer satisfaction to positive business outcomes.  1) There is a downside to continually devoting resources to raise customer satisfaction levels; 2) High satisfaction is a strong negative predictor of future market share; 3) Knowing a customer’s satisfaction level tells you almost nothing about how customer spending will be divided among the different brands used.

The authors share strategies to align customer satisfaction and profitability that companies should understand and implement as follows:

“Value to the Company vs. Value to the Customer—research and analyze your customers’ satisfaction levels with your product to the product’s profitability.”

“Market Share vs. Customer Satisfaction—begin with an analysis of customers’ satisfaction levels with not only your company but also with your competitors, as well as your and your competitors’ market shares.”

“Satisfaction and Customer Advantage—what really matters is whether or not your customer satisfaction rating is higher for your brand than for competing brands that a customer also uses.”

The authors conclude that increasing satisfaction levels can be a component of a company’s strategy, but perspective is needed.  In fact, a company may need to accept lower satisfaction scores from a smaller group of customers, in order to increase market share within a larger less homogenous group.  For researchers conducting customer satisfaction research, this context provides some fresh inspiration about how to weave conventional satisfaction research with additional data sources.

References

1 J. Hofmeyr, V. Goodall, M. Bongers and P. Holtzman, “A New Measure of Brand Attitudinal Equity Based on the Zipf Distribution,” International Journal of Market Research 50, no. 2 (2008): 181-202; and A.W. Mägi, “Share of Wallet in Retailing: The Effects of Customer Satisfaction, Loyalty Cards and Shopper Characteristics,” Journal of Retailing 79, no. 2 (2003): 97-106.

2 Some examples cited include: L. Aksoy, A. Buoye, P. Aksoy, B. Larivière and T. L. Keiningham, “A Cross-National Investigation of the Satisfaction and Loyalty Linkage for Mobile Telecommunications Services Across Eight Countries,” Journal of Interactive Marketing 27, no. 1 (February 2013): 74-82; Aksoy et al., “Long-Term Stock Market Valuation”; and others.

 

This synopsis was written by Lynn Croft, independent marketing and market research consultant. With 15 years of experience at companies such as Genzyme, Bayer Corporation, Shire, and Eli Lilly, Lynn has expertise in market research, market analysis regarding product launches, pricing and lifecycle management. 

 

[Are you planning your organization’s first customer satisfaction research? Or looking to refresh an existing program? Learn about goal setting, monitoring strategies, and common challenges in our 90-minute, live online Improving Customer Satisfaction class. MRA approved for 1.5 hours of PRC credit.]

 

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Article Synopsis: Still Full of Beanz (Effective Data Management)

How does a 150-year-old company stay relevant?

Originally published in Research Magazine July 9, 2014

By Lucy Fisher

Writer Lucy Fisher asks Colin Haddley, director of strategy, insight and capability at Heinz, “How does Heinz, a 150 year old company, stay relevant with consumers in a competitive market?”, the answer is research.  Innovation doesn’t just happen, “Generating great ideas is essential in marketing, but to generate these ideas you need to be disciplined in your approach,” Haddley points out. Managing market research data efficiently is the key.

Using a philosophy of test and learn, Heinz looks to multiple information sources for research, including electronic-point-of-sale, Nielsen data, panel data, and social media and brand monitoring.  One such panel, Heinz 57, is an online community of 300 consumers that the company uses as a source of customer feedback.

How then does Heinz manage all this data and turn it into successful marketing strategies? With customer insight teams of marketers trained in innovative thinking.  However, a big challenge is integrating the sources of data, and not focusing on any one source of insight. “Penetrating, meaningful insights are derived, felt and observed through a variety of sources of information. It is like building a jigsaw… it all starts with effective data management,” Haddley says.

By piecing all the research together, from the different sources, relevant pieces of customer insight emerge: what consumers like, do not like, want more of, or think is a flaw. “But it all starts with effective data management,” Haddley cautions. While the article didn’t specifically address how different types of market research data are integrated (perhaps that’s a recipe too dear to share), it’s still a great real-world glimpse into the value of leveraging multiple information sources.

This synopsis was written by Lynn Croft, independent marketing and market research consultant. With 15 years of experience at companies such as Genzyme, Bayer Corporation, Shire, and Eli Lilly, Lynn has expertise in market research, market analysis regarding product launches, pricing and lifecycle management. 

 

[Is your quantitative market research data collected & ready for analysis? Now what? Check out Research Rockstar’s real-time, online training program “Introduction to Quantitative Data Analysis” for help getting started. MRA PRC approved for 6 hours.]

 

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Article Synopsis: Seasonal marketing in a social age.

How consumer feedback can change what you know about seasonal buying patterns

Originally published in Quirk’s Marketing Research Review

July 2014 • Vol. XXVIII No. 7

By Amy Hayes, Vice President of Global Brand at Bazaarvoice, Austin, Texas.

“Seasonality” is a powerful word in the retail universe. In this article, Amy Hayes shares key points revealed from the latest results of Bazaarvoice’s semi-annual research of online customer conversations. Specifically, Amy discusses patterns revealed in mobile shopping behaviors.

Analysis of actual shopping behavior conducted from mobile devices suggests that conventional definitions of seasonal shopping behaviors are being disrupted by mobile shopping.  Beyond the powerful implications for marketers in general, this also has implications for market researchers who may be timing research on purchase plans and branding around seasonal shopping assumptions.

November and December have historically been the busiest shopping period for retailers, but new research reveals that product site traffic from mobile users continues to trend upwardly for the remainder of the year.  This suggests that mobile shoppers may actually form new mobile shopping habits during the holiday season. Many people try mobile shopping for the first time during the holiday season, and then become loyal mobile shoppers.

Another key shopping period is the back-to-school crowd, second only to the holiday season. Although school may start in the fall season, research uncovers that mobile shoppers actually begin back-to-school research/shopping in mid-June and peak in July.  Retailers and researchers heeding this research would benefit by considering this “pre” season period.

Based on Hayes’  review of the data,  researching actual mobile shopping behaviors (as opposed to say, sending surveys to mobile phones) shows strong value to market researchers as well as retailers focused on seasonal marketing, as it challenges conventional thinking about when seasons actually start.

This synopsis was written by Lynn Croft, independent marketing and market research consultant. With 15 years of experience at companies such as Genzyme, Bayer Corporation, Shire, and Eli Lilly, Lynn has expertise in market research, market analysis regarding product launches, pricing and lifecycle management. 

 

[Want to learn more about how to obtain market & customer insights from social media websites? Check out Research Rockstar's Social Media Meets Market Research live online class. Register soon - classes fill up fast!]

 

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7 Strong: Meet Our Amazing Market Research Instructors

Meet Our InstructorsResearch Rockstar’s instructor roster is now 7 strong. Well, 8 if you count our founder, Kathryn Korostoff who also teaches. Check out the Research Rockstars who teach our market research classes:

Susan Abbott is president of Abbott Research and Consulting.  Susan is a specialist in customer insight and innovation; expert qualitative research of all kinds, including online communities and discovery labs. She also shares her research insights on her blog. We look forward to Susan facilitating some of our qualitative classes.

Delanea Davis, founder and President of Solstice Strategy Partners, LLC, has led some very engaging classes on Writing Qualitative Research Reports and Managing Focus Groups. She brings her 18 years of professional experience with her to the class, and some very funny stories too!

Jeffrey Henning is the founder of Researchscape International, a market research publisher that enables customer-driven organizations to keep up with changes in consumer attitudes and behaviors.  Jeffrey is a member of AAPOR, ESOMAR and the Marketing Research Association. In 2012, he was the inaugural winner of the MRA’s Impact award. He is a well-known market research expert; follow him on Twitter @JHenning.

Janis Haywood, an Independent Research Consultant, is an experienced quantitative research pro. We are thrilled to have Janis teaching quant classes for us, most recently Questionnaire Design 201. Janis has broad experience, but we especially love her CPG research stories!

Karen Lynch, founder of Karen Lynch & Associates, has more than 20 years of experience as a qualitative researcher, facilitator and trainer. She is also a talented writer; check out her market research blog here. Karen teaches Qualitative Research topics for us, bringing amazing tips to our students from her experience moderating hundreds of focus group and individual interviews.

Dr. Steven Struhl is the founder of Converge Analytic. His specialties include discrete choice modeling, segmentation, Bayesian networks, machine learning, conjoint and other trade-off methods, market simulation, market structure analysis, product and service optimization, and more. He wows our students while teaching Introduction to Conjoint Analysis and other quantitative research topics.

Greg Timpany, co-founder of Anova Market Research, continues to impress us with his Quantitative Market Research knowledge.  Greg has honed his Market Research skills for more than 20 years, and shares lots of instructive, real-world examples in his classes. We have been so lucky to have Greg lead a number of our Introduction to SPSS classes.  Greg also tweets about market research topics; follow him @DataDudeGreg.

All of our instructors are actual market researchers. They speak from experience. They share real stories about market research successes and even failures. Their knowledge is practical, not theoretical. And frankly that’s what makes our classes so fun: they aren’t full of boring, academic information you will never really use. It’s all about real applications, best practices, and risk mitigation.  See our complete class options on our Training Store.

 

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Kathryn’s rant on too many market research conferences

Ever feel overwhelmed by how many solicitations you get to attend market research conferences? You are not alone! Kathryn recorded a video rant on this topic while driving to work.  It includes her decision on how she is going to handle the inundation of conference advertising.

You can also click here to view the video on YouTube.

 

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