Best Practice for Small Business. Marketing ideas for small business.

Satisfaction is a subject of great interest to market researchers. Satisfaction with companies and products is one of the most important key performance indicators (KPIs) a company needs to guide its progress. High satisfaction scores result in more sales, increased loyalty, and greater profits. It is the mark of a successful business and a high satisfaction score is the ultimate marketing accolade.

So what is satisfaction and what are the satisfaction norms? In the real world we don’t say to our friends and colleagues that the restaurant we have just eaten in was 8 out of 10, or that sunset was 9 out of 10. We use adjectives from the English language to describe how satisfied or dissatisfied we were. However, these variable descriptions would not allow us to arrive at a measure of group satisfaction and so we market researchers have to resort to measures on a scale. Numerical scales are favoured by market researchers and a scale from 1 to 10 is the most common one that is used.

In the world of business to business market research most successful companies achieve overall satisfaction scores in the corridor from 7 to 9 out of 10. A score of less than 7 is at the bottom end of the acceptable range and achieving an average score of more than 9 out of 10 is extremely hard. 8 out of 10 is a good average.

It was interesting to see the article in the Financial Times at the weekend that referred to research with the general public on satisfaction levels. Lo and behold, the results were very similar to what we find in B2B research. Average scores are in the 7 to 9 out of 10 corridor with professionals achieving higher ratings than those on lower incomes. Job interest and a good family life were important contributors to their high score.

There are some lessons for us here in business to business marketing. If relationships make for a high score of satisfaction in personal life, what do you think they do in our business life? If an interesting and engaging job makes for happiness in our personal life, what do you think interesting and engaging suppliers do for supplier satisfaction?

News Digest: Financial Times July 28/July 29 2007
Professionals are happiest

People in England rate their satisfaction with life at an average 7.3 out of 10, government research published today discloses. Responses varied according to occupation, with professionals seeming to be happier overall than pensioners, unskilled workers and the unemployed.

Future financial security was one of the biggest causes of dissatisfaction among the 3,600 people polled for the Department for Environment, Food and Rural Affairs.

Feeling part of a community and health were other aspects of life with which people were least happy.

Three-quarters of the respondents rated their life satisfaction at seven or more when they were asked to pick a number from one to 10.

This rose to 7.6 out of 10 among respondents from the social grades A and B.

These two groups include professionals such as doctors, solicitors, accountants, teachers, nurses and police officers.

Satisfaction rates fell to an average 6.7 out of 10 for the social group E, which includes casual labourers, state pensioners and the unemployed.

People in this group were found to be more likely than average to have regularly felt depressed, unsafe or lonely in the fortnight before being interviewed.

Professional workers were more likely than average to have regularly felt happy, energised or engaged with what they were doing during the preceding two weeks.

Being able to spend time with friends and family was one of the most important factors that affected respondents’ lives.

Health and personal relationships were among the other most frequently cited factors.

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We researchers are always trying to measure happiness. Actually we prefer to call it satisfaction. Are our customers satisfied? How satisfied are they? What makes them satisfied? What makes them loyal?

In this article in the Financial Times of Wednesday this week, economist Martin Wolf examines the subject. He reaches the conclusion that we have long recognised – that happiness (or satisfaction), is not progressive. In other words, once you have reached a certain level, it is hard to push it higher. This means that once people have achieved a certain level of wealth, any more wealth will not make them any happier.

So it is in business. Once you have satisfied your customer and a achieved a satisfaction score of 8 to 9 out of 10, you can throw a lot more things at them to make them happier but it will be a hard task. They are about as happy as you can make them. In fact, the more you do, the more they will expect beyond a certain point. The name of the game then becomes keeping them happy and keeping them loyal; locking them in to your way of doing business if you can.

There is lots to think about in this article and lots of links to the customer satisfaction work we researchers carry out.

Why progressive taxation is not the route to happiness

By Martin Wolf
Financial Times: June 6 2007

Happiness is fashionable these days. Yet should we accept the common view that the new “science” of happiness has cemented the superiority of Scandinavian social democracy over Anglo-Saxon liberalism? The answer is: No. The results are just as destructive to the pious certainties of “progressives” as to those of their opponents.

Richard Layard of the London School of Economics and the House of Lords produced an elegant, brief and influential exposition of the new doctrine two years ago. That doctrine itself, as he explains, is a modern reincarnation of Jeremy Bentham’s utilitarianism*.

What is Professor Layard arguing? First, happiness is the sole goal of human activity. Second, happiness is measurable. Third, we know what makes people happy and unhappy. Finally, policy should aim at achieving the greatest happiness. We will then realise that “there is more to life than prosperity and freedom”.

Happiness is the right goal, he argues, “because it is our overall motivational device”. Moreover, “unlike all other goods, it is self-evidently good”. Yet if aggregate happiness could be maximised at the expense of a minority, should we do it? If machine or drug-induced illusions could make people happy, should we force people to consume them? If we could genetically engineer human beings to be happier, should we do so? The new utilitarianism cannot dispose of such questions.

Yet whatever one’s views on utilitarianism as a philosophy or happiness as an exact science, one can still address the broad conclusions of this analysis.

Its most important negative conclusion is that, beyond a certain threshold, extra wealth does not make us any happier. In any society, richer people tend to be happier than poorer ones, but the proportion of people saying they are very happy does not seem to rise over time. The explanation for this is partly that relative position matters and partly that we become used to prosperity.

The positive conclusion is that we know what does make us happy: good family relationships; a sound financial situation, work, a trustworthy community, freedom from chronic pain and mental illness, and personal liberty. Correspondingly, just six factors explain 80 per cent of the variation in reported happiness: divorce, unemployment, the level of trust in other members of society, membership of non-religious organisations, the quality of government, and belief in God.

Consider these points more closely. First, the results do not show that generous welfare states do better than less generous ones: Swedes and Americans seem to be equally happy; the Irish and British are happier than the French, Germans, Italians, Spanish and Japanese. The only reasonable conclusion from the evidence is that prosperous liberal democracies tend to be happier than other societies.

Second, the results do not merely show that a rising gross national product may fail to raise happiness. They also show that increases in the size of the welfare state, improvements in life expectancy and other measures of health, and the liberation of women from household drudgery and couples from the prisons of unhappy marriage have also failed to increase reported happiness.

What is under challenge, then, is modernity itself, not a competitive market economy alone. Prof Layard makes that clear in his comments on the decline of community and the family and the rise of individualism, crime and television. A conservative could read this book, agree with the analysis and reach policy conclusions that are almost the polar opposite of those stressed by a good social democrat, such as Prof Layard.

Prof Layard’s conclusions are, however, rather different from those of such a putative conservative: tame the rat race by taxing excessive effort; increase economic security; and promote mental health through cognitive therapy and modern drugs.

If cognitive therapy and drugs can treat severe mental illness effectively, they seem worth promoting. For the economist, then, it is the economic policies that are most questionable. Prof Layard argues that higher income is a route to higher status. But higher status for some is always lower status for others. So this is what economists call an “externality”. The externality should be taxed, just like any other form of “pollution”.

One answer to that is that effort is already taxed quite heavily in western societies. Another is that if monetary status is discouraged, people will seek status on other and often more damaging dimensions, power being a particularly dangerous example. Yet another answer is that it is far from obvious why differences in status become increasingly disturbing as income differentials increase. The fact that someone is one’s boss or has a more prestigious position in society is a big enough difference on its own.

Furthermore, how far should we pursue this opposition to status? Why not abolish all indications of superior performance, from classed degrees to Nobel prizes? Finally, is it not evident that the search for status also has positive externalities - innovations of all kinds, for example?

In all, these arguments for more progressive taxation seem weak. This is less true of what Prof Layard says on economic security. While policies that raise unemployment are harmful to happiness under any plausible assumptions, there is no reason to abandon the welfare state’s most important achievements: universal health insurance, state-funded education and security in old age.

Where, then, does this new line of analysis take us? Personally, I find its philosophical and scientific underpinnings far from persuasive. But even if one goes along with it, the implications for policy seem far more ambiguous than social democrats believe. The findings are an assault on modernity itself, not just the forms of modernity the left dislikes.

I also see little here to undermine core principles of classical liberalism: people should be largely free to make their own choices, mindful of their obligations to others, except where those choices are harmful; gross domestic product should not be the overriding objective of policy; a big effort should be made to eliminate extreme poverty from the world; and the state should focus on remedying harms, while avoiding adding to them. But governments cannot make us happy. Happiness is something we have to pursue - and perhaps never find - for ourselves.

Happiness: Lessons from a New Science, Penguin, 2005

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£17b A Year Wasted On Unneccessary Face-To-Face Business Meetings

Polycom, the leader in collaborative communications solutions, today announced results from a ‘Congested Lives’ research study of over 1,200 businesses employees in the UK, indicating that unnecessary face-to-face meetings cost UK businesses £17 billion annually. Additionally the findings of the survey, showed office workers waste 23 days on average each year traveling to and from appointments.

The research shows that two-thirds (67%) of office professionals across the UK travel at least once a week for work-related meetings, and that an overwhelming majority (82%) who have travelled to meetings in the last year believed many of these meetings were unnecessary and could have been accomplished over the phone.

• Nearly a quarter (23%) of those surveyed believe 1-2 hours of their time could be saved each week by not attending off-site meetings, with one in five (21%) saying 3-4 hours of their time could be saved per week and one in ten (11%) believing 5-6 hours could be saved

• Over one half (57%) of people who travel for business say they are less productive in their job as a result

• The vast majority of respondents (88%) of people leaving the office for meetings weekly are board-level executives, followed closely by senior managers or directors (76%)

• 50% of professionals have to plan their work schedule around external meetings, and believe meetings impact the speed at which their company can make business decisions

• 48% say they travel more on business than they did five years ago

• Office workers in London, Yorkshire and The Humber and East Midlands (70%) travel the most for out-of-office meetings and only 53% of office workers in the North East travel for meetings

• Those working as business, management and professional consultants travel the most to off-site meetings (83%). Those working in the retail sector travel the least (46%)

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In market research customer satisfaction surveys always show perceptions that are driven by something that is good and something that is bad. In an article from the Financial Times, John Kay discusses the impact of the halo effect on market research.

Our leaders should learn to say goodbye to their haloes

By John Kay
Published: May 8 2007 03:00 | Last updated: May 8 2007 03:00

They call it the halo effect. Over a century ago, it was discovered that officers thought that soldiers who were strong were also brave and intelligent, but those who were cowardly were also weak and stupid. Performance, ranked by entirely different measures, gave the same answers. Commanders simply thought some soldiers good and others bad.

When I get feedback on a speech, or a class, I see the same thing: the answers are all clustered at the extreme right, or extreme left, of the form. Perhaps you have filled in a hotel’s comment form. If you found the reception staff friendly, you probably also thought the bedroom was spacious and the restaurant offered good value for money.

Sometimes this describes reality. A well-run hotel expects its receptionists to be welcoming and also cares about its restaurant: a well prepared lecturer is more likely to present relevant material. But often the halo effect is the product of our human tendency to find evidence to support the hypothesis to which we are already committed.

That is why first impressions are important and a well-run hotel offers a smile at reception. The halo effect poses a problem for market researchers and those who try to interpret the results of market research. Which product characteristics really matter?

The fine recent book by Phil Rosenzweig illustrates the power of the halo effect in business journalism about Cisco Systems. In the dotcom boom, the calibre of the company’s management, the effectiveness of its processes and the vision of its chief executive were discussed in reverential tones. In the dotcom bust, the same features of the company that had once been so lavishly praised were roundly condemned. What had been viewed through rose-tinted spectacles was now seen through the lens of failing performance.

There is a large element in performance that is random, or at least outside the control of the individuals and organisations concerned. The environment changes more than the personalities and corporations that populate it. Winston Churchill was a disastrous chancellor of the exchequer in Britain’s depressed 1920s, but the man of the hour when the country faced Adolf Hitler alone in 1940.

But our search for excessively simple explanations, our desire to find great men and excellent companies, gets in the way of the complex truth. The power of the halo effect means that when things are going well praise spills over to every aspect of performance, but also that when the wheel of fortune spins, the reappraisal is equally extensive.

That goes for Tony Blair and John Browne. The characteristics that were once the prime minister’s virtues are now his faults. What was once pragmatism is now lack of principle: broad popular appeal is now readiness to say all things to all men. Refreshing informality is lack of proper process; and the face of charm becomes the mask of insincerity. No one was much interested in scurrilous gossip about Lord Browne’s personal life when all was going well at BP but after the Texas City refinery disaster all bad news is news. In Chicago the grand figures who so readily accepted Lord Black’s cheques and hospitality rush to court to explain how comprehensively they were deceived.

For individuals, the lesson is to get out when the going is still good. But few do: basking in the halo effect, people come to believe the adulation they receive is well deserved. All political careers end in failure, said Enoch Powell, and if this is less often true of business careers it is not because business people are less vain or more shrewd, but because companies more often impose mandatory retirement.

For corporations, the lesson is that there is no recipe for enduring excellence: the distinctive characteristics that yield competitive advantage, because they are hard to replicate or emulate, will inevitably be more appropriate for some conditions than for others. If you top the list of most admired companies, there is only one direction in which your ranking can go, and it will.

P. Rosenzweig, The Halo Effect, Free Press, 2007

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Undertaking customer research on loyalty, satisfaction and service can make a big difference to your business. You’ll need to focus your efforts on finding out as much as you can about existing and potential customers. If you can work out how they make their buying decisions, you can adapt your sales methods and techniques to fit your customers’ needs.

For business customers, you’ll want to know how big their businesses are, what sectors they’re in, and who makes the decision to buy your product or service.

If you’re targeting individual consumers, it may be useful to know such things as their gender, age, occupation, income, lifestyle, attitudes or social class.

For your existing customers, try to find out:
• what they think about your products or services
• why they need your product or service - this may be different from what you believe
• why they buy from you and not your competitors
• what they think of your prices
• what they expect from you, eg reliable delivery
• how they rate your customer service
• how they think you could develop or refine your products or services

For your potential customers, try to find out:
• who your potential customers are and what groups they fall into
• how many potential customers there are
• how much of your kind of product or service they already buy from your competitors
• the criteria on which they make buying decisions
• what it would take to get them to buy from you
• what developments they expect in your product or service
• when and where they prefer to buy

Visit www.b2binternational.com/work.html for information on our customer loyalty and customer satisfaction research programme or contact one of the team at www.b2binternational.com/contact.html.

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