Building Loyalty Management Strategies and World-Class Service Since 1984 The Loyalty Strategy Report Volume 1, Number 2 Loyalty Management Themes Resonate in Orlando Inside this issue: • LMS Conference Scrapbook Second Quarter 2004 2 • Quality Systems Drive Customer Satisfaction • Using Services to Build & Track Loyalty • The ‘Soft Side’ of Loyalty Reward ROI 3 • Who’s Who at ΩMEGA: GoldMine TeleServices • Customer Profile: Boston Scientific 4 • ΩMEGA Update • Loyalty Rewards Program 5 • Loyalty News of Note 6 On behalf of everyone at ΩMEGA, I want to thank the sponsors, presenters and attendees for the resounding success of our second annual Loyalty Management Strategy (LMS) Conference, Feb. 25-26 at the Gaylord Palms Resort in Orlando. A highlight of the LMS was the presentation of the 2003 NorthFace ScoreBoardSM Awards. Thirty-seven companies qualified last year, an increase of more than 40% from the 26 winners in 2002. Congratulations to our “class of 2003.” More than 100 executives from customer service, sales, marketing, human resources and contact center operations gathered to share experiences and learn from each other as well as from our expert presenters and sponsors. An event scrapbook appears on page 2. Comments overheard most often in Orlando had to do with customer satisfaction and loyalty issues gaining increasing mindshare and attention at the top levels of corporate management. This is welcome news to those of us who work so hard to demonstrate the business ΩMEGA NorthFace ScoreBoard SM We always preach that investments in loyalty management and customer satisfaction produce bottom line benefits for a company. The latest proof of that comes courtesy of two 2003 ΩMEGA NorthFace ScoreBoardSM winners, Haemonetics Corporation and Waters Corporation. As shown in charts provided by the firms, each has outper- impact of maximizing customer and employee loyalty. ΩMEGA is pleased to welcome Incentive Logic, Rainmaker Systems and TUV Rhineland as regular contributors to The Loyalty Strategy Report. I’m sure you’ll find their columns informative and useful. We’re planning next year’s LMS Conference for fabulous Las Vegas in late February. Our early response clearly indicates an even bigger and better conference. Winners Outperform S&P 500 formed the Standard & Poor’s 500 index significantly. For Haemonetics, revenue from June 1999 through January 2004 grew by roughly 80 percent. By comparison, the S&P 500 index actually declined by some 10 percent over that period. Source: Haemonetics Corporation (See “S&P 500” on page 5) The Loyalty Strategy Report Page 2 Loyalty Management Strategy Conference/2004 Scrapbook Hard work and good camaraderie were served up in equal doses at ΩMEGA’s second annual Loyalty Management Strategy (LMS) Conference, Feb 25-26 in Orlando. #3: Sales Representative Suzanne Hall staffed ΩMEGA’s exhibit booth at Advanstar’s ICCM East, which took place in conjunction with the LMS event. #1: Four-time winners of the NorthFace ScoreBoardSM Award include (l-r): Dennis Pappas and Jim Leroux, CYTYC; and Michael Biery and Norman Young, Kronos Incorporated. Presenting the awards are ΩMEGA’s Rich Castellano (third from left) and John Maraganis (holding award). #4: Dennis Gershowitz of Alfa Wassermann Inc. has been a thoughtful and engaging moderator for both LMS conferences. #2: Attendees got what they came for from 20 presentations about all aspects of loyalty management strategy. #5: Erwin Ismael (right) of Sony was the winner of one of three PDAs given away by (from left) ΩMEGA’s Rich Castellano and Harry Rich. Photos by Bill Moore 1 4 2 3 5 Volume 1, Number 2 Second Quarter 2004 Page 3 Using Services to Build & Track Loyalty The ‘Soft Side’ of Loyalty & Reward ROI By Michael Silton Companies always need to maximize “bang for their buck,” or ROI, when planning incentive and reward programs. Smart companies know that strong customer loyalty leads to higher lifetime value, so they invest in programs to promote and measure customer loyalty. What they don’t always realize is that their existing service programs can be an excellent vehicle for building loyalty as well as measuring it – while also generating profits. Support and maintenance services have a significant impact on customer perceptions of your business. The way you treat your customers will determine whether or not they recommend your company, and also whether they are likely to buy additional services or products from you later. In other words, service quality drives loyalty. Service programs can also be an Michael Silton excellent measure of customer loyalty. If you offer service contracts at the point of purchase or soon after, customer response to that offer is a strong indicator of their desire to establish an ongoing relationship with you. Similarly, customers who avoid buying services until they have a problem with the product are telling you that your services are not worth what you are charging or that your product is not critical to their business. (see “Using Services,” p.6) You can calculate ROI for a direct marketing program by comparing campaign costs with revenue generated. But loyalty and reward programs add another dimension to the ROI equation: soft benefits. “Because a loyalty and reward program is not a direct marketing campaign, the desired customer action, such as a purchase, survey, or moving to an online service, may not result in quick, measurable costs and revenue,” says Michael Edwards, founder and CTO of Incentive Logic. “Developing customer loyalty is a long-term investment in the the lifetime value of your customers and Michael Edwards the continuous revenue stream they create.” For example, a points campaign that rewards customer loyalty might require 18 months for top customers to accumulate sufficient points to redeem at the highest obtainable level. In terms of ROI, you can compare revenue and costs associated with customers who participate in the program versus those who do not. (see “Loyalty & Reward,” p.6) Quality Systems Drive Customer Satisfaction The ISO 9000 series was developed as an international standard to confirm that manufacturers establish and maintain a uniform quality management system to better meet customer needs. The 1994 version is obsolete as of December 15, 2003, and all companies interested in the ISO 9000 registration must follow a new standard authored in 2000. Among other changes, the 2000 revision of the standard provides a new consistent structure focusing on quality systems and documentation. “In order to successfully prepare for the requirements of the stan- dard, companies need a solid awareness of the principles of quality, a demonstrated objective, and evidence of an effective management system,” says Thomas McCarthy, quality division manager of TUV Rheinland of North America, Inc. “The standard requires companies to document their processes and continuously identify opportunities for improvement that will benefit the customer.” Internal audits are required that provide tools to assess the strengths and weaknesses of the quality management system by reporting on the implementation and effectiveness of the quality management system. “By effectively controlling nonconformities, management has the means to detect if any trends or occurences require attention,” McCarthy said. “This also provides data that, when analyzed, may result in corrective or preventive action.” Thomas McCarthy Once an organization has been found to be in conformance with ISO 9001:2000, it will receive a certificate of registration, demonstrating the company’s commitment to quality systems and its dedication to customer satisfaction. TUV Rheinland of North America. Inc., headquartered in Newtown, Conn., is a subsidiary of the TUV Rheinland Group, Germany, and is a global leader in compliance engineering, testing and certification for domestic and foreign markets. To learn more about TUV, please visit www.us.tuv.com or call 1-TUV-RHEINLAND (1-888-7434652) The Loyalty Strategy Report Page 4 Customer Profile: Boston Scientific Boston Scientific is a worldwide developer, manufacturer and marketer of medical devices with approximately 15,000 employees. For 25 years, Boston Scientific has advanced the practice of lessinvasive medicine by providing a portfolio of innovative products, technologies and services across a wide range of medical specialties. The Company’s products help physicians and other medical professionals improve their patients’ quality of life by providing alternatives to surgery. In 1997, in an effort to centralize its customer service and distribution facilities, Boston Scientific opened the Worldwide Customer Fulfillment Center in Quincy, Mass. This consolidated operation is a 1.3 million squarefoot distribution facility capable of sending product anywhere in the world. The 500 employees who work in the facility enjoy a flexible and innovative culture committed to operational excellence and meeting the needs of physician customers around the world. In 1998, the company began its customer satisfaction program by surveying customers through an objective, thirdparty entity. Boston Scientific surveys some 1,500 customers on a monthly basis throughout the year. “Using Who’s Who at Renee Lane is operations manager for the GoldMine TeleServices Group. Each issue of The Loyalty Strategy Report will profile a different individual or group at ΩMEGA with whom customers have regular contact. gram, Boston Scientific contracted with ΩMEGA to conduct quarterly telephone surveys. ΩMEGA provides Boston Scientific with a series of customized “ScoreBoard”SM reports. Paul Warren customer feedback has enabled us to continually heighten our customers’ satisfaction,” says Paul Warren, general manager of Boston Scientific. “We survey such areas as placing orders, order and shipment accuracy, and speed of delivery. We have repeatedly received high marks from our customers concerning these high-value services.” “The results were overwhelmingly positive for fiscal year 2003,” says Warren. “We received a first-time rating of 4.3 on a 5.0 point scale, which ΩMEGA defines as ‘exceeding customer expectations.’” Boston Scientific relies on customer feedback to live up to its corporate philosophy, which is “to continually improve our ability to provide world-class products and services and enhance customer satisfaction every day.” In 2003, to further enhance its customer satisfaction pro- Ω MEGA: Goldmine TeleServices Group ΩMEGA’s GoldMine TeleServices Group generates quality sales leads for clients as well as for ΩMEGA’s own sales force to deliver a constant, cost-effective flow of new business opportunities. Services also include telesales as well as revenue generation from support contracts, training programs and professional services. “We often are the first people initiating contact with clients, so in that way we’re the front line of ΩMEGA,” says Renee Lane, operations manager for GoldMine TeleServices Group since 1999. She implements customized programs, oversees operations and maintains consistent client contact. Goldmine’s pride and joy is its proprietary SMART Database of 10,000+ executive decision makers in service and support. The list is regularly updated and grows by 15-20% per year. “We offer many competitive differentiators that our clients appreciate,” Renee says. “First, we were born in the CRM marketplace, so we have unsurpassed knowledge and database resources. Also, we have a unique ‘pay for results, not for time’ business model. This means that clients pay only for leads that turn into sales and/or those we close for our clients.” GoldMine service revenue and PathFinder agents are trained as consultants on clients’ products and services in order to replicate the lookand-feel of the clients’ own staff. “But we leverage our own business methodologies to execute marketing and sales processes seamlessly and transparently,” Lane says. Other key players in the GoldMine TeleServices Group are Aleksandra LeBlanc, database administrator; Laurice Pasciuto, Robert Tratynke, Eugene Penszynski, Pamela Dupras, and Edward O’Neill, PathFinder agents; and Diane Plante, Karen AntonelliWhite, Jean Rice, Jeffrey Albair and Dawn McCarron, service revenue agents. Volume 1, Number 2 Second Quarter 2004 Page 5 Ω MEGA Update CRMI Exhibits at SHRM ΩMEGA’s Customer Relationship Management Institute (CRMI) training organization is exhibiting at the Society for Human Resource Management (SHRM) 56th annual Conference and Exposition, June 27-30 in New Orleans (www.shrm.org). The world’s largest exposition in its industry, over 20,000 attendees and 800 exhibitors are anticipated Cobbler’s Kids Get Shoes After telling clients for years that they need to implement an employee incentive program as part of their loyalty management strategy, ΩMEGA has finally taken its own advice. “We will be using a program designed just for us by Incentive Logic,” said John Maraganis, ΩMEGA president & CEO S&P 500 “The objective of the program is to focus on delivering high value services to our valued customer base,” said Maraganis. The program will include ΩMEGA’s sales organization and client services group. Employees will be rewarded based on attaining designated revenue targets and customer satisfaction goals. “Furthermore, those with extraordinary accomplishments will earn additional points,” said Maraganis. ΩMEGA Loyalty Strategy Report Rewards Program We’re making it worth your while to help us update our huge mailing database! Be among the first 250 to respond to this offer and receive these rewards with our thanks: • Free annual web customer survey; $5,000 value (first 25 respondents) • $25 American Express Gift Cards (next 25 respondents) • Mass. State Lottery $5 scratch tickets (next 50 respondents) • Mass. State Lottery $1 scratch tickets (final 150 respondents) ΩMEGA at DSL Forum ΩMEGA was a featured presenter on topics related to customer care and call center support at the DSL Forum, May 18 in Toronto. Over 200 executives from leading international telecom, IT and Internet focused companies attended (www.dslforumorg). To claim your reward, simply contact us to confirm your name, title, company name, email and mailing address. Call Diane Santiago at (978) 256-3331 ext. 0, or email her at dsantiago@omegascoreboard.com. (cont.) In the case of Waters, its revenue was up 50 percent during that time. Both companies had conducted telephone surveys, international in scope, with ΩMEGA throughout 2003. Areas measured included technical support, product quality, customer service and training. Haemonetics is one of just five companies to have earned the NorthFace award for four consecutive years. Waters is a three-time NorthFace recipient. “We don’t know exactly what impact the commitment to customer satisfaction and loyalty had in these comparisons,” said Joe Camirand, director of client services at ΩMEGA. “But it’s clear that as a group, companies that do not make these kinds of investments don’t perform as well as those who do.” Source: Waters Corporation Using Services (cont.) Loyalty News of Note These are clear symptoms of decaying customer loyalty. Call Center Experiences Affect Loyalty So in addition to customer satisfaction surveys and other loyalty tracking and building programs, look to your service programs for insights into the relationship between your company, your products, and your customers. Customers are less likely to buy a company’s products if they have a poor call center experience when calling for assistance, according to a study released recently by Portland Research Group. The study was based on findings from more than 800 U.S. consumers who had contacted companies with a question or problem, and spanned several industries: telecommunications/ISP, consumer goods/retail, consumer services/medical, and travel lodging/food. Next time, we’ll look at service attach, conversion and renewal rates and discuss how to interpret them in terms of customer loyalty. Michael Silton is president of Rainmaker Systems, a leading outsourcer of sales and marketing programs for service contracts. Rainmaker’s services include customer data mining, strategic direct marketing, professional telesales, hosted contract management websites, invoicing and collection services. For more information, visit www.rmkr.com Loyalty & Reward (cont.) responses of those who were happy with their phone experience against those who were not. Although 46 percent of respondents have their issues resolved during the first contact, the average consumer must call 2.3 times before the problem at hand is remedied, according to the study. Future purchase intent drops from 76 percent to 55 percent with the second contact. The research shows that call centers can generate loyalty, and that CRM expenses are really investments that help increase sales and profits. The research firm discovered a 55 percentage point difference in future purchase intent when comparing the Read all About It! 139 Billerica Road Chelmsford, MA 01824 Telephone: (978) 256-3331 Fax: (978) 256-4556 www.omegascoreboard.com ΩMEGA Rewards Program We could go on, but you get the idea. Since 1984 ΩMEGA has been recognized as the expert in providing customer satisfaction and loyalty management services. We have helped these companies and scores of others to significantly increase their sales and profits. How can we help you? (see page 5) But the “soft side” is where the long term benefits are. Knowing what entices your customers is paramount to your success. “While gaining new accounts is a necessity,” Edwards says, “companies must budget substantial funds to reward existing customers. This is a much more affordable endeavor with higher returns.” Incentive Logic, Inc. offers a full line of incentive and reward software and services that enable companies to motivate, thank or reward customers, increase partners’ promotional effectiveness and recognize or drive employee productivity. Visit www.incentivelogic.com for more information.