How can management tell what customers want? David Shoesmith, managing director of Yorkshire, UK-based Abram Pulman Steel, found a new customer survey technique provided unsuspected insights.
A perennial problem for businesses is assessing customers’ satisfaction and their needs. Conventional methods of surveying tend to elicit responses only from the highly satisfied or the very disgruntled. But now it is possible to get a more complete view of customers’ requirements. A steel stockholding business, Abram Pulman Steel was one of the first to use this method already popular in the US, but relatively new in Europe.
The InfoQuest system has a particularly high response rate (75%), perhaps because it is not a box-ticking exercise, but involves what is described as a ‘chocolate box’. Instead of a chocolate, each segment contains a question, plus several strips of paper bearing answers ranging from ‘totally satisfied’ to ‘totally dissatisfied’. The respondent posts the chosen answer into a slot in that segment. This system has much more appeal for busy managers than dealing with yet another form.
Managing director David Shoesmith said, “Since the survey, we have been very successful in increasing our business and we are having to look at different working hours and increasing our staff to meet demand. Indeed, just eight months after the new style survey, internal accounts show the business is looking at a 30% increase in annual turnover”.
John Coldwell, who recently negotiated the European licensing rights for the InfoQuest Business Process Review system, and in particular its unique method of surveying, says he chose Abram Pulman Steel as a challenging early participant because it deals in steel, rather than anything remotely ‘sexy’ or ‘soft’, so its customers are not given to navel-gazing about ways of improving their lot.
The results were surprising. Although Shoesmith and his fellow director Chris Horner had assumed that customers were buying from them solely on price, many of them said that although price was important, customer service was a key selling point.
As Shoesmith put it, “All customers are very price conscious, but those surveyed considered our service to be equally important”.
Armed with this insight, Shoesmith and Horner encouraged staff to build on these service strengths.
Collating the results from InfoQuest’s surveys on behalf of more than 20,000 companies in 40 countries, some interesting generalisations emerge:
• a totally satisfied customer contributes 2.6 times as much revenue as a somewhat satisfied customer and 17 times as much revenue as a somewhat dissatisfied customer
• a totally dissatisfied customer decreased revenue at a rate equal to 1.8 times what a totally satisfied customer contributes to the business.
This last finding is particularly worrying, since it means that even with twice as many completely satisfied as completely dissatisfied customers, a business would be doing little more than standing still.
Companies must have at least 60 significant customers to provide a sensible volume of respondents, and these are contacted discreetly to ensure they are happy to participate. After that, InfoQuest monitors the replies until 75% have been received, then sends them off for analysis.
The survey certainly worked for David Shoesmith and Chris Horner, who have decided to change the century-old company ethos to concentrate on marketing and advertising.
“We’ve decided to change tack, raise our profile, and get our name out there. And we are having a whale of a time”, said Shoesmith. And turnover suggests the customers are appreciative, too.
* This article is from Finance & Management Magazine, published by The Institute of Chartered Accountants in England and Wales, and written by the editor, Helen Fearnley.