Shame on the customer?  NO– shame on the Strategic supplier.

It is more critical than ever in today’s economic business climate to ensure that any Strategic Supplier fulfills the following business best practices:

1. Adopt a ROI methodology that will document, validate and gain their customer’s agreement on the positive financial impact of the strategic Supplier.
2. Collaborate with top customers on developing a mutually agreeable joint score-card.
3. Re-engineer the sales organization to be “best-in-class” business resources; resources that can help customers be more successful.

The real challenge remains that this type collaborative, cooperative “buy-sell” relationship is not well understood by either party.  It may in fact bring with it a degree of skepticism.  Strategic Suppliers are often thought of by customers as suppliers who receive a substantial quantity of a customer’s business and in turn offer lowest pricing.  Strategic customers are often thought of by Strategic Suppliers as a customer who spends significant dollars with a supplier.  In both of these scenarios the relationship basis is too shallow to facilitate long-term financial success for both the customer and Strategic Supplier.

My observation is that the Strategic Supplier needs to take the lead and bring the practices to the table that will benefit all parties. Not all customers will be receptive to this approach; however, do not give up on it too quickly. The Strategic Supplier may have to not only prove, but reinforce their real purpose over time; the sole purpose of enabling mutual success through joint and transparent collaboration and cooperation.

Keep in mind three key words; sincerity, authenticity and integrity – these words may set the table for this collaborative/cooperative approach!

For more on Strategic Account Management Best Practices watch and subscribe to TheMetricsChannel

Dennis Chapman, Sr., founder and CEO of The Chapman Group and LoyaltyPROfessionals (TM) shares insights on working with customer relationship metrics in providing innovative strategic account management solutions for corporate customer/supplier loyalty programs worldwide. Enjoy and share this short message on the importance of having dashboards featuring highlights from his presentation at SAMA’s, the Strategic Account Management Association’s Conference in San Diego.

Think through just a few of these characteristics as I review what Jim and his team reveal as the commonality amongst 10X companies; companies that have exceeded their industry performance index by at least 10X:

 1.      The 20 mile march

Rigor and discipline to be consistent in execution of what works and makes you successful

• Follow the SAM process

 2.      Fires bullets and then only well-thought through cannonballs

Deploys in small steps without totally disrupting core business direction, practices and or philosophies

• Pilot SAM program and make ongoing corrections as appropriate

3.  Manage cash

Manage solvency so that you can weather market spikes (up or down)

• Ensure that you have the right strategic accounts; revenue as well as profitability and willingness to partner

 4.      Zoom Out – then Zoom In

Step back, analyze, strategize then focus in on key actions to take

• Establish important “voice of the customer” facts – feedback
• Fact-based (performance metrics) development of strategies and deployment of tactics – account planning

5.  Have a SMaC recipe

Specific, Methodical and Consistent recipe for success

• Having an account plan that is inspected frequently and validated in collaboration with the client 
  

I am not usually in the book-recommending business but this is a good one! – You are welcome Jim and Mort!

-KP

Dennis Chapman, Sr.

This change in supplier positioning – in terms of quantitative economic value propositioning rather than spend can be the gateway to creating more relevancy in the “C-suite”. The one key method for supporting supplier relevancy into the conversation between the strategic account and the strategic supplier is setting in motion a ROI methodology within a ROI calculating tool aligned to a specific solution.

The most significant transition to make is to focus on the economic impact – not costs or spend-percentage.  There are at least three critical factors to consider when making this transition:

• Take a holistic approach of economic impact analysis of the supplier’s solution for the client
  1. Factor cost reduction – costs avoidance – revenue improvement
• Collaboration and validation within the economic value propositioning process with the client
  1. Use documented, validated and acceptable facts and numbers
• Apply the skill set and behavior to support the tools required for making this transition
  1. Execute accurate training in use of simple tools to document the Economic Value Proposition

Relevancy can be attained by highlighting factual economic impact – this may well be the next horizon of transparent collaboration between strategic account and strategic supplier.

KP

Dennis Chapman, Sr.

1. The Sample – who are you going to survey
2. The Survey – the questions being asked of the participants
3. The Survey Process – including communications, frequency, motivations to act and closing the loop

In this 4^th and final part of our series, we will offer some additional general best practices to further improve response rates and help the overall sustainability of your customer survey program.

PART IV: GENERAL BEST PRACTICES TO IMPROVE PARTICIPATION

Even with a clean sample, a clear and concise survey script that aligns to the goals and expectations of the program, and a well defined and executed survey process, participation still may be lower than desired.  Below are a few additional best practices that can help to drive participation rates in your customer survey program.

1. Establish Internal Timelines

At the beginning of the program and each subsequent year, establish your project timeline. This will level set both internal and external expectations as to when participation is required and when results will be reported. In establishing the timeline, consider other survey initiatives (possibly being executed by another department) that your same sample / contacts may be asked to participate. When possible, try not to overlap with other initiatives, being courteous of the participants’ time.

2. Timing of the Survey Launch

It has been shown, that best participant rates are obtained when survey invites are sent out mid-week (Tuesday through Thursday) with Tuesday being the top choice. It is best to avoid Fridays and Mondays when sending out survey invites. Note: The majority of your survey responses will come in within the first 96 hours (4 days) of an invite being sent.

It is also important to consider national / international holidays that may occur around the time of your launch. If a holiday is considered a “major” holiday and prime vacation time, it may behoove your organization to re-evaluate the timeline and determine if it can be pushed up and/or moved back to increase the likelihood of potential responders being available to participate.

3. Ongoing Communications to the Customer

In Part 3 of our blog series, we spent some time discussing how important it is to close the loop with accounts/contacts. As part of the “closing the loop” process, we would recommend sending out an annual communication to the contacts in your sample (both participators and non-participators) indicating how the data was and/or is going to be used / implemented. As part of the communication, you can also include insight to strategic goals the organization is pursuing this fiscal year, which may or may not be a result of the survey feedback.

This transparency and information is welcomed and appreciated by your customers. It further demonstrates the importance and value their feedback has on the overall direction of the organization, which can help to sustain and improve participation rates over time.

 4. Revisit the Survey

As your organization and account/contact relationships evolve, it is recommended to revisit your survey script periodically – once a year or once every two years depending on your business. This will allow for adjustments to be as appropriate – situations may change, questions may have been misunderstood that need to be worded, etc.  With that said, it is important to maintain the “core” questions of the survey for trending / analysis purposes.

As you execute your customer survey program, never lose sight of the purpose – to better understand your customers and improve the overall customer experience. Providing extraordinary customer experiences will lead to improved customer retention. And with that, I leave you with a quote from Michael Dell of Dell Computers, “It’s customers that made Dell great in the first place, and if we’re smart enough and quick enough to listen to customer needs, we’ll succeed.”

A well-defined business process can range in complexity; however, all processes share three common characteristics:

1. Repeatable – the process can be done the same way each time
2. Predictable – we can expect the process to yield the same results / behaviors
3. Measurable – throughout the process we are able to compare expected with actual results

In the first 2 blogs of our series on optimizing survey responses, we covered how to establish a better sample for improved participation / response rates (Part 1) and how to create and deliver a meaningful survey to the respondent without hindering response rates (Part 2). Part 3 of our series addresses the survey process – how do we effectively deliver our well-constructed survey to our sample and what can we do as part of that process to drive up participation.

Part III: The Survey Process

It’s all in the execution! Many times great ideas fail simply because the execution of the idea fails. Implementing and sustaining a customer feedback program is no different – effective execution of the process is essential to obtaining candid customer feedback.

We recommend utilizing a 5 step process in launching customer feedback surveys:

Steps 1 through 3 of the process are specific communications that are sent/emailed to your sample. It is important that each of these communications (defined below) explains the purpose of the survey and the reason why their feedback is so critical to both the supplier organization (the one executing the survey) and their own organization.

The following outlines the specific purpose of each of the communications in steps 1 through 3 of the survey process:

1.       Executive Announcement / Survey Notification

The notification is a communication that should go out to participants informing them that a survey will be coming their way within a defined timeframe (i.e. 1 week) and asking them to participate. This initial communication should provide a program overview, including the goals and objectives of the program, indicate the value in them participating (i.e. how the data will be used for improvement efforts), and inform them of any incentives for their participation. It is recommended that, at least initially, this communication comes from an executive leader in your organization.

It has been shown that making individuals aware of the program / initiative prior to actually sending them the survey can improve response rates. In some instances, depending on the scope and nature of your program, account managers may actually choose to call on their customers and/or send a more personal email to inform them of your customer feedback program. This step is critical to the process because it creates awareness and buy-in to your customer feedback program.

2.       Invite

The survey invitation is the actual communication that contains a link (in the case of a web-based survey) and/or form for the individual to participate in the survey. It is important that this message reiterates, in a more condensed manner, the goals and objectives and the benefits of their participation (i.e. the motivation to act / the WIIFM – What’s In It For Me). We would also recommend providing the timeframe they have to complete the survey and the expected amount of time they will need to spend answering questions.

If possible, we would recommend providing an incentive for their participation as this could have a positive impact on response rates. Incentives can come in many forms and do not have to monetary. Some examples of participation incentives include:

• Donation to a charity – provide a list of 3-4 charities for the participant to chose from
• Gift Card and/or Discount on their next Purchase
• Information – provide a report of key industry data you obtain through the survey that may be of value to them; this would be non-client / organization specific information that could have a broad application

3.       Reminder

The reminder will be a follow-up to the invite and sent only to those contacts who have not yet responded to the survey. It will again restate the purpose, the value in participating and the deadline to complete the survey. In some instances, a second reminder may be sent to boost participation. In this case, the same template / approach can be used. We would not recommend sending more than 2 reminders.

Step 4 of the process, Close the Survey, is completed once all of the communications have been sent and respondents have been given ample time to participate in the survey. For a web-based survey, you will see most responses come in within the first 72 to 96 hours (3 to 4 days) of sending out an invite or reminder. It is important to establish an end date for your feedback, and closing the survey allows us to move on to Step 5 of the process- Analyze Data and Close the Loop.

Through analysis (means, correlation, regression, trending), we can better determine areas of where we perform strong, where we need to improve, where opportunities may exist, and how truly committed the customer is to the supplier. Analysis can and should be done at the account, business unit / division, and organization levels.

To ensure sustainability for your customer feedback program, the customer needs to be involved in the process. They are obviously involved in providing the feedback, but they also need to understand how the information they and other customers have provided has and will be used to better the customer / supplier relationship. This is what we call “closing the loop”.

It is important to demonstrate to the customer that their feedback was heard. This discussion of results can be done as part of your external business / account review process – it would be an item on the agenda. In closing the loop, it is critical to not call out specific respondents, but to speak more general about the feedback you obtained from the account and across all accounts, and indicate the action plan that has been put in to place to address the feedback – implementing an action plan with the customer allows progress to be tracked over time.

Closing the loop also helps contributes to the sustainability of the program by creating more buy-in and awareness for your program. The more involved the customer is in the process and the more visibility the customer has into how results have impacted strategic initiatives, the more inclined they are to participate over time – i.e. the more value your customers witness from your customer feedback program the higher your response rates will continue to be.

Establishing a well-defined survey process that is repeatable, predictable and measurable enables the customer to better understand their role in the program / process and the value it will ultimately bring to the relationship – individuals will only participate if they see the benefits of them taking the time to complete the survey. Make sure you communicate well with the customer throughout process– level set expectations upfront and close the loop to validate that the customer is being heard and action is being taken as appropriate.

In the last part of our series, Part 4, we will provide additional customer feedback program best practices that can help to optimize survey response rates.

Later that night, I got out my laptop with receipt in hand and began the survey. As I was going through each of the questions and sections, I quickly realized that the information I was providing was worthless and not going to tell much about my visit to their store. Essentially the survey had two problems – the questions being asked were not relevant to my visit and in some instances, there was not an answer choice to capture my sentiments. Nonetheless, I had to answer them to move forward. About 5 minutes into the survey, I stopped. It was not worth my time when the questions being asked of me were not reflective of my visit.

As a quick refresher, in Part 1 of our blog series on optimizing survey responses, we spoke about the importance of the sample, e.g. who will be taking the survey. In Part 2 of our series, we will cover The Survey; how to create and deliver meaningful questions to the respondent without hindering response rates – to avoid the problems I experienced in the retail survey mentioned above.

Part II: The Survey

At the heart of any customer feedback program is the survey. A well-constructed survey can yield invaluable data and have a significant impact on an organization’s strategic direction, operating procedures, and much more.  Conversely, a poorly constructed survey will not only provide data that is of little to no value, but it will also hinder participation / response rates.

As you navigate through the survey development process, consider the following 2 recommendations to make sure the survey is not the cause of low participation and/or abandonment (starting but not completing the survey):

1.       Stay Relevant

When you begin developing a survey, it is important to first define the purpose (i.e. goals and objectives) of the survey effort. A well-defined set of survey objectives will help to keep the survey on topic. Should the survey jump between non-related subject matters, you risk the participant not following the survey and/or becoming frustrated with the survey. Oftentimes, we see organizations just “throwing in a couple of questions” on an unrelated topic simply because they have an audience. This is not recommended – stay on topic and true to the survey objectives.

Just as important as staying relevant to the purpose of the survey, is staying relevant to the participant. The questions an individual is asked to answer should pertain to the elements of the customer/supplier relationship with which they are familiar.  To help with this process, utilize:

• Skip patterns – intelligence / logic can be built into most surveys so that only those questions that are relevant to the participant will display. The logic can be based upon known and/or CRM demographics as well as responses to qualifying questions in the survey.
• Opt-out answer choices – in the event that a participant may see a question they cannot answer, provide an answer choice that allows them to indicate this. For example, you may include an answer choice of “Don’t Know” or “I am not familiar with this” to minimize participant frustration and abandonment – individuals will often leave a survey if the answer choices are not pertinent.

2.       Monitor the Length of the Survey

More so than ever, and rightly so, organizations are particularly mindful of the time investment that they are asking of their customers. Between professional and personal relationships, we are all inundated with survey invitations. Keeping the survey to a reasonable length is important in maintaining and driving up response rates.

So what does “reasonable” mean? Typically we like to keep B2B surveys between 5 and 10 minutes and around 30 to 35 data points / questions that are relevant to the participant and the survey objectives – your survey may have slightly more or less. In determining the number of data points, make sure to consider skip patterns – you may have more than 30 questions in your survey, but based on demographics, an individual may only see a subset of those.

One thing we do not recommend is eliminating critical questions that address the survey objectives, strictly for the purpose of reducing the survey length.  If you feel the survey is too long, go through a review process to check for the following:

• Redundancy – are you asking the same question multiple times, in different ways? Some experts recommend this approach for validation; however, asking it one time is sufficient. If necessary, validating a response can be done through alternative venues (i.e. “closing the loop” / external business reviews).
• Relevance – is the question relevant to the survey objective and the participant? Is this something we already know?
• Actionable – does this question yield actionable results? Can you take this information and act upon it?

Monitoring the survey length while clearly communicating the expected time investment, will help to improve participation and minimize abandonment.

The survey truly is a critical component of any customer feedback program. Take the time to get it right – set clear objectives and ask the right questions of the right people!

Now that our sample has been established and a survey has been constructed, it is time to start collecting results. In Part III of our blog series, we will address what you can do during the Survey Process to optimize responses including; how to launch your survey initiative, communications, frequency, motivations to act and “closing the loop”.

• What response rate(s) should we expect?

• How do we get more people to participate?

• What will hinder our participation rates?

Achieving high levels of participation is a constant struggle for organizations implementing customer survey programs. Fortunately for you, our team of LoyaltyProfessional experts has put together a survival guide so that you do not need to struggle anymore.  It will give you the strategies and tactics to conquer it and take your survey program to new levels of success.

Through this 4 part blog series, we will break down the guide into the following key elements, all of which impact response rates:

1. The Sample – who are you going to survey

2. The Survey – the questions being asked of the participants

3. The Survey Process – including communications, frequency, motivations to act and closing the loop

4. General Best Practices – other recommendations to improve participation

In this first blog, we will be addressing The Sample – who will you survey and what impact can the sample can have on response rates, as well as the quality and usefulness of data.

PART I: THE SAMPLE (Contact Database)

Right out of the starting gate, an extremely critical decision needs to be made by the organization…who are we going to survey?

This is a seemingly simple decision; however, when data collection is done haphazardly, it will hamper participation and the usefulness / value of the data you receive. Putting together a systematic approach to this task will ensure that you have a valid and representative sample that is capable of feeding your organization with the intelligence they need to make strategic decisions.

Here are 2 recommended best practices to establishing a better sample for improved participation / response rates:

1. Go High, Wide, and Deep within your Accounts – 3 x 3 x 3

3 x 3 x 3, also known as high, wide and deep, is a recommended approach, or methodology, to selecting contacts. The 3 x 3 x 3 methodology allows us to survey multiple points of contacts at different management levels (senior, mid, and staff/first line management) and across different functions (Finance, HR, Marketing).

Should you find that you only have 1 or 2 contacts for an account, and cannot go high, wide, and deep, what should you do?  Start building those relationships! With only 1 or 2 established relationships at an account, your risk of attrition (risk of losing the account) is going to be greater.  In the event that one or both of those contacts were to leave or change positions, who would be left to continue the relationship and continue advocating for your organization?  Note: some small accounts may only have 1 or 2 contacts; however, this should be the exception rather than the norm.

In applying the 3 x 3 x 3 approach, you are ensuring that you hit all points of potential influencers within the customer’s organization, providing you with a more holistic view of how the customer  perceives the business relationship.

2. Selection / Cleansing Process

In the age of technology it is very easy to run a query in your CRM system of all contacts from all companies within a given demographic (i.e. industry) and send all those with an email address a survey.  However, this approach will negatively impact your response rate as most CRM’s are quickly becoming a repository of names for every customer contact you have spoken with, regardless of who they are and what they do.  Review your list!  There needs to be an internal cleansing process to validate contacts (are they still at the organization and should they be surveyed) and contact data (i.e. email address).

In the absence of taking the time to cleanse your data, you are more likely to get bounce backs for invalid emails, and have your survey invitation go unanswered or be deleted because the contact being surveyed has no (active) relationship with your company.  So, how should you approach the cleansing process?  Have those responsible for the customer / account review the contact data from the CRM for validity and adjust / correct as appropriate.

Ultimately, it is everyone’s goal to have a successful customer survey program, and although some define success simply by the number of responses, it is just as important for the survey responses to come from the right people, representing multiple points of view.

So now, once we have our sample, what do we ask of them? How do we ensure the survey itself does not hinder participation?

That is what we will cover in Part 2 of our Survival Guide for Optimizing Survey Responses.

It happened during a scene in the Patriots meeting rooms where Belichek stood in front of his team and referenced a quote from Sun Tzu, and his work, the Art of War.

“The battle is won before it is ever fought.”

The 3 time Super Bowl champion coach then goes on to explain who Sun Tzu was, the task that he was sent out to accomplish, and what he was attempting to teach the world about war through these words…That nothing can replace the importance of planning and preparation. After observing hundreds of battles of varying strategies across different landscapes with thousands of trained warriors, Sun Tzu came to realize that the outcome of each one of these struggles was not determined by the strongest army, or the numerous, but that outcomes were decided (almost beforehand) by the extent and effectiveness of the planning and preparation of one of the 2 sides.

Which got me thinking…this same theory and principle can be applied in the world of strategic account management. The organization with the most effective strategic account plan, who uses that document to actively plan and prepare, will win their “battles” – even before the battle lines are drawn in conference rooms and on conference calls. We have seen it over and over again in our 20 years of consulting SAM programs…that an effective (and updated) SAM plan puts organizations, teams, and customers, into positions where they can achieve levels of success they have ever only dreamed of.

So what makes for an effective SAM plan? A template inclusive of the following sections would be a great start…

 Metrics Dashboard: Summary snapshot of critical SAM data points

Account Demographics: Basic information about the account

Account Team: Definition of members (who), roles, and responsibilities

Financial Summary: Key financial data points – historical, and present; delivered and/or earned

Opportunities: List of current sales opportunities

Relationships: List of all key contacts and relationship metrics that measure the strength of the relationship

Account Rating: Internal, quantitative assessment of the account measured against best practices

SWOT Analysis: Strengths, weaknesses, threats and opportunities assessment (qualitative)

Strategies and Tactics: List of strategic account management initiatives and the tactics needed to achieve them

There are multiple answers to this question, and they can be found in loyalty surveys, customer experience management programs, and in fancy words like attrition and retention. But how do you know if any of these initiatives are ultimately benefiting your bottom line? Calculating the economic value of your account’s life cycle is the first step to effectively and accurately measuring the impact of an increase/decrease in your company’s retention rate.

Calculating an Account’s Life Cycle Value; Step 1

 First, you need to determine how profitable your average account is on a yearly basis throughout the age of the account. To do this you need to gather and analyze data associated with the costs and revenues of your accounts to create a life cycle profit pattern of your average accounts. Examples of the data you will need to collect include acquisition cost, base profit, revenue growth, operating costs, referrals and price premiums.

Calculating an Account’s Life Cycle Value; Step 2

Now that you know how much a account is worth based on life expectancy, the next question is logically; what is the average duration of a account?

The easiest way to answer this question is to calculate the retention rate and invert the fraction. To honestly determine the average duration of a account you need to develop retention rates based on the different classes of accounts that you have. Use company specific criteria to segment your accounts into classes. Examples of account criteria include age, source, industry and size. Next, develop annual retention rates for each class of account. Annual retention rates can be calculated by counting the number of accounts who defect over a period of time, annualizing that number, and then making it a fraction on top of the total number of annual accounts.

For example, 80 accounts defect over a 4 month period where your company had 400 total accounts. To annualize this number we multiply by 3, giving us 240 total annual defecting accounts out of 1,200 total annual accounts. As a fraction 240/1,200 is equal to .20. From this number we deduce that your company’s retention rate is 80%, and your company’s rate of attrition (defecting accounts) is 20%. By taking the inverse of this fraction we realize that your average account duration is 5 years.

Calculating an Account’s Life Cycle Value; Step 3

Now that you know how profitable your average account is throughout the age of the account, and you know the average age that account will realize, you can get an accurate estimate of the life cycle value of your average account. In terms of account retention, you can now easily determine how profitable it is for your company to retain accounts instead of acquire new ones.

These numbers are estimates and approximations of your company’s retention and attrition rates, and life cycle value(s). Approximating these numbers gives you and your company a good picture of how retention and attrition will affect your business but are not exact.

Use the following tips to further polish and refine these numbers:

1. Attrition rates are not constant. Usually, attrition rates are higher in the first few years of the account and lower later on. Develop a model that categorizes attrition rates on a yearly basis and apply these to the account profit pattern model.
2. Instead of using a single, static average of annual accounts think of classes of accounts moving through time. Remember you get a new pool of accounts every year and they defect at different times, but the investment is made into the whole pool. So to calculate the actual average present value of your account, you must study the entire group over time.

The Result

It is often more financially advantageous to save one account with a high life cycle value than to win three new accounts with lower life cycle values.

The path to increased growth and profitability may already exist…by working smarter to keep your current account base!