The Loyalty Strategy Report

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
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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
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(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.