FINANCIAL SERVICES
DESCRIPTION:
A leader in financial services was stymied by decreasing profitability and a four percent loss in market share in a one-year span while, for four years in a row, customer satisfaction ratings had increased steadily. The Juran team discovered the major issue was customer disloyalty.
PROBLEM STATEMENT:
If the firm’s customer satisfaction scores are high, why are its market share and profitability eroding?
PROJECT SYNOPSIS:
One-on-one interviews with disloyal customers revealed that nearly a third of lost business was motivated by negative experiences with the sales force. More than 100 drivers of lost loyalty were identified, with the top eight accounting for 75 percent of lost business. Remedying sales and support issues would more than make up for the lost market share. The company was encouraged not to cut its prices but, instead, initiate a series of highly visible, but not costly, changes to the sales force structure and selling process.
PROJECT GOAL:
In this instance, customer disloyalty—lost business from existing customers—amounted to one quarter of annual revenues. Our analysis showed that a five percent increase in customer loyalty would result in a twenty percent improvement in profitability, consequently, recapturing market leadership in only a year’s time.
PROJECT SAVINGS:
Market share has been regained at twice the originally planned rate. In addition, the average realized price has improved by four percent. Recognizing the soundness of the Institute’s customer loyalty approach, the company has replaced its former customer satisfaction measurement with an ongoing, systematic customer loyalty program.
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