In Part I of our Due Diligence blog, we discussed the critical nature of open-ended, in-depth customer feedback in understanding the value of your potential investment or in becoming a customer-focused company. Simple high satisfaction ratings (Sat) and/or high Net Promoter Scores (NPS) often don’t tell the whole story.
According to a Dan Ariely column in the WSJ (2-27-2022), “Researchers found that about 80% of online reviews [for restaurants] were four or five stars. This positivity bias makes the star ratings useless…But the researchers did find a better predictor of quality in the emotionality of the comments…The best option is probably to ask someone.” That is what Mayfield Consulting does – ask. We ask open-ended questions to understand the emotion.
This sets the stage for many surprises found while conducting open-ended interviews with customers that have given high check-the-box ratings to their supplier.
SUPPLIER of PERIMETER SECURITY SYSTEMS – First Surprise
Situation: A new CEO, taking over a flailing investment, found several of his largest customers were getting ready to bolt. And they were quite vocal as to why. His company was responding within several weeks to repair calls, but that wasn’t good enough for large companies that had many locations nationwide. They needed perimeter security around the clock. He wondered about the rest of his accounts since the large accounts were plenty vocal – directly to him!
After performing in-depth interviews with the rest of the accounts, Mayfield Consulting found a huge difference between the expectations of large and small accounts. Small accounts were perfectly happy with a several-week response time to service calls – they had never seen any better, i.e., sitting ducks for competition.
The CEO for the security provider stated, “High overall satisfaction with ‘our company’ from small accounts was probably due to the lack of competition in many geographies. Low scores on issues the customers described as critical were not reflected in the satisfaction or NPS scores.”
Using our data, he was able to go to his Board of Directors to convince them to invest in:
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- Hiring additional service techs to speed up service response time for both large and small accounts
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- Large accounts would gain faster service and would not leave the fold
- Smaller accounts would gain faster service leaving no room for a competitor’s pitch
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- Nationwide service, so he could expand with his largest accounts
- Hiring additional service techs to speed up service response time for both large and small accounts
Two years later, more open-ended feedback was performed which showed:
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- Many more accounts were satisfied and would give him high scores on all the critical decision factors – and the discussions backed up these high scores
- The security company was gaining revenue from their largest accounts with a nationwide expansion
Outcome: The Board of Directors could see not only from the financials, but from customer feedback that their investment in speedier and nationwide service had paid off, giving them confidence to invest in the next round of the CEO’s plan.
SUPPLIER of PERIMETER SECURITY SYSTEMS - Second Surprise
Situation: The next plan was to buy a regional competitor. During due diligence, the target company would not supply a customer list, so the CEO negotiated the price down – assuming and fearing many unhappy customers. Within days after the acquisition, Mayfield performed open-ended, in-depth interviews with ALL customers of the acquired company. From these discussions, we found:
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- Several accounts that were not satisfied, particularly with the length of time to get to repairs – those accounts were saved since the investment in time to respond had already been implemented
- A much higher level of satisfaction than anticipated
Outcome: We laughed. They should have paid more.
OTHER SURPRISES found from In-Depth Discussions
SUMMARY:
Customer feedback with open-ended questions encourages respondents to really think about their answers and try to explain “why” they said what they said – in a sincere effort to improve their supplier’s offering. They want action! These conversations definitely minimize surprises and lead to the right strategic investment. Investors, Boards of Directors and Senior Operating Managers need this kind of information to make informed decisions before putting money on the table or investing in upgraded offerings or services. Let us know if we can help!
Mayfield Consulting’s team has hundreds of combined years of experience in sales and marketing and provides market research as well as sales, marketing and PR strategy and implementation. All services are performed by seasoned professionals for business-to-business companies. Mayfield has special expertise in software, security, business services, financial services, and classic manufacturing industries. With a tagline of “Where Results Happen,” Mayfield Consulting clients have been named eight times in the last nine years to the Inc. 5000 List of America’s Fastest Growing Private Companies, won more than 50 awards, and experienced exponential growth.
