Achieving Higher Levels of Customer Satisfaction

With deregulation of long-distance services imminent, a South American telecommunications company found that its customers were becoming more demanding and increasingly dissatisfied with its services. The company retained Analysis Group to assess whether a focus on customer and employee satisfaction could help achieve competitive advantage, and whether a dollar value could be assigned to customer satisfaction.

In this South American country, telecommunications service was divided between two monopolies. Deregulation went into effect in the fall of 1999, opening the door for additional entrants. Analysis Group surveyed the client's most profitable segment of customers to determine what their behavior would be in the post-monopoly era and how our client could attract and retain them.

We found that satisfaction is an indicator of customer behavior. For example, we determined that a "very satisfied" customer is six times more likely to recommend the client's services than is a "satisfied" customer. Further, by migrating its customers to higher levels of satisfaction, our client could increase the average tenure of its customers.

For this client, the value of successful customer management was approximately $80 million annually ($5.9 million from new recommendations and $73 million from increased tenure of customers, according to our calculations). We recommended a portfolio approach, composed of 22 individual steps, to improve both customer and employee satisfaction. For higher levels of customer satisfaction, we suggested focusing on improved billing and the frequency of problems with the line. For higher levels of employee satisfaction, we recommended improvements in performance and experience recognition systems, as well as better training opportunities.