Providing Leaders with the Missing Link:Making Customer Information that is Linked to the Bottom Line Part of Leaders’ 360-Degree Feedback

Jim Miller

Shon Magnan

Jennifer Mattocks

For more information please contact Jim Miller at:

651-688-1912 or jmiller@questarweb.com

Presented in “Making 360 Matter: Program Attributes and Links to Organizational Outcomes” at the Eighteenth Annual Meeting of the Society for Industrial and Organizational Psychology, Orlando, FL April 11, 2003

Background

• Strategic benefit of 360° feedback is receiving input from each of a leader’s constituents …

LeaderLeader

SupervisorSupervisor

SubordinatesSubordinates

PeersPeers

Customers?Customers?

Background

• Why isn’t customer feedback included in leadership

development?– Not all leaders interact with external customers

– Reliability of customer ratings is suspect

– Often no direct link between particular managers and

customers.

• Instead of attempting to include customer feedback

in a typical leadership assessment model, some

retail organizations are using linking models to target

leader development as one way to improve

consistency and excellence in concept delivery.

Background

Linking• Models of organizational functioning and

outcomes (e.g., Heskett, et al., 1994; Wiley, 1996; Rucci, et al., 1998)

Operating System andService Delivery System

InternalServiceQuality

Empl.Satsfctn.

Empl.Retntn.

Empl.Prdvty.

Customers

ExternalServiceQuality

Custmr.Satsfctn.

Custmr.Loyalty

Bottom Line

RevenueGrowth

Profit-ability

Research Questions

• Will the climate for service created by a leader impact the consistency and excellence of concept delivery?

• Does it make a difference if customer feedback is utilized for administrative vs. development purposes?

Method: Sample

• Program #1: Survey responses obtained during a customer service tracking survey for a nation-wide 4000-unit retail chain.

• Customers were invited to complete an IVR survey.• Data collected from March 2001 through December

2001.• Total sample size 500,000 respondents.• Survey used for administrative purposes - store

managers evaluated and compensated for their customer results.

Method: Sample

• Program #2: Survey responses obtained during a customer service tracking survey for a nation-wide 150 unit restaurant chain.

• Customers were invited to complete an IVR or Internet survey.

• Data collected from January 2002 through December 2002.

• Total sample size over 90,000 respondents.• Survey used for developmental purposes - store

managers are not compensated for their customer results.

Method: Measures

• Program #1: Service Compliance – e.g. Associates Professional?, Wait Time Under 15

Minutes, Cleanliness of Store

• Program #2: Customer Satisfaction– Taste of Meal, Atmosphere of Restaurant, Knowledge of

Associate, Overall Satisfaction

• 5-point Likert satisfaction scales.

Results: Linking Feedback to Sales Performance

• Found significant correlations between customer

feedback scores and sales growth

Sales GrowthSales GrowthOverall Customer Score

Overall Customer Score

Sales GrowthSales GrowthOverall Customer Score

Overall Customer Score

.23

.31

Retail Chain (administrative)

Restaurant Chain (developmental)

Results: Customer Feedback and Sales Growth

Restaurant Chain Customer Satisfaction Scores

Sa

les

Gro

wth

- Y

TD

Results

• Feedback was developed for store managers that correlated sales growth to specific customer feedback items.

• Allows leaders to focus on the aspects that most affect their bottom line.

Customer Satisfaction SurveyRestaurant #620 Restaurant Level ReportMay 1, 2001 [Percent Very Satisfied]

50 Customers RespondingCustomer Loyalty Index:

This Period Last Period Market Company Top 10%Overall Satisfaction 54% 54% 54% 54% 54%Value for the Money 73% 73% 73% 73% 73%Likely to Revisit 77% 77% 77% 77% 77%Likely to Recommend 73% 73% 73% 73% 73%

Big 3 Areas to Work on:

1. Cleanliness of Dining Room 2. Speed Food Delivered 3. Freshness of Ingredients

"Critical" :

Taste of Meal 62% (G) 54% 54% 54% 54%

Server Menu Knowledge 78% (G) 78% 78% 78% 78%

"Important" :

Freshness of Ingredients 54% (Y) 54% 54% 54% 54%

Cleanliness of Dining Room 35% (R) 78% 78% 78% 78%

Friendliness of Server 54% (Y) 54% 54% 54% 54%

Speed Food Delivered 20% (R) 54% 54% 54% 54%

Server Timeliness 78% (G) 78% 78% 78% 78%

"Monitor"

Cleanliness of Restrooms 54% (Y) 54% 54% 54% 54%

Comfort of Restaurant 54% (Y) 54% 54% 54% 54%

Temperature of Food 54% (Y) 54% 54% 54% 54%

Lobby Greeting 78% (G) 78% 78% 78% 78%

Trend for Customer Loyalty Index

77%

(G) Green - Areas of Good News! (Y) Yellow - OK, but could be better (R) Red - Areas for Improvement

25%

50%

75%

100%

May-01 Jun-01 Jul-01 Aug-01

CL

I

Results

• For feedback to be valuable, store managers need to receive timely feedback.– Unlike traditional 360° feedback, data are collected

continuously.– Managers do not have to wait a year to see if the

improvement efforts they are making are impacting their customers.

– Feedback can be used as a early warning system - don’t need to wait until sales lag to correct a problem.

Results

• Results used to determine not only where managers need to improve - but how to improve.

Overall Low Service

Inconsistent Service

High Performance Low

Per

cen

t V

ery

Sat

isfi

ed

Conclusions

• Customer feedback can be an important component of a leader’s development plan.

• Strategies, such as linking, need to be created that provide timely customer feedback.

• Customer feedback developed with either an administrative or developmental purpose can provide valuable data.

Further Research

• How do we integrate customer feedback into a traditional 360° program?

• How does an organization where customers cannot be linked to individual leaders take advantage of this type of feedback?