Most customer surveys focus on a company’s overall performance on key product and service attributes associated with defining the overall customer relationship.  Companies that regularly measure their overall performance should be commended for monitoring their performance and adjusting their strategy to improve their overall customer satisfaction.  However, most leave out one of the most important aspect of the customer/supplier relationship, which is “how do they preform relative to competition?”.  Competitive intelligence can provide this critical piece of necessary information.  Too often companies are lulled to sleep by good performance ratings, only to lose business to competitors that are performing better in areas important to customers.

Incorporating competitive intelligence into customer satisfaction surveys provides the insight necessary to maximize the potential for growth within your current customer base.  The process for adding competitive insight is straight forward and adds little to the time it takes to complete the survey.

In assessing competition, we recommend using the Best Alternate Supplier (BAS) methodology to assess competitive position. Customers are asked to rate your company on each attribute of product and service performance. As they do so, they are also asked to rate the performance of their best alternate to your company (the one supplier they would buy from if they did not buy from you). The best alternate can be different for every survey respondent. In this way a best-in-class benchmark is created.

Since the ratings for your company and the BAS are of the same attributes, scores can be netted out, resulting in a number that indicates your position versus the best alternate – ahead or behind. We refer to these scores as net scores, the average evaluation of the study sponsor “net” of the Best Alternate Supplier. A positive net score indicates a competitive advantage and a negative score a disadvantage.

Competitive Position – Net Scores

In the above example, the company (let’s call them ACME) was perceived to be performing ahead of the best alternate supplier on most attributes, with the exception of product line, durability, ease of use and overall product quality, reducing total cost of ownership, quality of installation, equipment pricing, promoting a culture of safety, and trust and integrity. Many of these attributes were statistically at parity with the BAS, with an average negative net sore of less than 0.10. In contrast, many attributes, especially sales representatives, were rated well ahead of the BAS.

This analysis began to bring clarity to some issues that ACME was facing. For example, although ACME’s safety program was evaluated relatively high and an area of relative strength, that of the BAS was rated higher. Also, ACME did not fully understand why equipment and parts pricing was thought to be high. In the performance analysis, equipment and parts quality did not emerge as an improvement priority, and pricing did not appear out of line with competition. However, weak competitive performance on parts and equipment quality helped to explain why parts and equipment pricing was perceived to be too high – customer did not perceive the quality and price were in line, in other words, perceived value of parts and equipment was too low.

An additional competitive insight was gleaned by identifying the drivers of the Net Promoter Score (NPS) and their net score. If ACME could identify the attributes that were most responsible for creating positive NPS scores, and if they understood the competitive advantage they had on each of those drivers, they could then institute programs to improve and defend their position on those key items. We call those attributes NPS Influencers since they drive the outcome of ACME’s NPS.

NPS Influencers

In this example, there were seven attributes that drove ACME’s NPS score (in red area of chart). Additional analysis confirmed that these seven attributes accounted for 98% of the variance in Net Promoter Score results. Two of these attributes enjoyed a strong positive position versus the BAS – product knowledge and problem resolution – both attributes describing ACME’s sales representatives. Five other attributes were also identifed as NPS Influencers and these five were staistically at parity with the best alternate.  The three price-related attributes (parts and service pricing and perceived value) ACME elected to leave alone. However, ACME began an immediate process improvement effort  aimed at the other two attributes – conflict resoution and site supervision, to with the goal of developing clear differentiation and sustainable competitive advantage.

As a result of the study, ACME came away with some important conclusions and strategic direction.

• The company noted that its safety program – thought to be a company strength – had not been kept current with competitive programs and any competitive advantage had eroded. A safety consultant was retained to review ACME’s safety program and develop improvements to lower the Company’s injury rate and re-establish ACME as a world-class performer on employee safety.
• ACME’s sales force received survey results well as they were evaluated well ahead of competitive alternatives. Ongoing training and professional development was redirected toward problem resolution, conflict resolution and communication allowing the sales function to further distance itself from competition.
• The Company did not alter pricing on parts, equipment or service. However, they formed an internal process improvement team to look at site supervision and develop ways to more effectively track key areas of performance, and systematically improve performance on those same areas.
• Survey information was shared with ACME management first, then filtered down to each functional area and throughout the company, worldwide. ACME decide to conduct a follow-up survey one year later to track progress on the same attributes.

Through the integration of competitive intelligence in their customer survey, ACME was able to understand and identify specific areas of strength and weakness. The assessment allowed the company to hone in on short-term priorities for improvement and prioritize subsequent investments. By comparing results to the best alternate supplier, ACME developed a more accurate perspective on their position and the need for change. And, lastly, the results highlighted areas to monitor and improve customer behavior in promoting the company via word of mouth recommendations.

The competitive information gained form the survey helped ACME to identify and implement corrective actions before they resulted in lasting damage to the company and its hard-earned reputation. Since competition did not have this insight, ACME management believed they possessed a marketplace advantage that could be exploited for share gain and improved profitability.