After analyzing the case study, following questions arises: How does a company like Custom Research serve its clients and make a profit? What trends in the industry at the time the case was written are important to note? What are the pros and cons of having the same person both selling a research project to a customer and actually carrying out the research? Are all their their clients equally profitable? Evaluate the procedure used by Jeff Pope in dividing customers into categories of profitability. What are the problems in the way the analysis has been done? Why not keep all clients that cover direct costs? On the other hand, what are the problems associated with serving clients based on their profitability? Should Custom Research continue to serve all of its customers? customers? If not, which customers would you you suggest keeping? (How should Customer Research decide which customers to serve and which which to neglect?) What criteria would you use in making this decision? In general, how would you deal with customers you don't want to keep?
Learning Objective To
analyze the factors that makes clients profitable.
Custom Research is considering terminating service to many clients to eliminate unprofitable work and concentrate on the more profitable client projects.
Choose or Lose Judy Corson and Jeff Pope, cofounders of Custom Research Inc., realized they could grow their company by cutting their customer base in half. Custom Research Inc.'s bet-the-company growth strategy: cut it s customer base in half Judy Corson and Jeff Pope stared in disbelief at the chart they had just made. The numbers in front of them were staggering--staggeringly bad, that is. The
year was 1988. Holed up in a meeting room at the Holiday Inn across the street from their Minneapolis office, the cofounders of Custom Research Inc. had gathered in a high-stakes meeting with consultants and top CRI managers to figure out why the then 14-year-old marketing -research company had stopped growing. CRI had more customers than ever, and dozens of them were household names. The company had a manageable number of employees. But looking at the chart they had just drawn, Corson and Pope suddenly understood what was wrong. CRI had too many customers. Or too few good ones. At
that meeting Corson and Pope and their team had divided CRI's customers into four categories, based on the companies' perceived value to CRI's bottom line, and plotted the customers on a chart. Only 10 of CRI's 157 customers fell into the most desirable category (bringing in a high dollar volume and a high profit margin). A whopping 101 customers contributed very little to the top or bottom line. Many, explains Pope, "weren't profitable at all when you factored in the selling costs." Corson adds, "We looked at this and said, 'Wow!" In short, CRI was spending much too much time and valuable employee resources on too many unprofitable customers. And the effect on the company's business was palpable. Corson and Pope had been so busy tracking the progress of their top customers--a group of 30 or so large companies--that they had never really ranked their 127 other customers. After all, those "second tier" companies included such big names as Texas Instruments, Harcourt Brace, and Young & ho would turn down business from those household names? Rubicam. W ho
But the chart they had drawn for themselves made clear in an instant the problem with their business. And it forced Pope and Corson to make a dramatic decision. To jump-start CRI's growth, they would have to systematically dump a large number of their existing customers, and then ruthlessly screen new ones to make sure they passed muster. In effect, the company's new growth strategy was to turn away revenues--revenues it had come to count on. That
1988 meeting marked the beginning of a complete overhaul of CRI's business model. And the results have been staggering--but this time staggeringly good. In 1987, CRI had 157 customers and nearly $11 million in revenues. By earlier this year, CRI had reduced its customer base to just 78 but estimates that its revenues will be boosted by 175%, to $30 million. And perhaps most important, during that same period, the company has more than doubled its profits. CRI has spent years perfecting a system that gets to the heart of one-to-one marketing: the idea that you treat different customers differently. Promising new customers, like potential employees, are eagerly screened through a series of interviews before and after they start with CRI. There are individual plans for customer "promotion," regular reviews, and special perks, and the company takes great pains to measure and to try to exceed customer expectations. But, after all that, if customers aren't pulling their weight, they can be effectively "fired," just as employees can be. In fact, customers even face an informal version of the sixmonth review. "We know within six months if it's working," says Corson. "We won't follow someone over the cliff." Slash
and burn
Making the decision to dramatically restructure CRI's objectives and customer base was one thing. Doing it was another matter altogether. Sam Marcus, a New York City-based consultant who had helped coach CRI through its revelation at the Holiday Inn, watched on the sidelines as the partners worked up the courage to change. "They'd ask, 'Sam, do your other clients get this nervous?" Marcus recalls. "I reassured them the nervousness was fine." Until they hit a plateau, Pope, 56, and Corson, 55, who had become partners after leaving positions at Pillsbury, had watched their business grow without much difficulty. The plan to turn customers away was a scary leap of faith.
Handpicking customers was a high-stakes strategy. At the time, CRI had no guaranteed contracts to cushion the risk. (That's still true today.) What's more, it seemed as if every day another marketing-research firm was born, ready to undercut CRI's prices. Did the company have the credibility in the industry to pull this off? The
founders calculated they'd need to reap about 20% to 30% more business from some two dozen companies to help make up for the roughly 100 customers they planned to "let go" within two years. Anxiety
levels rose. For one thing, could CRI replace bad sales with good fast enough? Pope and Corson believed that their biggest customers "could be even bigger yet" if the sales staff were freed up to focus on those accounts. "But," recalls Pope, "believing in your head is one thing; your heart's another." And
there was a thornier issue: no one wanted to be the one to tell a current or potential customer "Sorry, we can't do that." Account managers were quick to make a case for why this or that customer should be excluded from the new guidelines. "It was greatly uncomfortable to let go of those [marginal] clients," recalls Samantha Ball, who was new in sales at the time. Jon Palmquist, a longtime account manager, explains the ambivalence that prevailed: "When your job is to bring in new business, you don't want restrictions on what new business you can bring in." But little by little, CRI began enforcing its new standards with existing customers. Small groups of employees rehearsed what they'd say to an old customer who called with one of those once-in-a-blue-moon projects. Everyone knew CRI made little or no money on those sporadic contacts. Senior vice-president Ginger Sack remembers how one General Mills employee routinely called once a year, at Christmas time. "I had to turn him down," she says. Paring down the customer list was most difficult on salespeople who had little experience dealing with major customers. But it was hard on everyone. "It was scary on the front line," recalls Sack, who notes that everyone was thinking, "What if my three clients don't pan out?" More important, what if big customers rejected CRI's bid to get closer? But to hear customers tell it, they didn't mind the extra attention. "I noticed a stronger relationship, and that there were more CRI people deployed at us. It was
impressive," says Robert Smith, who was then a director of marketing research at Dow Brands and is now at Maytag Corp. Such glowing customer reviews began to translate into increased sales and profits in 1989. By 1992, CRI had successfully overhauled its system, and there was an impressive leap in sales, to $16 million--up 45% over 1987's figure. Over time, even the salespeople were relieved. Instead of beating the bushes, they were able to focus on--and be compensated for--how well they developed the customers CRI had already carefully screened. The
gatekeeper
Forty-six-year-old Beth Rounds doesn't look particularly powerful. A petite, neatly groomed redhead, Rounds speaks softly and smiles easily. She works in a modest office near the front doors of CRI's Minneapolis headquarters. But Rounds plays one of the most important roles in the company: screening new customer leads and rejecting those that she thinks fall short of CRI's profitability goals. She is the gatekeeper. Anxious
would-be customers have to pass Rounds's entrance exam to learn whether CRI will consider taking them on. Her questions are simple, but Rounds is no pushover. She estimates that she rejects roughly 90% of all potential customers' queries that come in over the transom. Michael Henderson, a senior marketing-research analyst at American Century Investments, a mutual-fund company based in Kansas City, Mo., was slightly taken aback by that approach when he first called CRI last summer on the recommendation of a colleague. "There was a very candid emphasis on taking on larger business," he recalls. "Many vendors are happy to take on any business." Rounds, a 20-year veteran of CRI, was appointed to her current position in 1996, after playing an unofficial gatekeeping role--along with Corson, Pope, and others-for several years. When a new query comes in, Rounds tries to get crucial information from the prospect right away. It's a delicate balancing act, one that requires both diplomacy and reporting skills. "I'm trying to get five to six key questions answered," she explains. "I ballpark the budget for a project and ask if that sounds right. I'll hear, 'Yes, that sounds right,' or, gulp, 'That's our yearly
budget!' In the end I know what the customer's story is and if they're buying what we're selling. "When I explain CRI and how we do things, many take themselves out of the running," Rounds continues. "That makes it easy to make referrals." She maintains a short list of respected (indirect) competitors to whom she can refer rejected prospects, making her a de facto "help desk" for the industry. Rounds estimates that of the 20 to 30 such callers she talks with a month, only 2 or 3 are bona fide leads. A few dejected callers respond with the question "What's the matter--don't you need business?" Rounds reports. "But 99% understand what we're trying to do." Making the Rounds cut is a big deal for prospective customers. Once they do, they are fed into a CRI system tailored to serve their individual needs. Welcome to CRI's freshman class. The
freshman class
Lisa Gudding is the very picture of a rising young sales star. At once enthusiastic and thoughtful, the 33-year-old account manager possesses the kind of disarming charm they can't teach at the Dale Carnegie school. "I never knew I could love work so much," she says. Gudding is, as they say, a "find"--a loyal employee who over the past eight years has worked her way up from a position as a research assistant. Today part of her sales role is to help freshman customers find their way up the organizational ladder as well. CRI's sales criteria for first-year accounts, notes Gudding, are "much higher than when I first started in sales four years ago. The hurdle keeps going up." That means she must be ever more diligent in scoping out which of her freshmen have the potential to go all the way--to second-year "sophomore" status and eventually to "core" partner. Making such assessments is part of everyone's job at CRI, where knowledge about customers is a currency more highly valued than product knowledge or even technical expertise. "You learn not only a function but also about the client, the client's business, and the competitive nature of that business," says Samantha Ball, who started at CRI in 1980 as a telephone interviewer.
From the moment Gudding receives a lead from Rounds, she's working on it-researching the prospective customer's company, its industry, and the background of the individuals involved. She plays the role of a reporter, uncovering what was lacking in the customer's dealings with other marketresearch firms and thus finding out where the real opportunity lies for CRI. But even more, she's a matchmaker. In the earliest face-to-face meetings with a potential customer, she's already thinking about which combination of CRI people would be the best fit for the account. "There's a conscious attempt to match personalities," she says--even if that means taking herself off the account. Earlier this year Rounds gave Gudding a lead regarding American Century Investments. Gudding was clearly the right salesperson--her banking-industry experience allowed her to establish a quick rapport with the financial-services firm. ACI's Michael Henderson agreed to a meeting in Minneapolis, where he gave Gudding an indication of how much business CRI stood to gain. So far, so good. That
"freshman" looked promising indeed. A
dream team of your own
Once a potential customer has passed muster with Rounds and Gudding (or one of eight other account managers), it must also be approved by one of CRI's nine account teams. Each team, typically handling anywhere from one to five major customers, focuses on growing the business from its existing accounts. That way not only is it less tempting for a team to accept questionable customers, it's nearly impossible for it to do so. "We're able to say, 'Honestly, I don't think we can do this," says executive vice-president Jan Elsesser, who oversees the drive to grow new and current accounts. The account teams price all projects and put the kibosh on unprofitable-sounding ones. But once prospects pass the team test, they are quickly lavished with attention. In most cases, before the first project even begins, the customer receives a phone call or visit from one of CRI's four most senior executives. "We do this initial interview with every new client," says Corson. That meeting is followed by a letter from a CRI senior executive summing up the customer's stated expectations for the project.
Not long ago, Elsesser chatted with several marketing-research analysts at ACI (which, to date, has given CRI three projects in quick succession). Angela Murray, one of ACI's senior marketing analysts, was happy to set up the conference call. "We talked broadly about my relationships with other research firms and how we can do things differently," says Murray. "Jan explained CRI's philosophy [of focusing on fewer customers], and that was appealing to me. You want to feel as if you've got some clout." In turn, the team that is assigned to the new customer uses the interview to form its own plan for meeting--or even exceeding--expectations for the project, from designing the study to presenting the results. "Flawless execution" is what Robert Anderson, director of marketing research for Pillsbury Brands, calls it. variety of team members--not just the account managers and project managers--spend time visiting new customers to hear about their particular quirks and needs. "You learn to think like them and to know their culture," explains Corson. A
Pillsbury--which has stepped up its work with CRI in recent months--has gone so far as to set up work space for CRI's "platinum team" in a Pillsbury building, and Anderson is planning to send some of his own staff to CRI to attend training classes. Because CRI spends so much time with its freshmen, the staff can quickly tell who will drop out the first year and who will go on to join the sophomore class. It's a small group: the company needs only half-dozen or so new customers a year, each worth an average of about $200,000, to keep the pipeline flowing. "We don't intentionally rank the freshmen, but we do have a sense of who has the most potential," explains Elsesser. Top freshmen, she says, have the potential to double the sales they bring CRI, "and we've talked to them about that." sophomore is expected to show real growth in sales and profits by year two. If not--unless there is some compelling reason to keep the account--CRI prepares to cut bait. If a customer makes it through sophomore year, it is in for the RollsRoyce treatment. Today just 36 companies provide 86% of CRI's sales and 96% of its profits. And CRI employees try to treat those 36 as if their world revolved around each one of them. Because it does. A
The
partner principle
Ginger Sack, a gregarious woman known for holding planning sessions at amusement parks, is a leader of the "pink team"--the team devoted solely to Procter & Gamble. That's one of the perks of becoming one of CRI's core partners: you become a really big fish in a small pond. "Our job as a team is to bring the client forward," explains Sack. "The whole team is focused on getting new business. Everyone gets the [profit-and-loss statement]." In 1988, there were three people on the Procter & Gamble team doing limited work. Today the team has swelled to 12, while sales with P&G have increased about a hundredfold. CRI is now a P&G "approved vendor," with direct access to P&G's internal E-mail system and research database. In fact, some people at P&G say they couldn't function without CRI. "I've been working with them on everything I do," says Leanne Schimpf, a research supervisor on the Pringles brand. She considers CRI to be on an equal footing with P&G's own internal research group. "Other suppliers wait for you to call them," she says. "[CRI takes] the initiative. That's an added value because we're so busy around here." Surprise
and delight
How does CRI constantly know when and how to take that initiative with customers? Through the help of staffers like Jon Palmquist, who is now a senior vice-president and manager of new-product development. Palmquist isn't assigned to any particular team. In fact, she worries about all of CRI's customers. It's her job to find and develop new products for current customers---sometimes before the customers even know they need the products. Her sales territory: unlimited. Palmquist has become the ultimate sales sleuth--combing through project notes, interviewing customers, sitting in on team planning meetings, and reading between the lines. "I get ideas from our [core] partners," she explains. "You understand their business, and you can capitalize on what they need, sometimes a little ahead of when they need it, sometimes in response to a demand."
In short, CRI doesn't have "marketing people" or a marketing plan. Instead, the company has 36 individual "Surprise and Delight" plans, one for each major customer. The teams prepare the plans, which are reviewed and amended every quarter, with Palmquist often weighing in. One lucky customer doesn't know it yet, but it's about to receive some custom software, compliments of CRI. " This is a huge client, and I know the senior managers will appreciate it," says Corson. Such perks are all part of the company's strategy for success. "Every quarter CRI would send us a list of value-added activities they would have charged another client for that wasn't a partner," recalls Robert Smith, formerly of Dow Brands. "It was pretty staggering." After one project, he wrote the company, "Thank God for CRI." But CRI is always trying to up the ante. At year's end, all Surprise and Delight plans undergo another revision after the company's ambitious annual review of all its core partners and a few strategic freshmen. CRI's 17 senior vice-presidents conduct some 30 to 50 one-on-one interviews with customer contacts. The review is both CRI's report card and an industry snapshot. "It's our marketing research, but it's all clients specific--another tenet of one-to-one marketing," notes Corson. Of course, learning about the needs of individual customers is a lot easier, Corson points out, when you're focusing on 36 major customers "rather than 150." Jennifer Merrill, vice-president of consumer research for ConAgra Frozen Foods, laughs as she recalls some of the little perks she enjoys. "I get FedEx packages with malt balls for my birthday and candy bars slipped into a proposal because they know I like chocolate," she says. Still, there have been glitches. Since it has been instituted, the system has not produced glowing success stories all the time. For example, the "red team" was so disastrous that it was disbanded after finishing a year in--you guessed it--the red. Some clients--like Ford Motor Co.--never did make it to partner status despite great expectations. Furthermore, the loss of any VIP customer hurts--a lot. For example, CRI took a sales hit of about $2 million in 1993, Pope says, after Northwest Airlines grounded its research work with the company. " There's an ebb and flow to this," notes manager Pat Hughes, who recently lost Dow Brands when
the company was sold. But that hole was soon filled--by a former customer who came back to CRI. Now the teams view customers not as a onetime hit or miss but as part of a continuing cycle. The way Corson looks at it, the lifetime value of her customers is "infinite." Even those customers that don't pan out the first time are never written off: they could be future prospects. Pillsbury is a good case in point. One of those questionable accounts 10 years ago, Pillsbury officially joined CRI's freshman class earlier this year. CRI gave Pillsbury a brand-new page in the customer book and had the same high hopes for the account it has for every hot freshman. Both sides spent long hours interviewing one another before deciding to advance their renewed relationship to the partner stage. "It's a learning curve we're both on," says Pillsbury's Robert Anderson. He adds, "They understand they'll get a significant amount of our spending." In return, CRI employees are contributing to the intellectual capital at Pillsbury, where CRI team members can be found in the hallways and in research-project meetings. Anderson attests, "It's already begun paying off." What has given CRI the confidence to break so many of the old marketing rules? It's simple: the company understands its customers much better now. And it should. With 50% fewer customers than it had a decade ago--and with 50% more employees--CRI can afford to devote more attention to each customer. Ten years ago, the ratio of employees to customers was about one to two; today, with approximately 130 employees, that ratio is nearly reversed. At the same time, revenues per employee have doubled. It's no wonder CRI does very little advertising anymore. Every year now, Corson takes delight in a call she knows she will receive. Like clockwork, a yellow pages salesperson tries to get her to take out a bigger ad. Corson's reply is always the same. "Now why would I want to do that?" she asks.
Life on the Quad: The Quadrant Analysis
How CRI did it: In assessing which customers to keep, CRI calculated the profit for each one by subtracting all direct costs and selling expenses from the total revenues brought into CRI by that customer for the year. (Think of it this way: What costs would you not incur if this customer went away?) The cutoff points for "high" and "low" scores were purely subjective--they corresponded to CRI's goals for profit volume and profit margin. 1987
High Volume High Volume Low Margin High Margin 11
10
customers
customers
Low Volume Low Volume Low Margin High Margin 101
35
customers
customers
HIGH/LOW About half these customers were new ones that CRI figured would become more profitable over time. The other half were right on the line--on the verge of high/high. HIGH/HIGH At the top: These were customers who had pared down their suppliers and clearly valued an ongoing relationship with CRI. They accounted for 29% of sales. LOW/LOW
CRI once believed it could make many of these customers more loyal, but time revealed that this group wanted to work with various suppliers. LOW/HIGH These
were small customers who were very profitable. Was there more potential for sales?
A Tale
of Two Customers
Below is a comparison of two of CRI's "representative customers" in 1987. At first glance Customer A appears to be more valuable. But during the course of the year, Customer B racked up far lower direct costs and a third of Customer A's selling expenses, making it more than twice as profitable as Customer A. CUSTOMER A CUSTOMER B Revenues
$203,320
$156,000
Direct costs
$174,856
$113,162
Selling costs
$14,232
$3,120
Profit*
$14,232
$39,718
Profit margin 7%
25%
*Also known as "contribution margin," or what's left over to help cover the company's overhead and contribute to profits. Resources
1. Identify your customers. Sounds simple--but it's not, if you sell retail or
through distributors, for example. However, customers are often willing to divulge personal information in return for better service, frequent-buyer discounts, exclusive product offers, and so forth. Be creative. 2. Differentiate your customers. Not all customers are equal. So you need a
ranking system. Never mind trying to calculate the "net present value of all future profits." You probably don't have enough data to calculate the "lifetime value" of each of your customers. Instead, the authors recommend you score your customers on any number of variables--gross margins, repeat business, referrals, and so forth--that matter to you. 3. Interact with customers one-on-one. Once you've ranked your customers, you
can prioritize your time, spending lots more of it on your most valuable
customers. In return, customers may be more willing to share their purchasing plans and make you part of the process. Customize each customer's experience with you. This step takes many different forms--from writing separate marketing plans for each of your top customers (like CRI's "Surprise and Delight" plans) to mass customizing the whole production line. 4.
Screening
Prospects: Six Questions
"You can't just ask the questions," says Beth Rounds, CRI's chief gatekeeper and reporter-in-residence. "I backtrack a lot. Sometimes I explain why I'm asking the question." Nevertheless, for anyone looking for a systematic way to rate over-thetransom sales prospects, this is a good "script." bad answer: "I found you in the yellow pages." Unlike many companies, CRI doesn't ask this question so it can decide how to divvy up the marketing dollars. "If someone finds us in the yellow pages, they have no reason to use us over anyone else," CRI cofounder Judy Corson explains. "So it's a crucial question." A good answer: "A colleague of mine worked with you at another company." 1. How did you hear about us?
A
2. What kind of work is it (in terms of industry or scope)? More than anything,
that question reveals whether the caller is trying to price a quick, onetime project or one that's totally outside CRI's realm. If so, Rounds refers the caller to an indirect competitor. 3. What's your budget? That's akin to asking someone how much money he or
she makes, but Rounds often makes a ballpark guess on the project--and then gauges the prospect's response. 4.
W hat are your decision criteria? Rounds knows that CRI doesn't fare well in
blind bidding or in drawn-out, committee-style decisions. She's interested in callers who have some level of decision-making power. And she assiduously avoids getting involved in anything that smells like a bidding war.
5. W hom are we c ompeting against f or your business? Rounds is happiest when
she hears the names of CRI's chief rivals, a half-dozen large companies such as the M/A/R/C Group, Market Facts, and Burke Marketing Research. 6. Why are you thinking of switching? "There's a two-edged sword here," explains cofounder Jeff Pope. "Clients that are hard to break into are better because they don't switch too easily. But you need a way to get in--so a legitimate need for a new supplier is OK."
Rounds reports that each month only 2 or 3 of 20 to 30 callers answer enough questions correctly to warrant more attention. So why spend time with the rest? "It fits well with who CRI is," she says. "Do unto others....You never know where people will go."
Custom
Research Inc.
Custom Research Inc. (CRI), a national marketing research firm, leverages an intensive focus on customer satisfaction, a team- oriented workforce, and information technology advances to pursue old-fashioned ends: individualized service and satisfied customers. Since 1988, when CRI adopted its highly focused customer-as-partner approach, client satisfaction has risen from already high levels, and gains in productivity, sales volume, and profits have outpaced industry averages. CRI's steering committee, composed of partners Judith S. Corson and Jeffrey L. Pope and two executive vice presidents, is responsible for crafting CRI's goals and strategies and views customer loyalty as the firm's most valuable business asset. With all CRI employees as members of customer-focused teams, a flat organizational structure helps make executives immediately accessible to employees, customers, and suppliers. Well-developed systems are in place for understanding customer expectations, soliciting customer feedback, and monitoring each facet of company, team, and individual performance. Together, these systems help set the course for CRI efforts to meet or exceed customer expectations that can serve as a model for other professional services firms. A
QUICK LOOK
Founded in 1974 and based in Minneapolis, privately owned CRI conducts survey marketing research for a wide range of firms. The bulk of its projects assist clients with new product development in consumer, medical, and service businesses. Revenues of more than $21 million in 1996 place CRI among the 40 largest firms in the highly fragmented,$4 billion marketing research industry that is characterized by low entry costs and tough competition.
The
firm credits a
reputation for quality for making it one of only a handful of companies that has remained
independent
while
growing
over
the
past
two
decades.
Besides its Minneapolis headquarters, the firm has electronically linked offices in San Francisco and Ridgewood, N.J., as well as telephone interviewing centers in St. Paul, Minn., and Madison, Wis. It employs approximately 100 full-time staff members, most of whom are cross-trained to create the flexibility needed to accommodate
the
demands
and
schedules
of
research
projects.
Choosing in 1988 to concentrate its business on high-volume, repeat customers, CRI has reduced the number of clients it serves. In 1995, CRI's clients numbered 67, down from 138 clients in 1988; the number of larger clients during this period increased from 25 to 34. This emphasis on large accounts has paid off with a doubling
in
Surprising
revenues,
achieved
without
increasing
staff
size.
& delighting the customers
In recent years, CRI senior management aimed for a new level of consistency and competence in delivering quality services by organizing, systematizing, and measuring quality. CRI's steering committee distilled requirements for each research project to four essentials: accurate, on time, on budget, and meeting or exceeding client expectations. Before the first survey data are collected, criteria defining these requirements are determined in consultation with clients when CRI executives and project team leaders interview clients and they do that extensively. The
company was reorganized to make maximum use of customer-focused teams
and to merge support departments in order to reduce cycle time a growing client priority.
All
CRI teams have the same goal of "surprising and delighting" their
clients. CRI captures the essence of this goal in its Staricon. Quality at CRI is client driven the center of the Star and is integrated into the company's business system as captured by the five key business drivers that are the points of the star: people, processes, requirements, relationships, and results. With extensive employee involvement, the steering committee annually sets corporate goals for the company, which then tie to the goals for each work unit. Quarterly, account teams review with the steering committee the business plans and results for each
client. Meeting customer-specified requirements depends on efficient execution of welldocumented, measurable processes. Most professional services firms believe their services cannot be "standardized."
At
CRI, while each project is custom-
designed, the process for handling it flows through essentially the same steps across all projects. CRI developed and heavily uses a project implementation manual for interviewing. Internal "project quality recap" reports completed for every study track errors in any step of the project flow. CRI measures the accuracy of results and the quality of personal and telephone interviewing. For example, over the last several years ratings for interviewers show sustained average quality scores of approximately 95 points out of 100, up from 83 points in 1990. Customers have ample opportunity to advice and critique CRI. At the end of each project, clients are surveyed to solicit an overall satisfaction rating based on the customers' expectations. Each month the results of the client feedback are summarized and distributed to all employees. Internally, end-of-project evaluations also are conducted for CRI support teams and key suppliers. Personal interviewing contractors, for example, are evaluated on performance and contribute
ideas
for
improving
the
quality
of
their
service.
People Make the Difference
CRI uses a "high tech-high touch" approach to satisfying customers. On the "high touch" side, CRI uses its flat organizational structure and relatively small size to assure that information flows freely within the company. Just as importantly, they view continuous improvement as part of their jobs. Staff members are surveyed annually, giving CRI senior managers specific feedback.
A
variety of recognition programs; bonuses based on achievement of corporate,
team, and individual goals; and a peer-review system for evaluating personal performance serve to reinforce worker commitment to continuous improvement.
CRI has a company-wide education plan, used to align individual training with business and quality goals. Each employee has a development plan, which sets annual and long-term goals for improvement and helps to identify training needs. In 1996, the average CRI employee received over 134 hours of training. All new employees receive company-wide and job-specific training that addresses quality and service issues. CRI bases company-wide training requirements on client feedback, performance reviews, CRI's education plan, CRI development plans, onthe-job
reviews,
interviewer
monitoring,
and
employee
surveys.
A Technology-Driven Approach
The
"high tech" component to CRI's business is reflected by its alertness to
technological opportunities to improve its performance or to devise new services that respond to customer needs. "Managing work through technology-driven processes" is one of CRI's key business drivers. CRI led, for example, in the use of computers to assist in telephone interviewing, data collection, and analysis. Software enables CRI to use technology to integrate all stages of a project: produce a questionnaire for computer-assisted interviewing, control the sampling and autodialing for interviewing, edit and then tabulate the answers from the questionnaires, display them in tabular format, and generate report-ready tables for the final report and presentation. The use of computers has reduced cycle time for just one of these steps tabulating data from two weeks to a single day. CRI views its major software supplier as a key partner.
The
long-standing
relationship extends to annual planning sessions during which CRI shares its goals and the two firms determine how the software maker can contribute to meeting goals. These
and other quality-promoting actions including an unconditional satisfaction
guarantee aim to build client confidence and loyalty, which, in turn, generate a variety of business benefits. Since 1988, feedback from clients on each of its
projects shows steadily improved overall project performance. CRI is now "meeting or exceeding" clients' expectations on 97 percent of its projects. Seventy percent of its clients say the company exceeds expectations. CRI is rated by 92 percent of its clients as "better than competition" on the key dimension of "overall level of service."
