Evaluating Customer Satisfaction Means Answering These Questions:

1. Are you getting all you can from your customer satisfaction data?Introducing:ICSSThe Integrated Customer Satisfaction Systemfrom

2. Evaluating Customer Satisfaction Means Answering These Questions: • What benefits are important to customers? • How do you deliver on important benefits? How do your competitors? • Does your brand have equity that goes beyond its performance? How about the competition? • Do all customers want the same things? If not, who wants what? • Do all customers see you and your customers the same way? • How can you find customers with different needs?

3. Using a system of customer satisfaction techniques, ICSS can help you answer ALL these questions…. And presents them in convenient spreadsheet form!

4. ICSS Analytic Techniques • RenSat+ identifies what issues determine brand preference -- and how: • “Basic” needs that are costs of entry into the market • Key drivers with constant ROI • “Exciters” that can set a brand apart from the competition • BEE (Brand Equity Estimate) shows whether your brand – or the competition – is more preferred than its performance would suggest (or less) • Gap Analysis shows how your brand stacks up against the competition on each issue • DRIVESEG Derived Importance Segmentation finds groups with different needs, expectations, and perceptions • TARGET FINDER identifies needs groups for advertising and direct mail

5. How an ICSS Analysis is Conducted

6. Step 1: Determine the Variables The most important step is the first – making sure you’re examining what’s important and actionable • Dependent variable should be as closely related to consumer performance as possible (brand preference or choice) • Predictor items should cover every relevant aspect of needs and expectations in category We will work with you in developing a list of items to make sure you “cover the territory”

7. Step 2: Find the Underlying Benefit Factors The most well thought-out set of items will not necessarily capture the way the consumer views the category • The items as asked are only approximate measures of the way the consumer sees the brands • Factor Analysis identifies the categories the consumer uses, and how they relate to the questions you asked

8. Factor Analysis of Benefit Items The numbers show the relationship between the factors and the items. The higher the number, the more the item contributes to the factor’s meaning.

9. Step 3: RenSat+: Derive Importance of Factors Factors are important to the extent they drive preference: • For instance, if the preferred brand is consistently rated higher on value than the non-preferred brand, then value is important • Drivers of preference can be very different from what consumers say is important

10. Step 3: RenSat+: Derive Importance of Factors • But all factors don’t influence preference in the same way: • Traditional Key Drivers act in a straight-line fashion: the better your brand does on them, the more it’s preferred • Basic factors are “costs of entry” into the market: a brand is rejected if it lags the competition, but isn’t necessarily preferred for doing better • Exciters are “bonuses”: a brand is not penalized for not having them, but an advantage over the competition can translate into brand preference

11. EFFECT OF PERFORMANCE FACTORS ON PREFERENCE PREFERENCE High Exciter PERFORMANCE Key Driver Low Basic Feature Low High

12. Step 3: RenSat+: Derive Importance of Factors • RenSat+ uses linear and non-linear regression techniques to: • Identify what type of effect each factor has • Key Driver • Basic • Exciter • Evaluate the importance of each factor • Expressed as a percentage of total influence on preference

13. Trust is the most powerful driver by far Product Availability is a basic cost of entry into the market Good Service is an “Exciter” that can distinguish a brand from the competition

14. Step 4: Evaluate Competitors on Important Benefits Gap Analysis shows advantages and disadvantages of each brand at a glance • Listed in descending order of importance • Shows where you’re strong and weak • Shows your biggest threats and opportunities

15. Brand A is the most trusted brand – the most important factor • On Service, a competitive advantage, Brand A and Brand B compete for dominance. • Product Availability is a “cost of entry”. Brand A is at parity with its competitors – and that’s enough (as long as another competitor with better distribution doesn’t come in!)

16. Step 5: Assess Brand Equity Is a brand’s overall impression more than the sum of its parts? Is it less? • BEE (Brand Equity Estimator) uses the RenSat+ model to find out which brands do better (or worse) than their performance predicts • Preference for each brand is predicted using the RenSat+ factors, then compared with actual preference levels • Brands that exceed predicted levels have a positive brand equity: they outperform expectations • Brands significantly lower than predicted levels have negative brand equity: they are less preferred than might be expected by their performance on attributes

17. Brand A, even though it’s the category leader, underperforms its expectations In contrast, Brand B has positive brand equity: it’s more preferred than its performance on attributes predicts

18. Step 6:Find Derived Needs Segments It’s important to know the needs and attitudes of the market as a whole – but that’s not the whole story • Sometimes the total market’s opinion is only an average of two or more segments with contrasting needs and evaluations • DRIVESEG, our unique Derived Importance Segmentation method, can find and identify those segments

19. Derived Importance by DRIVESEG Segment 80% 70% 60% Importance (Share of Determination) 50% 40% 30% 20% 10% 0% TRUST SERVICE PRICE/ VALUE CONVENIENCE PRODUCT AVAILABILITY Attribute Factors Segment I (58%) Segment II (26%) Segment III (26%) • Segment I, the largest segment, values Trust and Service • Segment II values Convenience and Availability • Segment III is the Price/Value segment

20. Step 7:Analyze Brands By Segment Customers form segments with unique sets of expectations. Do they also view the brands differently? • Repeating the Gap Analysis and BEE within each DRIVESEG segment will answer that question

21. Segment I, the largest,buys based on Trust and Service • Brand A has Trust advantage • Brand B has the advantage on Service, but Brand A can compete by improving response time

22. Segment II is the Convenience/Availability Segment • Brand B has the advantage for Convenience • Product Availability is seen as a parity benefit (which is all it needs to be); however, Brand A may have an out-of-stock problem

23. Segment III cares only about Price/Value • For them, Brand C is the clear winner

24. Step 7:Analyze Brands by Segment We can also apply Brand Equity Estimation within segments • Do brands appeal to (or repel) customers in a given segment to a greater extent than their performance on attributes would suggest?

25. In the Trust/Service segment (Segment I), Brand B outperforms its attributes • By contrast, Brand A does considerably worse among the Convenience segment than its performance suggests • And, even though Brand C is the “price brand”, it underperforms its attribute ratings in the Price segment

26. Summary:Segmented Gap and BEE Analysis • If you’re Brand A, maintain availability and improve response time to leverage trust advantage and make inroads in the mainstream segment (Segment I) • Brand B is a strong competitor on two fronts – it holds Segment II with its convenience advantage, and competes with Brand A in Segment I by superior service • Brand C, the price brand, would have trouble breaking out of its niche in Segment III. Though Segment III consumers trust it, Segment I consumers, for whom Trust is most important, don’t. And even in Segment III, Brand C has little inherent equity; consumers choose it mainly because it’s cheap

27. Step 8:Identify and Target Needs Segments Needs segments don’t do the marketer any good if they can’t be identified so that marketing messages can be addressed to them • Target Finder identifies the demographic and behavioral groups in which each segment is most likely to be found • Finds compound definitions that can’t be identified “with the naked eye”

28. TARGET FINDER RESULTS

29. TARGET FINDER SUMMARY • Segment I is most likely to be found among women, particularly with household incomes over $35,000 • Segment II is most likely to be found among men, particularly those with no children • Segment III is most likely to be found: • among women with household incomes under $35,000 • Among men with children

30. ADVANTAGES OF ICSS • Unified system maximizes the value of customer satisfaction data • Modular – use the whole system, or conduct specific analyses • Factor model allows discrimination among benefits • You can really tell which issues drive preference • Derived Importance model avoids self-report bias • RenSat+ distinguishes types of influence • DRIVESEG segmentation avoids marketing errors due to non-discrimination of subgroups • TARGET FINDER increases actionability by making it easier to find segments

31. To discuss performing an ICSS analysis, contact Paul M. Gurwitz, Ph.D.At (212) 319-1833or by e-mail at:pgurwitz@renaiss.com