Todd Hollander Market Research

While no amount of research can ever completely eliminate the risk of deploying a marketing strategy, effective marketing research should significantly reduce uncertainty and financial risk. Here are a few tips for developing a marketing research project that pays off.

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According to a study by the Pew Research Center, 12.8 percent of U.S. households cannot be reached by a telephone survey because they have only a cell phone and no landline telephone. If these people were just like those with landlines, this would not create a problem for researchers. But cell phone-only adults are very different.

Cell Phone Only

A growing number of Americans rely solely on a cell phone for their telephone service, and many more are considering giving up their landline phones. This trend presents a challenge to market research and public opinion polling conducted by telephone, which typically relies on a sample of the population of landline subscribers.

The National Health Interview Survey, conducted by the Pew Research Center in conjunction with the Associated Press and AOL, found cell phone-only adults to be younger, more heavily African-American or Hispanic, less likely to be married, and less likely to own a home than adults with landline telephones. These demographic characteristics were correlated with a wide range of social and political behaviors.

In early 2003, just 3.2 percent of households were cell phone-only. In the fall of 2004, the National Election Pool’s exit poll found that 7.1 percent of those who voted on Election Day had only a cell phone. At the annual meeting of the American Association for Public Opinion Research, a government researcher predicted that the size of the cell phone-only group could approach 25 percent by the end of 2008 if the current rate of increase is sustained.

Landline Only

According to data from the National Center for Heath Statistics, 37% of Americans have only a landline. Like the cell phone-only population, Americans who use only a landline only are demographically distinctive. A much higher percentage (41%) are ages 65 and older, compared with the general public (16%). The landline-only group also includes a greater proportion of whites (82%) than the general public (73%).

About a quarter of landline users (23%) say they are very (8%) or somewhat likely (15%) to stop using their landline and switch to using only a cell phone. A much higher percentage of young people (40% of those under age 30 vs. 19% of those 30 and older) say they are likely to abandon their landlines.

The Bottom Line

Political polls can be weighted to offset the effect of the cell phone-only population. However, because of the rising number of Americans who no longer use landline phones, there is growing concern about how long the landline telephone survey will remain a viable data collection tool for traditional market research.

E-mail invitations are the preferred method for requesting participation in online surveys. Here are a few tips for making sure your email invitation is well received and produces the results you want.

Email invitations for online surveys often include a personalized greeting. It is standard practice to include a hyperlink to the survey so respondents simply click on the link to launch the survey.

As a rule, the survey invitation should communicate:

1. That the recipient is being invited to take part in a marketing research study
2. The purpose of the research
3. Who is conducting the research
4. How to complete the survey
5. How long the survey will take
6. What the the incentive is (if any)
7. How the privacy of survey respondents is protected
8. That the recipient can opt out of further contact with the sender

I am often asked how much information about the survey should be revealed in the invitation. My advice is to include just enough information about the survey to garner an acceptable level of participation but not so much that you tip off potential respondents on either the screening requirements for completing the survey or the specific questions that will be asked. Here’s why: If the invitation contains too little information about the the survey and the incentive for completing it, the response rate may be too low; conversely, if too much information is revealed, some unqualified respondents could modify their responses to screening questions in order to ensure that they are allowed to participate.

Sample Invitation

From: jsmith@acmeresearch.com

Subject: Request for Help with Toothbrush Research

Message:

Dear Mrs. Jones,

You are invited to help improve a leading brand of toothbrush by taking part in a short survey. Please click www.acmeresearch.com/toothbrush to launch the survey.

As a token of our gratitude for taking part in this survey, you will be eligible to enter your name into a prize drawing for one of five $100 prepaid gas cards.

This survey is genuine marketing research. It should take no more than 10 minutes to complete and is being conducted in accordance with the CASRO guidelines. This that means your identity will not be revealed to any other company, and you will receive NO marketing as a result of taking part in this survey. If you want to know more about CASRO or Acme Research, click on one of the appropriate links at the bottom of this message.

To start the survey, please click this link: testsurvey.

Thanks and best regards,

John Smith
President
ACME Corporation
Address
City, ST, Zip
Toll-free phone: xxx
E-mail: jsmith@acmeresearch.com

To find out more about ACME Research, click here www.acmeresearch.com.

To read the CASRO guidelines, click here www.casro.org/codeofstandards.cfm.

To read the terms and conditions of the prize drawing associated with this survey, click here www.acmeresearch.com/project32/tc.

You were selected for this study from a list supplied by XYZ corporation. If you would like to find out more about XYZ or request that you be removed from their list, click www.XYZ.com/Privacy.htm

The bottom line: A well-constructed email invitation will not only increase the response rate for your online survey, but will also improve the the quality of data you receive from respondents.

Consumer complaints about airline service soared 107 percent in July, the highest level reported for that month in five years.

The U.S. Department of Transportation fielded 1,717 complaints in July, up from 831 in July 2006, according to the agency’s Air Travel Consumer Report.

According to industry analysts, frustrations were caused by delays that affected almost one-third of flights in July, severe weather in the northeastern United States, and an increasingly impersonal customer service system.

Following years of losses, airlines are now filling planes to record levels. When disruptions occur, rebooking problems cascade across the system, which has less flexibility than in past years.

Betsy Talton, a spokesperson for Delta Air Lines, which saw its consumer complaints rise to 171 in July from 77 a year earlier. said Delta is trying to adjust its flight schedule by canceling flights when it knows far enough in advance that bad weather will force extensive delays.

American Airlines recently added five to seven minutes to the scheduled time of flights at major airports to reduce the number of flights classified as late. Flights are considered on time if they are within 15 minutes of their scheduled arrival.

The 70 percent on-time arrival rate for all U.S. airlines in July was the worst on record for that month. Airlines blame an antiquated air traffic system for many of the delays, and in August, Delta sent an electronic letter to its customers urging them to lobby Congress for more funds.

US Airways received the most complaints (267) in July, a rate of almost five complaints per 100,000 passengers flown. Southwest Airlines was the least cited carrier with 33 complaints, a rate of 0.34 complaints per 100,000 flown.

Delta’s complaint rate was 2.44 per 100,000.

Almost 45 percent of the complaints were about flight problems, including cancellations, delays or other deviations from the schedule. Mishandled bags accounted for 17.8 percent of the DOT complaints.

According to the J.D. Power and Associates 2007 Primary Mortgage Servicer Study^SM, BB&T (Branch Banking and Trust) ranks highest in overall customer satisfaction with a score of 860 on a 1,000-point scale. M & T Mortgage follows in the rankings with 828 and Citizens Bank ranks third overall with a score of 825. These lenders all perform particularly well in keeping billing statement error rates lower than the industry average; providing a wide range of options for making payments; providing flexibility when scheduling electronic payments; designing and/or using automated phone systems that address customer needs; and handling customer contacts quickly and efficiently.

USAA, a financial services provider open only to the U.S. military community and their families and therefore not included in the rankings, also achieves a high level of customer satisfaction.

The study finds that there are considerable financial benefits for lenders in delivering a highly satisfying customer experience, including increased referrals and higher customer retention rates—which is the percentage of customers who pay off a loan and then refinance or take out a new mortgage with their current lender. Specifically, doubling the rate of customer retention from the industry average can result in an increase of nearly 3 percent in mortgage servicing valuations, or approximately $38 million for lenders with a $100 billion portfolio.

“In addition to the benefit of increasing servicing right valuations, moving customers to high commitment levels can triple the number of recommendations, almost double the number of additional products that the customer utilizes and reduce marketing costs for generating new business,” said Ryan. “To achieve higher retention rates, lenders can first and foremost enhance the billing and payment process to make it more convenient, and dramatically reduce errors through systems such as e-mail notifications and automatic payments.”

The study also finds that customers who say they “definitely will refinance” with their current lender are much more likely to make monthly payments via the Automated Clearing House (ACH) method, which allows the lender to take payments directly from the customer’s bank account. ACH can eliminate issues with lost, late and misapplied payments, which all negatively impact satisfaction. In addition, the elimination of high-impact errors—particularly, the mismanagement of tax and insurance escrow accounts and payments—and the prompt and precise resolution of problems can directly and positively impact satisfaction.

The 2007 Primary Mortgage Servicer Study is based on responses from 11,481 home owners regarding their experiences with their primary mortgage servicer. The study was fielded in three waves in November 2006, February 2007 and May 2007. The study measures customer satisfaction with the process of servicing a loan based on four primary areas: the administration of the customer’s account; the billing process; the payment process; and the process of contacting the mortgage servicer.

For more information on customer satisfaction with home mortgage providers, visit JDPower.com.

If your company overemphasizes reactive approaches to customer satisfaction and habitually addresses customer service problems as they arise instead of taking proactive measures to prevent them, you may be engaged in a risky business.

This is the conclusion of a cross-industry analysis titled “A Look in the Mirror: The VOC Scorecard” recently released by J.D. Power and Associates.

The research included nearly 4,000 responses from 600 companies participating in J.D. Power’s online Voice of the Customer (VOC) assessment, which provides a snapshot of how a company compares to others in weaving the Voice of the Customer into day-to-day business practices.

The data reveal that a large number of organizations approach customer satisfaction reactively rather than proactively, confusing a commitment to satisfaction with a focus on responding to complaints.

“What we see is that many companies equate their commitment to customer satisfaction to the lengths they will go and expense they will incur to fix a problem once it has occurred,” said Bob Caruso, executive director and VOC leader at J.D. Power and Associates. “A significant number of respondents believe their company lacks a commitment to fixing identified problems in the early stages. This creates an inefficient way to do business that benefits neither customers nor shareholders, and reflects more of an interest in short-term profits than in building long-term customer relationships.”

In general, respondents indicated that their companies are doing only a fair job of meeting customer expectations, as the average score for the VOC Test was only 58 of a possible 100 points.

A copy of the report is available at www.jdpower.com/corporate/library/specialreports/pdf/LookInTheMirror.pdf.

With four models topping the rankings for their vehicle segments in an annual J.D. Power and Associates customer satisfaction survey of U.S. drivers, Honda Motor Company outperformed all other automakers.

Honda’s newly redesigned CR-V small crossover sport utility vehicle, Ridgeline truck and Odyssey minivan all topped their segments in the survey, which focuses on the first 90 days of vehicle ownership. The subcompact Honda Fit tied with Toyota Motor Corp.’s Yaris for a top spot.

Mercedes-Benz and BMW AG each had three models atop premium segments. Mercedes-Benz was tops with its midsize E-Class car and large S-class car, and its GL-Class tied for a top spot with General Motors Corp.’s Cadillac Escalade EXT in a segment that includes large luxury SUVs and crossovers. BMW’s 3 Series and 6 Series cars, and X5 midsize crossover SUV all received top rankings.

The study, now in its 12^th year, measures owner delight with the design, content, layout and performance of their new vehicles. Based on responses gathered between February and May 2007 from more than 91,000 purchasers and lessees of new 2007 model-year cars and trucks who were surveyed after the first 90 days of ownership, APEAL is designed to complement the J.D. Power and Associates Initial Quality Study^SM (IQS), which focuses on problems experienced by owners during the first 90 days of ownership. APEAL measures how gratifying a new vehicle is to own and drive.

More information about the 2007 Automotive Performance, Execution and Layout (APEAL) Study^SM from J.D. Power and Associates, including a video, article and appeal ratings are available at JDPower.com.

The United States Postal Service recently launched an online customer satisfaction survey by printing a survey link (http://gx.gallup.com/pos) at the bottom of customer sales receipts.

The stated purpose of the survey is “to help us improve postal service in your area.”

All that is required is a zip plus 4 of the post office visited (located at the top of the sales receipt) and the time of the visit. The confidential survey asks customers to rate not only the post office facility but also the clerk who assisted them on their visit.

The bottom line: Only time will tell if the survey results will lead to better service, but even the U.S. Postal Service, long noted for bureaucracy and inattentiveness, has recognized the need to measure customer satisfaction.

Survey results published in the July 2007 issue of Consumer Reports reveal that compared to other industries, the airline industry’s average satisfaction score of 72 on a 100-point scale is better only than such perennials of customer dissatisfaction as wireless carriers, cable TV operators, and computer tech support.

Approximately 23,000 readers rated their experiences on a total of 31,455 U.S. domestic flights in the survey, conducted in February of 2007 by the Consumer Reports National Research Center. The survey questions covered ease of check-in, seating comfort, on-time performance, and in-flight service.

Among the 18 airlines rated, JetBlue, Midwest, and Southwest were rated the highest, while U.S. Airways, America West, and United were rated lowest.

This is good news for JetBlue, which suffered a highly publicized service fiasco earlier this year that resulted in CEO David Neeleman tapping into YouTube to apologize to customers (see “JetBlue CEO uses YouTube to address customer satisfaction nightmare,” Feb. 21, 2007).

The full list:

1. JetBlue

2. Midwest

3. Southwest

4. Frontier

5. Hawaiian

6. Aloha

7. Alaska

8. Spirit

9. Continental

10. AirTran

11. Delta

12. American

13. ATA

14. Northwest

15. American Eagle

16. United

17. America West

18. US Airways

The bottom line: Although the troubled airline industry is back in the black, many customers are still seeing red.

The July 2007 issue of Consumer Reports includes customer satisfaction ratings for 48 major hotel chains.

The survey, based on Consumer Reports National Research Center’s 2006 Annual Questionnaire, included ratings from almost 35,000 subscribers who spent more than 139,000 nights at 48 hotel chains. Among the survey findings:

• The fanciest hotels doled out fewer freebies. Sixty percent of high-end hotels charged for Internet connection, compared to 10 percent of budget hotels.
• Most budget hotels aren’t a bargain; the least expensive generally scored the lowest. Their guests were more likely to report getting a poor night’s sleep because of noise or a bad bed.
• More than 70 percent of readers who haggled scored a rate reduction or a room upgrade, especially if they negotiated face-to-face. While the safer choice would be to call ahead, survey respondents who arrived without reservations actually paid less than those who booked in advance.
• Although readers were generally satisfied with their hotel stays, at least 33 percent encountered at least one problem. Some chains drew far more complaints than others. Fifty-five percent of readers that stayed at Howard Johnson had one or more problems, compared to 16 percent at Homewood Suites.
• Among the five top complaints and the chief culprits overall: (In Alphabetical Order):
  • Unattractive Decor: Days Inn, Econo Lodge, Howard Johnson, Ramada, Travelodge
  • Poor Room Lighting: Clarion, Days Inn, Econo Lodge, Howard Johnson, Travelodge
  • Excessive Phone Charges: Hilton, Omni, Hyatt, Ritz-Carlton, Westin
  • Heating or A/C issues: Clarion, Days Inn, Howard Johnson, Red Roof Inn
  • Uncomfortable Bed: Days Inn, Econo Lodge, Howard Johnson, Ramada, Travelodge

The Best Hotels

Consumer Reports rated hotels based on five categories: Fanciest, Luxury, Upscale, Moderate, and Budget, as well as the typical nightly rate readers paid. Per category, the highest-rated choices are:

• Fanciest: Price between $130 and $350. Simply the best according to readers, the opulent Ritz-Carlton, which earned top marks for value, service, upkeep, and low reported problems.
• Luxury: Price between $89 and $218. Scores were consistently good with slight differences separating the best from the pack. Among the best: Renaissance, Embassy Suites, Westin, Marriott, Omni, and Hyatt. Upkeep and service scored generally high for this group.
• Upscale: Price between $70 and $235. CR readers found this group to provide the best bang for the buck. Homewood Suites and SpringHill Suites were among the best. Residence Inn by Marriott, an all-suite chain also scored well. Walt Disney Resorts in Orlando and in California offered stellar service.
• Moderate: Price between $58 and $100. Drury Inn/Suites, Hampton Inn and Wingate Inn were top choices in this category. The Drury Inn and Wingate Inn showed much better than average scores for value.
• Budget: Priced between $40 and $85. Microtel was the star of the budget bunch, scoring as well or better than more well-appointed chains. It typically builds new hotels rather than converting older properties from other brands.

Consumer Reports’ best hotels report including complete ratings for all 48 hotel chains and more advice for finding a great rate can be found in the July issue, available on newsstands June 5, 2007 or by visiting http://www.ConsumerReports.org.