Delivering satisfaction

As evidenced by its performance in the competition for the coveted Malcolm Baldrige National Quality Award, Federal Express is a company that is committed to customer satisfaction. In October, the Memphis-based shipper became the first-ever recipient of a Baldrige award in the service company segment.

An integral part of the company-wide concern for service excellence is an ongoing customer satisfaction research study that Federal Express began with St. Louis based Maritz Marketing Research Inc. in 1985. Each business day, customers in four Federal Express service areas-U.S. domestic, U.S. export, and two areas within the company's retail services, the drop box and manned service center locations-are interviewed via telephone.

The respondents are screened to get to the person with the most familiarity with the firm's shipping practices. Gail Gilbert, senior research manager, Maritz Marketing Research, says that a "top down" approach is used in the interviews, starting with, for example, the company owner or president and moving down the ladder to the person(s) with the most responsibility for shipping.

Customers are asked to apply a five point scale of satisfaction to a variety of service issues (each of the four service areas has its own set of attributes) and also to rate their overall satisfaction.

"We solicit reactions to various components of our service-everything from billing to the performance of our couriers, package condition, tracking and tracing capabilities, helpfulness of employees-just about every aspect of our service in which we come in contact with our customers," says Chris Hargett, manager, research & analysis, corporate marketing for Federal Express.

Federal Express receives a quarterly report on the research from Maritz and the results are analyzed in a number of different ways, looking at the stability and magnitude of customer satisfaction trends in various geographic, customer, and industry sub-segments.

In-depth look

Supplementing these efforts, Federal Express conducts mail surveys in its Targeted Customer Satisfaction program to provide an in-depth look at customer opinions of very specific service activities such as invoice adjustments, new account handling, and customer complaint handling.

"It's our goal to understand the satisfaction and any sources of dissatisfaction that exist in all of our contacts with customers-regardless of where they are," Hargett says.

"Monitoring satisfaction on the basic but important values of on-time delivery, reliability, and speed of service goes without saying. We're also focusing on each and every other opportunity we have to make an impression on the customer to ensure that the highest standard of service is maintained. We have found that attention to the smallest details where the customer is concerned provides us with a consistently superior service that sustains our position of leadership in the industry.

"Whenever we see a downward trend in any category, we start examining the root causes that might be at work. We haven't had the opportunity, happily, to do that very often. But recently we have noticed in one particular area a trend that is not going the right way, so we're taking a close look at what might be at work there."

Couriers rated highly

Federal Express has been particularly happy to see its couriers rated so highly by respondents in the customer satisfaction study. "We've always found that the performance of our couriers is very highly regarded, and we consider that to be a very significant competitive weapon. The couriers are our company personified and it's most gratifying to see that their performance is so well received."

Hargett says that similar customer satisfaction studies done in Canada have helped pave the way for service changes there. "Our customers in Canada told us they would like to see more drop-off locations and that prompted us to increase the number of locations. We also found out that in addition to our shipping service to the U.S., our Canadian customers wanted to use us domestically for inter-Canada shipments, which helped make the decision to offer that service a lot easier."

Internal monitoring

The company also internally monitors its performance in a number of service areas as part of its Service Quality Indicator program, tracking the incidence of packages delivered late or on the wrong day, etc.

"The Service Quality Indicator examines our performance in various categories on another level. We know that delivering a package on the wrong day is a huge disappointment, but we also know that there are various factors that can contribute to that happening. It could be an aircraft delay, or something that the customer did by mistake, for example. The SQI helps us to identify the root causes that may contribute to service failures and to examine our performance in those areas," Hargett says.

Important in competition

Tony Byrd, senior project analyst, research & analysis, corporate marketing for Federal Express, helped guide the company through the application process for the Baldrige award. He says that the various efforts at tracking performance and customer satisfaction were very important in the competition for the Baldrige award.

"Customer satisfaction is the largest and most important of the award's many categories and subcategories, accounting for 300 out of a possible 1000 points. I think market research has played a significant role in the overall application, not only in the customer satisfaction research that Maritz has done for us, but also in the other ongoing studies we have. "

Supplier award

Federal Express recently presented an award of its own to Maritz, honoring it with the first Federal Express Research Supplier Quality Award as the supplier "who consistently delivered the highest quality service and best exemplified the spirit of continuous improvement during 1989."

"We employ a variety of suppliers for a variety of studies and we have never had a formal program in place to recognize those who provide the most outstanding quality throughout the year, so we felt that it was a good idea to establish one," Hargett says.

Maritz won the award, he says, for its work on the ongoing customer satisfaction study, during which it increased the number of interviews, reduced interview length, improved report delivery timing after fieldwork completion and improved study validity-while reducing the project cost.

Strong relationship

Both sides agree that the improvements made over 1989 were the product of a strong working relationship in which the two firms met often for in-depth discussions on the goals and performance of the customer satisfaction research.

"During 1989 we made some major changes to the study and we felt that Maritz was very responsive to us in making those changes and analyzing how we could potentially improve the study. For example, it used to take eight weeks from the end of field work until we would get our reports, and they were able to get that down to six weeks to make the report more timely," Byrd says.

Maritz' Gail Gilbert says that the quarterly reports given to Federal Express were also simplified and clarified and now include several kinds of specialized analyses.

Scale simplified

The most significant of the changes the questionnaire has gone through was a simplification of the scale used to measure satisfaction, from a 100 point scale to a 5 point scale. "We found that the scale formerly used was somewhat cumbersome for the respondent as well as Federal Express to interpret, so we simplified the scaling," Gilbert says.

"In order to maintain historical perspective during the change, we monitored satisfaction using both scales for a period of time and then set up transformation equations that allowed us to look at the data historically and still maintain that trend analysis," Tony Byrd says.

There have also been significant changes made to the section of the questionnaire that probes customer use of competitors. "We used to ask general questions, such as 'Compared to the competition, is Federal Express better, worse, or about the same?' But now those questions address specific competitors, which gives us better benchmarking by identifying the exact competitor against which the comparison was made," Byrd says.

The questionnaire has also been revised to obtain better information in a shorter interview. "It was tough, since in tracking work consistency is important," Gilbert says, "but we were able to maintain continuity even with the changes we made. We decided to shorten the length of the interview and pare it down to information that was absolutely critical. We cut the interview length in half, and by modifying some question structure we obtained more specific and more critical information."

For example, Byrd says, customers who use all four of the Federal Express services the survey covers previously might have gone through a lengthy interview. "If a customer fit all four categories, we had a series of questionnaires that might take 45 minutes to go through. We felt the process was too long and that we were getting some respondent fatigue, so we separated the process out so that no customer gets all four segments. At a maximum they may go through a 15 minute interview. We feel that the responses we're measuring now are much more valid."