Technology: Consumer Reports

Web-based results from customer surveys give McAlister’s solutions for satisfaction.

By Christine Zimmerman, Contributing Editor -- Chain Leader, 4/1/2005

McAlister’s Deli has learned that highly satisfied customers are the most likely to return and recommend the chain to others.

A McAlister’s Deli franchisee was having trouble with consistency in his operations. He went to Phil Friedman, president and CEO of the fast-casual chain, baffled about the problem.

As the men talked, it seemed as though the restaurant was doing everything right. Friedman suggested they go over the unit’s monthly customer-satisfaction scores online. And on went the light.

According to the unit’s customer satisfaction index, gathered through automated telephone surveys with customers, the restaurant had great scores when customers dined in-house, but terrible scores when customers ordered over the phone for takeout—a systemwide problem in the past. The franchisee discovered that he didn’t have enough staffing or terminals dedicated to phone-ahead orders. The company has since added registers away from the front counters and made sure that they were staffed appropriately. McAlister’s realized that in-house diners care most about food quality, while takeout customers rate order accuracy as their top priority.

“We went from having a very general discussion to looking at real, actionable details,” says Friedman. “It’s a real change to be able to have holistic discussions instead of just bottom-line, financial discussions.”

Ridgeland, Miss.-based McAlister’s Deli uses the automated telephone voice-response systems from Service Management Group to gauge customer satisfaction. The technology gathers the opinions of paying customers, as opposed to mystery shoppers or other “hired” customers. The system lets restaurants know how they are meeting the needs of customers and where they are falling short.

For a chain such as McAlister’s Deli, SMG can gather between 400 and 600 automated surveys per unit each year, according to SMG Vice President Jack Mackey. “You need a large amount of customer feedback to have usable results,” he says. “Service is too volatile to register only one or two opinions.”

Survey Says...
McAlister’s averages 30 responses per restaurant each month. In most units, every 25th customer receives a message printed on his or her receipt asking the guest to call into a telephone system. When customers complete the call, they receive a validation number for $3 off their next visit.

The survey takes about five minutes to complete. McAlister’s management developed the 20 or so questions, which measure service, the environment, food quality and food temperature. Customers punch in their rankings from one to five on their touch-tone phones and may leave specific comments or contact information.

As the survey participants answer the questions, the company can almost immediately view the answers on a Web interface, Friedman says. Managers also see the scores for their stores online, as well as those of other units in their districts.

Listening Carefully
John DiJulius, president of Minding Your Business, a customer-service consulting firm, and author of Secret Service: Hidden Systems that Deliver Unforgettable Customer Service, says that the ability for a chain to see a large sampling of customer-satisfaction data in real time is critical for making immediate decisions. “If you don’t see the red flags right away, by the time you do realize you’re heading down the wrong path, it might be six to eight months later—and then it’s like turning a yacht around in a bathtub,” he says.

Every managers’ meeting begins with customer-satisfaction reports.

“With the recession the past four years, consumers look closely at the things that they can downsize, replace or eliminate altogether,” says DiJulius. “It’s important to make yourself non-negotiable, something they will not give up.” He notes that customer service is at an all-time low right now in the retail segment, though restaurant scores have been picking up. “People are so used to poor service in their overall retail experiences, unfortunately, so if a restaurant does exceed expectations, customers will be loyal,” he says.

Making Changes
Friedman has long been a fan of using technology to gather data. “When we bought this company five years ago, we wanted to look at charting success from a research perspective. We wanted to know how to make an impact in a growing chain,” says Friedman. Prior to using SMG technology, McAlister’s only received customer-satisfaction information quarterly.

All of McAlister’s 23 company stores and 90 percent of its 155 franchised units have been using the system for more than two years. The chain’s marketing fund pays $200,000 a year for the service.

“It worked exactly like I wanted it to. When I first got involved, they told me that if you increase the number of highly satisfied customers, you will improve profitability,” Friedman says. “Now our highly satisfied customers are really taking hold. Within six months, we started seeing results.”

For example, between December 2004 and February 2004, 77 percent of the units with the highest likelihood-to-recommend ratings increased comp sales by 3.6 percent. Between February 2004 and May 2004, 74 percent of that same group increased their comp sales by 4.8 percent.

McAlister’s corporate Web site offers actionable data including access to customer voice comments.

Overall, Friedman says, McAlister’s customer survey scores have improved, as well. SMG’s model is based on the service-profit chain developed at Harvard University, which holds that sales and growth are stimulated by customer satisfaction. The first step is to create happy and productive employees and then create loyal, highly satisfied customers. The customers who rate their satisfaction as five on a one-to-five scale will be most likely to return and recommend the experience to others.

“I was so excited about the concept of receiving fives in the CSI that we used the theme, ‘The Power of Five,’ for our convention,” explains Friedman.

Creating Culture
“Throughout the McAlister’s system, this has become part of how we manage our operations,” Friedman says.

But he admits it has been a test of his salesmanship. “I’ve been preaching the goal of McAlister’s becoming a major chain. The foundation is customer loyalty. We need to hear the voice of the customer throughout McAlister’s.” But, he adds, in a franchise system, corporate needs to “sell” everything to the units. “Our marketing committee showed franchisees the need for research.”

McAlister’s looks at the data on a regular basis. All reports are online, and corporate can cut the data in different ways. Every managers’ meeting begins with CSI reports for the restaurant. “It’s a major part of what drives financials,” Friedman says. “Satisfaction equals loyalty equals increased checks.”

Based on the satisfaction reports, McAlister’s is putting phones behind the front counters to handle the large amount of call-in orders around lunchtime. “It’s a simple thing, but something we hadn’t thought of doing,” Friedman says.

Next up, he plans to study how to tie CSI reports into bonus compensation. “It has become part of every dialogue,” he says. “We can have tangible discussions on the results. CSI, sales results, profit results. They all relate.”