3.2 Estimating the Customer Survey Score
The customer survey score drives demand for your product in a segment. Your demand in any given month is your score divided by the sum of the scores. For example, if your product’s score in April is 20 and your competitors’ scores are 27, 19, 21 and 3, then your product’s April demand is:
20 / (20 + 27 + 19 + 21 + 3) = 22%
Assuming you had enough inventory to meet demand, you would receive 22% of segment sales for April.
What generates the score itself? Marketers speak of “the 4 P’s” – price, product, promotion and place. Price and product are found in the buying criteria. Together they present a price-value relationship. Your promotion budget builds “awareness,” the number of customers who know about your product before sourcing. Your sales budget (place) builds “accessibility,” the ease with which customers can work with you after they begin sourcing. To the 4 P’s we can add two additional elements– credit terms and availability. Credit terms are expressed by your accounts receivable (A/R) policy. Availability addresses inventory shortages.
3.2.1 Base Scores
To estimate the customer survey score, begin with the buying criteria available in the Courier’s Segment Analysis reports. For example, suppose the buying criteria are:
- Age, 2 years– importance: 47%
- Price, $20.00-$30.00– importance: 23%
- Ideal Position, size 15.0 /performance 5.0– importance: 21%
- MTBF, 14,000-19,000– importance: 9%
A perfect score of 100 requires that the product have an age of 2.0 years, a price of $20.00, a position at the ideal spot (5.0 and 15.0) and an MTBF of 19,000 hours.
The segment weighs the criteria at: Age 47%, Price 23%, Positioning 21% and MTBF 9%. You can convert these percentages into points then use these numbers to estimate a base score for your product. For example, price is worth 23 points. The perfect Round 0 price of $20.00 would get 23 points, but at the opposite end of the price range, a price of $30.00 would only get one point.
You can use the age and positioning charts in your Industry Conditions Report to estimate average points for those criteria.
However, the base score can fall because of poor awareness (promotion), accessibility (place) or the credit terms you extend to your customers.
3.2.2 Accounts Receivable
A company’s accounts receivable policy sets the amount of time customers have to pay for their purchases. At 90 days there is no reduction to the base score. At 60 days the score is reduced 0.7%. At 30 days the score is reduced 7%. Offering no credit terms (0 days) reduces the score by 40% (see “4.4.5 Credit Policy”).
3.2.3 Awareness and Accessibility
After your product leaves the factory and enters the marketplace, the calculations for its score become less exact. The score will be affected by the level of the product’s awareness (the percentage of people who know about your product) and its segment’s accessibility (the number of customers who can easily interact with your company).
Awareness is built over time by the product’s promotion budget. Promotion budgets fund advertising and public relations campaigns.
Accessibility is built over time by the product’s sales budget. Sales budgets fund salespeople and distribution systems to service customers within the product’s market segment.
Similar products with higher awareness and accessibility will score better than those with lower percentages (see “4.2 Marketing” for more information on awareness and accessibility).
If the TQM/Sustainability module is enabled, some initiatives can increase the customer survey score (see “7.1 TQM/Sustainability”).
Capsim Capstone Business Simulation India is a challenging but rewarding experience. It will help you develop your business skills and learn how to make sound business decisions. If you are serious about learning business, then Capsim Capstone Business Simulation India is the best way to do it.