Irv Shapiro recalls summoning his managers and asking, "How many of our clients are actively referring customers to us?" Days later, the answer came back: 25%--at best.

While customers claimed to be happy with the level of service they received from Metamor, it wasn't enough for Shapiro, CEO of the $31-million computer consulting company, based in Chicago. So now he rewards employees whose customers agree to be references.

All employees qualify for a quarterly bonus based on several performance measures. one of which is customer feedback. After talking to customers, supervisors rate employees on a scale of one to five for each aspect of customer service. Responses from dissatisfied customers are weighted more heavily. Supervisors then meet individually with each employee to discuss the results. If a client agrees to serve as a reference and gives high marks across the board, the employee usually earns the maximum bonus for customer service.

Shapiro paid out $200,000 to his employees in customer-service bonuses. Approximately 5% of overall revenue--or as much as 13% of payroll--is set aside for the incentive program. Of that, approximately 40% goes toward incenting customer satisfaction. The result? Over a five-year period, Metamor's average contract grew 10-fold, and approximately 75% of its current accounts sang Metamor's praises to their friends--representing an increase of 50%.

Copyright 1997 G+J USA Publishing