Daily Research News Online no. 6651 - Contract Delays Force Harris Revision

Contract Delays Force Harris Revision

April 10 2007

Harris Interactive has revised its forecasts for the second half of the year following sales bookings around $8m lower than expected in the third quarter of its financial year. The firm also chose today to announce a new loyalty tool, the Commitment Model.

The company has not finalized its results for the third quarter of its financial year 2007, but says sales bookings for the quarter should be around $58m - as opposed to the $66m discussed during its conference call held on February 2 this year. Third quarter results will be reported before the markets open on Friday, May 4.

CFO Ronald E. Salluzzo said that more than $9m in large contracts 'did not get signed as expected' during the month of March. Although between $4m ansd $7m of the same contracts should be decided in Q4, the delay will impact second half figures. 'Q3 revenue growth will be lower than expected and we now anticipate our 2HFY07 organic revenue (excluding recently acquired MediaTransfer AG) will be about flat with last year.'

President and CEO Greg Novak blamed the problems on 'uncertainty and upheaval' adversely affecting the pharmaceutical industry, and with it Harris's 'big-pharma-centric' Health Care research team � its largest US team. Novak said efforts to sell a wider range of services to existing clients, and to gain entry into new industry segments such as medical devices and managed care, were showing good results but at a slower pace than anticipated.

Many other business units showed good sales and revenue growth, adds Salluzzo. 'While we remain strongly confident in the long-term viability and growth potential of all of our research teams, we will continue to take the actions necessary to properly match our expenses with projected revenue in the short-term.'

The Harris Interactive Commitment Model, announced today, is claimed as 'the first research framework that allows businesses to accurately understand and measure the drivers of customer loyalty', using loyalty simulators that show how changes in service delivery, facilities and other factors might affect the bottom line. Stephan Sigaud, Group President of the Loyalty unit says the model is 'the culmination of decades of research and practice', and more precise than anything that has gone before.

The Model represents the way the relationship between customers and brands evolves over time, in a two dimensional format mapping the rational and emotional dimensions of commitment, and giving four relationship states:

Acquaintance � the customer is not connected to the brand
Partnership � the customer is rationally connected to the brand
Romance � the customer is emotionally connected to the brand
Commitment � the customer is both rationally and emotionally committed to the brand.

The model suggests that committed customers, among other attributes, are more likely to forgive failure, place frequent, consistent orders and usually cost less to service.

The model has been tested in two separate US trial projects, one with fast food restaurants and the other with retail companies and proved reliable, according to Joan Fredericks, Senior Vice President and Director of Advanced Methodology.

The firm will show several case studies using the model at its annual Loyalty seminar in New York, April 30 � May 1 � details are online at www.harrisinteractive.com/loyalty .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.