Focus on . . . Customers
Ideally, this is where the focus should always be, and, on the surface, it seems like a no-brainer: of course we listen to our customers and deliver goods and services based on those needs! But what happens when daily pressures, growth, and organizational/market changes distance you from the customer or prevent you from looking carefully at the processes that support them? Revisiting your commitment to, as well as the actual implementation of, "voice of the customer" or "VOC" is a smart move. That’s the subject we’ll tackle in this issue.
History and Meaning of the Term
VOC ultimately came from the manufacturing industry--Mitsubishi's Kobe shipyards to be exact-- in 1972 , and became extremely popular by the 90s . VOC has been defined as "a hierarchical set of 'customer needs' where each need (or set of needs) has assigned to it a priority which indicates its importance to the customer." These customer needs are important to collect from all points of entry to create a well-rounded plan (aka VOC architecture) for how to drive business, marketing, and product development decisions and efficiencies. Acronyms and tech-talk aside, let’s take a closer look at how we as entrepreneurs and small business owners (SBOs) might adapt some concepts from VOC to establish sound business practices.
First, let’s clarify some myths.
The Big Myths
Myth #1: Lack of resources is the primary barrier to implementing a customer-driven strategy. In a 2007 VOC study by Maritz Research, the majority of Fortune 1000 managers reported that what keeps them awake at night is "how to use customer feedback to drive performance improvement." Surprisingly, the same survey in 2005 reported the same results—and these are big companies with research departments and sizeable budgets! The problem is more akin to lack of focused, detailed attention about employee-customer interactions and managerial support and, in this area, SBOs have some clear advantages.
Myth #2: We don't have the skills and expertise to collect the data. You and your employees don't have to be technical whizzes or marketing mavens to get it. Data can come from current customers or potential customers during the sales process, incoming calls to customer support/help desk, comment cards or other in-store or POS feedback tools, and emails. In fact, anyone who interacts with your customers or prospects can collect data; it's just a matter of mobilizing this effort with the right tools and processes (Shameless plug: TDA can design these for you) backed by management leadership and training. By honing your listening skills, asking a few simple questions, and some simple tracking tools in place, you’ll be better equipped to harness valuable customer feedback.
Myth #3: If we build it, they will come! If you're a multi-million dollar company, you can take this approach and, at worst, simply cancel the product, cut your losses, and move on. Anyone heard of Coke BlaK? In January 2006, this coffee-infused "adult" cola was released into the market, although as sources report "no consumer ever asked for it" and "consumers' first reactions . . . seemed to be guarded" at best. In August 2007, Coca-Cola ceased U.S. sales of Coke BlaK after 2 years'--and thousands of dollars--worth of investment. What is for Coca-Cola a costly lesson could be a mortal blow to a small company. Therefore, it’s not enough to only collect the voice of the customer, but to heed it as well, assuming those are profitable customer-types worth keeping! While the release of BlaK will not impact customer loyalty to the long-standing Coke products, the same may not hold true for variations on a small business' product line or services.
Myth #4: Our customers have nothing bad to say about us. If you aren't hearing complaints, says Theodore Levitt in the Harvard Business Review, "the customer is not being candid or is not being contacted." Either way, customers who do not complain are less likely to repurchase than those who do (between 9-19%)—regardless of the business’ response. When a business resolves the customer complaint, that number shoots up to 54%. Therefore, you have a better chance of saving key clients by providing a mechanism to let them talk—and laying the groundwork for solutions.
Myth #5: We already conduct customer satisfaction surveys and sharing those results with everyone gets us where we need to be. Unfortunately, not everyone knows how to use those results to their advantage, much less change the company practices at the basic level to create change. Unless SBOs make the customer needs concrete and implement ways for their staffs to measure how they respond to those needs (what's called VOC architecture), it's just feedback in a vacuum. To illustrate, I’ll expand on the example of an insurance company, used by Randy Brandt of Maritz , to show how to integrate a VOC architecture.
Background: Your Way Insurance (YWI), a 15-person company, knows that its customers value both fast and accurate claims processing and measures their performance via customer satisfaction (CS) surveys.
Current: The CS results are sent to all managers each month and the Claims Manager calls a staff meeting "Our CS ratings are down," he says, "please do whatever it takes to get better and faster." The employees go back to their desks and try to improve. The next month, the rating may change or it may not.
Ideal: In addition to the CS ratings, the Claims Manager calculates: (1) how many days it takes to process claims and (2) how many claims are "do-overs." YWI not only surveys its customers on their satisfaction levels with processing time and accuracy but also considers how that rating plays into overall customer satisfaction. They also track the relationship between satisfaction and policy renewals (as well as customer profitability) and to no surprise find that happy customers stay with YWI longer. They find that 8 days is the maximum amount of time they have to complete a claim to keep a customer happy, all other things being equal. The manager calls a staff meeting and sets a goal of 4 days max to complete a claim, to start, with the choice of a day off, lunch with the CEO at Capital Grill, or a cash award for the claims rep who achieves the most accurate claims completed within the less than 4 days' timeframe. (This smart manager knows that one size does not fit all in terms of rewarding employees and wants to ensure department-wide motivation.) YWI claims processors now have a specific goal to work toward, with adequate motivation to achieve it. The rating is much more likely to go up.
Steps in the Right Direction
If you're motivated to avoid the pitfalls of these myths, here are a few steps to get you started:
Good luck!
1. Griffin and Hauser, 1991
2. Phelon, June 27, 2006
3. Griffin, 2002, 180.
4. Griffin, 2002, 179.
5. "What's Preventing You from: Putting the Voice of the Customer to Work?", AMA Webinar. September 11, 2007.
Ideally, this is where the focus should always be, and, on the surface, it seems like a no-brainer: of course we listen to our customers and deliver goods and services based on those needs! But what happens when daily pressures, growth, and organizational/market changes distance you from the customer or prevent you from looking carefully at the processes that support them? Revisiting your commitment to, as well as the actual implementation of, "voice of the customer" or "VOC" is a smart move. That’s the subject we’ll tackle in this issue.
History and Meaning of the Term
VOC ultimately came from the manufacturing industry--Mitsubishi's Kobe shipyards to be exact-- in 1972 , and became extremely popular by the 90s . VOC has been defined as "a hierarchical set of 'customer needs' where each need (or set of needs) has assigned to it a priority which indicates its importance to the customer." These customer needs are important to collect from all points of entry to create a well-rounded plan (aka VOC architecture) for how to drive business, marketing, and product development decisions and efficiencies. Acronyms and tech-talk aside, let’s take a closer look at how we as entrepreneurs and small business owners (SBOs) might adapt some concepts from VOC to establish sound business practices.
First, let’s clarify some myths.
The Big Myths
Myth #1: Lack of resources is the primary barrier to implementing a customer-driven strategy. In a 2007 VOC study by Maritz Research, the majority of Fortune 1000 managers reported that what keeps them awake at night is "how to use customer feedback to drive performance improvement." Surprisingly, the same survey in 2005 reported the same results—and these are big companies with research departments and sizeable budgets! The problem is more akin to lack of focused, detailed attention about employee-customer interactions and managerial support and, in this area, SBOs have some clear advantages.
Myth #2: We don't have the skills and expertise to collect the data. You and your employees don't have to be technical whizzes or marketing mavens to get it. Data can come from current customers or potential customers during the sales process, incoming calls to customer support/help desk, comment cards or other in-store or POS feedback tools, and emails. In fact, anyone who interacts with your customers or prospects can collect data; it's just a matter of mobilizing this effort with the right tools and processes (Shameless plug: TDA can design these for you) backed by management leadership and training. By honing your listening skills, asking a few simple questions, and some simple tracking tools in place, you’ll be better equipped to harness valuable customer feedback.
Myth #3: If we build it, they will come! If you're a multi-million dollar company, you can take this approach and, at worst, simply cancel the product, cut your losses, and move on. Anyone heard of Coke BlaK? In January 2006, this coffee-infused "adult" cola was released into the market, although as sources report "no consumer ever asked for it" and "consumers' first reactions . . . seemed to be guarded" at best. In August 2007, Coca-Cola ceased U.S. sales of Coke BlaK after 2 years'--and thousands of dollars--worth of investment. What is for Coca-Cola a costly lesson could be a mortal blow to a small company. Therefore, it’s not enough to only collect the voice of the customer, but to heed it as well, assuming those are profitable customer-types worth keeping! While the release of BlaK will not impact customer loyalty to the long-standing Coke products, the same may not hold true for variations on a small business' product line or services.
Myth #4: Our customers have nothing bad to say about us. If you aren't hearing complaints, says Theodore Levitt in the Harvard Business Review, "the customer is not being candid or is not being contacted." Either way, customers who do not complain are less likely to repurchase than those who do (between 9-19%)—regardless of the business’ response. When a business resolves the customer complaint, that number shoots up to 54%. Therefore, you have a better chance of saving key clients by providing a mechanism to let them talk—and laying the groundwork for solutions.
Myth #5: We already conduct customer satisfaction surveys and sharing those results with everyone gets us where we need to be. Unfortunately, not everyone knows how to use those results to their advantage, much less change the company practices at the basic level to create change. Unless SBOs make the customer needs concrete and implement ways for their staffs to measure how they respond to those needs (what's called VOC architecture), it's just feedback in a vacuum. To illustrate, I’ll expand on the example of an insurance company, used by Randy Brandt of Maritz , to show how to integrate a VOC architecture.
Background: Your Way Insurance (YWI), a 15-person company, knows that its customers value both fast and accurate claims processing and measures their performance via customer satisfaction (CS) surveys.
Current: The CS results are sent to all managers each month and the Claims Manager calls a staff meeting "Our CS ratings are down," he says, "please do whatever it takes to get better and faster." The employees go back to their desks and try to improve. The next month, the rating may change or it may not.
Ideal: In addition to the CS ratings, the Claims Manager calculates: (1) how many days it takes to process claims and (2) how many claims are "do-overs." YWI not only surveys its customers on their satisfaction levels with processing time and accuracy but also considers how that rating plays into overall customer satisfaction. They also track the relationship between satisfaction and policy renewals (as well as customer profitability) and to no surprise find that happy customers stay with YWI longer. They find that 8 days is the maximum amount of time they have to complete a claim to keep a customer happy, all other things being equal. The manager calls a staff meeting and sets a goal of 4 days max to complete a claim, to start, with the choice of a day off, lunch with the CEO at Capital Grill, or a cash award for the claims rep who achieves the most accurate claims completed within the less than 4 days' timeframe. (This smart manager knows that one size does not fit all in terms of rewarding employees and wants to ensure department-wide motivation.) YWI claims processors now have a specific goal to work toward, with adequate motivation to achieve it. The rating is much more likely to go up.
Steps in the Right Direction
If you're motivated to avoid the pitfalls of these myths, here are a few steps to get you started:
- 1. Define your existing and possible methods of customer/prospect
data collection. Do you have an e-newsletter? Consider developing a built-in response mechanism for feedback
(see "What Do you Want to Read About?" at left). Does it make sense to have surveys, comment forms, suggestion boxes,
user groups, advisory boards, centralized voicemail, chat rooms, blogs, message boards, etc? Are there elements of these
that can be incorporated into outgoing communications you already have (e.g., surveys with or as part of invoices or
order forms?). Carefully test the possibilities against what makes sense and look critically at the tools to ensure
they're doing the heavy lifting.
- 2.
Uncover the additional metrics you'll need in order to drive change internally and be sure to build
companywide understanding and motivation (as in the YWI example). Sometimes special attention is needed
to make the organizational culture shift to the data collection, measurement, and accountability cycle.
- 3.
Centralize your data storage. Make sure all the information is harnessed and accessible to those who need it
in meaningful formats.
- 4. Analyze carefully and develop the specific goals
and tools and processes to support them. Figure out who has the power to impact the customer experience and help them
to effectively do their jobs! If it’s product or distribution that needs to be addressed, pursue whatever avenues
necessary to drive improvement in those areas.
Good luck!
1. Griffin and Hauser, 1991
2. Phelon, June 27, 2006
3. Griffin, 2002, 180.
4. Griffin, 2002, 179.
5. "What's Preventing You from: Putting the Voice of the Customer to Work?", AMA Webinar. September 11, 2007.
