three page

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the voice Getting more from

of the customer

Organizations don’t have to fall short when it comes to leveraging insights drawn from the voice of the customer.

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At first glance, the news looks good for buyers and consumers: Improving the customer experience is a top priority in a majority of companies. At least that’s what these organizations say in advertise- ments, annual reports and other communications—as well as in statements made by their leaders and senior executives. A March 15, 2005 Forrester Research survey by Bruce D. Temkin, Customers Will Get More Attention in 2005: Survey of NA Firms Identifies Customer Experience Priorities, for example, found that 96% of senior ex- ecutives say improving the customer experience is either critical or very critical to the future success and growth of their companies.

Unfortunately, a closer look reveals the rest of the story: The same Forrester Research survey indicates that a majority of firms confess to delivering “sub-par experiences to customers.”

Perhaps there would be less cause for alarm if the results of the foregoing sur- vey were exceptional—but they are not. Findings from other recent studies suggest that trends in customer service and satisfaction are stagnant, or even declining. One 2007 global benchmarking study by D. Berenbaum and T. Larkinby (How to Talk to Customers, San Francisco, Jossey-Bass) showed a reduction in customer satis- faction from 82% to 68% in the last year alone. According to J. McGregor, writing in

Business Week (February 21, 2008), results of the J. D. Power and Associates 2008 Cus- tomer Service Champs study also revealed

a decline in customer service ratings in a majority of industries. Furthermore, this pattern in customer satisfaction and service quality scores does not appear to be confined to just the last couple of years. In fact, in nearly every industry that has participated in the American Customer Satisfaction Index (ACSI) survey since its inception in 1994, current scores are essentially the same as they were in that baseline year, or else they have declined—in some cases, substantially. (It is true that upward or downward swings in ACSI scores have been observed over the years, and these variations are more pronounced in some industries than others. But a comparison of the most recent ASCI scores to those from the 1994 baseline are either negligible or reveal a decline. Details are available at www.theacsi.org.)

So if companies really believe that improving customer experience is such a top priority, why aren’t there more improvements in customer satisfaction? Many explanations have been offered. Some assert that buyer expectations and require- ments have risen, and that customers simply are not as easily satisfied as they were in the past. Others blame cutbacks in service and staffing due to challenging economic conditions. Still others suggest that companies themselves aren’t quite sure how to deliver great service, or have failed to enable their employees and partners to do so.

B y D. R a n d a l l B r a n d t

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They say it is a top priority, but a majority of companies are not improving their customers’

experiences. One reason is that many of these companies continue to struggle to put the voice

of the customer (VOC) to work. Here we examine the specific challenges that are preventing

companies from using VOC data to improve the customer experience, and offer some general strategies for addressing the

most vexing of these challenges.

There also are skeptics. In the collective opinion of this crowd, the emperor has no clothes—or as one observer put it, “despite their rhetoric, most organizations have not made a significant and sustained commitment to customer satisfac- tion” (Denove, C. and J.D. Powers IV (2006). Satisfaction: How Every Great Company Listens to the Voice of the Customer. New York: Portfolio; p.1).

Most likely, there is some measure of truth in each of the preceding perspectives. However, after decades of working with organizations in automotive, financial services, retail, hospitality, telecommunications and other sectors, my col- leagues and I have concluded that there may be at least one additional factor in play. Simply put, a lot of companies are trying—but have yet to figure out—how to improve customer experience by putting the voice of the customer to work.

It is true that many organizations recognize the value of the voice of the customer (VOC). Investments made by organizations in VOC methods and processes have grown steadily from the early 1980s to the present. Today, hundreds of organizations regularly conduct surveys, solicit comments and complaints and gather data from other VOC sources in order to identify and pursue opportunities to improve customer experiences and relationships. In fact, according to a study by A. Wilson (“Attitudes Towards Customer Satisfaction Mea- surement in the Retail Sector, International Journal of Marketing Research, 2002, 44, 2, pp. 213-222) at least one study indicates that customer satisfaction data collection “is typically the larg- est item of firms’ annual expenditure on market intelligence, and is often the only systematic market intelligence that a firm generates.”

But while capturing the voice of the customer is one thing, putting it to work is quite another. The trouble is most orga- nizations have not implemented the necessary methods and processes for integrating the voice of the customer into day-to- day management and operations—and this is inhibiting their ability to use VOC-driven insights to improve the customer experience.

The purpose of this article is to offer a closer look at the specific issues and challenges that are preventing companies from using VOC data to improve the customer experience. Subsequently, we share some general strategies for addressing the most vexing of the challenges.

Our research Just how effective are companies at integrating the voice

of the customer into day-to-day management and operations? How successful are these companies in taking action based upon intelligence and insights derived from VOC sources? What are the specific issues and challenges that inhibit transla- tion of VOC data into practices and policies that lead to im- proved customer experiences and/or achievement of desired business results?

These were the questions that led us to conduct the 2007 Maritz VOC Practices and Challenges Survey. Specifically, there were two basic objectives to the survey:

• Determine how managers assess their organization’s over- all effectiveness in putting the voice of the customer to work.

• Identify specific issues and challenges that may inhibit the ability of organizations to integrate and deploy the voice of the customer.

Using input from exploratory research with numerous clients, along with discussions with our own account manag- ers and subject matter experts, we developed a list of 22 VOC issues and challenges that were repeatedly mentioned. This list was used to design items included in the survey instrument, which also contained questions about overall effectiveness at VOC integration and deployment.

We targeted managers of “Blue Chip” companies, with a total of 131 managers completing the online survey. Indus- tries represented include automotive, consumer electronics, electric and gas utilities, retail banking, healthcare, hotel and lodging, information technology, insurance, pharmaceuticals, transportation and telecommunications. Approximately 80% of the managers interviewed came from marketing research, consumer research, marketing, customer service or brand man- agement. (Since the data obtained from these interviews are proprietary, we have kept the names of managers and compa- nies confidential.)

what did we learn? For the most part, the results of the survey confirm what

my colleagues and I have suspected for some time: Most organizations are not where they want to be when it comes to

exeCUtive briefing

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integrating and deploying insights drawn from the voice of the customer.

• Of the managers surveyed, 75% indicated their organiza- tions are either struggling or at least need to improve at integrating the voice of the customer into day-to-day management and operations.

• Of the managers surveyed, 81% indicated that their organi- zations are either struggling or at least need to improve at taking action on the basis of the voice of the customer.

• At least 50% or more of these managers indicated that their organizations have been able to successfully address the following:

• Gain senior management buy-in to the importance of VOC.

• Maintain awareness of VOC purpose and goals. • Select survey and other customer metrics. • Convince managers/partners that surveys are accurate. • Get internal clients/partners to understand VOC. • Use customer survey as part of the management

dashboard. • Use inbound customer complaints to manage

relationships with individual customers. • Use survey results as a basis for defining action items. • Use customer survey data to manage relationships with

individual customers.

• On the flip side, at least 50% or more of these managers indicated that their organizations continue to struggle to do the following:

• Integrate multiple sources of VOC data to define priorities.

• Demonstrate the link between customer and financial metrics.

• Link VOC to internal operational metrics. • Integrate VOC and VOE (voice of employee) data. • Clarify survey action items so owners know what to do. • Pinpoint practices/processes that must be improved. • Communicate action plans to address survey action

items. • Get internal clients/partners to act on VOC information.

Thus, on the “good news” front, a majority of organizations have been generally successful at (a) establishing awareness and buy-in regarding the importance of the voice of the cus- tomer, (b) selecting and capturing VOC data and metrics, (c) using these metrics to “keep score,” and (d) using these metrics to take action on a limited scale (e.g., to manage individual customer relationships). On the other hand, most still perceive the need to improve with regard to (a) integrating multiple sources of VOC data to develop insights and establish priorities for improving the

customer experience, (b) linking VOC data/metrics with other business process and results data/metrics, and (c) taking action.

The results of the 2007 Maritz VOC Practices and Challenges Survey are consistent with the findings of at least two addition- al and relatively recent studies. Neil Morgan and his colleagues conducted a study of 37 companies spanning multiple indus- tries (N.A. Morgan, E. W. Anderson, and V. Mittal, “Under- standing Firms’ Customer Satisfaction Information Usage,” Journal of Marketing, July, 2005, pp. 135-151). They observed many of the same problems reported by managers who partici- pated in our survey:

• In most of the firms studied, there is little or no integra- tion of customer survey data with other customer data and/or relevant data from elsewhere in the firm.

• In all but one firm, measures of customer satisfaction are not linked to actual customer purchase behavior and/or financial results.

• Data are distributed to managers without identifying root causes or fixes to guide action planning.

• Insights from customer satisfaction measures are not distributed to frontline employees and/or many func- tional areas that could and should use them to improve quality and service.

• Customer satisfaction data tend to be used to support decision making in a very narrow and tactical, rather than broad-based and strategic, fashion.

Similarly, a study reported by The Gantry Group (The Gantry Group (2008). Best Practices for Customer Satisfaction Programs) indicates that the following are the three biggest challenges faced by companies trying to improve their cus- tomer satisfaction initiatives. (A copy of this study may be obtained at www.gantrygroup.com.):

• Achieving the necessary customer satisfaction data detail to pinpoint where in our business processes the problems originate

• Distilling customer satisfaction data into actionable, high-impact recommendations

• Tying customer satisfaction to organizational performance

All of the preceding findings suggest that organizations may go through a developmental process of VOC integration and deployment, such as the one illustrated in Exhibit 1. Dur- ing the early stages of this process, companies progress from building awareness and buy-in regarding the importance of the voice of the customer—through capturing and analyzing VOC data and reporting key insights/action items derived from these data. Much of the action taken in response to the voice of the customer is relatively limited in scope, such as using customer feedback to respond to individual customer prob-

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lems or complaints. Most organizations we surveyed currently are somewhere in these early to mid-stages of this process.

In order to progress to a more advanced stage of VOC inte- gration and deployment, organizations must develop methods to (a) make different VOC data sources “work together,” (b) link the voice of the customer to business processes and results, and (c) develop effective processes for taking action based upon VOC data, so that the voice of the customer is success- fully integrated into day-to-day management and operations. A few of the organizations we surveyed have progressed to this stage, but they are in the minority.

Clearly, there is more to success at putting the voice of the customer to work than just capturing and sharing VOC data with managers, and telling them to use it. Yet this appears to be as far as many organizations have gotten in their efforts to integrate and deploy the voice of the customer.

So, what can be done? Strategy 1: Adopt a uniform set of customer experience

categories, and apply it consistently to all VOC data sources. It is a common (and unfortunate) practice for organizations to use multiple category schemes to analyze data from various VOC sources. Thus, one set of categories or attributes is used to construct survey rating items; a slightly different set is used to sort, code and tabulate answers to open-ended survey ques- tions; and yet another set is used to organize inbound cus- tomer comments captured at Web sites or via contact centers. A consequence of this practice is that managers cannot make direct, apples-to-apples comparisons among results obtained from these VOC sources.

So, what are companies that have successfully integrated multiple sources of VOC data doing? Here is what two of the managers we surveyed, who indicated their company has “developed an effective method of addressing this challenge,” had to say:

“Client feedback is collected from multiple channels using standard business categories and sub-categories. The applica- tion of these consistent categories to ever-increasing volumes of client feedback is finally paying dividends, in the form of management being ‘convinced’ by quantitative reporting (met- rics) associated with ‘non-quantitative’ client feedback.”

“We combine survey data with transactional data from our CRM database using a common set of categories.”

Essentially, these organizations have created a uniform set of customer experience categories that are consistently applied in organizing and analyzing VOC data from multiple sources, regardless of whether the data are metric or non-metric, qualitative or quantitative. Such an approach makes it pos- sible to determine if results and conclusions drawn from one VOC data source converge with those drawn from one or more other VOC data sources. For example, the “convergence map” shown in Exhibit 2 presents hypothetical results for an insur-

ance company illustrating how survey ratings can be com- pared with inbound customer complaints (obtained through a customer contact center) to identify priorities for improvement. In this case, both high levels of customer dissatisfaction re- flected in surveys and a relatively high incidence of complaints suggest that “promptness of claims handling,” “explanation of coverage,” and “ease of doing business via the Web site” are areas in which the company can improve (see upper right- hand quadrant). This conclusion is being drawn from more than one VOC data source, which often leads to increased con- fidence that the “right” elements of the customer experience have been targeted. Furthermore, if category importance infor- mation is available, it can be juxtaposed on the elements in the convergence map to refine the prioritization process. With such information added, elements of the customer experience that are highest in importance and in need of improvement (based on multiple data sources) would be given the highest priority for action planning and implementation.

Strategy 2: Make linkage a standard feature of VOC analysis and reporting. Most organizations struggle to link VOC data to other measures of business processes and results, such as internal operational metrics, measures of employee experience and engagement, and/or financial and market performance measures. For example, here are some comments managers made in connection with linking customer data to financial and other key business results:

“Most leaders ‘get’ the importance issue, but monetizing key customer measures is still a work in progress, we’re work- ing hard on it, and we’re not yet there.”

“An executive committee has been tasked with develop- ing ways to demonstrate the link (between customer survey metrics and business results), but nothing concrete has come out of this.”

n exhibit 1 A continuum of VOC integration and deployment

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“We are still challenged to link (customer survey) results to business results such as revenue or market share.”

Linkage analysis can and should be performed routinely as part of an organization’s effort to integrate the voice of the customer into day-to-day management and operations. For instance, establishing a clear connection between a customer loyalty metric and actual customer retention and revenue helps build a “business case” for managing and improving customer experience. There are many ways to establish such a connection, and the key is to adopt the approach that is most appropriate for your market and industry. For details on how to link customer and financial metrics, see Brandt, et al., 2004, “Burden of Proof,” Marketing Research, Fall, 14-20; and Brandt, 2007, “For Good Measure,” Marketing Management, January/ February, 20-25.

Customer metrics also can and should be linked to inter- nal operational measures, so that targets for the latter can be aligned with customer needs and expectations. For example, the analysis illustrated in Exhibit 3 shows how variations in claims handling cycle time are related to higher or lower levels of customer satisfaction with “promptness of claims handling.” Such an analysis provides insight into where to “set the bar” for cycle time in order to achieve the desired level of customer satisfaction.

Generally speaking, the insights derived from linkage analyses enable managers to see and “connect the dots.” Man- agers see why managing the customer experience matters and how business processes and activities can/should be aligned to achieve such improvement.

Strategy 3: Implement a formal process for translating

VOC data into action. Many companies struggle to take action based on the voice of the customer, and a number of the man- agers we surveyed specifically commented on this:

“We have not been able to convert client satisfaction results into action to fix local problems.”

“There is lots of talk about using survey results to drive change, but little concrete action so far.”

“The challenge for us is to get data that is actionable enough for use by individual engineers or project teams.”

A prevalent practice in far too many organizations is to hand customer feedback to managers, accompanied by instruc- tions to “use the results to take action.” The consequences? Quite often no action is taken and/or the impact of actions taken is unclear:

• Responsibility for the customer issue may not be clear, which can result in no one taking ownership (or the wrong parties taking ownership), and ultimately no ac- tion (or ineffective actions) being taken.

• Insufficient detail regarding what the customer wants, needs or expects may make it difficult to determine what actions should be taken.

• Unless business processes or practices that directly impact the customer issue are identified, the organiza- tion may end up “fixing” the wrong things (or doing nothing).

The three-step process illustrated in Exhibit 4 is a system- atic approach to moving from data to action.

n exhibit 3 Aligning customer satisfaction and internal performance targets

Customer dissatisfaction

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n exhibit 2 Convergence map integrating survey and inbound complaint data

Incidence of inbound customer

complaints

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• Ease to understanding billing statements

• Competitive pricing

• Variety of coverage options

• Accuracy of billing statements

• Agent’s knowledge of products

• Agents response to requests

• Ease of policy renewal

• Ease of making policy changes

• Availability of agent • Promptness of claims handling

• Explanation of coverage

Lower

Lower Higher

Percent “dissatisfied” ratings from surveys

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Adopting such a formal process for translating VOC data into action plans furnishes an effective approach for addressing five of the most vexing challenges discussed earlier:

• Identifying owners of customer-driven action items • Clarifying survey action items so owners know what

to do • Pinpointing practices and processes that must be

improved • Communicating plans to address action items • Getting internal clients/partners to act on VOC

information

By taking the time to carry out the recommended process, an organization puts itself in a very good position to make im- provements because: (a) The people and parts of the organiza- tion that impact the targeted element of the customer experi- ence have taken ownership of it; (b) Managers have a detailed understanding of what the customer wants done (or done dif- ferently); and (c) Specific processes, activities, and other busi- ness enablers that furnish the means of addressing the targeted element of the customer experience have been identified.

Essentially, the organization is better prepared for action, because it has taken the “guess work” out of customer-driven

improvement. The organization has constructed a bridge on the road from data to action. This requires some extra effort, but it increases the odds of success substantially.

Moving forward Senior executives may make commitments to being

customer-driven, and they may acknowledge the importance of the voice of the customer. Companies can make investments in capturing, crunching and sharing insights derived from VOC data. These steps will allow organizations to make some progress toward putting the voice of the customer to work. However, unless the necessary methods and processes of VOC integration and deployment are put in place, progress likely will be stalled. The results of our research reinforce the last point: Most organizations have not progressed beyond early- to-mid stages of VOC integration and deployment because they have not yet implemented the necessary strategies.

There are three strategies that may enable organizations to move to an advanced stage of VOC integration and deployment:

• Adopt a uniform set of customer experience categories and apply it consistently to all VOC data sources.

• Make linkage a standard feature of VOC analysis and reporting. • Implement a formal process for translating customer

data into action. n

about the author D. Randall Brandt is vice president of customer experience and loyalty at Maritz Research. He may be reached at [email protected].

n exhibit 4 A three-step process for translating VOC data into action

Customer-driven action item identified

Do we know who is responsible for this

action item?

Do the owners have sufficient under-

standing and detail?

Have the relevant business “enablers”

been identified?

Develop and implement appropriate

action plan

“Drill-Down” into the issue for clarity

and granularity

Pinpoint the relevant operations, processes, policies, and other business

enablers

Determine owners of customer-driven

action item

NO

NO

NO

YES

YES

YES