|Customer Feedback Analysis
Walker's analytic experts will present ideas about gathering customer feedback to deriving insights from it that will positively impact your customers and your business.
I was recently with a business strategist from a Fortune 500 company who stated there were ultimately three reasons corporate strategies fail. Even though he was speaking of overarching corporate strategies, the three reasons align with what I have seen related to customer strategies:
You measure the wrong things – Good strategy is the result of careful, intelligent analysis; however, the old maxim “garbage in, garbage out” applies here. In customer strategy consulting, this can be the result of jumping on the bandwagon of the latest killer metric without a full analysis of whether or not the metric actually applies to your industry. One way to avoid this shortcoming would be to conduct a pre-program strategic assessment – this step will allow you to learn not only the key customer touchpoints, but also identify the critical needs of key stakeholders in the process. It will also help you make certain you are profiling the customers the right way and focusing on the most critical.
- You make the wrong decisions – Even if you measure the right data, there is no guarantee you will make the right decisions. Some of this is related to the data itself – in customer strategy consulting, using statistical methods that allow us to determine which areas of focus will have the greatest impact on customer loyalty will provide some insulation against focusing on the wrong areas. There is, however, another source of potential error – and that is the direction of where the market in total is heading. Every decision is framed not only by the data you observe, but also by your outlook on the competitive environment in general. To ensure you get it right, there are three recommendations I would make:
- Include competitive assessments in your loyalty measurement program – Having an idea on your position relative to the competition can help fine-tune your analysis. You can read more about benchmarking options in this series.
- Commit to ongoing measurement – This does not necessarily mean an ongoing data collection effort; rather, it is about knowing when to re-assess the customer landscape to ensure you are accounting for all the relevant issues. Most clients do this every 18 to 24 months at a minimum.
- Build macro and micro-level strategic plans – The overall strategy that emerges from the statistical analysis is best used in the context of focal areas that have the greatest impact on the greatest number of customers; however, building more micro-level, customer-based action plans will ensure you are accounting for the individual differences that exist among customers.
- You do not take action – This is the one we tend to see the most. I once worked with a person who was prone to saying “strategy is cheap; execution is hard.” When I first heard him say this, I thought he was saying that strategy was simple; I now realize what he meant was that even though strategy can be hard, it is infinitely more difficult to execute on a plan of attack you know is correct. The phenomenon of acting in ways that are not in your best interest is less about intelligence and more about discipline. I tend to use diet and exercise as an example – I know I should exercise more and eat less, but it is far easier to do the opposite. We at Walker have designed a framework to help navigate the key disciplinary elements needed to take action – namely, organization, process, communication, and motivation.
Certainly there are many reasons strategies can fail; however, I suspect that most of the reasons would fit into this framework. Being mindful of the potential pitfalls that may exist can help you be more proactive in building a plan that will maximize your probability of success.
Mark A. Ratekin
Sr. Vice President, Consulting Services
This is the fourth part of our ongoing series designed to understand some of the dynamics that help explain how companies in the Walker Index outperform the market by over six-to-one. So far, we have explored the dynamics of Relevance and Alignment, Team and Resources, and Information Gathering. In this entry, we will focus on the role that Communication plays in supporting and reinforcing the customer listening process.
Mary Young and James E. Post published an article in 1993 that outlined the approaches that world-class companies use in communicating with employees. Even though the article is a bit dated and focuses on employee communication, the content is still quite relevant. Moreover, I would make the argument that the principles work equally well when considering how to communicate with customers.
The eight approaches outlined by Young and Post were as follows:
1) The CEO’s role as communicator – Young and Post make the case that the CEO has to not only be the chief communicator, but also must be a believer in communication. Those who excel in this tend to have frequent communication, reinforce their vision, are good listeners, are willing to answer tough questions, and are more disposed to quickly responding to sensitive topics.
2) Walk the talk – If you talk about being committed to customers, make certain your actions reinforce that – for example, make certain your infrastructure is designed to serve customers effectively, and make certain you view your processes from the customers’ perspective.
3) Be Open to Two-Way Dialogue – Surveys and other listening methods are a good way to start gathering the perspective of customers, but customers want (and expect) more. In an age of Twitter, Facebook, and other social media outlets, customers expect a two-way dialogue. At a minimum, be certain you are communicating back what you learned, what your action steps are, and when customers can expect to see improvements.
From an internal employee perspective, be certain that employees have an outlet to share their thoughts and ideas on how to improve. This personalizes the experiences for the employee and helps them to see how they can contribute to the bigger picture – plus, from an execution perspective, employees will often be able to identify with the issues the customers articulated and will often have thought of possible countermeasures to address those issues.
4) Face-to-Face Communication – Customers want you to close the loop and to do it in a way that is personal; when possible, a face-to-face session can help to not only address issues that you have learned about that particular customer’s experience, but can also have an ancillary benefit of providing a framework for strategic account planning.
Employees, too, want to engage in a face-to-face conversation. Given geographic dispersion of companies, it may not be feasible (or cost-effective) to have the CEO (or Chief Customer Officer) visit every single location; however, the management of each location can and should endeavor to engage in a face-to-face communication process to ensure the core messages are being sent and to engage in the two-way dialogue that Young and Post recommend.
5) Having a Shared Plan of Communication – While the CEO can be the chief communicator, it is incumbent that all employees be aware (and committed to) the key messages you wish to send to customers. This means that a rigorous, detailed plan of communication should be developed to ensure messages are reinforced in a consistent manner at the level that makes the most sense. One method in a B2B context divides the core messaging between two groups:
Senior Management – Addresses the “why,” “what,” and “when” of changes customers can expect related to strategic initiatives that emerged from a customer listening program
Account Managers – Address the “who,” “how,” and “what” of the changes – in other words, those that are generally more focused at a customer vs. systemic level.
6) The Bad News/Good News Ratio – It is tempting to focus only what is working well; however, if you focus on only the positive, it can suggest that you did not hear the pain points that customers are experiencing, which can further imply that you are not really customer-focused. So, you should plan to share some of the less-than-stellar feedback – it will not only illustrate that you are listening and that you are intent on improving, but it will also make the good news more believable.
7) Tailor the content to the audience – When communicating, it is important to consider who your intended audience is, what their needs and expectations are, and what methods work best in communicating with them. Even within an account, there are often different strategies for communicating – for example, the way you communicate with your client’s CEO will no doubt be different from how you communicate with your front-line contacts.
Also realize that your employees are a target audience as well. This means making certain you are communicating a consistent set of core messages both internally and externally in ways that best resonate with the unique stakeholder groups.
8) Communication is a process, not an event – Young and Post suggest that companies migrate from communication being a transactional event that is focused on tactics to building a focus on process and strategy. They further recommend that firms focus on some specific aspects in this process:
a. Communicate the what, why, and how – Tell a comprehensive story in order to set the expectation of what will occur from this point forward.
b. Be timely in communicating – This is more important in our fast-paced, highly connected environment of today than it was when this article was published in 1993. It is better to communicate in a timely fashion, even if that means you do not have all the answers. Not doing so risks a loss of engagement and trust from your customers.
c. Continuously communicate – This is particularly important if you are being timely in your communication – new information and details will emerge, which means you should communicate that not only as soon as possible, but also in an iterative fashion to reinforce the message.
d. Make the connections – When describing what you learned, be sure to connect how your actions at a macro level will impact the experience the customers has at a micro level – in other words, make certain the message is relevant. For employees, tying how their work will lead to greater levels of customer loyalty (and the financial impact this has on the firm) is extremely important in securing commitment and buy-in.
Having a disciplined approach to communicating both internally and externally will help to ensure that what you learned in your customer listening process is internalized by both customers and employees. However, this internalization by itself is not enough – the communication must represent the initial action that the company takes on the results. This initial action must be followed up by action in both a macro (company) level as well as a micro (account) level. We will tackle the topic of Action in the next entry of this series.
Mark A. Ratekin
Senior Vice President, Consulting Services
 Young, Mary & Post, James E. (1993). Managing to Communicate, Communicating to Manage: How Leading Companies Communicate with Employees. Organizational Dynamics, 22(1), 31-43.
This is the third part of our ongoing series to understand some of the dynamics that explain how companies in the Walker Index outperform the market by more than six-to-one. In the first two segments, we examined the roles that Relevance and Alignment and Team and Resources play in world-class customer listening and how the Walker Index companies perform on these dimensions. In this entry, we will focus our attention on the area that is most closely associated with customer listening – the Information Gathering process.
Let’s start with a strategic view of the Information Gathering process. Why is this step important? To quote our client, IHS CEO Jerre Stead, “Facts are our friends.” Given the right data, we can make very informed, strategic decisions. For this to be the case, however, there are some conditions that have to be met:
1) We have to actually gather and use the information – This sounds horribly obvious, but I have seen examples in my career where companies invest considerable funds to gather data only to use a single number (or discount the results altogether).
Moreover, in companies that have an abundance of data, the company can suffer from “analysis paralysis” – that is, they have so much data it becomes debilitating – or, worse, they can be so silo-oriented that they do not know what they have across the entire enterprise, which means they either gather the same data again or make decisions on gut feel alone.
2) We have to know who the feedback represents – For us to be able to generalize the results of the listening program, we first have to know what the results are representative of. From the perspective of a traditional customer listening program, this means that customer lists have to be complete (no cherry-picking), up-to-date (particularly if you are segmenting by product usage, geographies, etc.), and (if you are using a sampling approach) randomly selected.
This has relevance at the account level as well – as we focus more on taking action and linking results to financial behavior, our core unit of measure is often the company, not the contact within the company. Therefore, it is important that we have a diverse set of informants within a single account so account leaders can have a comprehensive view of the health of the entire account.
3) It is not just about quantitative data – Statistical models are nice, but, to quote George Box, “all models are wrong, but some are useful.” This essentially means that any statistical model has limitations, so it is important to be able to evaluate the limitations (via R-squared values, for example) and provide additional context. This is where unstructured data come in.
“Unstructured data” is what we used to refer to as verbatim comments, open ends, write-in comments, etc. Unstructured data is important in a number of ways – it can provide context/flavor to the quantitative numbers, it can uncover issues/factors not accounted for in our model, and, increasingly, text analytics are allowing us to converting the unstructured data into concepts that can be incorporated in modeling.
4) We need to be mindful of other listening posts – I touched on this above; before you start gathering new data, be sure you are fully leveraging the information you have already gathered – it may be good enough to answer your business question.
We counsel our clients to warehouse their customer listening data in a common database application; this makes all the data accessible from within a single platform, it allows us to control how often a customer is solicited for opinion (to minimize customer burnout and keep sound response rates), and it enables us to see how a single customer’s sentiment changes over time (this will be very important when we discuss the step of Validation).
This is also where social media fits in. I have seen three schools of thought emerge as it relates to social media:
a) Social media will replace traditional research entirely;
b) Social media has too many limitations to be a viable decision-making tool;
c) Social media can be used to complement traditional listening tools/approaches;
I tend to agree with the more moderate third approach – clearly, social media has some technical issues (it likely does not represent the entire customer base, the signal-to-noise ratio is lower than we might like, etc.), but it does provide additional context and insight that can help provide clarity on any issues that may exist within the customer experience.
Among the Walker Index companies, there is strong performance on the topics of having structured listening programs with sound sampling/customer list management practices and incorporate unstructured data. Perhaps not surprisingly, the assimilation of unsolicited data (such as social media data) into the results has a low adoption rate at this time. This, however, is changing – as companies take better steps to integrate their data (through CRM installations, for example), the ability to leverage these data increases. It is an area that will continue to improve into the near future.
Many customer listening programs begin – and, unfortunately, end – with the Information Gathering process; therefore, this is probably the area where most programs have alignment. As we know, though, it is not sufficient to just gather the information. In part four of this series, we will focus on the importance and benefits of Communications in the world-class customer listening program.Mark A. Ratekin
Senior Vice President, Consulting Services
In my last blog, I offered a hypothesis about why companies in the Walker Index tend to outperform the broader market indices by a factor of at least 6:1. The theory is that companies that have a customer-oriented culture are more likely to listen to – and react to – the needs of their customers. This creates a virtuous cycle – the needs of customers are addressed, which builds loyalty, which builds repeat purchase (and minimized attrition), which leads to robust financial results, which leads to better-than-average stock price appreciation.
There are a number of elements that have to be in place in order to set this cycle into motion, some of which are more strategically-oriented (such as Relevance and Alignment, which I discussed in my last blog), others are more tactical in nature (such as elements of Information Gathering, which we will look into in a future entry in this series), and still others are a blend of the strategic and the tactical. This is the case of today’s topic, Team and Resources.
There is a blend of both strategy and tactics when developing your customer advocacy steering team. From a strategic perspective, you want to consider:
1) Do we have appropriate executive support and involvement?
2) Do we have representation across the different lines of business and functions in the organization? Is it the right mix of customer-facing and internal support people?
3) Do we have the right leader enlisted to keep the team moving forward?
The tactical aspects relate to the work that is involved – that is, the nuts-and-bolts, roll-up-your-sleeves activities that highly effective teams manage. My colleague Leslie Pagel recently provided some excellent guidelines on identifying the ideal candidates, articulating the task expectations, and outlining how each member should use customer feedback in their role.
The most effective teams that we have seen in our client organizations exhibit a number of characteristics:
1) They have executive support/involvement – The support and reinforcement from the executive ranks is a must-have in order to implement true cultural change.
2) They have diverse, widespread participation – It is not solely a top-down initiative; rather, there are representatives from the entire organization to ensure proper penetration across the entire enterprise.
3) They have the right team dynamic – Smart teams recognize that forming a team is a disciplined, structured process - remember Tuckman’s “Forming-Storming-Norming-Performing” cycle. Working through the cycle will help the team to become a stronger unit in the long run.
4) They understand the “inter-connectedness” of the group – Once the team successfully navigates Tuckman’s cycle, each team member understands the role he/she plays and how they can help each other.
5) They create a network of allies, inside and outside the group – Smart team build and leverage a network outside of the team as well as inside the team. They specifically identify advocates that can help them advance the cause outside of the core group.
The process must start with executive support/involvement and, obviously, the formation of the team. How do the companies in the Walker Index stack up? Roughly nine out of ten companies have executive involvement, and a little less than two-thirds have a formal steering team in place. It makes sense that team formation lags executive support/involvement, as the executive sponsor is the catalyst for the implementation of a full-scale customer strategy.
We cannot really overstate the importance of having the right Team and Resources in place – in fact, without an effective team with the right members, our ability to execute on the remaining areas of world-class customer listening – Information Gathering, Communication, Action and Validation – is heavily constrained. As such, this is an area for careful, purposeful consideration and execution.
In my next entry, I will delve into the notion of Information Gathering and will discuss how the Walker Index companies stack up on some traditional and emerging aspects of the information gathering process.
Mark A. Ratekin
Senior Vice President, Consulting Services
When we show customers and prospects The Walker Index, we generally get two questions:
1) Can I invest in that index? The answer is no – the Index is a “virtual” fund made up of our publicly-traded clients. The purpose of the Index is to provide a tangible proof-point for why adopting a customer-oriented strategy makes good business sense. In this case, the focus creates the kind of financial outcomes that the market at large finds attractive, and therefore, demand for stock in these companies increases (which makes the price of the stock increase).
2) What explains the differential in the long-term value of the Walker Index vs. the broader market indices? Since its inception in 1994, the Walker Index has outperformed the broader market indices by anywhere from a factor of 6:1 to 8:1. What explains this? I believe the answer is that companies that have a true orientation toward their customers are attracted to working with Walker, which increases their likelihood of long-term success.
This answer, however, is not very actionable – so, with the help of my colleagues, we conducted an assessment of the companies in the Walker Index across the six areas of world-class customer listening in an effort to better understand what steps companies can take to emulate the success exhibited by our clients. Over the next several weeks, I will share some data from that assessment and will conclude with some additional insights that we have seen in the data that we have tracked over the last seventeen years.
The first area that we will examine is the notion of Relevance and Alignment. The idea is simple – for an organization to have an effective customer listening program, there has to be a firm connection to the company’s strategic initiatives. This effectively cements the notion of customer centricity with the key methods and indicators that management will use to assess the firm’s success. This critical first step is what keeps a customer-focused strategy from becoming the management “flavor of the day;” moreover, it creates the imperative to pursue the discipline of Validation. We will focus specifically on validation in a future blog.
Relevance and alignment are commonly thought of across two dimensions – business issues and financial outcomes. I tend to think of these in a cause-and-effect manner – we link to business issues so that we can connect the rationale of the customer strategy to the core issues facing the business; if we are successful in addressing these issues, then the financial outcome will be the outcome we achieve. Common business issues might include:
1) How can we more effectively cross-sell our product/service portfolio across our existing client base?
2) How do we make certain that our new product initiatives are aligned with the needs of our customers (and can we foresee those needs even before our customers – and our competitors – do)?
3) How can we improve our revenue forecasting capability in an effort to minimize variance in our anticipated financial results?
4) What firms would be an attractive acquisition candidate for us (and how do we maximize our probability for a successful integration of the two firms)?
The financial outcomes are generally the outcome from addressing the business issue; common examples include:
1) The level of customer retention (and the corresponding impact to the top- and bottom lines);
2) Share of wallet and growth within an account;
3) Average customer spend and breadth of the product/service portfolio that a typical customer purchases;
4) Adoption rates of new technologies or products among existing customers and the impact on firm revenue growth;
How do the firms in the Walker Index stack up? Over 90% of the Walker Index companies have clear connection to the core business issues, and nearly three out of five firms have strong alignment to financial outcomes and the trend appears to be showing signs of continual improvement.
This focus on relevance and alignment clearly creates a "stickiness" that is a hallmark of world-class customer listening, as it provides a foundation upon which customer-centricity can nurture and grow, which leads to superlative financial performance.
In my next entry, I will focus on the importance of Team and Resources in the customer listening process and will share how the Walker Index companies perform on that dimension.
Mark A. Ratekin
Senior Vice President, Consulting Services
If you are like me, you have likely received a number of email notifications from companies stating that your email address may have been compromised. As a result of a security breach at email distributor Epsilon, email information was hacked that impacted 2% of Epsilon’s customers (for a list of known companies that were impacted, click here). Epsilon reportedly sends more than 40 billion emails annually, so there is a good chance that you or your customers were impacted by this security breach.
What does this have to do with the customer experience? In short, it erodes the trust that exists between the customer and the organization, and it is difficult to imagine a situation in which customer loyalty can be cultivated in the absence of trust. The reasons for this decay in trust are fairly intuitive:
1) Customers expect companies to guard their data – It is likely that every opt-in process disclosed that these organizations used a third party to manage elements of the customer experience (communication, promotion, etc.); however, customers rightfully expected that all steps would be taken to ensure that any information shared would be properly guarded.
2) Communication has been sparse – To Epsilon’s credit, it appears that they moved swiftly in alerting their customers once the breach was discovered; however, the details have not been as forthcoming to end consumers. Moreover, the tone of these messages has taken on a decidedly legal tone (likely for good reason), including statements that the company has been assured that only name and email data were compromised. As a consumer, I was left with the feeling that the company was relaying what they had been told, but they were not entirely confident in what they were reporting.
3) There is a feeling of a lack of control – The tone of the messages sent by companies suggest a lack of control of how sensitive customer data is stored, managed and used. This lack of control extends to the end consumer – that is, I feel as though once I share my information, I have lost all control with respect to how my data are managed. This increases skepticism, which reduces trust.
What should we expect the fallout to be as a result of this breach? For starters, we should expect that spamming and phishing attempts will skyrocket – this has been a topic that has been addressed in nearly every notification I have received. As a result, customers will be more apprehensive with sharing their information, and will be less likely to click on links in emails (for example, to take a customer survey). This will adversely impact response rates, which will beg the question as to whether our customer listening efforts are truly representative in nature.
Fortunately, there are steps we can take to proactively address this issue. In addition to advice provided by my colleague Becca Lewis (see Becca’s blogs on response rates here, here, here and here), Walker has written a book on tactics and strategies to increase response rates (if you are a Walker client and do not have this booklet, please ask your account team for a copy). Above and beyond this information, there are three additional steps companies should consider when launching a customer listening initiative in light of the Epsilon breach:
1) Provide a way to validate that the survey is legitimate – Many of our clients will construct a special website that customers can visit to validate that the survey request is legitimate. This is also a great opportunity to set expectations on how your organization will use the information (and the follow-up that customers should expect to see).
Given the extra concern over clicking links in emails, it may be preferable to have a link available from your home page to route customers to this page (as opposed to providing a link in the email notification). This also reinforces to all customers (even those who were not selected in the sample) that you are focused on listening to – and acting on – customer feedback.
2) Do not ask questions you should know the answer to – This is particularly important with respect to any sensitive account information such as account numbers, contact information, etc. Data elements such as these should be linked from your CRM data so that they can be leveraged in the analysis on the back end. This will not only streamline the survey process and prevent concern about sensitive information, but it will also focus on the most important aspect of the survey – getting the customer’s feedback on items that you do not already know.
3) Communicate early and often – This is a common theme, but it bears repeating – you cannot communicate enough with customers. Communication does not take a one-size-fits-all approach, either – you should consider things such as a CEO video embedded on your site, utilizing the front-line account team to alert customers of the coming survey (and take the lead on any follow-up), promoting the survey initiative in billing inserts, and so on. Taking a varied approach will maximize the probability that your customer will participate in the program.
Data breaches such as that experienced by Epsilon are unfortunate; it is my hope, however, that these tips will help you to take a proactive approach of getting ahead of the issue with respect to your customer listening initiatives. If you have other thoughts, please feel free to share them.
Mark A. Ratekin
Senior Vice President, Consulting Services
In my last blog, I provided some thoughts about how companies may elect to react to evidence that suggests that customer and employee sentiment may be on the decline. In this final entry of this series, I will conclude with some suggestions that employees may want to consider as they plot the path that their career will take.
Employees need to develop strategies and tactics that will resonate with their two key stakeholder groups – customers and their employer. Fortunately, many of the strategies that can be employed will serve the needs of both stakeholders. Consider the following:
1) Know Your Value – To be able to assess your worth to your customers and your organization, you need to understand where you fit in the value chain. To do this, take a few minutes each week to answer the following questions:
a. What did I spend my time on this week? What were the issues that commanded the most amount of attention?
b. Did these activities add value? Does the time you spend result in tangible value to either your customer or your employer? If so, how can you articulate that?
c. What did I work on that prevented me from providing even more value? This is basic opportunity cost – every hour spent on a non-value-added (NVA) activity prevented you from adding tangible value. Understanding what those NVA activities are (and, more importantly, what you can do to minimize and/or eliminate them) will move you one step closer to maximizing your own value.
It may be useful to keep a brief daily log over a few weeks in order to provide the data you will need to see the themes that emerge.
2) Communicate Your Value – Once you understand how and where you provide value, it is critical that you communicate that with both your customers and your employer. Be careful here – the objective is to communicate how your work is helping them, not how great you are. The context within which this is framed can make all the difference in how the message is interpreted.
3) Continue to Learn – No business or job stays the same. Technology impacts how, where, and even if the work gets done. Customer tastes and needs can change which can impact the extent to which demand for your product or service changes. The economy at large can determine how your product or service stacks up compared to other needs (and, therefore, whether it is a necessity or a “nice-to-have”). Moreover, the pace of change is accelerating, which means that employees need to continue to learn in order to stay ahead of the curve.
Note that “learning” does not necessarily mean “go back to school.” This is certainly a viable (and worthy) endeavor, but there are other ways to learn – for example, read a book on a new technology that can make your business more efficient (and you more valuable as an employee). Read a trade journal to stay abreast of the competitive landscape. Do a Google search to see what competitors are doing (or what their customers are saying about them). Scan the web to see how customers use your products and services, and make note of new ways of use that may represent cross-selling opportunities for you when talking to your customers.
And don’t forget – when you learn something new, make sure to communicate with your company how this adds value (in tangible terms).
Ultimately, employees are responsible for their own long-term prosperity; this brings me to my final recommendation – build your network. Harvey Mackay wrote a book called Dig Your Well Before You're Thirsty: The Only Networking Book You'll Ever Need. The basic premise was simple – it is important to build, nurture and maintain a network before you need it. This is not necessarily a mercenary activity that reeks of disloyalty to your employer – in fact, building your network will also raise the profile of your organization, which can lead to more business for your firm. However, building your network helps mitigate your personal risk of being unemployed for a long period of time. Fortunately, following the other recommendations will help to maximize your value to your current firm and if you find yourself looking for a new employer, you will be well-prepared to make a compelling case to prospective employers.
I hope you have found something of use in this series; if so, I would love to hear from you.
Mark A. Ratekin
Senior Vice President, Consulting Services
In my last blog, I shared some evidence that suggests that customer sentiment is on the decline, which I hypothesized was a function of the economy. The bottom line was that left unchecked, this will become a self-destructive cycle that can have severely negative impact on the company and its employees. So, what can we do about it?
Here are five strategies that companies can pursue to ensure that they come out of the recession as intact as possible (and, possibly, emerge as an even stronger organization):
1) Understand where you provide value, and invest in it – Companies that do not understand where they provide value will be tempted to make flat, across-the-board cuts in their budgets in an effort to control costs. This is terribly short-sighted – rather, they should analyze how (and where) they provide value relative to the competition and – perhaps more importantly – where they are spending money that creates little or no value. Once these areas are identified, invest in value creators and eliminate the non-value-added activities. Understanding these dynamics will provide more opportunity to do more with less without having an adverse effect on the firm.
2) Reinforce your value proposition externally – We have never seen a client that cannot benefit from more (and better) communication with customers; this is particularly critical during challenged economic periods when customers are more likely to be frustrated and – at the same time – will exert price pressure.
3) Use the strained economy to launch a product versioning strategy – A challenged economy may be the best time to develop a product versioning strategy – in other words, develop variations on existing products and services that provide another (generally lower) purchase point for customers. Some will balk at this – after all, it means, to some extent, cannibalizing your own customers; however, if the alternative is that the customers do not buy (or bargain so hard that they eat the margin of top-tier products), this does not serve the company’s best interest.
4) Look for synergies via a strategic acquisition – Loyalty leaders experience greater profitability, less volatility in stock price, and generally greater stock value appreciation over time. These benefits are essentially magnified during a challenged economy, as less customer-oriented firms will likely struggle more. This position of strength may provide the financial wherewithal to pursue a strategic acquisition; however, we would caution firms against the temptation to absorb a weaker competitor simply to gain market share. The reason comes back to customers – a weak competitor will likely have greater flight risk among its customer base, suggesting the asset you are buying may not be stable. Our guidance – make sure you know what you are buying.
5) Adopt a “we are all in this together” attitude – with both customers and employees – This is more of a communication strategy that can be done in conjunction with the prior three strategies – showing your employees that you know where you create value with reinforce what is critical to the firm (and will provide a clear line-of-sight on where the greatest opportunities for success are). The product versioning strategy reinforces to customers that you recognize the economic realities (and value them as customers), but it also re-frames the expectations around features, service levels, etc.
Starting with an understanding of what customers value (and how you can invest and differentiate on this value) will help to ensure that you are focused on generating the greatest return and can serve to focus employees on what matters most.
Employees should be mindful of how they fit into the picture; in the final blog of this series, I will discuss some strategies that will serve employees well in any economy (but particularly in a challenged economy).
Mark A. Ratekin
Senior Vice President, Consulting Services
Is customer loyalty on the decline or improving? We often find that clients want to evaluate their own performance relative to the “norm.” It is always good to look above and beyond your own data as a means to provide context for the trends you are seeing (I did a blog series on this topic a while back that you may find useful). One thing to remember when using benchmark data is that you should be able to evaluate the fit and appropriateness of the benchmark as well as the worth (and rigor) of the underlying data.
A well-respected benchmark of customer sentiment is the American Customer Satisfaction Index. This index has been existence since the mid-1990s and has a regular, regimented schedule of studying satisfaction trends across a wide variety of industries. The consistency in how the data are collected and reported provides some rigor in the process that can be absent in some benchmarks. In addition, despite some criticisms related to its concentration in the B2C space and the black-box nature of the calculations, it has been analyzed and vetted by a number of academicians. In the most recent update, the ACSI authors state that the ACSI has hit the lowest levels since 2008.
We, too, have seen some evidence of a shift in customer sentiment toward more of the High Risk category (you can learn more about the Walker Loyalty Matrix here). Interestingly, there is a similar trend starting to occur among employees – more and more employees are becoming less engaged, and are planning to look for new work when the recession ends. My colleague Chris Woolard (Walker’s employee expert) has blogged recently on this topic.
The convergence of the decline in both customer and employee sentiment suggests, to me, that a more macro-oriented dynamic is at play.
What is driving these shifts? Becca Lewis blogged about the impact that the economy has on customer behavior at the start of the economic downturn. The combination of the simultaneous shift in customer and employee sentiment is interesting; at the risk of analyzing without immense statistical rigor, here’s my assessment of what is driving this phenomenon among both customers and employees:
· In a challenged economy, companies are delaying or deferring purchases as long as possible; this has the effect of hitting the P&L of service providers, who remain committed to maximizing shareholder returns. To achieve this, they cut any and all extraneous people costs as well as any discretionary expense items.
· Customers who are purchasing run into roadblocks – they have to wait longer for salespeople to respond (because staffs have been cut), they wait longer in queues for customer support, and they are forced – either by their provisioning groups or by sheer survival instincts – to negotiate harder with vendors. This has the result of providing a negative customer experience. This situation not only exacerbates the P&L situation, but it creates a stressful environment for employees.
· At the start of the recession, there was evidence that employees were simply grateful to maintain employment; however, over time, the stress created by more work among fewer associates, coupled with frustrated customers, creates a situation where employees are waiting for the tide to shift so they can seek greener pastures.
In short – an environment in which the customer experience suffers hurts everyone – customers, employees, and the company at large (including shareholders).
The good news is that companies and employees alike can get ahead of the curve by focusing on a few good strategies. I will cover those in my next two blogs.
Mark A. Ratekin
Senior Vice President, Consulting Services
In this post I want to focus on a specific implication of the service-dominant logic: Complexity. Adhering to the service-dominant view of exchanges requires a significantly more complex view of the world, and this is definitely true for customer advocates. You can no longer focus on just one customer transaction or one type of customer interaction point without accounting for a great number of other partners and relationships, many of which do not directly interact with either you or the customer (e.g., supply chain, R&D, economic policy, etc.).
This is not a new problem; nearly everyone recognizes the complexity of modern markets. The problem is understanding this complexity and optimizing the right pieces to ensure customers' needs are met. The only way to do this is through advanced analytics and comprehensive databases. Standard business analytic tools like correlation and even simple, multivariate regression are not going to cut it. Analyzing data from one source is not going to suffice. We need tools that can understand moderating effects and the complex, multi-level, cross-boundary interactions implied by service-dominant logic.
There is good news, though. First, there are tools available and being developed that can help us. Second, complex models don't have to be complicated to understand. About a month ago my colleague, Leslie Pagel, had a post about embracing complexity, which linked to a great TED video by Eric Barlow titled, "How complexity leads to simplicity" (it's only 3-minutes long). This type of approach has to be the future for customer feedback analysis if we expect to capitalize on our customer relationships and our customer understanding as a sustained competitive advantage.
"Simplicity does not precede complexity, but follows it."
- Alan Perlis
Troy Powell, Ph.D.
VP, Statistical Solutions
"The aim of marketing is to know and understand the customer so well that the product or service fits her and sells itself." - Peter Drucker (1973)
This broader thinking is nicely encapsulated in a concept called Service-Dominant Logic, which is based on a 2004 article in the Journal of Marketing by Stephen Vargo and Robert Lusch ("Evolving to a New Dominant Logic for Marketing"). This logic uses concepts like "value-in-use" and "co-creation of value" instead of the "value-in-exchange" and "embedded-value" concepts more familiar to the current, goods-and-services dominated paradigm that we generally operate under. Instead of companies trying to market to customers, the goal should be marketing with customers and other value-creating partners in the supply chain.
One of the most noticeable concepts to make its way from this new logic into the popular business press is the concept of value co-creation. But beware, most discussions of this concept have de-valued it to little more than co-production or customer-involved innovation, which is a small part of it's true meaning.
To me, the heart of service-dominant logic is partnership. We need to realize that there are no clear-cut roles in the modern economy. There are not individual parties who are responsible for one section of the supply-production-consumption chain - parties who perform their role to peak efficiency, pass a "product" along to the next stage in the chain, and then convince customers it is valuable. In fact, companies cannot create or deliver value to customers. At best they can offer a value proposition to customers and then, if accepted, interactively work with customers to create value - hence value co-creation.
Here's an example of the difference in viewpoints as described by Evert Gummerson in "Service Provision Calls for Partners Instead of Parties" in the Journal of Marketing (2004). The traditional view of exchange would see a physician providing expert advice to a patient who would receive it and (hopefully) get better. A service-dominant view sees this interaction a little differently: "The physician provides expertise in certain therapies, but patients are experts of their own experience of a disorder. To arrive at a superior solution, doctors need interactions with patients, and patients must not only consume the therapies but also produce them by taking medication, exercising, and altering their lifestyles."
Suddenly, what could be seen as a unilateral transaction where success is dependent primarily upon the expertise of one party becomes a partnership. And the success of the interaction now depends on the expertise of both doctor and patient and a network of partners supporting both sides - medical schools, pharma companies, families, insurance, access to nutrition, lifestyle coaching, fitness centers, etc.
I'm still not sure of the full impact of this view on how we function as customer advocates except that it makes our role even more critical to company success. In fact, if this view is correct, then the only real competitive advantage a company has is in the way it understands, interacts and partners with its customers and partners to create value.
Troy Powell, Ph.D.
Five Trends We Can See From Examining the 2010 1to1 Customer Champions – Wrap-Up and RecommendationsThursday, November 11, 2010 by Customer Feedback Analysis
This is the sixth and final part of a multi-part series on the trends we are observing among the 1to1 Customer Champions with respect to their efforts to build a customer-focused culture.
Over the course of this blog series, I have examined the themes that we can observe by examining the 2010 1to1 Customer Champions. In the course of the series, we discussed the importance of:
Why is being customer-focused so important? At the risk of repeating themes that you will see across all the Walker blogs, we know from our own research and research from academia that:
- Customer-focused companies tend to have a greater share of loyal customers; these customers tend to spend more, purchase more widely across your product/service portfolio, and are more resistant to competitive alternatives;
- Customer-focused companies use the feedback to determine a plan of attack that yields optimal results – that is, it minimizes the cost of implementation while maximizing the financial impact it will have on the organization;
The result includes three outcomes that create a virtuous cycle that benefits both customers and the company in total:
1) These firms tend to enjoy greater financial success than their less-customer-focused peers.
2) As a result of the greater financial success, these firms’ executives are more likely to be “true believers,” which means they will not only continue to invest in customer-centric strategies, but also “walk the talk.”
3) Customers benefit from the level of focus placed on them by the company, and they reward this with greater spend levels and/or lower likelihood of defection.
How can companies ensure that they are perceived to be Customer-Focused companies? Here are some suggestions based on our work with clients:
a) Develop a rigorous feedback gathering method – Use proven sampling techniques to ensure that feedback is being gathered in a fashion representative of your customer population.
b) Have a plan for follow-up – Commit to doing something with the information; if you cannot commit, then do not waste your customers’ time.
c) Look for immediate service recovery opportunities – Scour the real-time results for clues to where services or products are not living up to customer expectations and create a closed-loop process (including set time-bound service level agreements) for your front-line associates to follow-up.
d) Use driver analysis to prioritize effectively – Using a structured feedback approach offers the opportunity to create models that provide insight on where to focus – skipping this step (or focusing solely on raw performance scores) may result in suboptimal improvement efforts.
e) Integrate internal metrics into your analytic plan – Linking behavioral metrics (such as financial data or other performance metrics) will not only bring clarity to what you need to do (particularly important for associates who are not customer-facing), but also how to track your success.
f) Utilize customer feedback in account planning – As sales teams are preparing forecasts, be sure to integrate customer feedback as another data source to consider when looking at which products and services to promote with a specific customer. Walker’s Value Mapping process can be an effective means of providing broad strategies for segmenting accounts that can have great utility in the account-planning process.
g) Communicate what you are doing – The trap that some companies fall into is that they are Customer-Focused Companies that are perceived by their customers as being Lip-Service Companies. The solution? It sounds too simple, but it is true – do not forget to communicate what you learned in the process (and what you are doing about it). This can take a variety of approaches, ranging from a broad-based communication to all customers from the CEO to more tailored messaging to a specific customer account.
It is not easy to become a customer-focused company – if it were, everyone would do it, which would diminish (if not eliminate) its value as a competitive differentiator. If you keep in mind the five themes we see among the 1to1 Customer Champions and leverage the recommendations put forward in this entry, your firm will greatly increase its odds of being a successful, customer-focused, and financially rewarded company.
I hope this series has been of value to you – I would love to hear your own success stories.Mark A. Ratekin
Sr. Vice President, Consulting Services
This is the fifth part of a multi-part series on the trends we are observing among the 1to1 Customer Champions with respect to their efforts to build a customer-focused culture.
Part four of this series focused on how to leverage our employees in the action-taking process. Taking action is critical because it provides an ROI to your customers for the time investment they made to share their feelings and perceptions with you. It is also important, as taking action is the only way that we can trace the impact of our actions from a financial perspective.
The challenge that most organizations have – particularly in this challenging economic environment – is that resources are more scarce than usual. This means that firms are more likely to be short-staffed, so adding work to an already full list is a recipe to have our efforts to take action fall flat.
The key? We have to make the insights from customers relevant, easy-to-understand, and linked to the day-to-day work of all associates. How can customer loyalty practitioners manage this? This brings us to the next trend we are seeing among the 1to1 Customer Champions.
Trend #5: New (or Enhanced) Tools are Available
The 1to1 Customer Champions remind us of the tools that are available for us to leverage in our customer-focus efforts; some of these are new, while others represent the latest version/evolution of tried-and-true tools:
a) CRM integration – The investments that firms have made over the last decade or so in the area of CRM are starting to show payoff – from a customer knowledge perspective, being able to link customer demographics/profiling information and actual behavior data to survey metrics creates the opportunity for more robust customer intelligence.
The impact of CRM integration is twofold – first, it provides a data infrastructure into which program findings can be warehoused; second, it can provide a myriad of other data that can be used in segmentation exercises. This provides a more credible framework within which to articulate ROI (for example, by using actual customer purchase behavior in lieu of a survey-based question around intended behavior).
b) More powerful predictive modeling – The ability to integrate other data streams into customer survey data would be for naught without the ability to build sophisticated models. The computing technology available today means that analytic approaches that were either highly theoretical or too mathematically challenging even ten years ago are now accessible.
c) Social media and text analytics – The newest tools that are emerging include data from social media sources coupled with the rapidly-advancing discipline of text analytics. The ability to harness these non-structured data sources is beginning to add incremental value to our customer analysis efforts; there is clearly more to come on this front.
These tools represent, in my opinion, a “data enhancer” rather than a wholesale replacement to current data streams – that is, they provide additional insight that can bring further clarity to the more traditional quantitative analysis.
What are the common threads of these tools? First, they leverage the latest technology; many of these tools and techniques were simply pipedreams a few years ago. Second, they recognize that data from disparate sources can and should be leveraged in a variety of ways. Finally, they offer to streamline processes that historically have been challenging (I can recall, for example, a time in my career when it was not uncommon for a customer list to be written on a sheet of paper vs. having a consolidated file of data). Streamlining these processes creates capacity for practitioners - for example, by eliminating time spent data-entering customer records and managing multiple customer data sources, we can work on more strategic initiatives - such as making customer information relevant, easy to understand and integrated into the everyday workflow process of all employees.
In my final blog of this series, I will discuss what outcomes that the 1to1 Champions will enjoy as a result of their efforts and will provide some recommendations on what steps you can take to ensure that your firm is seen as a customer-focused organization.
Sr. Vice President, Consulting Services
This is the fourth part of a multi-part series on the trends we are observing among the 1to1 Customer Champions with respect to their efforts to build a customer-focused culture.
In my last entry, I discussed how a company’s inclination to gather customer feedback interacts with its proclivity to act on that information to form how customers will view the company (in customer-orientation terms). The key constraining factor that any company will have in its efforts to act on customer feedback will be the orientation of employees. The 1to1 Customer Champions have a keen understanding of this, and it brings us to the fourth trend we have observed among this prestigious group:
Trend #4: Employees At All Levels Are Critical
This should not come as a surprise – we at Walker have been advocates of integrating customer and employee feedback for roughly twenty years. Over that timeframe, we have seen that the following best practices contribute to building a customer action framework that has long-term “stickiness:”
1) You cannot communicate enough – I have never seen the results of an employee loyalty survey in which communication is not a driver of employee loyalty; several of the 1to1 winners clearly had a plan for how to frame the firm’s customer program, how to communicate its anticipated impact on both the company and its employees, and how to articulate what was expected from employees. However, this was not a one-time event – the best programs have an ongoing plan for employee communication, including not only status updates (similar to what are provided to customers), but also opportunities to publicly recognize and celebrate short-term wins and role model behavior.
2) Do not assume that customer centricity comes naturally – The best companies are the ones that understand most people have good intentions but may need help in converting intention to behavior. Many of the 1to1 Customer Champions talked about how they trained their employees to use the information to make customer relationships better. This includes providing tools and frameworks for taking action on the data.
This is a gap that we sometimes see with companies – they are willing to invest in designing, gathering and analyzing the feedback, but they fall short on training their employees on the use of the information. As customer loyalty advocates, we are, to some extent, hardwired to think about how customer loyalty impacts customer behavior in an almost subconscious fashion. Not all employees share this intuition, which is not bad – they simply have a different focus. It is our job as customer advocates to help our fellow associates “connect the dots” between their day-to-day activities and the corresponding level of loyalty that customer exhibit.
One case comes to mind on this – our team worked with one of our clients to show the connection between software failure and customer sentiment. We are able to show that high levels of a specific type of product failure in one quarter was followed by lower overall customer sentiment in the next quarter. Making this connection not only helped the operational group understand how it impacts customer loyalty, but also provided a means to set performance targets in a manner that aligned with their day-to-day work.
3) Make customer focus a part of everyone’s job, not just “one more thing to do” – I’ve written about this previously, but it warrants another mention – if we try to pile a customer-focus initiative on top of an employee’s existing work, the probability of failure is high. Here’s why – most employees are extraordinarily busy (particularly as firms have cut back on the number of employees in light of the recession); adding to an already heavy workload means that something will fall through the cracks.
A better approach is to audit workflows in each employee group and determine how the customer feedback can assist in the workflow (which is what we did in the software failure example cited in point #2 above). For example, leveraging customer feedback in the account planning process helps a sales associate achieve his/her key goal – to sell more.
4) Linking customer feedback to compensation – Another theme is the notion of linking some portion of bonus compensation to customer feedback. This is not a step that should be entered into lightly - before implementing an incentive compensation plan, we advise clients to use the following questions as a litmus test on their proposed plan:
a. Are the metrics we have selected valid? In other words, are we measuring what we really mean to measure? For a metric to be valid, it should have a clear connection between the metric and the firm’s financial success.
b. Are the metrics we have select reliable and stable? Reliable means that results are consistent – that is, they do not vary based simply on statistical whims. Stable means that the metric is not prone to wide fluctuations – this level of volatility is, by definition, difficult to predict and therefore will be less impactful in shaping behavior.
c. Are the results achievable? Any incentive that is driven by an unrealistic or unreachable goal will lose impact and will be considered worthless by employees.
d. Is our approach to gathering the customer feedback free of bias? This generally relates to the methods employed in sampling and gathering the feedback. How many times have you had a customer service interaction which culminates with a statement similar to this:
“…you may get a survey related to this experience; if there’s any reason you won’t give us a ‘5,’ please let me know.”
I had one experience in which an auto dealer, as a “convenience” to me, offered to pay me $25 if I would bring my survey to them – they claimed they wanted to make it easy for me to return my feedback. Do you think my skepticism was warranted?
The fear is, of course, that we will compromise the integrity of the metrics (i.e., their validity), which will result in artificially high scores that have no relevance to true customer sentiment. This not only will result in the payout of undeserved incentives, but it severely compromises our ability to use the customer feedback to predict future business performance – which is a serious problem.
Ultimately, we encourage clients to link customer feedback to incentives, but it has to make sense and be a part of an ironclad, defensible system of measurement.
Engaging and leveraging associates in the customer action process yields a more sustainable process, which in turn will reinforce the customer-focused nature of the firm’s culture. From a business perspective, this is the gold standard – building and maintaining a customer-focused culture will create a long-term sustainable competitive advantage that your competitors will not be able to easily replicate.
In my next blog, I will discuss some of the tools we can employ to help employees leverage the power of customer feedback in their ongoing efforts to take action in an efficient manner.
Mark A. Ratekin
Sr. Vice President, Consulting Services
This is the third part of a multi-part series on the trends we are observing among the 1to1 Customer Champions with respect to their efforts to build a customer-focused culture.
My last blog focused on being able to identify the business impact of customer loyalty/customer feedback programs. The primary reason for this was that articulating the link to business impact will resonate better with executives. From a broader perspective, however, I would offer that this is simply the right thing to do – if any of our actions in our businesses do not result in a positive payoff (which would include loss prevention), then we should be extremely critical of whether the activity is worth pursuing.
When consulting with our clients on business impact linkage, we are often asked how to drive more impact – in other words, how do we make certain that our customer-centricity efforts are generating a payoff? The answer is amazingly simple to articulate, but, from my observation, far more difficult for most companies to implement. It is the third trend we see among the 1to1 Customer Champions:
Trend #3: Acting on Customer Feedback is Imperative
I would suggest that there are four general outcomes that can occur when considering customer feedback programs and action taken:
1) Customer-Focused Companies actively solicit feedback from their customers and have a system in place to act on the feedback, both at a systemic level as well as at an account-level. These companies will, over time, have a greater share of loyal customers that are engaged, and their financial performance will thrive, because the action they are taking is customer-driven.
2) Lip Service Companies actively solicit feedback, but – from the customer’s perspective – do not take any action on the feedback. They either lack the infrastructure and discipline to take action on results, or they are acting on the results and not communicating their efforts to customers.
These companies are perceived as saying what customers want to hear, but acting differently. Over time, their claims of customer focus will fall on deaf ears, as evidenced by declining survey response rates and increased customer defection rates. More importantly, if they have not taken action on their customer results, it is impossible to determine what changes in their financial position - positive or negative – are attributable to change in customer sentiment.
3) Gut-Feel Companies are good at taking action, but they don’t actively solicit feedback from their customers. Feedback comes in an unprompted fashion, which means that any action taken is based on the most vocal customer (which may not be the largest nor most strategic customer) or on the last customer interaction (a “last-in, first-out” mentality). While these companies are to be commended for taking action on customer feedback (albeit informally), the chief concern is that reacting in a gut-feel manner can yield underperforming (or non-existent) payoff.
4) Internally-Focused Companies do not respond to customer feedback in either a systematic nor unprompted fashion. These are companies that tend to believe that they are so visionary that relying on customer feedback will stifle their creativity – in short, they are smarter than their customers. Very few companies can pull this off – most who adopt this approach will be perceived (rightly, in my opinion) as simply being arrogant.
Most of the 1to1 Champions fall into the first category – Customer-Focused Companies – they have formal feedback programs, a framework to take action (and incentive structures that support action), and a means to communicate their progress.Of course, it stands to reason that one necessary key to taking action is having engaged employees. We will delve into the topic of employee engagement in my next entry.
Mark A. Ratekin
Sr. Vice President, Consulting Services
This is the second part of a multi-part series on the trends we are observing among the 1to1 Customer Champions with respect to their efforts to build a customer-focused culture.
In my last blog, I discussed the importance that executive engagement (or, as my colleague Leslie Pagel would call it, executive ownership) plays in creating a customer-focused organization. One question we often hear from clients is how we can secure executive engagement; I have observed two characteristics of leaders that typically exist in firms that have the ability to become truly customer-focused:
1) A natural affinity for customers – These are enlightened executives that intuitively understand the linkage between customer-centricity and business success. When a company has leaders (starting with the CEO) that exhibit this characteristic, we often hear that customer focus is “in the company’s DNA,” though, as Pat Gibbons points out, it goes much deeper than that.
2) Show me the money – This is the more common situation – CEO’s are, after all, capitalists who are charged with creating a positive return to shareholders. This is not to say that these leaders do not value customers; rather, they want to make certain any investment will yield an acceptable payoff.
I would suggest that naturally “Enlightened Executives” are a rare breed, which is why we often get the question on how to engage executives. The easiest answer is to show them that it works – in other words, show them the money!
This leads me to the second trend we see among the 1to1 Customer Champions:
Trend #2: Links to Business Outcomes are Required
The days of investing heavily on customer-centric strategies because it intuitively “feels right” are long gone. The best programs are those that move beyond scorekeeping and get to tangible business outcomes. From a financial perspective, this can range from tying customer scores to revenue retention/growth metrics (a “prove it to me” exercise) to creating new revenue opportunities (by mining the data through a lead generation/cross-selling lens).
These outcomes, incidentally, do not always have to be financial in nature – tying customer perception to operational efficiencies that come as a result of increased customer centricity are not only often easier to accomplish (from a data availability perspective), but they can also be restated in financial terms.
Ultimately, we can have a debate about which comes first – executive buy-in or demonstrated business impact – regardless of which comes first, it is clear from our experience (and the data from the 1to1 Customer Champions) that the key to having a sustainable customer-centric model is directly linked to the ability to demonstrate tangible business impact.
In my next post, I will talk about a characteristic of customer listening programs that is woefully underutilized yet is critically important for long-term success.
Mark A. Ratekin
Sr. Vice President, Consulting Services
The 2010 Customer Champion awards from 1to1 Magazine were recently announced. We at Walker were particularly proud to see our client Gloria Berndl, from CDW, earn some well-deserved recognition for the work that she and her team have accomplished. In total, fifteen customer champions were identified across a variety of industries, including IT, retail, financial services, education, airlines, and automotive.
As I reviewed the stories of the fifteen award winners, five themes clearly emerged that the wise practitioner will take note of. Over the next five weeks, I will highlight a key trend and discuss the implications we should consider.
Trend #1: Executive Buy-In Is Key
As we typically see with our clients, the most successful customer loyalty programs are those that are led in a top-down fashion; the same is true with many of the 1to1 Customer Champions. Without a champion at the most senior level in the organization, loyalty is not as likely to take root and yield cultural change at a grassroots level.
Executive support is critical for a number of reasons, including:
1) The executives are ultimately in control of whether the company will invest – and by how much – in the program (including resources to be allocated to the initiative, how much to invest in employee training, whether or not to tie compensation or other rewards to the program, etc.).
2) Internally, it creates credibility – if the executive team is leading the initiative, then it is less likely to be seen as most recent “the flavor of the day” management fad.
3) Externally, the executive sponsor puts a face on the program with customers. This person effectively sets the expectation that customers will have regarding the level of customer focus exhibited by the organization at all levels. This can serve as an effective signal to the market (which, according to the literature and our own Walker Index, responds to such signals) as well as being an effective attractor for new customers.
4) Being the chief customer advocate in an organization immediately provides a context by which the CEO can connect with customers.
It is easy to take executive sponsorship for granted when it exists; it can be challenging, though, to build. In fact, one of the questions we often hear from clients is how to engage executives. The main answer to that question is the second trend we see emerging, which will be the topic of my next blog.
Mark A. Ratekin
Sr. Vice President, Consulting Services
Fornell, C., Mithas, S., Morgeson III, F., & Krishnan, M. (2006). Customer Satisfaction and Stock Prices: High Returns, Low Risk. Journal of Marketing, 70(1), 3-14.
Remember back to a few weeks ago, we were discussing the topic of incorporating operational data or any other information we keep on our customers with their survey data to help us get a fuller picture of the customer experience. This data can be very useful to include in analysis of the customer experience, but as mentioned we need to take the time to assess our confidence in the information (i.e., is it up-to-date, etc.).
Ideally all the data sources that we have will agree with each other, but practically that really does not always happen. The first thing we need to do is assess the level of agreement – where is there agreement? Where is there disagreement? Next, we need to decide what we are going to do when they don’t agree. For example, if a customer indicates their issue was not resolved, but our records indicate the case is closed – do we treat this respondent as one with a resolved or unresolved issue? What about the number of transfers or the reasons they called support, which data source do we treat as the ultimate authority? What do we do?
Well as with most things, it depends on what you want to do with the information and how it will be used. There are cases where the customer’s voice should override other data sources, but there are also times when it makes sense for other data sources to be the authority. Ultimately this comes down to the objective of the analysis, but a few examples are outlined below…The Customer indicates their issue is not resolved, but our metrics indicate the case was resolved.
- Some things to consider:
- What steps does a case have to go through to be resolved? Do any of these give indication on why there could be disagreement?
- With the type of issues that we are being looked at, could an issue be resolved for a short time but then reoccur?
- Typically, we see scores decline tremendously when issues are not resolved. Is analysis is looking at these groups separately, as the placement of these respondents will impact scores and findings.
- Possible Decision:
- Since the customer’s experience is completely the survey with the mindset that their case is not resolved, then the customer’s voice should override our metrics and they should be considered as an unresolved case.
- A follow-up could be triggered based on survey responses that would allow someone to contact the customer to see what issue they are dealing with. This would have a two-fold advantage in that it would help the customer resolve their issue, as well as showing them you are listening to what they are saying.
- Some things to consider:
- Do the lists in the survey correspond with how you talk about issues internally?
- Is any organizational or operating structure trying to be mimicked? For example, are separate teams/departments to handle certain issues?
- Possible Decision:
- One of the goals of the survey is to provide actionable information to teams that are in charge of fixing the issues customers call about. In this case it is important to ensure the information can be aligned with the various teams.
I’m sure there are multiple other situations or possible decisions that you can think of that would result in either the customer voice being the authority or operational data. While there will never be a cut and dry answer of always using one or the other, it is important to think through your objectives and use of the information to come to the best solution.Becca Lewis
Director, Marketing Sciences
Companies increasingly understand the importance of developing strong relationships with their customers, and they use customer feedback assessment as a tool for doing so. They are also aware that the nature of the competitive market is part of this dynamic, but often choose not to explore that when soliciting feedback. It’s true that there are often several improvements to be made even without looking beyond your own walls to the competitive landscape. Few companies, though, can say that they have never felt the pressure of competition.
Responses to questions about your company’s competitors can be insightful on their own, and that feedback can be explored even further through gap analysis. Gap analysis can be an invaluable tool for some companies, but is not for everyone. It can be more costly to supplement standard customer relationship questions with those for competitive assessment, and the resulting insights can be tricky to incorporate into the big picture that most audiences are used to seeing. However, there are some advantages to gap analysis within the customer relationship arena:
- If the market offers customers a variety of options…
- If you hope to grow by “stealing” customers from your competitors…
You must understand where your company’s advantages lie.
- If your company consistently loses customers to a competitor…
Gap analysis can highlight what performance areas might be causing that shift.
- If your company is performing very well or very poorly across the board…
Gap analysis can help narrow focus by identifying which areas have the greatest impact on your company’s competitive position.
Asking your customers what they think about your competition, even if you think you already know (or maybe don’t WANT to know!), can bring your company one step closer to reaching the top of the market.
Cortney LantryDirector, Marketing Sciences
Remembering back to my last post, the amount of data kept on a customer is increasing within organizations and tying this data to customer survey data could help us gain better insights into the customer experience.
Potentially fulfilling every researcher's dream, using this data could open the door to massive amounts of data to analyze while answering business questions. However, with that we can’t lose sight of the quality of the data. In other words, more bad data isn’t necessarily better. So keeping that in mind, before we use this data to help aid us in understanding our customers, we need to evaluate the data itself.
The first thing to do here is look to see what data you have available. This will help you gain a better understanding of where/how this data could enhance your understanding of the customer experience. For example, if only product information is kept for customers, then it would be logical to look at this data alongside a customer’s product ratings. This could help explain trends you are seeing in the data, as well as gain a profile of the type of customers that use particular products. A few examples of things to consider are…
· Type of data?
o Is it sales history? Customer demographics? Account Information (ex. size, tenure, etc)?
o Do we have information for individual contacts within an account or simply account level information?
- How easily can this be linked to customer survey data? Are there common fields, such as customer ID, which can be used to link the data?
o Is data tied to an individual/account or is it tied to departments within your company (ex. call center, agent)?
o If there are metrics in the data (ex. Issue Resolution Days), how is it calculated by your company?
· Location of data?
o Is all this data stored in a central database? Spread out among different parts of the organization?
o Is this data available for you to access? Format you can use?
The second thing to assess is the quality of the data to ensure that it is giving us accurate information about our customers. We don’t want to use customer data that has never been updated or doesn’t reflect the current customer’s situation. Instead we want this data to accurately reflect our customer as they are today so this information can be paired with their current perceptions of your company. A few examples of things to consider are…
· Who owns this data?
o How is it populated?
o How often is it updated?
· Is there a lot of missing data?
o Do we have data just for select segments of customers or for all customers?
This assessment will give us a better understanding of what the data is telling you, where it may be best used in the analysis, how best to link the data, how easy it will be to obtain and then any cautions/limitations that could be kept in mind with the use of this data. More to come next week on linking and benefits of using the data…
Director, Marketing Sciences