Customer Strategy Consulting

When we think about differentiation in a business-to-business context, our minds tend to go right to how products are unique.  We think about how Apple has been able to differentiate in the market through disruptive innovation or how a company made an acquisition to help strengthen their product portfolio.  We do see and understand, although less frequently, how service-related or customer-focused characteristics of a company can help to drive a competitive advantage as well.  But which is more important?  Differentiating by being a product-focused company or a customer-focused company?

Companies obviously have to pick one angle to stand on, likely supplemented by some level of operational excellence, in order to drive strategy. While that’s true, there obviously has to be a balance.  An extremely customer-focused company won’t succeed without a product that meets some bare minimum threshold of product satisfaction.  The same goes for product-focused companies that need to provide a level of service that allows them to retain customers.  Understanding this balance and the “breaking point” of profitability is what companies today continue to try and understand in order to separate themselves from the competition.

Where we as customer advocates can help our organizations with this balancing act is by helping to define what “customer focus” means.  Customer focus today requires a new approach, particularly with the shift towards customers having more power in the relationship than ever before.  They have greater access to information than in the past, access to many more alternatives, and the ability to communicate with other customers.

The key will be to figure out what’s next and how companies can continue to find their “sweet spot” that allows them to differentiate from their competitors.  One key component to this will be a focus on partnership.  Understanding from customers what you can do as a company to help their business be more profitable and using that as the driving force of strategy is critical.  More focus on customer profitability, less focus on product profitability.

We have continued to change our focus over time on how we measure customer feedback.  Shifting our thinking again to understand customer profitability and partnerships should be considered a logical next step in this evolution.  Without a focus on customer profitability and partnership aspects of the relationship, companies will struggle to differentiate in the future.

Katie Kiernan
Vice President, Consulting Services

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:

1. 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.
    
2. 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.

3. 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

Launching a new voice of the customer initiative is a big undertaking. Unfortunately too many companies do just that – they launch! They charge into an initiative without taking the time to develop a thoughtful plan. Given the potential impact of a company’s customer engagement strategy and the importance of doing it right, it makes sense to conduct an assessment to consider all the elements that will be critical to the launch and implementation of a results-oriented program.

The following 11 key elements are the key factors to consider in a well-executed assessment.

1. Scope – The scale of this undertaking is understood and the necessary resources have been identified.
2. Readiness – The degree of organizational readiness has been assessed and it is understood what will be necessary to create buy-in for the initiative across the organization.
3. Alignment – There is a clear line of sight on how customer insights tie to business results.
4. Listening posts –The organization has determined how they will collect and integrate the most important information for making customer-focused decisions.
5. Stakeholders – The information needs of the organization have been assessed and it is understood how customer insights will be distributed and used across a variety of functional departments and customer-facing associates.
6. Education – Programs to drive awareness, understanding, and action have been identified to bring about the necessary corporate culture for customer-focused success.
7. Communication – Communication needs have been outlined to understand how the organization will drive internal awareness, deliver actionable reports, and communicate externally with customers.
8. Technology tools – Technology tools needed to facilitate the collection, analysis, and distribution of customer insights have been identified and it is understood how these tools will integrate with existing technology systems.
9. External resources – There is an understanding of what additional resources will be necessary for methodology, research, technology, training, and additional consulting.
10.  Metrics – The key metrics for the success for the company’s customer engagement strategy have been established.
11.  Roadmap – A detailed plan or roadmap has been developed that includes a timeline of activities and a breakdown of the necessary individuals to be involved in a practical, phased program.

Patrick Gibbons
Principal/SVP
Walker

Usually when we think of relationships, we think of having a connection with another person.  Relationships are so important that Facebook profiles indicate you are “in a relationship” when you have a special connection with someone. 

A friend made the decision to home school her oldest child this year.  The reason?  Family interactions were turning into a series of transactions.  They were losing the key ingredients of a real relationship.  Every day they went through the same routine:  Wake the kids up, get them to school, go to afterschool activities, do homework, have dinner, and then bed time.  By simply going from event to event, they were missing the critical connections of being a family.  Home schooling is changing their interactions – from going through the motions to having a lot more involvement in each other’s lives.  It’s not for everyone, but it is making all of the difference in how this family connects with each other.

As a customer strategist you might think about how this applies to your company.  (Yes, there is a connection…) 

1. Is your company in a relationship with customers?  Or, do you simply have a series of transactions?


2. Is it possible that you might have even fallen out of relationship with your customers?  Are you simply going through the motions?


3. Do you think your customers have started connecting with someone else (e.g. your competition)? 

To be in a relationship, you should take time to understand customers’ needs, expectations, and wants.  Know how well you’re doing and where you need to make changes.  Customer Listening Programs are a great way to obtain information and the insights needed to develop a Customer Strategy to create or enhance customer relationships.

My advice is to make sure you are not just focusing on the transaction at hand.  In addition, be in a relationship with your valuable customers!

Kitty Radcliff
Vice President, Consulting Services

How does your company operate? Are you “winging it” or do you have a plan and a process to get things done?  

According to urbandictionary.com “winging it” means to improvise with little preparation.

There may be successful companies that don’t plan much. But in my experience, without a plan and process to improve the customer experience - nothing happens. 

Companies are much more likely to achieve their goals when their systems and processes work together. This was recently reinforced when a business colleague shared a successful example of using customer feedback in a very tangible way. 

• The VOC program identified issue resolution as a priority area for the support organization. Open case age was over 50 days. A customer could easily get lost in the shuffle. Eventually many had to call in again and start all over. (How frustrating would that be?) 

• The team put a big focus on managing and reducing open case age in their action plan. They created global visibility around the issue and built accountability into the process. (No winging it here!)

• As a result, open case age has dramatically declined. The customer experience is better and customers are more satisfied with the time it takes to resolve issues. 

Case age has been reduced by 67%, but they’re not done yet. The team is working to reduce it even more - and they will. They have the discipline to stick with the process and make a difference.

“Winging it” usually isn’t enough to execute a customer focused strategy. Aligning the customer results effort with process improvement is critical to your success. 

Kitty Radcliff
Vice President, Consulting Services

The cloud is changing a variety of customer interactions, one of which is the purchase process. We've seen a shift from buying, to renting, and now to subscribing.

Consider movie viewing as an example. Years ago, to watch a movie at home, we bought a VHS or DVD. Shortly thereafter, we went to Blockbuster and rented the movie. Today, many subscribe to Netflix, where they pay a monthly fee and get unlimited rentals. 

This change is happening across many industries, including those providing business-to-business products and services. In the report titled, "Sizing the Cloud," Forrester predicts the "global market for cloud computing will grow from $40.7 billion in 2011 to more than $241 billion in 2020."

This shift is impacting the role of customer strategy consulting. Historically, customer strategy consulting has focused on predicting repeat purchases by identifying which customers are likely (or not likely) to purchase again, when the need arises.

With the cloud, customer strategy consulting is focused on protecting the ongoing and recurring revenue. It is focused on predicting which customers will continue their service versus those who will cancel.

While there are many similarities between the historical role of customer strategy consulting and the role for companies with cloud offerings, consider these differences.

- The switching barriers are minimized for cloud customers, shifting the risk from the customer to the company. To help protect their investment, the company needs to have an intimate understanding of their customer segments, sophisticated analytics to understand and predict renewals within each segment, and systems or business processes that optimize the renewal potential.

- For many cloud-based companies, one sales manager could have many customers. Having a clear line of sight into each customer becomes difficult, if not impossible. Companies need a system that leverages the various sources of customer information to help sales managers prioritize where and how to spend their time.

• Show results and data in ways people enjoy and understand.
  
  
• Develop strategies for customers in both developed and developing areas of the world (although these are becoming increasingly more similar).
  
  
• Consistently think of future trends when developing customer strategies.

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[1] 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

 Take a look at this email example - does it look at all familiar?

Ok, maybe my example is a bit extreme, but is it that farfetched? Sometimes a customer experience team will simply send a message to everyone in the organization with all of the information and details included.   Sure, that’s easy. But, a mass message can get lengthy and is typically not as successful as sending a targeted message to a specific group. (If there is too much information or a long list of action items the critical message gets lost.)

We recommend that you focus communications to have the most impact. To do that, you first need to define the audience. Consider the following: 

1.    Who are the potential audiences for this communication?

2.    What are they focused on from a strategic perspective? 

3.    What actions do you hope will result from the communication? 

Understanding what is important to the potential audiences, along with what you really want them to do, can help narrow in on who you need to target.  Going through this process to define the audience is the first step in communicating for action! 

Kitty Radcliff
Vice President, Consulting Services 

Be FAT. Flexible. Adaptable. Teachable. That’s all they asked of us – a group of people participating on a mission trip to Haiti. That’s all they asked, but it wasn’t always easy.

We came together from all walks of life – families, students, doctors, nurses, managers, a lawyer, and consultants. Individually, none of us would be able to handle the task before us. Together, we could make a difference for Nehemiah Vision Ministries and the people of Haiti. We could make an impact; we just needed to be FAT. 

Flexible: We didn’t know what we would be doing when we applied for the trip. (It ended up being medical mission providing people living in IDP camps with much needed medical treatment and medicine.) 

Adaptable: We needed to adapt to whatever situation we were in. The campus was completely full when we arrived. Some of us slept in bunk beds, others on cots. I didn’t expect to sleep on the top bunk, but I did! (Even though it had been more years than I want to admit since I slept on a top bunk…)

Teachable: We did things we have never done before – helping the medical professionals, building shelves, organizing a thrift shop, and cooking dinner for over 100 people. You just had to be willing to learn and pitch in.

Those same traits – being FAT – are important for our Customer Experience Teams too. 

We Need to be Flexible: In my experience, every customer listening initiative ends up having some surprises or hiccups along the way. It’s important to not be too rigid. The process may need to change, the schedule may need to change, survey questions may need to change or the way we share information and insights may need to change.   

We Need to be Adaptable: We need to adapt to the situation, which might mean adapting improvement priorities, action plans, and customer strategies. 

We Need to be Teachable: We need to be willing to learn new skills, to leverage new technologies, and to consider new ways to improve the customer experience. 

I sure hope all of my team members think I’m FAT!

Kitty Radcliff
Vice President 

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).[1]

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

• Client interactions - Walker clients shared their journey and best practices for leveraging customer, partner, and employee insights to create world-class outcomes. We heard numerous stories about individuals who have used the customer or partner perspective to drive change within their organization and generate a return on the investment.
• Roundtable discussions - Walker clients and Walker associates facilitated roundtable discussions on the topics of 1) strengthening channel/partner relationships , 2) engaging account teams, 3) leveraging the customer perspective for a competitive advantage, and 4) increasing the value of customer comments through text analytics.
• Six working sessions  - Walker consultants facilitated discussions and activities related to each of the six essential elements for world-class listening (see diagram for the six elements). Each session included a description of world-class and steps for getting there.
• Social time - There were several opportunities to network and interact with all of the attendees and to enjoy the Palm Springs destination.

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 an effort to keep up with the latest news related to mergers and acquisitions, I am continually educating myself by pilfering through a never-ending inventory of content, online and elsewhere. Recently, I have read a number of very good articles and blogs on merger and acquisition strategies, processes, trends, etc., and many of these articles are very articulate in how they advise completing a successful merger or acquisition. 

Most recently, I read an article in Consulting Magazine that mentioned some staggering statistics related to the percentage of CEOs that were interviewed not knowing the clear strategic rationale or the long-term financial contribution that the deal would bring to the company.  The article was well done and went on to talk about the right questions to ask and shared many strong points related to today’s mergers and acquisitions climate.  However, nowhere in the article, or in many other articles on this topic, was there any mention of the need to clearly understand the customer base that is being acquired.  

I realize that many mergers and acquisitions are aligned to a pure financial play or intellectual property or other non customer-related attributes, but for those mergers and acquisitions that have greater strategic implications the goal still remains to impact the multiple or potential market share gain or successful entry into a new market.  So shouldn’t it be of primary importance to include a thorough examination of the customer base? Thorough, meaning a deep, fully representational view crossing segments, geographies, and the population as a whole? I have seen, first hand, the fall-out of completing an acquisition without proper due diligence on the customer base.  Needless to say, it didn’t end well.  This does not have to be the case.  Understanding your customers to create competitive advantages begins before and culminates with the completion of an exit with favorable valuation multiples.

Here is the link to the article from Consulting Magazine – it’s worth a read. 

Michael Good
Vice President, Strategic Account Manager

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

I have a new baby boy at home, and after a pretty sleepless night, this morning’s HBR “daily stat” about caffeine consumption caught my eye.  A group in the UK studied the effects of caffeine on collaboration, and found some key differences between men and women.  When it comes to collaboration on stressful tasks, they found that caffeine tends to impair men's performance but actually boosts women's ability to work under pressure. 

This is a light-hearted topic, but it does speak to the power of segmentation.  In our daily lives as Voice of the Customer advocates, we can find some interesting and useful applications of the data we work with when we break it apart and look for different behaviors, needs and tendencies across our customer segments.  Last year, my team worked with a client to develop a set of common customer ‘personas’ using segmentation analysis.  In VOC work for large B2B companies, we often only focus on 'A Priori' segments – those that we already know and use in daily business operation, such as region, channel, etc.  In this case, the objective was to take a more empirical approach and let the data tell us how customers tended to group together based on their profiles and their needs.  Many different demographic, firmographic, preference-based, and performance-based metrics were fed into the analysis. 

The outcome was the identification of 4 unique 'customer personas' that were common in this customer base.  We were able to understand the variables that characterized each ‘persona’, the relative size of each within the population, differences in their loyalty, differences in their needs and interests related to training, and how best to communicate with each customer group. 

Great outcomes for the client and their customer strategies... and a little good news about my daily caffeine habit, too.

Krista Roseberry
Vice President, Consulting Services
Walker