Walker Information Blog

One thing that often gets overlooked in the gathering of customer feedback is what your customers tell you about the competition. Obviously, one of the primary objectives of any customer feedback initiatives is to gauge how your customers perceive their interactions with your company.

But, how you factor in any comparisons to other relationships your customers have may change the perspective on the feedback. For instance, let’s assume that 70% of your customers view your company as Easy to Do Business With. Sounds great, right? You might even be tempted to take this nugget of feedback and trumpet it out to the marketplace. That’s fine if you have benchmarking information that suggests the industry average for this concept is 50%. But, if 80% of your customers view your key competitor as Easy to Do Business With, then this is something you likely need to work on before you celebrate.

Two good examples of taking what customers have complained about have been used in high profile ads recently. Apple has done a good job exploiting feedback about Microsoft in humorous campaign around the launch of Microsoft’s new Vista OS.

Apple has not escaped criticism, and Motorola has recently launched a campaign targeted at some of the negative feedback received about the iPhone.  


 

Both campaigns are humorous, but are made possible only when these companies listen to feedback about themselves, but also about their competition. 
 

The same concept works on Loyalty, and can be even more powerful. In this scenario, if you’re measuring your customers’ relationships with the competition, you can begin to understand how plausible dual-loyalty is in your relationships. It’s very possible that while a customer is Truly Loyal to your company, they may also have a similar level of Loyalty to your biggest competitor. In that case, the ability for you to increase your share of wallet may be harder to achieve. However, if another customer is Truly Loyal to you, but High Risk to your competitor, this represents a very strong opportunity that should be explored to help you prioritize your time and resources.

So, while it’s good to be selfish when it comes to customer feedback, don’t forget that it’s not always just about you.

Brad Harmon
Vice President, Consulting Services

In previous blogs, we have reviewed findings-to-date, regarding what specific elements of the survey process have been shown to be influential on response rate.  If we take a step back from the specifics, at the heart of the response rate issue, is respondent motivation. How do we get respondents to want to take a survey? In a recent article by Pete Cape, “Understanding Respondent Motivation,” he provides a historical review of how psychological theory on human motivation can help us tap-into motivating survey respondents.  This week, I will start with his review of the Behaviorists, relating how Behaviorist theory can provide insight to the response rate issue.

Behaviorist Theory in a Nutshell

·         The behaviorists provided the concepts of reinforcement, punishment and extinction.

o   Reinforcement concerns strengthening a desired behavior as the result of either experiencing a positive condition (Positive Reinforcement) or eliminating a negative condition (Negative Reinforcement).

o   Punishment concerns weakening behavior as a result of experiencing an aversive condition (Positive Punishment), or removing a positive condition (Negative Punishment).  

o   Extinction occurs when the reinforced behavior is no longer effective.

·         A primary criticism of behaviorist theory is that it provides a mechanistic view of human behavior, which is limited, as the motivation behind human behavior is complex.

How does Behaviorist Theory Aid Understanding of Response Rate?

Sometimes you can learn the most from the criticisms of a theory. Respondents are unlikely to be sustainably motivated to complete a survey by making any single improvement, or removing any single negative component, at one point-in-time. For example, providing a deadline by which to complete the survey has been shown to significantly impact response rate; however, a deadline alone is not likely to sustain response rate, rather there are many other influential factors. Instead of focusing on any one factor, consider the entire survey process-

·         Remember that the process starts before the respondent chooses/declines to take the survey- creating a survey that is easy for the respondent to take, pre-communication, personalizing communication, scheduling reminders, etc.

·         And, the process continues after the respondent completes the survey- communicating and acting upon findings, showing and proving that the feedback matters.

Next week, we will start to examine psychological theories that assume a more humanized-approach, exploring how understanding human needs can help us tackle declining response rates.

Amy Heleine

Director, Marketing Sciences

Reference

Cape, P., “Understanding Respondent Motivation,” Survey Sampling International White Paper, 1-17.

Recently, the topic of encouragement came up in a small group discussion – the question being “Why is it so difficult for some people to encourage each other?” The general sense being too often we don’t recognize the efforts and lengths people go to since they are “simply doing their job.”

You may have seen the video where two students at Purdue University,The Purdue Compliment Guys, show us it is not difficult to encourage others.  Last spring they gained national attention for standing on a prominent walkway at the center of campus every Wednesday and offering free compliments to hundreds of passersby. Their goal is simply to brighten people's days.

Their praise might be surprising, but is definitely appreciated and makes people feel good:  
http://www.youtube.com/watch?v=QShPNcjgtfs

As a customer advocate, you likely recognize the importance of motivating individuals to take action on customer feedback. It’s true some people are motivated by linking their personal success with customer success (through pay and other rewards). But, let’s not forget the importance of reinforcing or sharing positive messages to keep people motivated. Recognizing their efforts can go a long way in motivating for action.

You’re doing a great job!  And, I encourage you to offer a word of encouragement to your colleagues…


Kitty Radcliff
Vice President
 

If your business is like most, you have some problem customers (See my last post, Firing Customers to Increase Profits) and those customers could be harming your profitability in many ways, the worst of which might be by distracting you from properly serving your best customers.

So before you fire those problem customers, what steps should you take?

The first step is to make sure that you have correctly identified the customers that are hurting your profits (again, see last post and the study by Kaplan—check out the graph!). These customers are ones with which our mutual value equation is off kilter. We use a tool we call Value Mapping to understand the mutual value equation—what we are getting from the relationship and what do our customers think they are getting. When both halves of that equation are low, the customer will likely be in that 5% of customers that cost us 20% of our profits.

The second step is account planning with open communication. Sit down with your problem customers and have an open dialog with them about the difficulties you are having serving them in a mutually beneficial way. Just make your points clearly. Keep their perspective in mind while you are doing it, but still be firm in your communication. Then listen. And as hard as it is, let them vent. Let them be defensive (they probably will be). Don’t argue, just listen. Make a point to write down the things they are saying and points they are making. Even though they are arguing or being overly defensive, they hear you.

If you think the second step was hard, you might not like the third step. Find something in the notes you took that you can make point of “giving” on. Find an adjustment you can make. Make that adjustment publicly with them and make a big deal of it. Major mea culpa. Then expect some changes in their behavior too.

Give them a chance to change, but don’t wait too long. If they have had opportunities to come around and haven’t shown any willingness to do so, you are going to have to hike up your proverbial pants, take a deep breath and confront them. Work on the relationship and transform them into a profitable customer.

You might have to fire them if they are simply a bad customer (especially if they continue to push the ethical or moral boundaries discussed briefly in my last post), but work hard to avoid that. Just don’t ever think that it is out of the realm of possibilities.

And don’t let your problem customers destroy your relationships with your good customers.

Revenue is the life blood of business. I absolutely abhor the thought of giving up any revenue or suggesting that any business should do so. But sometimes, it is simply the right thing to do. Businesses are quick to deal with problem employees, but employees are a vital part of the value equation just like customers. Shouldn’t we deal with problem customers similarly? Problem customers, just like problem employees, harm our relationships with good customers.

The profitability equation is simply out of whack with some customer relationships. Some customers just cost too much to serve. See if any of these sound familiar…

·         The customer that starts your relationship with their procurement department negotiating all the value added components out of the relationship—then the customer accuses you of bringing no value. In order to deliver the value that you are accustomed to providing your customers, you add more resources, do more work, all under the contract and price negotiated originally. Profitability suffers.

·         The customer that negotiates your contract to the bare minimum level of acceptability, effectively commoditizing your business, yet continues to ask for more and more and more. Then, when you present or suggest a billing for the additional work, they accuse you of “nickel and diming” them. You don’t bill them, profitability suffers.

·         The customer that is so difficult to work with that none of your talented people wants to work them. Someone is assigned, tries to power through the combat duty and eventually you lose a good employee that you have invested in training and developing. Your profitability suffers.

·         The customer that continually pushes your people to cross ethical or moral boundaries. Your people can respond several ways to this dilemma (hopefully acquiescing is the way they refuse to respond!), none of which is generally healthy for the customer relationship (although taking the high road is always the best answer, but this is a more in depth topic for another time). Regardless, profitability suffers.

In all of these cases, your company might be better off without these customers. But companies often feel they are not in a position to do without and, therefore, they live with the drain on their business.

In a study done by Robert S. Kaplan of The Balanced Scorecard fame, he found companies have a few unprofitable customers that could be costing as much as 20% of the profits of the company. The following chart was published in that study.

Remember, the objective is to serve our customers in a way that helps them be more successful. Some of these problem customers prevent us from helping them and our other customers that aren't problems. That simply cannot be a customer-focused way of doing business.

So, should we fire these customers? Maybe, but as a last resort. There are many other things we should do first. That’s the topic for next time.

Do you have any scenarios of customers that drain profitability?

•  Customers don’t notice messages.  So communicate often and use a variety of approaches.

• Customers can be annoyed by messages – there are too many/not enough, they are too flashy/not flashy enough, they are useful/wasteful … you get the picture.  Spend time planning/testing so your messages will be on target with your audience.

• Develop a consistent ongoing communication approach with customers so they are more alert to your messages and more likely to pay attention.  Focus on a long-term dialog, not just a one-time dazzle.

• Communication is often an after-thought and does not receive the kind of resources given to our product and service offerings.  Make sure that communication is an integral part of your customer engagement process, and make the most of the puny budget.

Science has advanced mainly through failed hypotheses. New theories, ideas, or inventions are based on the invalidation of a previous hypothesis. This type of advancement is also true in other arenas, including business. However, most people focus on confirming hypotheses and spend little, if any, time looking for contrary evidence. I think there are a number of reasons for this:

• We have an emotional investment in the hypothesis and want to be right. This is especially true when we created the hypothesis or when our job is seemingly dependent on the hypothesis being true (which is hardly ever true, even when it seems to be).
• Our boss or executive leader is a big proponent of the hypothesis, and we don't want to contradict them.
• We created a bad hypothesis that really can't be invalidated.
• We don't even consider that our assumption or belief should be tested and skip creating a true hypothesis. We treat our assumption as a statement of fact and then go about putting together all the evidence that supports it without even considering contradictory evidence.

1. Create a culture of testing and inquiry. It is essential to moving your company forward.
2. Develop good hypotheses based on your assumptions. 
3. Know what it would require to disprove the hypothesis.
4. Try to find good, solid evidence against your hypothesis. The supporting evidence is much easier to find. 
5. Be willing to challenge the common wisdom of your company or leadership when the hypothesis is shown to be wrong. This can be uncomfortable, but if you do it respectfully and with the support of strong evidence, the message should be accepted. It also helps to have a few other colleagues in your corner! 

The October issue of Quirk's published the last of a three-part series on how satisfaction measurement has gone awry and ways to fix it. I thoroughly enjoyed this series and would encourage anyone who administers or uses data from a survey-based customer feedback program to read it.

Of all the problems with traditional customer listening programs, there is only one thing the authors claim will thoroughly corrupt a program - tying feedback scores to corporate incentive plans or compensation. This may seem counter-intuitive. Including customer scores in an incentive program helps focus the organization on customers, right? Ideally, yes. Practically, not so much. It focuses the organization on the score, but not usually on the customer.

The authors provide three key reasons why tying incentives to customer feedback scores is dangerous:

1. The goal of the survey shifts from pleasing the customer to pleasing the organization. If you currently use survey scores in your incentive plan, consider how much time you spend setting, explaining and defending the goals. And this time increases exponentially if you miss a target, which is exactly when you should be talking to customers to see why scores are down instead of defending the numbers internally.
2. Those responsible for the survey become the "police" instead of the "partners." The time you spend with internal stakeholders is more often focused on defending the metrics and methodology than on helping the organization internalize and act upon the customer feedback.
3. You actually give executives an incentive to question the research and results. Making it part of the compensation plan brings high-level attention to the customer survey, but actually encourages executives to question and nit-pick the details instead of focusing on the big picture.

1. What problem is the customer trying to solve?
2. Does your product or service help them solve this problem completely?
3. What does the customer have to do to make your product work for them the way they want it to work?

Wait a minute, what curse?! I thought we were supposed to be customer-driven…isn’t that a good thing? Everything I read says that customer-driven companies are more successful, not less. Nope, being a customer-driven company is detrimental to creating value for your company and your shareholders.

So, if not by our customers, how should our companies be driven? We have to drive our own companies. If we let customers drive and make our decisions for us, our companies would all be commoditized. Who would really make decisions for us? Procurement. Now, you’re starting to see things my way, huh?

So, just ignore the customer and run things our way, right? Hardly. We should be running our companies in a very customer-focused manner. It might sound like a fine line between customer-driven and customer-focused, but simply put, run your business by bringing your customers' perspectives into your decision-making and strategic-planning processes, run your business to help your customers succeed, run your business with customers in mind and always to deliver value to them; just make sure you are running your business and not your customers.   
     

The above chart is a great analysis of the impact of taking a good thing too far. In Customers at the Core by Schieffer and Leninger, they discovered that companies that were customer-driven (“customer controlled” in the chart) were far less profitable than those that were customer-focused (or, “customer insight controlled”).

Two good indications of being customer driven can be seen in how your company responds to price pressure and how certain account managers act during confrontational moments with customers.

When price pressure arises, does your company sound an alarm and figure out what you need to do to buckle to the pressure? Is it a foregone conclusion that you will acquiesce to the demand for a lower price? Or does your team work to better understand what your customer is trying to achieve and design a better solution then work to describe and document the value being delivered to your customer?

What about those confrontational moments or courageous conversations with your customers? Do your account managers handle those like they work for the customer, or like they work for you with the intent of helping your customers succeed? Ever say, or hear someone say, “Sometimes I wonder whether he works for us or for the customer”?

It may be a fine line, but working to help our customers succeed is a recipe for mutual success. Letting our customers drive our businesses and make decisions for us is one that will surely result in failure for our companies.

 R.I.P. Selling, you will be missed. Selling (date of birth – beginning of time / date of death – sometime between 1999 and 2009) sadly passed away at some point over the past 10 years. Selling had been with us as long as mankind existed. Selling impacted all of our lives and touched many of us through all of our sensory nodes. Selling also had a great sense of humor, like on the car lot, Selling would always play games with us and stir our emotions or during company workshops when Selling would come into our business as an outsider dressed in a sharp suit with all the right answers regardless of the questions. It was simply amazing how well articulated Selling was on his feet. Selling will be deeply missed by all mankind.

Now wouldn’t it be sad if that epitaph were true? That was purely fictional as it has been 100% confirmed that Selling is not dead, in fact, Selling was just spotted at a shoe store in Des Moines last Tuesday.

There’s this common misnomer that those of us that are in Business Development and Strategic Account Management should never “sell” our clients. There are several books on this concept and a wide variety of well publicized opinions at a library or internet connection near you. Well, is selling really dead or are we just packaging it differently? We have conversations, we build relationships, we show strategic value, we drive towards return on investments made in our product or services, the list goes on – but in essence, aren’t we really doing all of that with one end goal in mind – to sell something?

We dance around the idea of making sure that we are not making our clients or prospects feel as though we are actually trying to do just that. When did “selling” a product or service become a bad thing? Why is selling getting a bad rap? I mean, if you are successful at delivering value and positively impacting your target audience’s environment, wouldn’t it be a disservice NOT to sell them?

I think what we want to avoid is not the concept of selling, but the uncomfortable impact of “pressure”. You can sell me something without applying any pressure whatsoever and if successful in doing so, then we have just begun cultivating our relationship at another level. Pressure is replaced with Value and those that understand that Value just get it, they understand the impact that it can have on their life, their organization, their objectives, etc.

Selling is very much alive. Now what’s it going to take for you to drive this concept home today?

Michael Good

Vice President

1. A headline - All of Steve Jobs' titles are short and memorable. Spend a little extra time in coming up with a good title. Make it fit in one line and use it consistently.
    
2. A villain - Using a villain as a motivator helps bring people together under a common cause. It also helps bring out the competitive nature in everyone. Your main competitor would be the most obvious villain, but it could also be an idea or roadblocks that stand in the way of your company's goals.
    
3. A simple slide - Keep the clutter off the slides. Jobs uses mostly pictures and very few words. Too much information on a slide is distracting to the audience. You should be presenting the information, not making the audience read it.
    
4. A demo - People start to lose interest after about ten minutes. Mix up the presentation with demonstrations of a product, an example of a situation, or a video. Jobs does something different about every ten minutes to keep the audience interested.
    
5. A holy smokes moment - Create a memorable event that your audience will want to remember. This is something that should be unexpected, and should emphasize the main topic of your presentation. When they leave your presentation, this is the one thing that they should not forget.