Walker Information Blog

As you probably know, every 10 years, the United States government attempts to survey the entire population of the country. To me, this is the ultimate survey program, and while there are differences to the feedback that we try to gather from our customers on a regular basis, there are a lot of parallels as well. In fact, I think there are several things that we can learn from the government’s efforts here that can help us execute and act upon feedback we gather. This is the first of three planned articles about the 2010 US Census. Over the next couple of months, I’ll explore the process in three parts: Pre-Survey, Data Collection, and Post-Survey.

Pre Survey:

The founding fathers of the United States helped to instill a culture for surveying the population of the United States all the way back in 1790 – in fact, Article I, Section 2 of the Constitution of the United States dictates that a survey will be conducted every 10 years

"The actual enumeration shall be made within three years after the first meeting of the Congress of the United States, and within every subsequent term of 10 years, in such manner as they shall by Law direct."
-- Article I, Section 2 of the Constitution of the United States

This is an important lesson for us to learn from. The fact that this has been planned for, mandated, and carried on as tradition allows for it to continue, relatively unquestioned. Couple that with the decisions that are made based on the feedback, and there is little doubt that the US Census is part of the DNA of our culture, and process whose value is demonstrated consistently to the country.

The process for determining the questions to ask is a well thought out process, and ensures buy-in from key stakeholders in the U.S. Government. In fact, three years prior to the survey process, the U.S. Census Bureau must inform Congress of the subject areas they’d like to cover in the survey, and must have the questions locked down two years before the survey is launched. By going through this process, the information needs and question-owners must be identified and the potential decisions to be made must be considered long before any feedback is gathered. This ensures that "nice to know" questions are challenged, while "need to know" questions are given priority. 

While having such long lead times might be nice, obviously in our efforts we cannot afford this amount of time in gathering information for business decisions. But, the key lesson here is that every key stakeholder gets an opportunity to weigh in and is required to demonstrate how the information gathered will be used. This process continues to ensure buy-in and sorts out the key information needs long before the process is underway.

If there is one thing that the U.S. Census Bureau has done well, it is communication. They certainly have covered all the bases, from buying commercial time during the Super Bowl, sponsoring a NASCAR team, to making sure that children are aware (thanks to Dora the Explorer).


They've also developed a robust website, and have mailed out individual communications directed to respondents. As you can see, the Census does not suffer from underexposure. Its owners have done a great job of building awareness, while also branding the effort. It has been dubbed “In our Hands,” and provides a call to action for us as respondents:

 “We can’t move forward until you mail it back.”

While the process is expected to cost $15 billion (that’s about $48 per person), it is necessary to achieve the response rates that are necessary to allow for proper actions to be taken as a result of the feedback. This year, the Census Bureau is expecting a response rate of 64% (in 2000, 72% of Americans participated).

This biggest lesson in communications that we can apply to our efforts is how the census has demonstrated it has the full support of the President of the United States, as exhibited by the following video.

Note that the video is not just available in English, but also has been offered in other languages, an acknowledgement of the differing needs of the target audience.

The final item that’s critical in the pre-survey planning is illustrating the importance of the program to potential respondents. Their site has a section dedicated to providing reasons to participate, and outlining decisions and actions that will be impacted by the results. There’s also a threat, which I suppose we could incorporate into our survey efforts, but it probably left to those who could conceivably enforce a penalty to the very audience they’re targeting.

On Census Day (April 1, 2010), we’ll look at the data collection process, and identify some of the best practices that the Census is employing to make this as effective as possible. Hopefully by then, both you and I will have participated, and we can share our own experiences.

 

Brad Harmon
Vice President, Consulting Services

One of the challenges that any organization faces when deciding to implement a customer-centric strategy is one of high intent mixed with low discipline/follow-through. My colleague Phil Bounsall likens this to the various personalities you might see at the gym.

Chef Boyardee has recently launched an ad campaign in which they say that kids can get a full serving of vegetables in a bowl of their various products – ravioli, spaghetti, etc. The point they are making is that you can effectively “fool” your kids into eating their vegetables, since they like to eat ravioli. All questions of the veracity of their claims aside, the main point is that eating their product is a win-win.

How does this relate to customer-centricity? From our experience, we see four factors that help determine the success of a customer-centric strategy; one these, alignment with work processes, speaks to the notion that being customer centric is what we do, not one more thing to do. The key here is to understand which of your processes are getting in the way of maximizing customer focus and either eliminate them or re-tool them so that they align with the customer-centric strategy.

Like exercise and eating vegetables, being customer-centric makes logical sense – everyone knows this is good for you, but making it happen is much more difficult. To the extent that we align the strategy to how we do the work (and how we are rewarded) shifts the tide away from customer-centricity being a “flavor of the week” to a means of achieving our personal – as well as corporate - goals.

What barriers in your environment prevent your organization from becoming customer-centric?

Mark A. Ratekin
Sr. Vice President, Consulting Services & Resource Management

1. In the past, they shipped different flavors of soda to each member for taste testing. Not only was it fun to receive and try the unreleased drinks, but each person had a chance to voice their opinion.
2. Dew Labs regularly asks in-depth question through online polls. The most recent poll wanted the community's opinion on which sites to place Mountain Dew ads. It definitely wasn't your typical, “pick your favorite” type of question.
3. Email and direct mail are also utilized. Dew Labs sends monthly emails with updates on contests and new polls. They also use traditional mail to send Mountain Dew freebies to members.

Many people fail to hit their sales targets because they just don’t know what they are selling. Yeah, they know the product or service and can articulate the features but that will almost always miss the mark.

The good account managers don’t focus on features or a laundry list of benefits because they know that will get them nowhere—especially with a reluctant prospect. Here are 4 things that strategic account managers can do to hit the mark with prospects.

1.      Know how your product or service can help your prospect solve problems that are top of mind and direct your value proposition squarely at those problems. This requires some work to really understand what they are struggling with. Start with any public information available (if your prospect is private, check out the public information for its competitors). One of my favorite documents to study after the Form 10-K and the Proxy Statement is their Analyst Day slide deck. Great stuff about strategy and execution from their top leaders.

2.      Know what’s important to your buyer and leverage your strengths. What makes your best customers stick with you? Is it your product? Or maybe it’s something else about the experience they encounter when doing business with you. You need to know—from the perspective of your customers—and really push those areas where you excel. Don't guess about this. Chances are you will be wrong. Ask your customers.

3.      Know who you are competing against and sell accordingly. Unless you are different from all the other companies out there (you aren’t), you stack up a little differently against each of your competitors. The best way to understand these performance differences is by asking your customers. If your company has a customer listening function, see what’s available. If competitive information is not available, start demanding it.

4.      Know when to stop talking and do it. Sometimes we just talk and talk, telling our prospect about every benefit they could ever hope to get from our product. Problem is, they don’t care about almost everything we just told them. Be focused. If you have done your homework and know what matters the most to them, focus on that and leave the rest for later. Sift through all the benefits of your product or service to arrive at those that give you the best chance to win.

Think of three seines with different size openings. The first seine allows through any benefits that help them solve their problems. The second seine allows through any of those making it through the first net that are actually seen as important to your customers. And the third seine is different for each competitor…of those making it through the first 2 seines, which make us a better choice than Competitor A?

This filtering system should allow you to focus on the very few items that will increase your odds of winning by knowing exactly what you are selling.

The past few weeks, I’ve been spending a lot of time reading customer comments submitted in their survey feedback. And when I say “a lot of time,” I mean, a LOT of time.

The more time I spend reading through these comments, the more I realize that everyone should be reading these comments. Maybe not every single comment, but there are some customers who tell us very succinctly (and for the most part, politely) what they see going on in the relationship – calling out the strengths, the weaknesses and what they want to see improved. These comments are what tie together all of the numbers, all of the quantitative aspects of the information and summarizes it in a handful of statements, directly from the customer. These are the comments that should be shared with those who need to take action on the feedback.

The challenge I’ve given myself, and would challenge all who are responsible for driving action, is to be sure to incorporate customer voices along with all the numbers. We may find that by using the customer voice, truly in their own words, it will help drive understanding of customer perceptions and motivate others to take action.

Lauri Jones

Senior Analyst

• Information – My best professors were intelligent and knowledgeable about their topic. They shared great information that I could really use. 
• Engagement – My favorite professors were engaging. They were passionate about their topic and it showed. Somehow they connected at an emotional level that helped me understand and appreciate the topic.

• Information, without engagement. It’s just boring with no emotional connection.  
• Engagement without information. That’s shallow. Not enough substance.

In my last post, I described a management paradigm called Customer Capitalism; the theory, as put forth by Professor Roger Martin, is that firms should focus on satisfying their customers while ensuring that their shareholders realize an acceptable rate of return (on a risk-adjusted basis). This is a sound theory – we at Walker would certainly concur with Professor Martin – but like most management theories, the execution of the strategy is where the complexity lies.

Our work with clients suggest that any firm intent on building a culture of customer-centricity should consider four key areas of focus, particularly if the strategy is more transformational in nature (for an example of such a strategy, see this post by my colleague Brad Harmon on the shift underway at Domino’s Pizza). The key areas of focus are:

1)      Organizational support – Is this a top-down initiative? Are key people and/or teams established to facilitate the shift toward a customer-centric culture? Without the proper buy-in and support structure, the execution of the strategy will be difficult if not completely impossible.

2)      Integration into work processes – Do all entities become customer-centric, or just client-facing employees (the right answer, of course, is everyone)? Have the work/process flows within the organization been reviewed to determine the extent to which they are supportive of a customer-centric strategy? Do we have methods of using customer feedback to ensure that information turns into action? The key here is to make certain that being customer-centric is what we do, not one more thing to do.

3)      Incentive alignment – Most people have good intentions; however, it is usually true that what gets rewarded gets done. Consider this – if a company claims to be customer-focused but only rewards customer support reps based on minimizing average call time, how often will employees go the extra mile to make certain a customer’s needs are met? Will customers interpret this as a customer-focused organization when they call for support?

4)      Effective communication plans – In order to prevent the Customer Capitalism strategy from being “the flavor of the day,” ongoing communication plans for both employees and customers are a must. Moreover, the communication plan has to be multi-faceted to reach people with different listening and learning styles – this can include newsletters, emails, video streams (on the firm’s internet and/or intranet sites), advertising, etc. The key is to have ongoing and relevant information streams to maximize the probability of breaking through the clutter.

It is important that each of these areas be carefully planned and executed for one primary reason – any company that says it is (or is becoming) customer-focused sets a heightened expectation among its customers. That is, the fact of merely saying you are customer-focused means that customers will expect more. Not delivering on this promise can be catastrophic to the firm – consider the recent case of Toyota. For years, the Toyota brand has been built on the notion of quality – a breach of this brand promise (and the way that management has reacted to the crisis) has not only brought negative consequences to Toyota, but it has been argued that Toyota’s fall from grace has been more dramatic simply because customers expected more.

So, one may question the wisdom of implementing the Customer Capitalism strategy – it would appear that there is a significant downside to failure. While this is true, for the firms that approach the strategy in the right way (and weave customer-centricity into the fabric of their culture), the upside is considerable:

·         Customers will be more loyal, meaning

·         Customer retention (and existing customer growth) will be high, and

·         Customers will be more resistant to being lured away by the competition, and

·         Opportunities for price premiums will be more abundant, which means that

·         The firm will enjoy a healthy P&L and balance sheet, which, in turn, leads to

·         Opportunities for above-average shareholder returns.

However, getting there is not easy; if it were, everyone would do it, which would eliminate the strategic competitive advantage. By considering the four factors I outlined above, you will be moving on the right path.

Mark A. Ratekin
Sr. Vice President, Consulting Services & Resource Management

Face it; there is a certain amount of luck in everything we do. Get lucky and you succeed. Luck turns against you and you don’t. So what can we do to increase our odds of having luck on our side?

I’ve noticed a few things about good gamblers that probably apply to increasing the odds of successful account management as well.

·         Know the rules. If you don’t know how to play craps, don’t. If you don’t know much about the rules of your prospect, don’t approach until you do. What is their business model? What are their challenges and opportunities? What can you do to help them succeed? What are their protocols for starting new relatioships?

·         Understand how the house operates. Ever notice that you don’t get that tired in a casino? Might have something to do with the increased level of oxygen being pumped in. Ever notice that the drinks just keep on coming? Knowing these tricks help the winners avoid the pitfalls. Ever have one of those customers that meets with you all the time to learn what’s new, what are all the other companies doing, etc., but they never buy anything? I call them “Takers” and, if you let them, the relationship will go on the same way for a long time. Understanding that they are takers will allow you to adjust where you spend your time and find opportunities more likely to turn into business.

·         Know the odds. Good gamblers know the odds of every bet they make and focus their bets on the best odds. Good account managers focus their time and attention on the best places to create growth. If you knew which customers were loyal to your company and not at all loyal to your competitors, you would focus some serious attention there because your odds of growing share of wallet are much better.

·         Don’t be greedy. The consistent winners know when to stop and walk away with the loot. They resist the greed temptation, which is strong. Good account management starts with a focus on helping your customer succeed, not “winning” the business at all costs.

·         Pay attention. Counting cards is against the rules, but paying attention to what’s played is not. Pay attention to your customers. Most companies have a customer listening program in place. If yours does, pay attention to what your customers are telling you and use that to increase your odds. Who is telling you that there is a problem you can alleviate? Who is telling you that there is more business available? If your company doesn’t listen to customers in a formal way, its probably time to start.

Good gamblers have perfected the skill of optimizing the odds. It doesn’t guarantee success, but it does give you the best possible odds for success. Know the challenges and opportunities, don’t be greedy and pay attention to your customers. Always ask yourself, “How can I improve my odds of success?”

A recent Harvard Business Review article suggests a new management paradigm is developing. In “The Age of Customer Capitalism,” Roger Martin provides a brief history of management theory; simply put, Martin calls out two periods of managerial capitalism to date:

1)      Management Capitalism This period, which started in the early 1930’s, created the notion of professional management, prompted by the work of Adolf A. Berle and Gardiner C. Means, whose book The Modern Corporation and Private Property made the case for management that was separate from ownership of the firm. This work ushered in a period in which management became a valued discipline by creating processes and roles that help to fuel the economic growth of firms. It could be said that by creating the division of labor between owners (who are, ostensibly, more entrepreneurially-oriented and therefore more focused on the vision of the firm) and management (who are more oriented toward building systems and infrastructure that facilitates the realization of the vision), firms leveraged the unique skills of individuals in a way that was not only scalable, but also increased the probability of firm success.

2)      Shareholder Value Capitalism The second period emerged in the mid-1970’s, when Michael C. Jensen and William H. Meckling  suggested in their article “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure” that managers focused on their own financial well-being at the expense of the firm (and, therefore, shareholders). This work (along with other management-critical treatises such as The Peter Principle: Why Things Always Go Wrong, which posited that managers in a firm advance to their level of incompetence) created a skeptical view of management; Jensen and Meckling suggested that a better focus for the firm would be shareholder value maximization.

Professor Martin suggests that shareholder value capitalism is also a flawed theory, and provides some compelling evidence that the shareholder value paradigm did not pay off for shareholders (in short – between 1933 and 1976, when management capitalism was king, the S&P earned compounded annual returns of 7.6%; between 1977 and 2008, during which shareholder value capitalism has been in vogue, the S&P created compounded annual returns of 5.9%). Further, Martin argues that shareholder return cannot increase in perpetuity.

So, what is a firm to do? Martin suggests that the answer is Customer Value Capitalism – that is, the path to shareholder value creation comes by maximizing what we at Walker call customer loyalty. In Professor Martin’s words:

“…companies should seek to maximize customer satisfaction while ensuring that shareholders earn an acceptable risk-adjusted return on their equity.”[1]

Why can’t the firm focus on both customer value as well as shareholder value? Professor Martin provides two arguments. First, from the perspective of optimization theory, you can only maximize one variable while controlling for all other variables. While this is technically correct, the second reason cited is more compelling – shareholder value reflects the value stockholders place on the company’s future earnings, and it is impossible to any firm to continuously raise –and deliver on – expectations. If we assume that customers are the source of all future earnings, then logic would suggest that maximizing customer value would be the best way in which to maximize shareholder return in the long run.

Do the data bear this out? Professor Martin provides some anecdotal examples in support of customer capitalism; we can add several more from our work with clients (many of which we have previously discussed in this blog - see this entry and this entry for more information):

1)      We continue to see a statistical connection between what customers say they will do and what they actually do;

2)      We have witnessed the correlation between a customer’s loyalty and his/her revenue growth rate, profitability, willingness to buy across a firm’s multiple categories, etc.

3)      The Walker Index, a composite of Walker’s publicly-traded customers, continues to outpace the broader market indices in total (see this entry for more discussion on the Walker Index);

In addition, the academic literature provides analysis consistent with what we see in our client work.

However, the notion of Customer Capitalism is another example of easy strategy that is extremely hard to execute. In my next blog, I’ll look at some of things firms should be mindful of – and prepared to do – if they aspire to adopt the strategy of Customer Capitalism. In the meantime, what do you think – what has worked in your firm (or what have you witnessed as a best practice among firms, brands, or products that you use)?

Mark A. Ratekin
Sr. Vice President, Consulting Services & Resource Management

Too often our account management programs are like the local fitness center. And I don’t mean that they are healthy. Here are three similarities that I have noticed between fitness centers and our account management programs.

1.      The New Year’s Resolution. Every year when January rolls around I can’t find a locker, and the locker room is so crowded it’s ridiculous. This happens because people make a resolution to get fit, lose weight, whatever. So people flock to the gym. Three weeks later, things are back to normal. Happens every year.

I see the same thing with account management programs. Account managers adopt a new account planning tool or commit to customer-focused account management. It lasts for a while, but sooner or later, people figure out that being customer focused takes work and they revert to their old ways. For anyone who doesn’t revert, a real competitive edge exists.

2.      Dress for Success. There are a group of people at my club that don’t really work out. But they look incredible. They buy workout outfits the way I buy suits, shirts and ties. Everything is coordinated. Style is definitely trumping function. I always figure I look tired and sweaty when I’m there regardless of my clothes.

These dressers remind me of the account managers that talk a great game, show up at all the right places, and send birthday cards to all the company executives. They just don’t sell anything. They look good, but they are not doing the right things. They are not achieving company objectives.

3.      The Injured Reserve. There is a guy at my club that is constantly present, but never working out. But, there is always an injury excuse. “I came to lift, but I tore my rotator. Better sit it out today.” Next week, a leg. His back the week after.

This manifests itself in account management with the typical excuse, “That doesn’t make sense for my customers.” Everyone else should use our account engagement tools, but this account manager is different. Uh huh.

These fitness center tactics are common. We simply have to be more diligent, more customer-focused, more value-additive than our competitors. We have to actually work out, use the tools our companies have given us. Time to get fit!

Recently I had the privilege to assess nominations to the Hall of Fame sponsored by the Indianapolis Chapter of the American Red Cross. 

It was humbling to learn about the many individuals and organizations that embody the core humanitarian values of the Red Cross – those who saw a need and responded with specific acts of courage or kindness, those whose contributions enhance the community, and those who have had a lifetime of service. 

The heroes who might be easiest to recognize are those who risked their lives for others – those who helped others trapped in a burning building or who were submerged underwater or who were being viciously attacked. 

But we cannot forget the quiet heroes – those whose contributions are perhaps less spectacular, but every bit as important.  They make a difference in their community and in the lives of those around them.  (The Hall of Fame event will not be held until April, so it would be unfair for me to comment more about these quiet heroes at this time.) 

Participating in the selection process made me think about the quiet heroes of our customer feedback programs, such as those who:  

1. Ensure the customer contact list is correct and up-to-date.
2. Communicate program updates, making sure everything is accurate.
3. Review survey translations to ensure meaning across languages. 
4. Disseminate results to others in the organization.
5. Follow up with participants to address specific issues or opportunities.  

There are a lot of quiet heroes, let’s be sure to recognize their efforts!   

Kitty Radcliff
Vice President

 

Have you ever had one of those moments, where you see the exact same data presented in a new way, and it makes you say, "Aha!"?

I recently encountered this situation, which reminded me of how powerful visuals are in communicating the customer perspective.

There are so many different ways to visualize customer feedback. You can use graphs, bubble charts, verbatims, summary words, pictures, symbols - the list goes on and on.

And, it seems like different people interpret visuals in different ways. I'm sure you can all relate to an instance where the information was obvious to you, but when presented to someone else, it just wasn't registering.

Here are a few lessons I've picked up along the way:
 

• Use visuals that help the audience interpret the information. For example, the stoplight color coding is used because people understand that red is bad and green is good. This isn't meant to suggest that you write out all of the details on the slide. The visual should speak for itself.
• Only show information that is relevant to the point you are making. As the person in charge of the customer program, it is our responsibility to look at all of the information, but we don't need to share it all with our audience. Only the key points.
• Try different formats when visualizing the data. It's important to experiment with different views (e.g., bar charts, line charts, gap scores, bubble charts, etc.). Seeing a variety of options will help determine which one best communicates the key point.
• Always be clear on the purpose of the data. Ask yourself, is this a detailed report of findings (to be used by a small group of people) or a summary presentation? What do I hope to accomplish once I'm done communicating this information? Am I trying to prompt action or communicate progress?

When I was in graduate school, I had a professor whose area of interest was sample size. He published a great article on the topic (see citation below), and I find myself thinking back on the key points of it every time I am asked the question “How big of a sample do I need?”

As Dr. Lenth says, “An undersized study can be a waste of resources for not having the capability to produce useful results, while an oversized one uses more resources than are necessary.” Studies that are “too big” also have the potential to come back with every variable being statistically significant -- even those variables that are of little actual importance. Clearly, finding the right sample size for your program is important but can be a balancing act! To make it easier, there are questions you can ask to help figure out what sample size is appropriate.

·         Exactly what are the goals of this study?

·         What do you estimate the response rate will be?

·         What timeframe do you have for collecting data?

·         What will happen if we don't get the right sample size?

·         Does the scope of the study need to be narrowed due to limited sample?

There is no “one size fits all” when it comes to sample size. Each program will have its own requirements; hopefully, remembering to ask a few easy questions will make finding the right one for you a relatively painless process.

Jessica Gregory,

Marketing Sciences

Citation:  Lenth, Russell V.  "Some Practical Guidelines for Effective Sample Size Determination."  The American Statistician.  August 2001, Vol. 55, No. 3:187-193.

• Be strategic: resource the initiatives with the greatest chance of success
• Commit completely to the end-goal, and be specific about what it is
• Rally the team, including those in supporting roles
• Keep score so you know when you’ve won

• Embracing adversity as a challenge and an opportunity
• Building trust
• Focusing on your goal
• Uncovering hidden blocks and working through them