Six New Voice of the Customer Trends

Source: The Vovici blog "The Listening Post".

Andrew McInnes, Analyst with Forrester Research Inc., presented six new trends and framed them by discussing the value of customer experience and Voice of the Customer programs.

He is reminding us to evaluate these practices in light of their firm’s customer experience ecosystem. Not all companies will benefit by implementing every item on this list. Rather, when evaluating a new activity, make sure it links to an important customer interaction or moment of truth. Also consider how employees can be empowered and influenced with data and communication.

Why does customer experience matter?

Sam Walton, Founder of Wal-Mart, said “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” Clearly, a company cannot succeed without customers.

Why is the Voice of the Customer important?

If the customer is your boss, the voice of the customer is your performance review. Neglect what he or she says and you are likely to be replaced – by your competition.

Why are VoC Programs important?

Focused VoC programs improve the customer experience by acting on feedback and making systemic improvements across the company. These programs help change company culture via the sharing of customer stories, providing recognition, and offering rewards around customer-centric behavior. Finally, successful VoC programs deliver business results by increasing loyalty and retention, lowering service costs, and increasing sales.

Andrew observed that many trends first seen in 2010 continued throughout 2011. In addition, following are six (6) new trends demonstrated by the finalists and winners of Forrester’s 2011 VoC Awards:

1. Tailoring VoC activities for specific customer segments. In 2011, many programs included the powerful element of tailored customer communication and activities. Activities were customized for frequency, content, and level of personalization. For example, a B2B company may identify their customer segments as Executives, Managers, and End-users. Executives may require more one-to-one communication (phone calls, site visits) at a lower frequency. In contrast, the end-user may receive more frequent communication requiring less personalization (surveys, newsletters).
   
   Adobe Systems invites customers to share product ideas via an online portal; product suggestions are then demoted and promoted by the votes of other customers. Feedback from the Adobe product teams is provided through the portal so customers know the status of their idea submissions.
   
   
2. Measuring the value of an improved customer experience in general. Good VoC programs regularly measure the overall value of customer experience efforts, most often linking customer feedback scores to loyalty and revenue. This measurement proves that customer experience and VoC are important – and relevant.
   
   Adobe Systems brought together customer feedback with customer lifetime value data to statistically demonstrate that the most loyal customers were also at the higher end of customer lifetime value.
   
   
3. Proving the value of the VoC program specifically. By linking interventions with cost, retention, and/or revenue, a VoC program proves that it directly drives value. Value can also be driven indirectly by linking the outcomes of VoC-initiated projects to business results.
   
   
4. Bringing the VoC to life for back office employees. It takes an entire company to serve customers well. In addition to front-line employees, back office teams – such as billing, legal, finance, IT, and marketing – make decisions that directly impact customer experience. VoC leaders can align employee behavior around VoC through a number of ways, including variable compensation and performance evaluations.
   
   Programs must bring VoC to life for all employees by creating a motivational, emotional connection to the VoC program. Intel gives every employee in the company two days off if they reach their “customer delight” goals. Adobe Systems built a customer listening post room; employees can visit and immerse themselves in customer feedback. Twitter comments, survey feedback, and call center data displays – in real-time – on television screens in what is, essentially, a customer NOC. Talk about being dedicated to the customer cause!
   
   
5. Building networks of VoC champions. VoC programs need four levels of ownership: Executive Sponsors, VoC teams, VoC Champions, and everyone else! As an example, Forrester’s award winners were very active in building VoC Champion teams in 2011. While the role and definition of “VoC Champions” varies from one company to the next, they are typically delegates from each business area who understand the operations of their team—and know what the VoC team is doing. They are able to articulate the importance of customer-centric behavior to other team members while bringing the voice of the customer into all business process improvement activities.
   
   
6. Aligning key functions around VoC insight and action. In 2011, VoC leaders engaged other business functions in VoC activities. They aligned closely with Business process (for organizational and procedure improvements), Market Insights (for survey design and analysis), and Customer Intelligence (for mining customer databases combining operational and behavioral data with feedback). This alignment demonstrates increased sophistication of VoC programs as they drive strategic initiatives and increase value for the organization.

Moments of Truth for Customer Experience Management

Despite spending significant sums on studying and improving customer experience, many companies are simply not seeing the customer loyalty they want.

By Eleanor Bloxham, CEO of The Value Alliance and Corporate Governance Alliance. Published on the Fortune blog.

FORTUNE -- What company doesn't want customers to have a positive reaction when they think about doing business with it?

But despite spending significant sums on studying and improving customer experience, many companies are simply not seeing results, according to a recent survey of 8,000 customer experience professionals in 2,160 companies globally by consultancy Beyond Philosophy. The findings provide a road map any company can use to court new and repeat customers.

According to Steven Walden, research director at Beyond Philosophy, companies in retail, banking, technology, and telecommunications tend to spend the most on so-called customer experience initiatives. Yet of the top 10 spenders, only one made a top 10 list of successes, according to the survey.

What are companies doing right and, just as importantly, what are they doing wrong?

'Lipstick on a pig'

HP and Dell are two of the top 10 spenders on customer experience – and they do a fair job, but not what you would expect based on the cost and effort, Walden argues. What haven't they figured out?

Both companies provide a standard product that "does what it says on the tin," Walden says. They both have big organizations and spend dollars on thinking about the customer, but this is mainly from the perspective of usability, functionality, and fixing what's broken. From a customer perspective, "there's no wow there," Walden says, it's more about "putting lipstick on a pig."

A case of 'measurementitis'?

Other companies get it wrong by resorting to "measurementitis," says Walden. This often happens when a software vendor comes knocking and convinces a company that the way to improve customer experience is to measure every interaction with its customers. HSBC, another top 10 spender, is guilty of this, Walden says.

The problem with this approach is that companies will measure loyalty but then won't act on their findings. Why would they do this? Measurement instead of real action can be a draw for managers who want to create fiefdoms, Walden says. You can build a sizable team under you just by measuring things, but "you can't make a pig thin by weighing it," he says.

Customer surveys – or employee surveys, for that matter -- that result in no action are much worse than having no survey at all. It just fuels anger to ask people to state their complaints and take no action based on the results.

Turning a new leaf

By contrast, American Express (AXP), another top spender, is on its way up largely because they are concentrating their efforts on providing a "good feel" when customers call. The company has begun to stem its loss of customers, says Walden.

The Gap, another top spender, has even put the term "customer experience" into the titles of its in-store workers, but that has yet to improve the company's image.

Vodafone is the only top spender that also made the most admired ranking in Beyond Philosophy's survey. How did they do it? According to Walden, they maintain a great brand image through their sponsorship of the Formula 1 auto racing events.

"Customer experience is at the heart of everything they do; it's in the culture and DNA of the organization. It comes from the top down. Like HP, Vodafone may not be massively innovative, but they operate from this clear statement of intent -- in contrast to HP, where customer experience is a program," Walden says.

Using emotion well

Who does it really well without spending a ton? Tesco makes it because of "the strength of the relationship they create with the customer, as if you are part of their family," Walden says.

This contrasts with Wal-Mart , which is currently having trouble defining itself to customers and the marketplace. Even Family Dollar Stores, Walden says, recognizes that price alone won't draw all the customers a retailer needs. How customers feel about the company matters.

Which brings us to the top three most admired companies: Apple, Amazon, and Zappos. What do all three have in common? Charismatic leaders with a young feel to the product and delivery, Walden says. They have maverick, cutting edge approaches -- and don't just listen to customers, they lead them. They are creative and don't get bogged down in analytics, he says. Customers love these companies because of the personal feel and emotional connection they provide, Walden says, and emotions not only connect you to the company, it makes you want to buy from them as well.

For Apple, the most admired in the survey, the question will be whether they can replicate the explicit attention to detail the late CEO Steve Jobs instilled.

Clearly, it's easier to create personal feel and emotional connection in a small company rather than a large one but, Walden says, Apple in the 1990s would not have made the most admired list. Jobs set out to change that – and CEOs can. They just need to know how – and maintain that focus, gaining support for their vision and holding everyone associated with the company accountable.

Customer Service Through Social Media: The game has changed

States Harry Rollason of Useful Social Media: The rise of social media has changed customer service beyond recognition.

In today’s competitive landscape, customer service is more important than ever. A company’s reputation for satisfying their customers has never been so valuable.

It’s worth pointing out that it takes three times as much internal resources to acquire a new customer as it does to retain one. In these lean times it puts an awful lot of pressure on companies to ensure retention rates are as high as possible. And good customer service is a great tool to do this.

But are companies getting it? Does it look like big corporates are responding to this change in the landscape?

The short answer is no:

• Over 58% of tweeters who have tweeted about a bad experience have never received a response from the offending company
• 55% of consumers expect a response the same day to an online complaint – yet only 29% receive one
• 43% of consumers say that companies should use social media to solve customers’ problems

These statistics lay out clearly how the game has changed. Customers will no longer be happy with ‘old style’ customer service. To satisfy your customers, it’s essential to have a responsive social media presence.

To be fair, things are changing. By the end of the year, 75% of US-based companies expect to use social media for customer service. It’s a reaction to the changing game. Gone are the days when social media was all about marketing through Twitter and Facebook. It’s now an integral tool to ensure you are responsive not reactive, contactable not aloof and authentic not robotic. And increasingly, it’s about solving customer’s issues in real time through social channels, showing your dedication and transparency to your customers.

B2B Customer Experience Scores Are Low And Excuses Ring Hollow

Forrester's Paul Hagen posted this blog entry

The customer experience for companies doing business with other companies stinks. Three independent studies that Forrester Research has conducted over the past year indicate that the business-to-business (B2B) experience is perceived as worse than that in the bottom-of-the-barrel consumer industries such as TV service providers and health insurance plans in Forrester’s 2011 Customer Experience Index. This is not surprising for several reasons. Many B2B firms believe that customer experience is something that only consumer-focused firms like Disney, Zappos, and Ritz Carlton need to consider. Moreover, many B2B companies argue that purchasing decisions are made for a complex set of reasons other than customer experience. Finally, they often say that because of the relatively low number of accounts, they already provide a personalized experience through account management teams.

Firms making these rationalizations miss several important points. First, if word of mouth is important to sales, then so is customer experience. Forrester’s consumer research shows that only 23% of individuals trust radio and TV ads — and only 19% trust direct mail — while 73% trust recommendations of friends and family. There is little reason to believe that the numbers are much different for B2B. And while Facebook may not amplify opinions, social media tools used for professional networking in online communities certainly do. Second, firms that have poor experiences with other firms buy less. The experience design company, Walker Information, finds that firms whose customers are trapped spend significantly less, grow more slowly, and have lower gross margins than those that are truly loyal. Forrester’s research suggests similar outcomes, with strong correlations between customer experience ratings and likelihood to purchase again, recommend, and switch. Third, customer experience is not limited to the customer-facing employees, such as account managers and call center representatives, or the contract holders at the client’s company. Rather, the end-to-end experience often includes interactions driven by back-office employees that make life difficult and frustrating for important stakeholders who could drive future business at the client firm.

Improving the B2B customer experience from its dismal state is more than a marketing effort. After all, marketing only owns a small portion of all of the interactions with customers. Companies such as John Deere, Maersk Lines, Fidelity, Philips Electronics, and Intuit understand this and as a result have significant B2B customer experience efforts under way. While in some respects the B2B experience is more complex than the business-to-consumer (B2C) environment (e.g., diverse stakeholders within a client), other issues with partners, resellers, agents, and other intermediaries that impact or even deliver the experience are very similar. In fact, the best practices that the best B2C firms use apply to B2B firms. Best practices include:

• Defining the intended experience for the target customer. As experience design firm Beyond Philosophy puts it: “To improve customer experience implies you are somewhere today and you are heading somewhere else. The strategic question is ‘where?'” To get started, firms need to define who exactly they mean by the customer . . . something all the more important for B2B companies, which have many stakeholders inside of a client. One manufacturer found that it had 26 personas across departments just to describe those maintaining purchased equipment within client firms. Some were upward of 10 years old, and all were at varying stages of development. By rationalizing these down to just a handful of well-developed personas based on behavior rather than departmental role, those redesigning the experience — a cross-functional team that included employees as diverse as engineers, contact center staff, and account managers — created a common vocabulary and target to work on. Another B2B firm, in trying to decide for which stakeholder within its client base it should prioritize, realized that concentrating on improving the experience for lower-level logistics clerks would swing much more business its way than improving the customer experience for higher-level contract managers.

• Understanding the customer perspective. The most challenging aspect to improving the customer experience is for firms to shift to outside-in thinking in which employees put themselves in customers’ shoes, rather than today’s inside-out mindset that focuses primarily on narrowly defined internal metrics. Common experience design practices, such as behavioral personas, customer journey maps, and voice of the customer (VoC) programs, can help turn this around. Export Development Canada’s customer journey map for its insurance group found more than 35 internal handoffs between departments across 14 customer touchpoints with little consistency in total time to completion. The group used journey (value stream) maps to focus project teams and Lean methodologies for aligning internal business, processes, people, and systems. The result was a 60% reduction in processing time with improved predictability, a 24% increase in Net Promoter Score (NPS), and reduced waste.

• Aiming to change the culture. Firms serious about improving the experience realize that a cultural transformation needs to take place. Key practices such as recruitment and hiring, onboarding and training, internal communications and storytelling, performance metrics, and rewards and recognition systems aimed at changing the beliefs and behavioral norms of internal employees can similarly be applied to partners, resellers, agents, and other third parties that affect the B2B customer experience.

The widely divergent range of customer experience scores that B2B firms achieve in Forrester’s studies today suggest there is a lot of room to differentiate based on customer experience. And that could translate into big dollars. In the B2C space, Forrester estimates that a 10-point increase in its Customer Experience Index score can amount to up to $1.5 billion. But changing culture isn’t easy. Those that get the jump will create something that takes time and is hard to replicate.

Grow your Share of Wallet in multiple-supplier B2B accounts and boost profits

B2B Sales & Marketing Executives:

GROW YOUR SHARE OF WALLET IN MULTIPLE-SUPPLIER ACCOUNTS AND BOOST PROFITS

The case for growing Share of Wallet

In many of today’s stagnant or shrinking B2B markets growing through new customer acquisition may not be an option. It may at best be a
long-term option, with a high sales and marketing investment attached.

You need a profit growth option that is realistic, can be achieved at much lower cost than new customer acquisition, and in much shorter
time: Increasing Share of Wallet in existing multiple supplier accounts.

I have extensive experience in helping B2B companies systematically review key customer relationships in a multiple-supplier setting. Over the years I have been surprised by the frequently lacking knowledge of the Share of Wallet within an account, and if this share has
remained stable, increased or decreased.

While sales volumes might seem satisfactory, there is thus a real risk that a competitor is “eating the cheese off your sandwich”, without you knowing it.

Customer Satisfaction is a key driver of B2B Share of Wallet

The predictable myth that needs debunking is that Share of Wallet success in B2B is driven by price.

However, empirical research identifies four key drivers of Share of Wallet, with Customer Satisfaction at the top:

• Customer Satisfaction
• Trading Terms
• Length of Relationship
• Supplier Capability

The impact of Customer Satisfaction on Share of Wallet in B2B is three times as strong as the other drivers which have virtual equal impact.

Trading Terms is a strong driver of Customer Satisfaction and is undoubtedly also of high relevance.

How I can help you increase Share of Wallet in B2B accounts

As a seasoned customer service consultant with more than 25 years experience in some twenty industries I know my way around the critical issue to increasing Share of Wallet: Customer Satisfaction.

I developed and widely applied a process and methodology for reviewing key customer relationships with the purpose of turning them into High Value Relationships. In the process I conducted more than 400 executive interviews, mostly in person and also via telephone.

This is a “Fresh Eyes relationship X-ray process” that helps you see hidden flaws:

• Determine strengths and weaknesses and develop competitive benchmarks, with a focus on customer satisfaction.
• Bolster your relationship with key customers and increase Share of Wallet.
• Prevent unnecessarily losing a key customers (what would the cost be?).
• Demonstrate how you value this customer.
• Design a strategic account management plan.

Is this an expense or an investment?

If you consider this as an investment and you pilot this process, you are advised to ask yourself:

“What is the dollar value of this account? If I invest X amount of dollars (typically less than $10,000) in an in-depth review process, what are my chances that I will not be able to increase enough Share of Wallet to break even?”

My experience has been that without exception this process always provides a positive experience and my clients had no problems acting on the information and recouping their investment.

Most important is to know or discover how easy it is to pilot this process and if it works for you!

The upwards potential is significant, while the investment is low.

Visit my website for more information about me or contact me for a no-obligation phone conversation or request a service brochure with details.

Can you improve customer service and profitability by Exorcising Demon Customers?

During the many customer service improvement workshops I have conducted I have often heard participating front employees observe the difficulties and dilemmas of dealing with those difficult customers that always require extra attention and firefighting and who never seem to have their own act together. The squeeky wheels get the grease, but these customers take up time and resources that could much better be spent on building the relationships with "good" customers. The question is often asked: Can't we fire customers?
I think so!

You have to keep a special eye on those customers you want to wean from your business. Deal with the bottom-feeders first to immediately free up additional resources to help support your more profitable customers.

And then there are the customers that on the surface seem important customers. But are they???

I like this [abbreviated] blog posting by Bruce Hunter of Lighthouse 360 who puts a great perspective on this issue. He also introduces the notion that using Activity Based Costing to establish the Cost To Serve is an enlightening practice to help make those difficult decisions about exorcising customers.

An Evil Myth

The unfortunate reality is that most demon customers, on the surface, seem like everyone else. In fact, they may themselves be unaware of their true nature. But take it from me: demon customers exist, you've probably got 'em, and even as we speak they may be sucking the lifeblood out of your company. The sooner you are able identify and exorcise them, the sooner your business will benefit.

Easier said than done, right? A while back, I stared across a conference table at a group of radio executives and wondered how to tell them that the last national account they had scored was a loser. These were hard-knock sales folks who knew their industry and knew how to chase down leads and convert them into time blocks sold. For years, their philosophy had been "any customer is a good customer." It was my unenviable task to educate them that this old truism was not, in fact, true.

Their situation wasn't unique. Years before, I had assumed the leadership of another business organization that had developed along similar lines. Culturally, the group had bought into the notion that the bigger the customer, the better. Not only did they bring in money, they also provided a certain cache simply by being a customer - that would, reasoned the groupthink, surely bring in even more big customers.

That organization had succumbed to an evil myth. Not only is bigger not necessarily better, in most cases we discovered that these mega-customers were actually bad for business. (I know. It didn't make sense to them, either - at first.) To prove it, I conducted a customer profitability study that forced us to take an inventory of all of our customer-related costs and where they were being applied.

I have often had the occasion to cast my eyes upward and give thanks for the folks from the finance department. This was one of those times. They performed a bottom-up exercise called "activity-based costing" that aligned the right costs to the right customers. Before that, costs had been averaged out across the customer base in the belief that it provided a decent view of the costs associated with each customer. As it turns out, that was a fundamentally flawed belief.

What emerged from this financial exercise was a very different view of the customer base. To widespread surprise, we saw that some of our largest customers were actually our "worst" profit performers. They sucked vital resources in terms of the people dedicated to the business, they were the most demanding in terms of price concessions, and they were quite low on business sustainability. They regularly required us to bid on projects, which resulted in more time and resources spent preparing the bid as well as the inevitable price concessions. (Think about it: when was the last time you were able to increase price and build margin through an RFP process?)

The People > Service> Profit Chain

I was asked to write a blog entry for DrakePulse which connects the HR community with Drake International. Here is what was published.

The companies with the sharpest customer focus and who have made this into a market differentiator typically enjoy an above average profitability. This is not anecdotal but supported by ample hard data. In other words: Sharper customer focus leads to a sharper competitive edge.

Their brand of customer service is however ingrained in everything these companies do and don’t do, in terms of: Processes, IT deployment, customer management and measurement, organizational leadership and people management. In other words, it is part of their “organizational DNA”.

In this context we often speak of the People>Service>Profit Chain. Tom Peters used to say that it takes turned on people to give turned on service. In the excellent organization everybody has a customer and is focused on partnering with customers, be it internally or externally.

All of this to say that it is requisite to success that everybody – and I mean everybody – in the organization has a high customer service aptitude. Skills can be trained but a person has the right “customer stuff” between the ears or not.

Hence my recommendation to any organization that is intent on (further) sharpening their customer focus, to the extent that it becomes a sustainable competitive advantage, needs to conduct pre-interview customer service aptitude testing and use passing this a first hurdle in the hiring process. Thus, eventually, the entire organization will be infused with people who all have an above average and pre-determined service aptitude and ethos.

There are tools for this measuring this. I have experience with a particular one that is soundly pedigreed and proven. In the U.S. this is at times deemed legally risky, but I have repeatedly been assured that this practice is do-able and it is being done. This has consistently been a success factor for South West Airlines.

If you want to make this profit chain work, my advice is: Do the right thing and do first things first in hiring.