Chapter 4

When Customers Speak—Who Hears Them?

Almost all new customer–supplier relationships begin with a transaction where the customer behaves in one way and the supplier behaves in a certain way as a result of it (or vice versa). The customer pays the supplier and the supplier provides a product or service. Some suppliers are content with that transaction model. Many are not. They know that a competitor’s cheaper, faster transaction is waiting around every corner. For those suppliers, the challenge becomes: How do you keep this customer’s transactions with you and keep your competitors out of the picture? How do you keep your customers satisfied enough to stay with you? This is the point where many companies start their customer focus. This is Level I of the Customer Focus Maturity Model® (CFMM)—a very basic level, but a very important foundational level that must be managed well before progressing to higher levels. (See Figure 4.1.)

Figure 4.1 Level I of the CFMM

Level I—Voice of the Customer (VOC)

Most companies at Level I start their customer focus journey because they have experienced some type of customer risk such as rising customer complaints, increased turnover, unusual pricing pressure, lower contract renewal rates, and so forth. Some companies, though the minority based on our experience, start their Level I efforts as a preventative maintenance initiative as a new competitor, new customer, or new market enters the scene and although the company has no currently known problems or risks, they don’t want to be surprised and caught unprepared.

Level I companies most often begin their customer focus efforts with some type of process or program to assess the voice of the customer (VOC). VOC activities include a wide range of steps or processes a company takes or applies to enable, solicit, encourage, and use customer input. The most common benefit a company seeks from a VOC effort is to uncover instances and causes of any customer dissatisfaction, complaints, defections, or other problems. In essence, VOC efforts help to detect the customers’ unmet needs. There are a number of different techniques companies use to discover such problems. We’ll briefly describe some of the more prevalent ones:

• Customer surveys
• Customer focus groups
• Customer interviews
• On-site assessments
• Customer communities

In general, we see companies use three different types of survey processes—periodic surveys, transactional surveys, or incident-based surveys. Periodic surveys are typically conducted on some preset schedule, such as quarterly, semiannually, annually, or biannually. They are conducted for a large portion, or all, of a company’s customer base on a certain recurring schedule, and are often supplemented by smaller-scale interim surveys of a cross-section sample of the customer base or a particular customer segment. The periodic surveys we see most often used are ones based on satisfaction, loyalty, or net promoter metrics.

Transactional surveys are usually conducted after select types of transactions or touch points. For example, signing a sales contract, placing an online or phone order, arranging for credit or financing, placing a customer support or service call or inquiry, and having a product serviced, repaired, or exchanged are all examples of transactions that might trigger a survey from the supplier.

Some companies use incident-based surveys that are typically administered after a complaint has been filed or a customer has encountered some type of problem. One thing a surprising number of companies don’t do, however, is send an incident survey to a customer who has defected. Too many companies are reluctant to take this important step and the reasons we most often hear are: they’d rather not further aggravate the customer by asking for input after the fact; they don’t want to appear desperate for business or admitting to mistake; and they just don’t have a good mechanism or control in place to follow-up in an effective and consistent way. This is a huge missed opportunity. Granted there are some defecting customers who will be further aggravated by it, and some who might view it as a sign of weakness or guilt. But hey—they’ve already taken their business elsewhere. What more harm can they do to you? The fact is, not much—if it’s handled appropriately.

There are valuable insights to be learned and possibly something to be gained from following up with customers who defect. At a minimum, it’s important to get their view as to why they left, which won’t necessarily match the reasons they give your sales or customer support personnel. The ten reasons—other than or in addition to price—we most often hear customers tell us they leave a particular supplier, in no particular order, are:

• Poor handling of a complaint—even a single incident.
• Unexplained changes in policy, price, product, or sales force.
• Customer misinterpretation or mistake.
• Supplier employees are disingenuous, abrasive, or don’t consistently apply policies.
• Products or services don’t meet requested or promised expectations.
• Promises are made but not kept; poor follow-up or follow-through.
• Late, inaccurate, or terse communications from supplier.
• Customer expectations were unrealistic or not managed well by supplier.
• Poor quality of delivery, installation, or post-sale service.
• Customer felt taken for granted; customer felt treated like a transaction.

Clearly, the supplier who’s reluctant to follow-up with a defecting customer will often go on thinking it was due solely to price, and will miss the opportunity to possibly improve some internal process, policy, or capability. Moreover, they’ll miss the opportunity to engage the unhappy customer one more time and possibly reopen the door that had been slammed shut. Incident-based surveys and related recovery efforts can be an effective tool for existing, as well as defecting, customers.

Some people view transactional and incident-based surveys as one and the same, but the incident-based survey is usually a damage-control step whereas a transactional survey may or may not be in response to a problem or risk, and may be just as preventative as it is remedial.

Customer focus groups can be an effective means of gaining in-depth insights from customers, whether the customers are of similar or mixed characteristics, and they can be an effective way to road-test upcoming key initiatives, new offerings, or change in a company’s process. Customer focus groups can be difficult or time consuming to coordinate, as it usually takes some effort to persuade enough customers to participate. They also require a certain skill to effectively facilitate.

Customer interviews are excellent, but underused, vehicles for gaining some of the additional insights or addressing some of the nuances mentioned above about surveys and focus groups. The key drawbacks about interviews is that they take a certain amount of courage to face a customer one-on-one, and they take a lot of effort to cover enough customers to obtain any macro or market-wide insights. They are, however, excellent for probing deeply into the views and needs of specific customers.

For example, Wachovia is said to use a third-party organization to conduct customer interviews after various touch point experiences, with at least 300,000 interviews being conducted in a year’s time. But you don’t need to be big, or use external resources, to benefit from these steps. Stoner Inc., a small (about 50 employees) specialty manufacturer of cleaning, lubrication, and coating products, is a great example. Stoner supplements its formal customer survey process with a structured approach to contacting current, prospective, and former customers each week to hold more personal and productive dialogues with them. More than 1,000 customer contacts are made each week by the Stoner team.1

On-site assessments are a tool that many organizations don’t know or think about and consequently don’t use as much as they could or should. In essence, an on-site assessment is a type of audit that targets specific touch points of the customer–supplier relationship. It typically uses brief, structured questionnaires and/or interviews conducted by the supplier company’s personnel. Each questionnaire or interview is tailored to the specific processes, tasks, or activities involved at that particular touch point. Oftentimes the supplier company will dispatch a small team that coordinates the assessment participants and timing with the customer such that the team is in and out in a half-day’s time or less.

These assessments can produce the depth of insights comparable to those gleaned from interviews, but they have the added advantage of targeting different aspects of the overall customer–supplier relationship. So they provide the depth of an interview in a much more comprehensive picture. They do have drawbacks, however, being time consuming and more intrusive than surveys and requiring much more design time than focus groups or interviews.

Lastly, customer communities can be important sources of customer insights. They can reflect the sentiments—both favorable and critical—from a broad range and large number of customers but cannot be readily managed or controlled. Experience shows that it is best for a company to create and openly encourage such communities rather than wait for your customer base to do it for you in a less structured, non–company-sponsored venue. Usually, when customers form communities themselves, they originate, and possibly never get away from, negative insights. If the community is moderated or managed to some extent by the sponsoring company, it does provide the company with a forum to respond to and possibly correct any problems or perceptions.

One of the most well-known and effective customer communities may be the Harley Owners Group (H.O.G.) that Harley-Davidson spawned many years ago. H.O.G. has become an institution that over the years has drawn customers from all walks of life—from boardwalks to boardrooms. H.O.G. members come together to share, promote, and support their Harley experience though biker rallies, H.O.G. clubs, clothing, accessories, and the like, all of which have shaped a group of brand advocates that is clearly unique and pervasive.

The above discussion about VOC tools is meant to be illustrative, not comprehensive. Clearly, there are others we haven’t mentioned. There are also ways of combining the features and benefits of one tool with another to create hybrids, and there are other pros and cons of these specific tools. In general, these and other VOC techniques can be very effective at enabling, soliciting, encouraging, and gathering customer input. Three key points must be kept in mind for any company at Level I.

The first point above is self-explanatory. Different approaches work better or worse for different segments and different customers at different times and under different circumstances. Customer focus never has been, and never will be, a one-size-fits-all solution.

The second point was already illustrated in Chapter 2, when we talked about using metrics that matter the most (i.e., metrics that matter to the customer). Despite how obvious it seems to engage the customer beforehand, many companies don’t. Most just don’t think about doing it, some fear doing it, and a significant number don’t know how to do it.

The third point warrants further attention. Whether you engage them beforehand or not, customers are generally going to be more than willing to respond to their supplier’s survey—especially if it’s the supplier’s first survey attempt. Most customers view surveys as meaningful tools as long as they believe the supplier is actually listening to and doing something with the feedback. It’s a shame to see how many suppliers conduct surveys and then do a poor job of planning and managing post-survey follow-up and communications. Worse is the number of companies that conduct a survey, do little or no meaningful follow-up, and then expect customers to react well the next time the supplier sends a subsequent survey.

A survey is like other customer–supplier transactions in many respects—one being that it requires follow-up and management of expectations. Companies must have a plan for managing the results. That plan should answer each of the questions in the list below (and there may be others your company could add). Each answer should be followed by the most important management question of all: Who will do what by when and with whom?

• How are you going to analyze the data or responses?
• How are you going to prioritize the identified issues?
• What are the potential follow-up actions, and what specifically does that follow-up look like?
• How will you ensure that a follow-up action does, in fact, happen?
• How will you manage any unique customer issues that need to be addressed?
• How will you identify and handle any programmatic or system-wide issues revealed?
• How will you circle back to all participating and nonparticipating customers?
• How will you improve future survey efforts as a result of what you learned?

Many of these same follow-up steps apply to any number of VOC activities—not just surveys. Anything you do to solicit customer input must have a corresponding plan for using or responding to that input. Customers will usually give you credit just for taking a step to understand their perceptions, measure their satisfaction, or otherwise solicit their input. But they want to know that your interest was sincere, that their input was reviewed, and that something will happen as a result of it. Until you’ve proved that to them, it’s best that you don’t even think about surveying them again.

Advantages and Limitations of VOC

To summarize, voice of the customer techniques are generally quite effective for a company relatively new to Level I, or for a company struggling with defining its Level I approach. There are some clear and consistent benefits of VOC efforts, including the following.

Two of those benefits are particularly compelling. One is the credit a typical customer gives you for fixing a problem. According to J. D. Powers, “data shows that customer encounters in which a problem is resolved quickly and efficiently receive higher satisfaction scores than situations in which there was no problem at all.”2 When there are issues, they tend to appreciate and value the interest, humbleness, and responsiveness of their suppliers—within reason. In sum, Level I efforts are particularly effective for recovery situations. The second key benefit is the ability to measure progress. Being able to quantify, track, monitor, evaluate, improve, and reward progress is critical to the execution of any business initiative. Similarly, it becomes increasingly vital to a company’s customer focus efforts, as we’ll be describing in more detail when we discuss Level III.

There are also several important limitations of VOC activities to consider. Some of these we’ve already mentioned, but we present them below in one list.

• Too many VOC efforts are based solely on the supplier’s view of what’s important.
• A significant number of the related tools are poorly designed.
• Communications before, during, and after the VOC process or activity must be effective.
• Many VOC activities are viewed as being “owned” by the customer service, customer care, or customer support teams.
• Most efforts engage a slice of the customer base and experience that’s too narrow.
• A number of VOC actions are limited to the point of sale or closely related functions.

These last two points are particularly noteworthy. By their very nature, voice-of-the-customer tools ask customers about their experiences with you—their current supplier. In many cases, however, a customer’s expectations of a supplier may actually have been shaped by the customer’s experience with a supplier in another, different industry. Typical VOC tools and techniques cannot effectively get to the levels and types of discussions that will reveal those “perceptions from the periphery.”

In addition to this nuance, the customer organization is a multifaceted, multilayered entity. The “customer experience” for such an organization goes far beyond the sales transaction and the buyer-and-seller players involved in that transaction. There are numerous other people in the customer organization who interact with the supplier’s product, service, people, systems, and processes. These include technical advisors and influencers who collaborate with the procurement staff. There are operations people and end users as well as service and maintenance personnel who might have to use or support use of the supplier’s product or service. There are executive sponsors and other management players who must informally endorse or formally approve the purchase decision. And there are accounting and claims personnel, shipping and receiving employees, receptionists and admin support staff, among others—all of whom have some type of “experience” with the supplier.

Similarly, there are myriad other people in the supplier organization who interact with the customer’s people, systems, and processes—even with the customer’s products in some cases.

Every player in the customer organization is an important touch point or part of the entire customer–supplier relationship. Every one of them has their own view of what it means to be “easy to do business with.” Every one of them has their own respective expectations, pain points, and definitions of value. Any one of them can influence their company’s decision to continue doing business with (or do more business or less business with) a respective supplier. Any one of them might have a voice someone in the customer organization is going to listen to and be influenced by. Unfortunately, most supplier VOC activities only focus on one or two key players in the customer organization. They only hear one or two of the voices, and miss the others—the voices of others who might be talking about them.

So you, as the supplier company, need some way to hear as many of those voices as possible. You need connections that go beyond the initial buy decision or sale transaction. The more connections the supplier has in the customer organization, and the deeper into the customer organization those connections go, the more a supplier can learn about the customers—what they need, and exactly how they need it to be provided. Thus, the harder it will be for a competitor to pry that customer away. It’s a lot harder to break the grip of multiple relationships than it is to break the grip of one.

There are a few other limitations of Level I efforts or activities that suppliers must understand. (See Figure 4.2, which illustrates the points A, B, C, and D in the following discussion.)

Figure 4.2 Assessing VOC Limitations

Level II of the CFMM is the “teaming level,” which addresses the above limitations and moves the customer focus journey to the next phase of effectiveness and profitability. The teaming we’ll describe is not the type of teamwork most people think of when they first hear the term. At this level, we’ll describe unique and very effective ways of working across the customer–supplier boundary with the following purpose or objectives:

• Engaging customers in a way that uncovers their unstated needs—needs that can put the supplier company at a unique competitive advantage—and ways to stay abreast of those real-time needs as they evolve.
• Developing a deeper and more comprehensive view of what value means to the broader customer organization and using that understanding to provide increasingly more value to them, gaining more of their business and creating more barriers to entry for your competitors.
• Identify ways of equipping and engaging a broader range of supplier personnel in ways that create a greater number of—and longer-term—mutually beneficial customer–supplier relationships. Level II multiplies the number of people who are actively thinking about and looking for ways to further differentiate your organization.

In Chapter 5 we present Level II of the customer focus journey.

1 Kristen Johnson, “Stoner: Built on a Strong Foundation,” Quality Progress (August 2004): 40.

2 Chris Denove and James D. Power IV, Satisfaction: How Every Great Company Listens to the Voice of the Customer (New York: Penguin, 2006), 182.