Peppers and Rogers Whitepaper

8/3/2019 Peppers and Rogers Whitepaper

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white paper | 2010

Capitalizing on Customer Feedback

Creating Measurable Value rom

Voice-o-the-Customer Programs



©2010 Peppers & Rogers Group. All rights protected and reserved.

Capitalizing on Customer FeedbackCreating Measurable Value from Voice-of-the-Customer Programs

Executive Overview

Everybody’s doing it—or, so they think. Gathering customer feedback has become increasingly

commonplace, with over three-quarters of companies now having a customer listening func-

tion.1 Yet, less than one in ten describes it as innovative or cutting edge, 2 for good reason.

• Lack of proactivity. Too often the gathering of customer feedback by the company is

an attempt to react to a problem that has already occurred (e.g., a decrease in customer

retention) rather than an act to prevent its occurrence.

• Lack of practicality. Too often the customer feedback doesn’t drive noticeable changes

to customers’ experiences with the company, as a consequence of descriptive analyses

that are deficient in delivering proscriptive insight.

• Lack of performance. Too often companies lack the discipline and the capabilities to

demonstrate the linkage between the savvy use of customer feedback and an improve-

ment of business results.

Capitalizing on customer feedback requires more than the occasional sending of surveys in

response to ad hoc business needs. It requires a strategic and ongoing dedication to hearing,

listening, understanding and acting upon the voice of the customer (VOC) through a formal

program built upon:

• Active listening—an “always on” mechanism providing all customers the opportunity

to share their compliments, complaints and comments about their experiences with a

company’s products and services

• Pulse monitoring—a reoccurring and systematic means of tracking changes in business

outcomes, their leading indicators, and the influential drivers by periodically surveying

a statistically representative sample of customers

Listening to customers has always been essential. It hasn’t, however, always been effective.

Creating and implementing a thriving VOC program begins with an expanded vision for the

role and importance of customer feedback, continues with an awareness of the challenges

and best practices for succeeding, and concludes with demonstrated accountability that links

the investments to the observed returns. This white paper addresses these three themes, and

provides the reader with examples of the principles in practice.

ContentsExecutive Overview __________

Thinking Anew About

Customer Feedback __________

Realizing a Return ____________

Achieving Accountability ____1

Conclusion __________________1

Man with a Folding Chair3

A sales manager at Siemens AG often carried a folding

chair into internal meetings. At first, the other sales rep-

resentatives in the meeting were puzzled. “Who are you

expecting to join us?” some asked. “Shouldn’t we just get

some more chairs brought in here?” others suggested.

“No,” the manager replied, “this is my customer’s chair.

I brought it into the meeting so my customer can sit right

here and listen to our discussion.” The simple presence of

the folding chair always changed the character of the con-

versation. It reminded everyone of the importance of

customers and caused all to ask, “What would our

customer say?” and “How would our customer react?”

The sales manager eventually became known as “Der

Mann mit dem Klappstuhl” or “the man with the folding

chair.” The lesson he taught was powerful: always remem-

ber to consider the customer’s perspective in every deci-

sion. Hearing, listening, respecting, and responding to the

voice of the customer makes this principle come alive.




Key ConceptsWhat is a VOC Program?

A voice of the customer (VOC) program is a channel for acquiring business insight about custom-

ers and what is important to them. The central facets, from both a company’s and a customer’s

perspective, include:

Company Perspective

• Importance, as an ongoing strategic initiative central to the success o the company

• Centralization, with integrated data rom multiple source o customer eedback

• Accessibility, with the timely dissemination o customer eedback (at individual and aggre-

gate levels) throughout the organization to empower change

• Responsibility, assigning the task o responding to a customer to an appropriate individual in

the organization, and the monitoring o the timeliness o completing that duty through case

management

• Actionability, with distilled insights rom the eedback having practical and potent applicabil-

ity in real-time

• Accountability, achieved by quantiying the linkage between actions to improve the customer

experience and business outcomes

• Comprehensiveness, encompassing both qualitative and quantitative customer eedback

Customer Perspective

• Availability, giving customers the opportunity to share feedback whenever they choose do so

• Anonymity, with the option o allowing customers to provide eedback without disclosing

their identity to ensure orthright comments; and simultaneously allowing the company to

individually respond and carry on a dialog

• Responsiveness, providing a reply to a customer’s eedback in a timely manner

What Is Engagement?4

“We see engagement—for both customers as well as employees—as positive, proactive

involvement ,” explains Don Peppers, founding partner of Peppers & Rogers Group. When

an individual is engaged with a company, she or he is involved. Interactions occur, informa-

tion is exchanged, operational friction is reduced, and the cost of switching increases over

time. According to Allegiance, strong engagement also involves a strong emotional bond

to a company.

Involvement is a necessary but not a sufficient condition for engagement to be present,

however. For involvement to rise to a state of engagement it must also be proactive —name-

ly, the individual must be self-motivated and must be the one initiating the participation,

setting in motion a sequence of events. A proactively involved customer may recommend

the company’s products to friends or colleagues and take a personal interest in the com-pany’s success or failure. A proactively involved employee won’t wait for management to

explain that a problem needs to be fixed—she or he will see the need and solve it now.

Finally, the proactive involvement must be of a positive nature—constructive, beneficial,

and helpful. The intent of the proactive involvement must be to foster the ongoing develop-

ment of the relationship.

“When all three pieces are present—positive, proactive involvement—customers and em-

ployees are more than satisfied and more than loyal: they are engaged,” notes Peppers.

We see engagement

as positive, proactive

involvement. When it

happens – customers

and employees are m

than satisfied and loy

they are engaged.



©2010 Peppers & Rogers Group. All rights protected and reserved. 4

Thinking Anew About Customer Feedback“You can’t be in all places at all times—you need eyes and ears and feet on the street for you. A

voice of the customer program clones you, and places you in the midst of the marketplace to get

an accurate understanding in real-time.”

—Chris Cottle, Vice President of Marketing at Allegiance

In the end, all revenue comes from customers. Building productive and profitable relationships with

customers is the key to sustainable, long-term business success—but, relationships cannot be built

in a vacuum and cannot be developed in the absence of shared knowledge. This is the fundamental

strategic reason why a company must be in tune with the voice of its customers, hearing and acting

upon their expressed perspectives, improving their experiences and thereby enhancing the strength

of their relationships with the company. The alternative to knowing about customers is guessing

about customers—and, that has proven to be neither wise nor a recipe for winning.

This strategy manifests itself in numerous ways, and delivers benefits that can extend through-

out nearly all parts of the enterprise. “Historically, companies have viewed the application of in-

sights from a VOC program too narrowly,” explains Kyle LaMalfa, Best Practices Manager & Loy-

alty Expert at Allegiance. “Today, insights based upon customer feedback have the potential toimpact and to improve the performance of many areas in a company.” It is important, because a

company dedicated to competing on the basis of customer relationships knows that all parts of

the enterprise directly or indirectly influence those assets. For a customer centric company, every

function is ultimately “customer facing.”

Consider the breadth of applicability of VOC programs throughout an enterprise.

• C-Suite.For senior executes, a VOC program becomes an indispensable tool for crafting the

company’s strategic vision. Deeply understanding customers’ needs allows a company to

identify a path to position the company to fulfill those needs in the future, by more clearly

seeing both the “to be” as well as the “as is” states.

• Sales.Understanding the drivers and the leading indicators of changes in customers’ per-

spectives toward the company allow sales management to proactively detect (and enable

corrective action against) trends in business outcomes. Unlike sales tracking systems, the

thrust of a VOC program allows sales professionals to see beyond “what happened” to “what

might happen”—and, to understand the reasons why.

• Customer Service. Today, for many businesses, the primary interaction point between the

company and the customer occurs when service is needed: a question to be answered, a

problem to be solved, or a confusion to be clarified. Getting it right is a golden opportunity

to strength the relationship, and a VOC program allows a company to understand “what

works” in successful company-customer interactions and to monitor customers’ perceived

satisfaction with those interactions.

• Marketing.For marketing to work well, it must be relevant to its audience. A VOC program

facilitates the development of effective positioning and messaging by incorporating the vo-

cabulary and the viewpoints of customers, the identification of purchase decision factors,

and the structure of the most beneficial segmentation schemes based upon customers’ ex-

pressed needs.

• Product Development. In a rapidly evolving marketplace, companies must continually im-

prove existing products as well as identify future products. A VOC program contributes to the

achievement of both goals—and, in the process, allows a company to broaden the depth and

breadth of their relationship with the customer, resulting in improvements in share-of-wallet.

In the end, all revenuecomes from customers.

Building productive and

profitable relationships

with them is the key to

sustainable growth.




• Finance.The foundation of finance is money—more specifically, customers’ money spent

with the company. A VOC program can help align finance professionals with the realization

that all money comes from two sources: what customers spend with the company today,

and what they are likely to spend in the future.5 Both sources of customer equity are highly

influenced by customers’ perception of and experience with the company, and knowing and

monitoring the quality of those perceptions and experiences is as important to the health of

the business as knowing and monitoring cash flow.

• Human Resources. A VOC program provides insights into those specific employee traits

that contribute to the development or to the destruction of customer relationships, knowl-

edge of which may be utilized in hiring decisions, in performance evaluations, and in training

programs. For example, with a VOC program, it is possible to understand that the intention

of “showing empathy and concern” most effectively manifests itself through specific behav-

ioral cues such as (a) reflecting upon and reiterating what the customer said or (b) validating

the customer’s emotions.

Organizations are, by nature and by design, highly differentiated—consisting of a collection of

distinct but integrated functions. The efficient performance that results may, however, incur a

steep price: an increase in the psychological distance separating employees from the customers

whom they are privileged to serve. A VOC program can help to minimize this problem, by continu-

ally infusing the customer perspective into the collective consciousness of the company, across

all functions.

Doing so is now more important than ever before, because the old business model of “make &

sell” is being supplanted by “sense & respond,” in which companies must now detect and react

to unpredictable and unstoppable change by becoming highly adaptive.6 A VOC program can play

a pivotal role in this process, and deliver other key business benefits—but, only if it embraces a

proven set of practical principles.

Figure 1: Organizational Areas that Use Customer Feedback

The use o customer eedback may extend throughout numerous unctional areas within an enterprise—with

substantial opportunity remaining to urther its penetration in many companies.

Source: Aberdeen Group7

38%

57%

19%

37%

31%

50%

16%

Sales

Customer Service

Customer Insights Group

Product Development/R&D

Market Research

Product Marketing

Public Relations/ Corporate Communications

A VOC program con-

tinually infuses the

customer perspective

into the collectiveconsciousness of the

company – across

all functions.

0% 10% 20% 30% 40% 50% 60%




Realizing a Return“Discovery is the journey; insight is the destination. You must become your own seer.”

—Gary Hamel, world-renowned business thought leader

Like any business initiative, an investment in a VOC program isn’t guaranteed to realize a re-

turn or the company. However, when the design and delivery o the VOC program is tightlyaligned with a small set o proven principles, success is nearly assured.

PRINCIPLE 1: Attain clarity on the business problems to be solved

A VOC program may deliver many unexpected and serendipitous beneits along the way, but

it begins with a ocus upon an organization’s most pressing points-o-pain. Stray surveys are

not a substitute or sound strategy, and in the absence o explicit goals customer eedback

may lack clarity and coherence.

To be maximally eective, the deinition o those pain points begins with a business end:

enhancing customers’ share-o-wallet, retention, or lietime value, or example. For each such

objective, ask two questions: (1) what are the leading indicators (e.g., customer engagement)

that portend a change in that outcome; and (2) what are the drivers (e.g., customers eelingconident and inormed) which, i positively altered, will be most inluential in aecting those

leading indicators? These questions will lead to testable hypotheses about the causal chain

connecting tactics to results.

Additionally, this clarity will guide decisions about what data to collect, rom whom, and at

what requency; plus, it will suggest how the data are to be analyzed and reported.

PRINCIPLE 2: Analyze customer feedback to separate signal from noise (and, to

discover diamonds in the rough)

Customer eedback may be the consequence o a company initiated action (e.g., sending a pe-

riodic survey) or o customer’s own initiative (e.g., completing a “contact us” website orm).

In both cases, the eedback may be structured (e.g., quantitative responses on a rating scale),

unstructured (e.g., qualitative input as comments), or a combination o both (see Figure 2).

Analyzing these data to produce business insight has historically been a challenge or most

organizations, due to the lack o a centralized and integrated database combined with the

absence o powerul (but yet straightorward) statistical tools. Business proessionals want

answers, not more programs to be learned and problems to be solved.

Today’s VOC platorms allow companies to overcome these obstacles in several ways.

• Standard reporting and custom dashboards provide a consistent view o the customer

eedback inormation over time, organized so as to be directly applicable to the com-

pany’s business objectives or the program.

•Predictive analytics allow companies to understand cause-and-eect (e.g., the inluenceo an employee training program upon customer delight) and to orecast changes in a

business outcome (e.g., purchase intent).

• Segmentation allows the company to drill-down and to identiy a subset o customers o

interest (e.g., those experiencing the greatest change in willingness to recommend the

company to riends and colleagues).

• Classification and regression modeling produces a tree-like graph subdividing the cus-

tomer population into the most opportunistic subsets (e.g., to grow revenue).

When the design and

delivery of a VOC progra

is tightly aligned with

a small set of proven

principles, success is

nearly assured.




• Preset alerts notiy the company when criterion thresholds (e.g., quantity o complains

per day) have been reached, permitting a rapid response to a developing situation.

• The use o sophisticated text mining allows the automated distillation o ree-orm com-

mentary into sentiments (e.g., percent positive, neutral, or negative comments) and into

clustered themes (e.g., product usability).

For analysis to be maximally eective, it must be guided by principle 1: attaining clarity on thebusiness problems to be solved. Undirected data mining is worthwhile and can sometimes

yields serendipitous surprises, but directed and ocused analysis in tight alignment with the

original business problem should be the top priority. Seek irst to solve the company’s points-

o-pain, and then explore the data with an open mind to discover unanticipated associations.

Through all these mechanisms, customer eedback is transormed rom data into inorma-

tion and knowledge, and rom hindsight into insight and oresight.

Source: Allegiance and Peppers & Rogers Group

Figure 2: The Spectrum of Customer Feedback

Gradations o customer eedback exist along unstructured/structured, qualitative/quantitative and customer/

company dimensions. A good VOC program will encompass the entire spectrum o options.

HypothosisExploration

LongitudinalViewpoint

CompanyInitiated

Consistency

Unstructured Qualitative

Structured Quantitative

Open-EndDiscovery

EpisodicViewpoint

CustomerInitiated

Flexibility

Listening to customers has

always been essential. Doing

something with the feedback

is becoming critical.




PRINCIPLE 3: Act on customer feedback

Unless the company alters some aspect o its behavior toward its customers, it will ail

to realize a return on its investment in a VOC program. Those actions can occur at the

individual customer level (case management), at an aggregate customer level (change

management), and an organizational level (knowledge management).

• Individual Customer Level. When individual customers provide eedback—

whether a compliment, complaint or comment—they are providing inormation

that is o value to the company and, as a result, the company should reciprocate

and response with value: at a minimum, a prompt acknowledgement o the receipt

o the eedback and a statement o appreciation. The timeliness o the reaction is

key: as the response time increases rom minutes to days, the percent o custom-

ers who will not buy again more than doubles.8 In the case o complaints or prob-

lems, a company’s ability to resolve the issue in a timely and thoughtul ashion

engenders more loyalty than existed beore the negative incident.9

Making it happen requires an automated case management process in which

the subject o the customer’s eedback is automatically recognized, the communi-

cation is routed to the appropriate person within the company according to a set

o business rules, and the person’s responsibility to reply is tracked (and esca-

lated and reported to management i delayed) to ensure that the loop is actually

closed with the customer. Treating a customer in this respectul way serves to

repair a damaged relationship or to strengthen a developing one.

• Aggregate Customer Level. Though the application o principle 2, the analysis

o aggregate customer eedback may uncover opportunities or the company to

institutionalize improvements in how it delivers the customer experience through

a change management process. For example, it may be ound that customer en-

gagement is enhanced by interactions with employees in which they “go beyond

what is expected.” Acting on this customer eedback requires translating theabstract insight into tangible employee behaviors (e.g., oering an unexpected

product suggestion by asking, “Did you know you can also do...?”), training on

those behaviors, and incorporating them into reward and recognition systems.

These behaviors become new “clues” that customers detect, resulting in an en-

hanced customer experience.10

• Organizational Level. Acting on customer eedback also has a knowledge man-

agement component. For example, in the case o a bank with many branches,

one o the locations may test and discover a particularly eective technique to

overcome a problem identiied through the VOC program. By capturing and dis-

seminating that knowledge throughout the enterprise, the business beneit ismultiplied.

In all these cases, acting on customer eedback implies the sharing o inormation within

the organization. For this reason, a good VOC platorm must support row level database

security to ensure that the company’s business policies concerning access to the cus-

tomer eedback are enorced.

When an individualprovides feedback – a

compliment, comment

or complaint – they are

providing information

that is of value.




PRINCIPLE 4: Embed customer feedback into the company culture

When the attitudes, behaviors, beliefs and values concerning the importance of customer feed-

back become a socially accepted standard inside the organization, then customer feedback has

been engrained in the company’s culture. Under these conditions, the customer perspective—

gained through a VOC program—is systemically persuasive throughout the enterprise and be-

comes a central facet of the company’s customer-centric purpose and vision.

Getting there starts with principle 3—acting on customer feedback. When employees through-

out the organization see that the voice of the customer is actually being heard, they begin to

internalize the criticality of customer feedback to the company’s success. Thus, the act of acting

of customer feedback itself serves to elevate the importance of the VOC program and, more gen-

erally, helps to sustain a customer focus over time.

An owner and leader for the VOC program, whether started within a department or across all

divisions, helps to ensure its continued visibility and viability. Managing the overall process, set-

ting priorities, coordinating multiple listening channels, and ensuring that results are achieved are

all vital.

Those results, when broadly communicated, accelerate the embedding of customer feedback

into the culture. Consider reporting upon the current state of customer engagement in company

town hall meetings and in employee communications, and use storytelling to illustrate how cus-tomer feedback is making a difference.

Finally, remember that what gets measured gets managed. Linking employee recognition and

reward to changes in customer feedback metrics aligns incentives with goals and provides mo-

mentum for the VOC program.

Source: Aberdeen Group7

Figure 3: Customer Feedback Strategies

The top two strategic customer eedback actions (planned or underway) to alleviate business pressures

(e.g., increasing customer loyalty) are depicted.

15%

19%

21%

23%

21%

19%

15%

14%

17%Tie employee compensation to performance ratingsfrom customer feedback

Establish voice of the customer weightings (i.e., priori-tize customer feedback by customer/segment value)

Develop “alert” to drive immediate action based oncustomer feedback

Integrate customer feedback into centralized datarepository

Link actions taken in response to cus tomer feedbackto increased revenues and other financial outcomes

Establish method for responding to customer feedback

Define best practices for utilizing and deriving action-able insights from customer feedback

Create a team or committee dedicated to customerfeedback management

Create a shared understanding of what customerfeedback metrics are important

What gets measured,

gets managed. This

principle is especially

relevant with VOC

programs.

0% 5% 10% 15% 20% 25%




Achieving Accountability“A ‘VOC’ program isn’t about ‘vapidity of confidence’—but, about demonstrated ‘value on capital.’”

— Gary Rhoads, Ph.D., Loyalty Expert and Co-Founder, Allegiance

Achieving accountability for an investment in a VOC program is widely recognized as being im-

portant by a majority (68 percent) of senior executives ; yet, less than half that number (29 percent)are actually linking feedback to ROI2. It is not an impossible task, but it does take discipline and

dedication, involving the steps of:

1. Identifying the business outcomes of interest

2. Documenting the existing baseline state of those business outcomes

3. Introducing an initiative to enhance customer engagement and assessing improve-

ments in the business outcomes over the baseline

1. Business outcomes. Begin at the end, and consider those identified business outcomes

that are of most importance to the company (see principle 1, page 6), such as customers’ share-

of-wallet or retention. Though independent academic and applied research, it is commonly

recognized that these outcomes are influenced by customer engagement. Share-of-wallet,

for example, is 23 percent higher for fully engaged as compared to average customers; 11 and

80 percent of executives believe their companies’ customer engagement practices impact

customer loyalty12—with research evidence supporting that conviction.13 The task, however,

is to show that these generally reported effects manifest themselves specifically within your

own company.

2. Baseline state. To achieve accountability, it is necessary to understand the existing base-

line association between customer engagement and the business outcomes identified in step

1, since every company already has in place some initiatives that drive customer engage-

ment (e.g., customer service and customer relationship building activities). A pulse survey

process, in which a representative sample of customers are contacted monthly is used to

gather information about their customer engagement level plus reported information on thebusiness outcomes (see months 1-3 in Figure 5). In the case of share-of-wallet, for example,

knowing the number of products owned and multiplying it by the average revenue per prod-

uct converts an abstract share-of-wallet concept into a tangible economic metric on the scale

understood by all business professionals—namely, dollars.

3. Introducing an initiative. Next, an initiative designed to enhance the drivers of customer

engagement is introduced. It could be an enhancement to the VOC program itself, such as

a closed-loop complaint management process (see month 4 in Figure 5); or it could be a

specific tactic identified through the VOC program that addresses a deficiency in customers’

experiences. The impact of such an initiative isn’t immediate—there will nearly always be a

time lag—but, if the initiative is successful, then the business outcomes will trend upward

following its introduction (see months 5-7 in Figure 5). The difference between the average

post-initiative and pre-initiative business outcomes, divided by the pro-rated expense of the

VOC program plus the cost of the initiative, yields an ROI.14

Note that a single improvement in customer engagement yields a positive impact in multiple

business outcomes (e.g., both share-of-wallet and customer retention in Figure 5). Thus, when

computing the ROI on a VOC program, the sum of all the changes in the business outcomes must

be considered—and, in the way, the full range of the impact is captured.

When computing the

ROI of a VOC program

the sum of all of the

changes in the busi-

ness outcomes must

be considered.




In addition to comparisons over time, the ROI of a VOC program may also be estimated in a simi-

lar way by comparing organizational units during the same period, which has the advantage of

controlling for exogenous marketplace factors (e.g., changes in macroeconomic conditions). For

example, a bank may contrast the business performance of those branches in which the initiative

has been introduced versus those where it is absent, observe differences in customer engage-

ment levels, and correlate those differences to branch profitability.

Alternatively, an independent estimate of the quality of the execution of the initiative for each

bank branch can be obtained to assess if improvements in the implementation of the initiative

are correlated with improvements in the outcomes. For example, in one research study using this

technique, bank branches that executed a customer relationship initiative well increased both

loyalty and satisfaction of their customers, while those branches in which the execution was poor

actually depressed both measures.15

The business justification for a VOC program may also be strengthened by considering:

• Curtailing cost. Some organizations have 100 or more surveying and feedback tools in

use,16 and replacing those with one VOC solution may reduce both the expense of the tools

as well as the expense of maintaining (and optionally integrating) diverse databases. Also,

improvements to the customer experience identified by feedback have allowed enterprises

to reduce expenditures on customer retention programs by 25 percent.17

• Improving resource allocation decisions. Should a bank invest in hiring more tellers or in

the training of its existing staff? A VOC program may show, for example, that the wait time

in line at a bank branch is one of the least important factors in enhancing customer engage-

ment, while the training of tellers in how to make an emotional connection with customers

is quite important. In this way, a VOC may guide the wisest allocation of scarce resources.

• Reducing risk. By catching a problem early through customer feedback and correcting it,

the company’s exposure to risk may be mitigated. For example, one lawsuit avoided by a


Figure 4: The Evolution of VOC Impact

VOC programs progress along a developmen-tal path, [1] beginning with the collection oa single metric (e.g., Net Promoter Score),ollowed by disillusionment and disappoint-ment because it provides little guidance or

improvement.

[2] The adoption o leading indicators o busi-ness outcomes denes the next step in the journey, ollowed by an unease about how toimpact those indicators.

[3] A ocus upon drivers o those leading indi-cators takes an organization to the nex t level,raising concerns about the tactics which mayhave the greatest infuence upon them.

[4] When an organization links drivers toleading indicators to business outcomes, itprogresses to the next phase, ollowed by arealization o the need to orecast changes inthose outcomes.

[5] Finally, with the use o predictive analytics,companies are able to deeply understand the

interdependencies and estimate uture ben-ets. Across all these phases, the businessimpact is enhanced as the sophistication othe VOC program moves rom an emphasis onhindsight to insight to oresight.

The business justifica-

tion for a VOC program

can include curtail-

ing costs, improving

resource allocations,

reducing risk and

enhancing marketing

effectiveness.

V O C I m p a c t

Hindsight Insight Foresight

1a. Collecta singlemetric

2a. Identifyleadingindicators

3a. Identifydrivers

4a. Measurebusinessoutcomes

5a. Predictbusinessoutcomes

1b. But sowhat?

2b. But how toinfluence them?

3b. But how toimpact them?

4b. But how toforcast them?




hospital due to a product or process defect may be worth a significant sum; or, reducing the

likelihood of a new product failing in the marketplace because it doesn’t satisfactorily meet

customer requirements may be of substantial value.

• Enhancing marketing effectiveness. When customer feedback is integrated into a CRM

system, it may improve campaign productivity. For example, when leveraging customer sen-

timent gathered through the VOC program, the response rate to a referral promotion may be

improved, or the effectiveness of a customer retention program for “at risk” individuals.

“When in doubt, send a scout,” advises Rhoads. For companies contemplating a VOC program, using

a pilot program incorporating surveys to customers allows a solid economic estimate of the value

of improving customer engagement. If the number of engaged customers grows by as little as one

percent, the value of improvements in share-of-wallet and customer retention may be significant. 13

Figure 5: Demonstrating

ROI for a VOC Program

The comparison o the value o

business outcomes (e.g., customer

share-o-wallet and retention) be-

ore and ater the introduction o a

VOC initiative allows a company to

estimate an ROI (see text or addi-

tional explanation).

1 2 3 4 5 6 7Month

Conclusion“Feedback is the breakfast of champions.”—Ken Blanchard, author and management expert

A VOC program is so much more than the occasional sending of a survey. It is a recognition of theimportance of customers to a company’s success, and a commitment to include their perspectives in

decisions being made throughout the enterprise. It begins with clarity on the business problems to be

solved, continues with the practical and insightful analysis of customer feedback, and concludes with

the deployment of initiatives guided by that analysis to demonstrably impact those business prob-

lems. Through iterations of these steps, customer feedback is embedded into the company culture.

“Acquiring customer feedback is an essential element of a learning relationship,”18 explains

Peppers. “It allows a company to learn more about its own strengths and weaknesses, and to use

those insights to improve the efficiency and effectiveness of its strategy and tactics.” n


Introductionof CompliantManagement

Process

B u s i n e s s O u t c o m e s ( $ M M )

C u s t o m e r E n g a g e m e n t I n d e x

$4

$3

$2

$1

$0

100

80

60

40

20

0

Customer Engagement Index

Share of Wallet

Retention




13

CASE STUDIES

Texans Credit Union:

Continuously Improving through Customer Feedback

With assets o $1.7 billion, Texans Credit Union operates 28 branches and serves over 140,000

member with the aim o being their inancial institution o choice or banking, wealth manage-

ment, and insurance products and services. Achieving that vision requires a ocus upon members

to engage them with the credit union, and that in turn requires the collection, analysis and use o

customer eedback.

“We recognize the importance o engaged and satisied members,” notes Melissa Wozniak,

Market Research Manager at Texans Credit Union. For example, shiting ive percent o customers

rom “modestly committed” to “highly committed” can drive an additional $1 billion in deposits

or a bank with one million customers, according to J.D. Power and Associates.17

“We have a long history o using customer surveys, but needed to overcome two critical prob-lems,” explains Wozniak. The irst was that survey data were scattered around the organization

in distinct databases and collected with dierent tools: employee

surveys in one department, episodic customer transactional surveys

(e.g., new account openings) in a second, and longitudinal customer

satisaction surveys in yet another. “This resulted in silos o inorma-

tion, making cross-analyses very diicult and hindering our ability to

draw conclusions. Dierent wording o survey questions combined

with the use o varying rating scales urther complicated our ability to

hear the voice o the member and take action upon those insights.”

Second, Texans Credit Union struggled with gaining easy access to its customer eedback data.

The use o dierent data collection tools inside the organization and the use o outsourced ven-

dors that provided only summary indings made the problem worse.

The credit union considered creating its own tool to address these needs, but because the

time and costs were too great, decided that it was better to buy than to build and acquired the

Allegiance eedback platorm. It not only overcame both obstacles, but caused the credit union

to ocus on what matters most. “You can’t approach all your laws at once, or you’ll only create

more laws,” Wozniak says. Allegiance “points us in the right direction—that solving this problem

will have the most impact and so this is where you should ocus and have the biggest impact on

the bottom line.”19

It also allows the discovery o “low hanging ruit”—problems that are easily solved. “From

our members, we received unstructured and unsolicited eedback about our monthly statements

asking that additional inormation be included. The request made perect sense,” notes Wozniak.

The recommendation was easy to implement, required little cost, and yet demonstrated the credit

union’s commitment to its values, which include both member satisaction as well as continuous

improvement.

The eedback platorm is used by the credit union to log and track not only inbound communica-

tions rom members, but also outbound responses rom the credit union—even telephone calls

which are captured by adding a note to the case describing the conversation. I a response or a

“This is something

that we always

wanted to do, but

previously we just

didn’t have the

tools to do it.”

continued




14

resolution o a customer complaint doesn’t occur within a speciic period, the case is automati-

cally escalated to a manager or attention.The credit union also sends a monthly survey to a representative sample o one-twelth o its

members, so that any single member only receives the survey annually in order to avoid respon-

dent atigue. This survey allows the credit union know the pulse o member engagement and busi-

ness outcomes (e.g., willingness to recommend) on an overall basis and by branch location. “We

ound, or example, one branch that excelled in customer engagement, and upon closer inspection

o the qualitative comments, learned what they did dierently than other branches: they used the

names o members when servicing them. We now coach to that behavior in our employee train-

ing,” says Wozniak.

These data are soon to be incorporated into the scorecard used by sales, to reinorce the act

that the quality o service is as important as the quantity o production; and it will impact incentive

compensation. “This is something that we always wanted to do,” says Wozniak, “but previously

we just didn’t have the tools to do it.”

The commitment to hearing and acting upon the voice o its members is evident among senior

leadership. The CEO personally reviews all member eedback—and everyone in the organization

knows it. Furthermore, the senior executives are evaluated in part upon the state o member en-

gagement, so accountability or and visibility o the goal are clear.

Nicor National

Using Feedback to Unify Culture and Delight Customers

Nicor National provides energy-related products and services to over 500,000 customers in 15

states, including warranties on home appliances, energy eiciency programs, and heating and

air conditioning sales and service. Every year the company has over one million interactions with

its customers. Through initiatives that ocus on hearing and acting upon the voice o customers

(VOC)—and the voice o employees (VOE) who serve those customers—the company is building

positive relationships and urthering its goal o becoming the leading provider o energy manage-

ment and warranty solutions across the nation.

“We listen, we empathize, we solve. We know that just one call or home visit creates a lasting

impression o us and our partners,” explains Barbara Porter, Vice President o Business Develop-

ment and Customer Service at Nicor National. For this reason, the company has put in place VOE

and VOC solutions rom Allegiance to capture and capitalize upon insights rom both unstructured

comments and structured surveys.

“As we continue to grow, our biggest challenge is maintaining an unfiltered relationship and com-

munication with front-line employees,” notes Porter. Using the VOE platform, the company is able to

capture the feedback of those employees in its contact center who directly interact with customers,

continued

CASE STUDIES




15

reply to that feedback, and track the performance of its response. “We have been able to improve

employee retention in our contact center and thereby reduce new personnel training costs that are

hundreds of thousand of dollars annually,” says Porter. “And, a number of great product and service

suggestions have come forward that had not been considered previously.”

The VOE platorm is also being used to provide insight about the employees’ perceptions o

how well their managers and leaders are living the company’s values. Every time employees

starts the VOE system on their desktop, they are given the opportunity to provide eedback on

how management is impacting the culture o the company. The importance placed upon creat-

ing a uniied culture isn’t accidental. In act, building a culture o employee engagement is one

o the critical goals or the company, and one o its primary justiications or the investment in a

eedback platorm. The other is a clear recognition o the importance o retaining customers.

“We know that a one percent shit in customer retention

impacts our bottom-line by hundreds o thousands o dollars

annually,” explains Bob Bean, Vice President o Marketing at

Nicor National. To better understand its customers’ perspec-

tives, the company has enabled customers to provide unstruc-

tured and unsolicited eedback through a “contact us” link on

its website. This eedback is routed to the appropriate group

within the company based on the customer’s concern. Ad-

ditionally, the company deploys outbound customer satisaction surveys ollowing a contact

center interaction, with open-end comments captured and transormed into customer voice in-

cidents so that they can be addressed and tracked. Almost 30 percent o these outbound surveys

have a ollow-up action associated with them, so managing them properly is a key component o

the customer experience. “We have learned, or example, that the customer’s perception o the

value o our energy and warranty products is changing,” notes Bean. “Through our customereedback processes, we’ve been able to keep a inger on the pulse o the evolving needs o our

customers.” Customer eedback has also helped the company redirect its marketing campaign

activity or improved eectiveness, identiy new sales channels, and support strategy discus-

sions around pricing.

Nicor National provides its energy eiciency and warranty services to utilities and markets

them under their partner’s brand. “Those utilities want to know the degree to which we are

providing exceptional customer service,” notes Porter. “And our customer eedback platorm

allows us to answer that question, thereby providing us an important point o competitive di-

erentiation.”

As the marketplace continues to change, Nicor National is using its VOE and VOC platorm to

ensure that the mindset and motivations o employees are aligned with customer needs. It’s all

about “Positivity at Work.”

“Through our customerfeedback processes,

we’ve been able to keep

a finger on the pulse of

the evolving needs of

our customers.”

CASE STUDIES




Q&A with Don Peppers

Customer-Focused Business Strategy Leader

Don Peppers, Founding Partner, Peppers & Rogers Group, shares his

insights on VOC programs.

Q: Are VOC programs more important today than ever beore?

A: Yes. Simply stated, the era o the silent customer is gone or good. Customers will make their voices

known one way or another. With a VOC program, a company can channel some o that energy and maxi-

mize its value to the irm.

In a time when the business environment is extremely volatile, it’s important to understand what your

customers like, what they don’t, and why. A company cannot settle for “reading the tealeaves” of transac-

tional databases anymore in an attempt to detect customers’ needs—it’s critical to hear directly from custom-

ers. Companies should hear what customers want to say, in all its unstructured richness. Filtering feedback

through the lens of what companies want to ask has it place, too; but never forget that qualitative input can be

especially valuable. The objective is to get the most honest and straightforward feedback as possible, from

as many customers as possible, as quickly and continuously as possible—all with the ultimate objective of

enhancing customers’ experiences with your company in order to build stronger relationships.

Q: What are the most common misconceptions about VOC programs?

A: Too many companies think that a VOC program is something “nice to have,” i the money were avail-

able; rather than something needed to drive business results. A VOC program may be misperceived as

a “sot asset”—but, it’s actually “hard” and real. The aster you can get, understand and use customer

eedback, the aster you can respond to it. The aster the response, the more agile the organization. And,

the more agility, the greater the likelihood o continued success.

A second misconception is that getting worthwhile eedback or making business decisions requires no

sophistication. In actuality, it takes not only a company’s commitment to hearing the voice o the customer,but also a company’s investment in capabilities to collect, analyze, report and act upon that eedback. It

also takes the application o science—involving the design o the program, the eedback collection meth-

odology, and the analysis approaches.

Q: Is there a secret o success or realizing a return on a VOC program?

A: Think o a VOC program as an integral part o the marketing planning process. To maximize the value o

a VOC program, use the customer eedback to sharpen and ocus product development and launch plans,

or example, and to supplement and guide other marketing research and database analysis activities (e.g.,

segmentation studies). In this way, the impact o the VOC program is multiplied.

Q: What is your advice on how to best demonstrate the value o a VOC program?

A: The most persuasive arguments are almost always anecdotal. First, look for opportunities to capture sto-

ries about how a customer suggestion beneficially influenced a business decision, or about how a customer

complaint was resolved with great success. Second, share these stories with management—and, with em-

ployees throughout the company to vitalize and to sustain the commitment to the VOC program.

You need to maintain the numbers, too; keeping counts o the number o customer eedback sugges-

tions received, or example. And, you need to be able to “connect-the-dots,” showing that customer eed-

back has guided the selection and the design o initiatives to enhance customer engagement, and that

improved levels o customer engagement do, in act, deliver enhanced business results.




Allegiance, Inc.

Allegiance, Inc. oers next generation eedback and voice o customer (VOC) management

sotware to help organizations grow customer and employee loyalty and engagement. The

Allegiance Engage sotware platorm acilitates survey creation and gathers responses and

unsolicited comments in real-time into a centralized online system, saving time, eort and

money. Allegiance solutions measure customer and employee engagement, revealing preciseactions to grow engagement and increase revenue. Allegiance Enterprise Feedback Manage-

ment (EFM), predictive analytics, and proessional services combine to help businesses capi-

talize on eedback and engagement. In 2009, Allegiance was ranked 5th on the list o astest

growing, privately held sotware companies in the U.S. by Inc. Magazine.

For more inormation about Allegiance, visit www.allegiance.com.

Peppers & Rogers Group

Peppers & Rogers Group is dedicated to helping its clients improve business performance by ac-

quiring, retaining, and growing profitable customers. As products become commodities and glo-

balization picks up speed, customers have become the scarcest resource in business. They hold

the keys to higher profit today and stronger enterprise value tomorrow. We help clients achieve

these goals by building the right relationships with the right customers over the right channels.

We earn our keep by solving the business problems o our clients. By delivering a superior

1to1 Strategy, we remove the operational and organizational barriers that stand in the way o

proitable customer relationships. We show clients where to ocus customer-acing resources

to improve the perormance o their marketing, sales and service initiatives.

For more inormation, visit www.peppersandrogers.com

Author

With over iteen years o marketing experience and advanced study in cognitive psychology,

research methodology, and statistics, Thomas Lacki, Ph.D., is privileged to contribute to the

creation o higher value solutions through best thinking or the clients o Peppers & Rogers

Group. In the role o Senior Advisor, 1to1 Faculty, he leverages his own expertise in under-

standing individuals behaviorally and analytically to achieve measurable relationship market-

ing results today, and to elevate the practice o relationship marketing tomorrow. Tom has

shared his insights with conerence audiences throughout the world, and has published re-

search and white papers about CRM.



©2010 P & R G All i ht t t d d d 1

Endnotes1 Vittal, S. and Frankland, D. (2009) How Customer Intelligence Can Bridge the Social and O line Divide.Forrester Research, Inc.

2 (2009) Voice o the Customer (VOC) Industry Research Report: Insights and Trends or Today’s VOC Prac-titioners. Retrieved November 15, 2009 rom: http: //www.allegiance.com.

3 Peppers, D. and Rogers, M. (2008) Rules to Break & Laws to Follow: How Your Business Can Beat the

Crisis o Short-Termism. Hoboken, NJ: John Wiley & Sons.4 Peppers, D. and Beauchine, F. (2009) To Spur Success, Engage and Enable Employees. Retrieved Novem-ber 15, 2009 rom: http: //ww w.1to1media.com

5 Peppers, D. and Rogers, M. (2005) Return on Customer: Creating Maximum Value rom Your ScarcestResource. New York: Doubleday.

6 Haeckel, S. (1999) Adaptive Enterprise: Creating and Leading Sense-and-Respond Organizations. HBSPress.

7 Zabin, J. (2009) The ROI on Customer Feedback. Aberdeen Group.

8 LaMala, K. (2009) The Nine Habits o Leading Customer Feedback Managers. Retrieved November 15,2009 rom: http://www.allegiance.com.

9 (2009) Turning Customer Complaints Into Proitable Opportunities Using the Six Sigma Tool Kit. Re-trieved November 15, 2009 rom: http://www.sixsigmaiq.com/article.cm?externalid=388.

10

Berry, L., Carbone, L. and Haeckel, S. (2002) Managing the Total Customer Experience. MIT Sloan Man- agement Review , 43(3), 85-89.

11 Flade, P. (2006) Unlocking Customer Service Excellence. Retrieved November 15, 2009 rom: http ://gmj.gallup.com/content/20764/unlocking-customer-service-excellence.aspx.

12 (2007) Beyond Loyalty: Meeting the Challenge o Customer Engagement—Part I. Retrieved November 15,2009 rom: http://www.adobe.com/engagement/pds/partI.pd.

13 LaMala, K. (2008) The Positive Economics o Customer Engagement. Retrieved November 15, 2009rom: http://www.allegiance.com.

14 Discontinuing the initiative and observing a return to the baseline perormance urther strengthens theargument; however, the opportunity cost o doing so may be prohibitively large.

15 Colgate, M. and Danaher, P. (2000) Implementing a Customer Relationship Strategy: The Asymmetric Im-pact o Poor Versus Excellent Execution. Journal of the Academy of Marketing Science , 28(3), 375-387.

16 Thompson, E. and Kolsky, E. (2006) How to Decide Which Feedback Management Tool Is Right or You.Gartner Research (G00140842).

17 Kolsky, E. and Moaz, M. (2003) Using Customer Surveys to Improve Business Processes. Gartner Re-search (SPA-19-1128).

18 Peppers, D. and Rogers, M. (2004) Managing Customer Relationships: A Strategic Framework. Hoboken,NJ: John Wiley & Sons.

19 Sisk, M. (2009) Customer Satisaction: Find and Nurture Your Biggest Fans. Bank Technology News ,22(6), 28.

Documents

Peppers and Rogers Whitepaper