Building an Effective Voice of the Customer System

I recently delivered a webinar for the Institute for the Study of Business Markets (ISBM) explaining how to design Value-Driven Process Improvements in order to achieve superior business performance. Such initiatives are highly dependent upon an effective Voice of the Customer (VOC) system—one that is proactive rather than reactive, that uses the metrics of customer value rather than the metrics of customer satisfaction and that includes perspectives from the customers of your competitors in addition to your own. At the conclusion of that webinar, I received numerous questions about how to design and implement such a VOC system. After years of deploying VOC systems in manufacturing, service industries and consumer packaged goods, I’ve identified four simple criteria to guide the development of an effective VOC system in any industry.

1. An effective VOC system must provide actionable results. We’re currently running an informal poll on our Web site to determine the biggest problem people are having with their VOC systems, and the overwhelming response is “Making the data actionable” (61 percent). If your VOC system is to have any credibility, it must provide clear direction for competitive marketing strategies, and it should direct specific improvements in people, products/services, and processes in order to deliver superior value. Of course, no one wants to take action based on data that is not demonstrably predictive of business performance. This means that you’ll have to abandon the metrics of customer satisfaction and replace them with the metrics of customer value, as we’ve noted here previously. You’ll also need questionnaire attributes that are performance-based, rather than agreement-based, and those attributes must provide sufficient detail to direct meaningful actions.
2. Actionable results require a strategic focus. One of the problems of most VOC systems is that they tend to aggregate customer feedback across all market segments served by the organization, and across all product/service categories the organization provides. The result is an “average” perspective that lacks sufficient focus for any meaningful actionability. The solution to that problem is to stop trying to be all things to all people, and to start focusing on those product categories and market segments that provide the greatest opportunity for business growth. With that type of laser-like focus, the organization can deploy a VOC system that will enable them to understand value within those targeted product/markets better than anyone else—and therein lies the key to market share growth.
3. The VOC system must provide results that are quantifiable. There’s no doubt that useful insights can be gleaned by a review of customer complaints, mall intercepts, focus groups, or depth interviews, but a truly robust VOC system will provide:
   1. A quantitative assessment of Critical-to-Quality factors (CTQs) and their relative importance
   2. The quantitative identification of competitive performance gaps on those CTQs
   3. Empirical evidence of both reliability and validity
   4. These conditions will require shifting your VOC system to a VOM (Voice of the Market) system—one in which the customers of both your own company and those of your key competitors are each rating the performance of their individual providers on specific quality, price, and image attributes. Those ratings can then be analyzed with statistical tools familiar to all Six Sigma practitioners in order to provide the information listed above.
4. The output from your VOM system must be easy to communicate. As research companies work to differentiate themselves from one another, they often end up producing extremely sophisticated charts, graphs, and tables that require a Ph.D. in statistics or engineering to understand. The goal of an effective VOM system should be to generate output that is easily understood by the very employees who are providing the goods and services, as well as by shareholders and other stakeholders. Employees want to provide superior value to their customers, and they’ll work hard to achieve that goal, but they also want to know how well their work is “moving the value needle.”

Developing and deploying the type of VOC/VOM system that can effectively drive Value-Driven Process Improvements is not as complicated as it may seem. Once you’ve determined which product/markets to focus on, there are just four key steps to complete.

1. Determine what questions to ask. These are the quality, price and image attributes that are used by customers to rate the performance of their provider(s). It’s very important that these attributes come from customers themselves, and not just from an internal group of sales personnel and managers. In order to achieve that, you’ll need to conduct some individual depth interviews and/or focus groups (depending upon your industry) in order to capture the very criteria used by customers when making their purchase decisions. An actionable survey might very well include 50-70 such performance attributes.
2. Determine how to ask the questions. Depending upon your industry, you may conduct the actual survey by telephone, over the Internet, or with a survey panel. The important thing is to ensure that you are getting the right person to complete the survey—either a decision-maker or a key influencer.
3. Use the right tools to analyze the data. The basic tools to generate the appropriate value metrics include factor analysis, regression analysis, analysis of variance and cluster analysis—all tools very familiar to any Six Sigma Black Belt. The resulting value metrics should include:
   1. A Market Value Model—to identify Critical-to-Quality factors and their importance
   2. A Competitive  Value Matrix—to map your competitive value proposition and value performance gaps
   3. A Customer Loyalty Matrix—used to enhance the loyalty of your current customers, and to move the needle on your Net Promoter Scores if you use those
   4. A Competitor Vulnerability Matrix—to identify the vulnerabilities of key competitors
4. Link those value metrics to important action items. The value metrics listed above will enable you to prioritize your most important opportunities to provide superior value in your targeted product/markets. Those opportunities will typically consist of systematic improvements to your organization’s products and services, its customer-facing people, and the processes by which you create and deliver superior value.

You Should Check Out:

Value-Driven Six Sigma Requires New Tools and Views

Using the Voice of the Customer to Drive Organizational Culture Change

An Introduction to Six Sigma Management

The Legend of Motorola: Embracing the Next Generation of Process Improvement

Value, Value Streams and Value Propositions

Report Abuse   mrharris 01/11/2010 9:33:37 AM EST Reg and Eric make a lot of good points here - determining what questions to ask, how to ask them, and to whom are particularly critical, along with structuring your study so as to make your results truly actionable. For readers who would like to learn more about structuring their Voice of the Customer study, Applied Marketing Science has courses scheduled on April 6-7 in Boston, as well as in conjunction with the ISBM (Institutde for the Study of Business Markets) later on this Spring or early summer. All of these offerings will be taught be Voice of the Customer guru and Applied Marketing Science Executive Vice President Gerry Katz. Check out http://www.ams-inc.com/npd/training.asp for more information. Replies (0) Post a reply Sign in or Sign up to post a comment

Report Abuse   Reg Goeke 12/20/2009 12:58:37 PM EST For those of you who would like to view my webinar on this subject, you can do so by following this link: http://media2.impactlearning.org:8080/wmv/ISBM/wm12276.wmv Or, send me your email address and I'll send you a copy of the presentation. Reg@MarketValueSolutions.com Replies (0) Post a reply Sign in or Sign up to post a comment

Report Abuse   Reg Goeke 12/20/2009 12:55:17 PM EST You make a useful point, Colin - one which serves to differentiate the strategic application of VOC/VOM from the tactical. At the strategic level, the periodicity of collecting and reporting the voice of the customer will be a function of the dynamism of the industry. In rapidly evolving environments, this might be done quarterly or bi-annually. In more matrue industries, once a year of every two years may suffice. And the information should be used by multi-functional teams to develop and deploy competitive marketing strategies - that's the "actionability" at the strategic level. Once those competitive strategies have been deployeed - including improvements to processes, products or services, and people - then the tactical level of VOC kicks in. That's an ongoing measurement of customer reactions to those improvements - and the timing and distribution of that information will be a function of the customer experience. Thanks for the interest. I'll be posting another column at www.customermanagementiq.com soon that begins to address the tactical applicatons. Replies (0) Post a reply Sign in or Sign up to post a comment

Report Abuse   eric@6sigmarketing.com 12/19/2009 1:02:44 PM EST Colin: You might want to check out my new book from Productivity Press - Listening to the Voice of the Market. In I detail a generalized approach for actually developing a VOM/VOC Center. Thanks for your comment and interest. Eric Replies (0) Post a reply Sign in or Sign up to post a comment

Report Abuse   Reg Goeke 12/10/2009 2:27:55 PM EST You make a useful point, Colin - one which serves to differentiate the strategic application of VOC/VOM from the tactical. At the strategic level, the periodicity of collecting and reporting the voice of the customer will be a function of the dynamism of the industry. In rapidly evolving environments, this might be done quarterly or bi-annually. In more matrue industries, once a year of every two years may suffice. And the information should be used by multi-functional teams to develop and deploy competitive marketing strategies - that's the "actionability" at the strategic level. Once those competitive strategies have been deployeed - including improvements to processes, products or services, and people - then the tactical level of VOC kicks in. That's an ongoing measurement of customer reactions to those improvements - and the timing and distribution of that information will be a function of the customer experience. Thanks for the interest. I'll be posting another column at www.customermanagementiq.com soon that begins to address the tactical applicatons. Replies (0) Post a reply Sign in or Sign up to post a comment

Report Abuse   cstein 12/10/2009 11:21:38 AM EST Reg and Eric - great summary of the approach to a VOC system. I would only add that the design should incorporate the organization's hierarchy and business rules to facilitate the "actionable results" functionality and outcomes of the system. Perhaps this is intuitive for those who are in the habit of designing, building and/or managing such a system, but it merits a special focus - the breadth, depth and frequency of VOC reporting will be different (but equally important) for the the C-level exec, the senior manager, the line manager, the supervisor and the front-line employee responsible for resolving a specific customer comment or complaint. Whether it's aggregate, enterprise-wide data on all customers, or a particularly pressing, individual survey response or feedback session, only a 'smart' system that is based on the roles, functions and processes in an organization can effectively make use of all this incoming data. Regards, Colin Stein Director of Marketing ResponseTek (www.responsetek.com) Replies (0) Post a reply Sign in or Sign up to post a comment