Voice Of The Customer Programs Need A Better Business Story

More than half of companies say that they have voice of the customer (VoC) programs in place today, and many others say that they’re planning to establish programs within the next year. That’s a good thing, because collecting, analyzing, and acting on customer feedback is a recipe for success in financial as well as customer experience terms. The firms recognized in Forrester’s 2010 Voice Of The Customer Awards attributed impressive business results to their VoC efforts, ranging from increases in customer retention to increases in revenue per customer.

Unfortunately, most companies still aren’t feeling the business value of their VoC programs. We recently surveyed members of our Customer Experience Peer Research Panel Survey. The vast majority of respondents said that their VoC programs were extremely or very valuable in improving customers’ experiences. But fewer than half said that they got the same financial value from their programs. This might not be a huge shocker, but it is a problem.

Companies that see gaps between the customer experience and financial benefits delivered by their VoC programs are likely:

  • Not doing the right things to drive business value. Most companies have dozens of opportunities to improve their customers’ experiences, but not all of those opportunities are worth pursuing. Here’s a hypothetical example: Imagine that E-Trade, primarily an online discount broker, heard suggestions through its VoC program to serve coffee in its branches. Acting on that suggestion might improve the branch experience to some extent, but would it really matter to customers? Would it cause them to trade more or transfer additional accounts to E-Trade? Would it make them any less likely to leave the company for a competitor? Probably not. It wouldn’t be a meaningful improvement for customers (or align with the company’s strategy), so it wouldn’t change customers’ behavior or ultimately drive business results. 
  • Not measuring the right things to show business value. Other companies might be doing the right things based on VoC insights but not be measuring the financial benefits they achieve. Imagine that E-Trade (again, hypothetically) also heard feedback that basic online transactions took too long for customers to complete. If the company invested in making those processes quicker, it would likely see major bumps in customer feedback scores. Over time, it would likely see changes in customer behavior as well — more frequent trading or more accounts per customer, for example (other things being equal). But if the relationship between customer perceptions and customer behaviors never gets measured, the financial value of the VoC program might never get the recognition it deserves.

Are these the only possible explanations for the reported gap between the customer experience and business value delivered by VoC programs? Of course not. Some companies might be too early in the process to see financial benefits. Others might not directly measure financial benefits but still believe (and thus report) that they exist. Nevertheless, VoC leaders who see this gap in their organizations should examine whether they are doing and measuring the right things to drive and demonstrate business benefits. Those are the levers they can pull to take their programs to the next level. If they do nothing, they’ll continue to see their efforts regarded as disconnected from — or even antithetical to — financial success, when that’s actually far from the truth.    

Forrester recognizes VoC programs that drive customer experience and business value in our annual Voice Of The Customer Awards. The 2011 nomination period starts on March 25th. Visit our VoC Awards home page for details about past winners and this year’s process.   

Comments

Agreed 100%

I commented on a Linkedin group the same opinion:
following customer hints is a good intention but rarely applied

thanks for this information,

thanks for this information, useful for me.

Real-time Customer Analytics

The relevance of the traditional VOC is depleting by the day, and leading CPG companies and Retailers are increasingly realizing that. Customers and shoppers are becoming increasingly unpredictable as they constantly shift across channels and refine their preferences based on the influence of their Facebook and Twitter communities, and/ or swayed by the Groupon-type offerings.

While companies that have no VOC programs in place wil definitely benefit from having one, it is obvious that there is a more dynamic manner in which customer behavior, preferences and feedback needs to be understood. Tomorrow's VOC strategy needs to recognize the need for "speed" (gathering data, analyzing and taking action - all in near real time). Leading companies are making rules-based decisions on pricing, promotion and product bundling, and trying to determine how they can attract the right customer traffic and increase conversions at every touch point. Hence, every customer needs to be understand on their own merit and at every touchpoint - rendering the traditional models of VOC obsolete. This recognition should drive companies to think of creative ways in which the VOC can be sought. Driving stronger integration with Facebook and Twitter-type communities is one example of how this can be done.

Thanks for the comments

Thanks for your comments. I agree that social outlets like Facebook and Twitter are important listening posts for many VoC programs. I also agree that speed (and relevance) of reporting is key, since it helps to drive action. But I'm not sure that 'traditional' VoC sources are obsolete. To me, determining what's relevant and what's not is first and foremost a matter of understanding your customers -- where their key moments of truth are and how they're willing to provide feedback about those moments, whether through surveys, emails, or Tweets. It's also a matter of understanding what you can do with the information you gather. I'd hate to see companies start ignoring all of the extremely relevant pieces of feedback coming in through emails, calls, surveys, etc by thinking they are somehow no longer worthwhile listening posts (all 'traditional' VoC sources in my book). I'd also hate to see them focus their attention on goals that are beyond their capabilites.

Do any companies stand out as taking innovative approaches to VoC and getting great benefits? I'd love to share their best practices.

Economics of customer experience

Extremely interesting information. I covered the topic in my blog trying to answers that question: http://www.cesconi.com/?p=166

I also participate in a specific project to build a Customer Experience Dashboard combining financial and CE KPIs: http://www.custvox.com/Testimonial/13.html

Thanks again

Thanks for the comments (and nice to hear from you). I like your straightforward (though not common) approach to proving this value. It certainly puts customer experience in the business context that it needs to be in. With approaches like this, though, I often wonder: How do you frame customer experience in the familiar language of business while also trying to change the conversation?

Excellent post,

Excellent post, Andrew!

Speaking from the vendor perspective, selling the business value of VOC software is always one of the biggest challenges. When asking the client for a 5 or 6-figure investment, the client is going to ask--quite justifiably--what ROI he/she is going to see for that money! After all, if he/she spends that money on an AdWords campaign or on a TV spot, odds are that there will be a bump in sales.

As vendors, we do, however, have one very big lever that we can pull: reporting. Inasmuch as ROI and business value are concerned, we do our clients a collective disservice when we focus only on description. It's like a doctor who spends all his time talking about the disease and no time talking about the cure. To deliver true business value for our clients, we have to think in terms of prescriptive and not just descriptive modalities.

Reporting is no doubt key

Thanks for the comments. I very much agree that reporting is a huge differentiator between effective and ineffective VoC programs. I think of the answers to the three basic 'what,' 'so what,' 'now what' questions as the big requirements of reporting. Answers to those questions help people decide what they should do.

This is a very good insight

This is a very good insight to pinpointing and promoting customer relations which is still a pivotal part of effective marketing today.

VOC is not Sexy

When companies think voice of the customer, they quickly think surveys. Surveys have such bad rep because many are long, boring, and useless. The problem is that there is not direct link between feedback and revenue. If an idea or marketing campaign was inspired from a customer, there is no current way to relate these two.

One way to get direct results as Mehul Desai said is being more real-time. The problem is that dashboards and reports although real-time, can hide information that is of most urgent importance when aggregated. What is needed is a system that can directly take care of customer issues and at the same time measure its impact in loyalty and ROI. For example, implement a system with half of the ecosystem and A/B test it to show executives the importance of VOC. Success!