Leveraging Voice of the Customer

I came across an interesting question at the Customer Management IQ site today that should be of interest to any executive or manager responsible for voice of the customer at their organization. The questioner wanted to know how to leverage her VOC, and whether some customer opinions are more important than others. Here’s my $.02:

Her question really has several facets:

  1. What type of VOC will be most leverageable?
  2. How should that VOC be analyzed?
  3. Which customers are most important?, and
  4. How do you actually leverage that information?

I’ll address those issues in that order.

(1) As you know, there are many types of Voice of the Customer, ranging from the passive and reactive (complaints) to the more proactive but qualitative (interviews, focus groups) to the proactive and quantitative (surveys and panels). Each serves a purpose, but to truly leverage your VOC it should be proactive, purposive, and quantitative. Moreover, if you really want to leverage your customer information, you should extend VOC to become the Voice of the Market (VOM) – which means that you would be surveying not only your own customers but those of key competitors as well.

(2) Your next task will be to transform that survey data into meaningful metrics. By meaningful, I mean that the resulting metrics should (a) be predictive of future business performance, and (b) provide managerial direction. This will require a shift from the metrics of customer satisfaction to the metrics of customer value. There is now lots of evidence (Gale, Reidenbach, Reichheld, and others) that the metrics of customer satisfaction do not correlate well with business performance. Why would you rely upon a metric that is unrelated to your business goals? The metrics of customer value, on the other hand, have proven to be the best leading indicators of market share – leading to both high levels of customer acquisition and customer retention (loyalty).

(3) Now we get to the crux of the matter: the metrics of customer value are both product- and market-specific. People buying a luxury sedan will define value differently from people looking for a sports car. And the business user of a computer will define value differently than will the typical home user. You want to focus your investment in value metrics on those market segments that are most attractive for your business (they’ll provide the greatest ROI) – and you want to use those metrics to understand value within those segments better than anyone else against whom you are competing. There are some great tools available that will help you identify those high-priority segments.

(4) Finally, you want to be able to truly leverage your value metrics into superior business performance. Those value metrics should enable you to identify competitive performance gaps on those factors that are critical to quality from a market perspective (CTQs, in Six Sigma parlance). The nature of those gaps, whether positive or negative, will point you to the specific product (service), people, or process issues that you can improve to achieve or sustain a competitive advantage. You’ll find some great information on the “how to” in one of our most recent books, “Competing for Customers and Winning with Value.”