Integrating VOC Into CRM

Doug LeFever
Member

Posted 24-Aug-2005 08:14 PM

Speaking in Process Excellence terms, where exactly do you integrate the Voice of the Customer into CRM? Before vision & strategy established? After customer segmentation? Possibly at several points throughout the process? Thoughts?

Gwynne Young
Managing Editor, CustomerThink
Member

Posted 26-Aug-2005 08:11 AM

[Posted for Jay Curry]

Doug,

The Voice of the Customer is an integral part of CRM. You need customer input to help you develop vision and strategy. You can use VOC to develop customer segmentation. And you need it as an ongoing process to track improvements and trends in the marketplace. You can't separate the two.

And check the CRMGuru research on critical success facors: having a customer-centric strategy supported by customer attrititon data, customer satisfaction info and voice of the customer programs was far and away the No. 1 factor common to success with CRM.

Jay Curry
jay@voice-of-the-customer.com
www.voice-of-the-customer.com

Graham Hill
Guru
Member

Posted 26-Aug-2005 08:51 AM

Doug

As Jay suggests, hearing the Voice of the Customer (VOC) is critical to long-term success.

Whilst many companies talk about establishing VOC "projects" to go gather it, in reality, it has a role to play during every customer touchpoint within the end-to-end customer experience.

It should be collected from customers at every available touchpoint. Sense then needs to be made of the information collected and decisions made about how to manage different customers differently during the touchpoints. The insights generated then need to be passed back to the touchpioints for action. This leads into a virtuous cycle of gathering VOC, planning improvements, implementing them, measuring the impacts of the improvements on the customer and the business, and then starting the whole process again.

This VOC-based PDCA cycle is the basis of the success of leading companies like Toyota.

The increasing importance of customer co-creation in on and off-line business—where customers are intimately involved in designing, delivering and consuming products, services and experiences—will only serve to highlight the importance of VOC in business success.

And just to repeat what I wrote earier, hearing the VOC is much more than just a project. It is a critical business capability that drives long-term success.

Graham Hill
Independent CRM Consultant

Vladimir Dimitroff
Member

Posted 27-Aug-2005 05:09 AM

Good consensus here, both Jay and Graham porvide quality explanations on why the place of VoC is neither 'before' the Vision, nor at any particular point 'inside' the process. It is, indeed, everywhere.

I can't help referring to the metaphoric language of a famous CRM guru and author (a pair of authors, in fact) and their equally famous consulting firm, who speak of a learning relationship and call the perpetual process of capturing VoC "drip irrigation". Drop by drop, one question at-a-time, you build that ubiquitous insight. The (mutal) understanding that will allow you to deliver better value—and get better value in return. Incremental two-way learning is also the best way to build the trust essential for loyalty and long-term, profitable relationships.

Speaking in Process Excellence terms, a good end-to-end customer process contains multiple 'check points' examining opportunities for a learning interaction and prescribing relevant action. During process design, at every step of a process the designer asks the question 'is there an opportunity to talk and learn?' and, where applicable, inserts a 'learning step'. This can be a loop, sub-process or module (modular process design isbest practice) utilising the specifics of the touchpoint (communication channel/medium, interaction type) to ask one further question and ensure the response is captured, stored and analysed. Or it may be just a step to capture communication coming from the customer on her/his initiative—the important part is the 'corporate memory', i.e. capturing and storing it. Which is one of the basic rules of 'drip irrigation':

Without the latter, proactive response, all the learning is rather meaningless. It may be your behaviour towards the customer, or a fault/feature of your product, or your porcess itself—but something must change as a result of the learning.

Some examples of 'embedded' VoC in routine processes and company life are:

Which reminds us that VoC doesn't have to be explicit, it is often implicit—'between the lines', paralingual, 'body language', purchasing and product usage behaviours.. Plenty of 'voice' for companies with ears, eyes and brains. No, I am not being sarcastic about IQ, just about the mindset to listen and learn.

Happy listening!

Vladimir Dimitroff
PRISM Consulting
vdimitroff@prism-gb.com

Vladimir Dimitroff
PRISM Consulting (UK)
vdimitroff@prism-gb.com

Graham Hill
Guru
Member

Posted 29-Aug-2005 01:01 AM

Vladimir

There is a growing consensus that companies should listen to, take note of and incorporate the voice of the customer at all touchpoints.

But this raises a number of practical questions about the practice of gathering customer information in general.

1. Which information is most useful?

Gathering customer information is a time-consuming and expensive process. And as in so many things, not all information gathered is equally useful. CRMers blithely talk about creating a "360 degree" view of the customer, but my experience is that only about 10% of that , or "36 degrees" if you like, is actually useful for hands-no customer management. The rest is just customer noise. Knowing which information to gather and when, is much more important than just gathering information because it is there.

2. How do you get the useful information to where it can add the most value?

As most managers can attest, once customer information is gathered, it is often sucked into a database "black hole", never to be seen again. And the customer information that does reappear from a departmental database is often not shared very widely within the company that collected it or with delivery partners. There is considerable research that documents the problems that departments or functional groups have in sharing information with each other. That is one of the reasons that so many companies have multiple customer databases. The 10% of useful customer information needs passing to the touchpoints that can use it to improve the customer experience. This is the hardest part of using the voice of the customer.

3. Do customers trust you to use it wisely?

Almost every week passes with another gaffe made by companies who supposedly "look after" customer information. If it isn't hackers breaking into supposedly secure databases, it is staff leaving computer tapes with unencrypted customer information on the train, or customer printouts in the dumpster. As Glen Urban in a recent article points out, this has contributed to "trust" becoming one of the most important factors in developing anything more than a passing transactional relationship with a company (see http://papers.ssrn.com/sol3/papers.cfm?abstract_id=400421#PaperDownload). Not just trust that the product does what it says on the tin and that the company won't try and rob you, but also trust that the company will look after your precious data. And moreover, that they will use it for your benefit, not just for theirs. Developing trust in customers is one of the coming competitive battlegrounds, particularly for data intensive companies like banks, telcos and airlines.

The voice of the customer can provide companies and their customers with a lot of mutual value. But it is much more than just gathering customer information at every touchpoint. At the end of the day, its success is based entirely upon the precious commodity of customer trust.

And a question...

Who are the companies you trust to use information about you in your best interests?
Why do you trust these companies?
And who are the companies you don't trust?

Graham Hill
Independent CRM Consultant

Jim Barnes, CRMGuru Panelist
Advisory Board
Member

Posted 29-Aug-2005 11:32 AM

Hi Doug and colleagues

I'm enjoying the spirited and valuable response to Doug's question. I'd like to go back to some observations that I made in a recent article on CRMguru.com entitled "To Hear the Voice of the Customer, Listen Outside the Box" in which I suggested that we should make an important distinction between VOC and conventional customer research.

While I agree with my colleagues that customer input is needed at all stages of a CRM "project" or "implementation", I would also suggest that we not view CRM as a project, but rather as an orientation or a culture. If we accept this view, which I would suggest is being more widely accepted all the time, then it should be obvious that we need customer input all the more becsuse the firm will be truly customer driven.

But, the concept of VOC to me suggests giving the customer his or her voice, to provide input in conversational and informal ways, rather than in response to formal survey questionnaires. I'd be looking for the kind of insight that will give your CRM initiative meaning, that will differentiate it from another firm's approach because you have truly listened to that all-important voice.

There is a danger, I believe, of considering all forms of marketing research to be equivalent to the "voice of the customer." I think also that it is important to make a distinction. Just doing customer research as it has conventionally been done will not necessarily give you a competitive edge or result in a more effective CRM initiative. There is a great deal of criticism being levelled today, for example, at customer satisfaction research which is alleged by many to fall far short of being useful in a CRM context.

It's important to realize that the customer has several voices and the voice that we will hear in response to a survey question is not necessarily the same voice that the customer will use when talking with friends. We have to be able to tap into the customer's inner voice as well as her more public one. All of this suggests the use of techniques to reveal those voices at each stage—certainly before establishing your customer strategy, and on an ongoing basis to let you know how well you are doing and what the customer would like to see you improve upon.

Great question. Good luck on teasing out those voices.

Jim Barnes

Jim Barnes specializes in Customer Strategy as a member of the CRMGuru Advisory Board. For more information, please visit Barnes Marketing Associates.

Graham Hill
Guru
Member

Posted 05-Sep-2005 02:55 AM

Doug, Jim

I think a general word of caution is due at this point in the discussion.

Throughout this and other discussions on CRMGuru, the general superiority of having a customer-orientation is repeatedly asserted. For example, Jim states that,

Quote...

The underlying suggestion seems to be that putting customers at the heart of business—taking a customer-orientation—is a superior business strategy to say, a more balanced market-orientation (that considers customers, but also competitors, market trends and other factors too), an internal brand-orientation strategy or a hard-nosed sales-orientation strategy.

Unfortunately, the balance of evidence today suggests that putting customers at the heart of business, is in fact an INFERIOR business strategy, compared to a more balanced market-orientation that considers customers and other factors equally.

It is in achieving this difficult balance between creating value for customers by responding to their needs, wants & expectations, creating value for shareholders by doing so as cost-effectively as possible and doing this sustainably over time so that value for both can be provided over the longer-term, that constitutes a superior business strategy.

This does not mean that hearing the voice of the customer during many touchpoints over their lifecycle with a company is not a critical capability—quite the contrary—but that it is just one part of a bigger picture of what constitutes a superior business strategy.

The reality today, as Jim suggests, is that most companies are in fact not customer-oriented enough. Just take a look at how much resources branding and push-marketing consume in comparison to hearing the voice of the customer (in all its forms), customer insight generation and sharing this insight with those who can use it. That this imbalance needs to be corrected for the good of the business is not seriously in doubt, but it needs to be done based upon what we know today about the drivers of superior business performance, not an unsubstantiated wish to "crown the customer" as king.

Customers are critical to success, but they are not the only ball game in town.

I have thought long and hard about this posting. I hope that you will too and will respond with your own forthright opinions.

Graham Hill
Independent CRM Consultant

David Mangen
Member

Posted 08-Sep-2005 09:25 AM

Doug,

I concur with my colleagues who have advised you that VOC is ubiquitous—it can exist at almost any touch point that you have with the customer. This presents both tremendous opportunities as well as the potential to result in conceptual, analytical, and financial gridlock:

# Financial gridlock because you almost certainly will not have the resources to effectively look at every touch point.

# Conceptual gridlock because you will have too much on your plate, and you will in all likelihood collect a huge volume of data without having an over-arching plan regarding how you will use that information, and thus much of it will be fundamentally irrelevant.

# Analytical gridlock because the entire process is not integrated into an overall plan and the volume of data will make concise analysis difficult.

My advice to you is to step back and ask a very basic question. What are the two or three things that we really want to learn? Ask this question within the context of your company's overall business strategy. As Graham Hill has pointed out, this will help you to focus on those issues that are most useful to you. It will control the volume of information, making it possible to actually use the information that is collected. Furthermore, it will help to ensure that your VOC work addresses your company's strategic objectives.

The answer to this question will also influence how you go about collecting information. While I agree with Jim Barnes that customer satisfaction research is often not terribly valuable in a CRM context, I suggest that this deficit stems more from a simplistic and self-serving approach to customer satisfaction research than it does from the idea of customer satisfaction research per se. (In my opinion, customer satisfaction research is too often focused on getting good scores for the Malcolm Baldrige National Quality Award than it is on actually improving customer service.) I also fundamentally disagree with Jim's assertion that VOC requires that the customer "...provide input in conversational and informal ways, rather than in response to formal survey questionnaires." Depending on the answer to your basic question of what it is that you want to learn, the qualitative approach advocated by Jim may in fact be the proper way to proceed. However, one of the basic axioms of good research is that you let the research questions dictate the methodology used to collect data and the analytical tools applied to these data—not the other way around—and while there are many questions that are best addressed by the informal/conversational approach that Jim advocates there are also many questions that are poorly addressed with this data model.

Step back and think strategically. What is it that you need to learn to advance your business objectives? Use the answer to that question to select your touch points, to structure your data collection, and to guide your analysis and change efforts—and then dynamically repeat the process as your business objectives change.

David J. Mangen

Posted 08-Sep-2005 02:42 PM

Imagine, if everyone in a company did what was in the customers best interest within the overall business strategy. Would we still need to spent so much effort on VoC and related activities?

Graham Hill
Guru
Member

Posted 09-Sep-2005 01:53 AM

Malcolm

You make a very interesting point. There are two main difficulties in complying with your suggestion: knowing what is in the customer's best interest and knowing how it fits within the overall business strategy!

You need to hear the voice of the customer (within the larger voice of the market) to be able to at least start to tackle the first difficulty. You should gather this through a variety of methods including surveys, focus groups, interviews, direct observation and even exploratory co-creation with lead customers.

This insight can then be used as an input into the strategy formulation process itself in the form of customer scenarios. The other key inputs into the strategy formulation process are an understanding of your business capabilities and an understanding of what actually drives value creation. Strategy is the art (not science) of achieving an appropriate balance between these three factors.

Business is a difficult balancing act; you can't give all customers what they want all the time, not if you want to be profitable. And you can't just focus on the bottom-line, not if you want to keep your customers.

So, whilst I like your idea in principle, experience tells me that the devil is in the detail of knowing how to make it work.

Graham Hill
Independent CRM Consultant

Posted 09-Sep-2005 11:14 AM

Graham

It appears to me that your suggested approach is also pretty complex. Assuming that some form of direction and values are in place why shouldn't the company trust it's employees to do the right thing for customers?

Malcolm

Graham Hill
Guru
Member

Posted 12-Sep-2005 02:02 AM

Malcolm

This is a difficult question that goes to the heart of how we work with customers during touchpoints. And we should never forget that, financial-engineering aside, these touchpoints are the ONLY points at which value for a company is created. Everything else a company does is cost, whether it supports the touchpoints or not.

But answering your question is not a trivial exercise, as the question challenges the whole basis of how companies organise and manage how work is done today.

All companies need to go through something like the strategy formulation exercise that I outlined earlier. They need to think about what customers value, how good they are at providing it and whether they can make enough money by doing so to keep owners happy. They also need to think about what competitors are doing so that their strategy isn't uncompetitive. This applies just as much to SMEs as it does to multi-national corporations. It provides the direction that you quite rightly wrote about.

Assuming that some sort of strategy is in place, companies still need to provide staff with some kind of "framework" that describes what work will be carried out, how it will be carried out and who will carry it out. This shouldn't be a big, thick handbook—which would be largely ignored anayway—but it must provide sufficient guidance for those who will carry out the work.

Although this serves as a broad generalisation, there are obviously different degrees of formalisation of the framework. Different companies require different levels of guidance; a start-up with 10 people where everyone knows everyone else probably doesn't need much if anything, whereas a 1,000 seat call centre for a mobile telco almost certainly does. The need for some form of formalisation rises significantly once you exceed 100-150 staff, at which point the complexity and cost of organisational coordination significantly increases. This was as true in the times of the Roman Army with its cohorts of 100 soldiers under the command of a Centurion, as it is for leading-edge companies like W L Gore (Goretex), who split their production factories into two once they reach a size of 200 staff.

And different jobs require different levels too; accounting needs formal procedures to enable them to meet their legal obligations, whereas customer-driven innovation where staff work with customers and innovate together almost certainly doesn't. I helped a UK-based credit card company to develop a hybrid-organisation that provided an efficient, effective working environment for high-volume card-administration work and a flexible, exploratory working environment for market-sensing and rapid-response marketing. Whereas the card administartion part of the organisation was highly formalised, the market responding part was not. The staff who would do the work were extensively involved in "co-creating" the new organisation.

And the framework must change as the work it describes changes.

The evolution of the modern company suggests that staff do need different levels of guidance to carry out their jobs productively. This isn't just a company-centric view; in providing a standardised way of working it ensures higher-quality for customers too, at least in terms of less variability. Perhaps the most effective way of doing this today is in the form of "high-performance work groups". But although these are relatively autonomous in how they carry out their work and who does it, they do have make extensive use of frameworks to guide the work they should be doing.

So whilst I agree with you that you should trust staff to do the right thing for customers, in most companies you still need to "organise" them to the point where they can do their work efficiently and effectively, and to provide them with a framework of sorts to enable them to do their work productively. The real challenge today is in helping companies to "loosen-up"; to enable staff to have more say in how they do their work, to self-organise to solve problems as they happen and to be more innovative, without reducing core productivity or the company loosing focus on what it is business to do.

Graham Hill
Independent CRM Consultant

PS. If you are interested in this topic, take a look at the UK Thinktank Demos' paper on why future organisations must loosen-up, available available at http://www.demos.co.uk/Disorganisationfinal_pdf_media_public.aspx.