Most companies are happy driving into the future using only NPS-mirrors. NPS will tell them all about how satisfied or dissatisfied the customers are with what the companies currently are doing. But nothing about what the customers want in the future.
This situation is based on a widely spread belief that you can’t ask the customers about what they need. And this belief is fueled by many success stories like the Smartphone, or Facebook. To ice the cake some even quote Henry Ford:
“If I have asked the customer what they wanted, they would have told me a faster horse.”
It is all based on a misunderstanding of what a customer need is. The Smartphone or Facebook are both examples of technical solutions. Customer needs are the answers to the questions of – why do customers buy Smartphones or spend time on Facebook, which is something completely different.
Just because customers can’t tell you the next big innovation doesn’t mean they don’t understand their own needs and resource concerns.
Suppose your NPS-score turns out bad, isn’t it then already too late to fix the situation? Is it wise going forward using only backward-looking NPS-data?
Companies delivering higher customer value are more successful, profitable, and grow faster. It is a simple cause and effect relationship between customer value and all essential financial metrics in your company. “Voice of the customer” (VoC) is an excellent tool to get a grip on customer value and build a foundation for a customer-centric organization.
There are many studies out there demonstrating the effects that this tool can have on customer value, profitability, and growth. Follow this link to download one such study from the Aberdeen group. Our own experience confirms similar results. One of our customers increased the sales volume with 900% for a product, another tripled sales from new products. Implemented right, a solid “Voice of the customer” will deliver outstanding business results.
However, I would also like to raise a finger of warning. Not all VoC programs are successful. The most common group for failures is what I call “simplified methodology.” The typical “quick fix solution” – Let’s go and speak to some customers or let´s send out a questionnaire, and the Voice of the customer is done.
The second reason is “weak implementation.” Not enough training, resources, time, and management support is allocated to the VoC. People just make the moves without a proper understanding of the objectives or to increase customer value. The VoC is treated as one of many checkbox items on the to-do list.
Remember that wrong data is worse than having no data. A poor VoC may provide false or incorrect data leading you and the entire organization down the garden path.
A modern VoC is so much more than just collecting data. I believe that four equally essential objectives need to be met simultaneously:
First is the training of your employees to become more customer-focused. Many of your colleagues have little or no experience of interacting with real customers. As I see it meeting real or virtual customers should be part of every organization’s training program. VoC offers unique opportunities to do this in a systematic and structured way.
Secondly, a modern VoC strengthens the relationship with your customers. Executed right, the VoC is an appreciated learning experience also for your customers. Preferably an integrated part of your value-based selling methodology. And it can help formulate powerful Challenger sales messages.
Thirdly, it should not only collect spoken customer needs and resources concerns but also hidden and unspoken ones. A VoC is not about asking the customers what they want and then do what the customers told you. A VoC most go beyond the obvious; it should fill out the blind spots and provide new and previously unknown insights.
And finally, the customer insights must be documented in a way so that it can be communicated to all employees. Facts require data to back them up — otherwise, they are just opinions. Many internal conflicts can be eliminated by replacing internal goals with the common objective of delivering unrivaled customer value. You need to design and implement your VoC to attain all four objectives to reach the results of the top performers.
After working with many organizations over the years, I realized that much of the stuff that is going on in organizations are labeled “Voice of the customer.” I realized that I had to break VoC down into some smaller components so I could check each element separately. So the 8-steps below are eight different elements in what I would call a world-class VoC.
In engineering, there is a saying that the devil is in the details. However, then it comes to VoC. I prefer to reformulate this proverb:
The magic is in the details.
It is at the detailed level that magic happens or is lost. The magic is all in how the details of each step are designed and implemented.
The first step is to define the customers. If you have followed the customer value challenge, you know by now, that customer value is in the mind of the customer and not a property of your product or service. The concept of customer value makes no sense without a clear and unambiguous customer definition.
Products aimed at unclear or broadly defined segments are never rewarded with premium prices. The customer must be defined in a clear, visual, and concise way that can be communicated and understood across the whole organization and guide the value innovation process.
The persona summarizes and highlights the unique and important characteristics of the key customers in the customer chain and important facts about the market segment. The persona allows information about the customers and the business context to be shared in a clear and sustainable way.
The second step is to explore value by:
listening to the Voice of the customer. Asking the customer via in-depth interviews, focus groups, or similar activities
observing the customer and studying his/her background, history, and business
experience the situation of the customer. Putting yourself in the customer's shoes by performing the same activities the customer must do by ordering, installing, operating, servicing, and repairing the product.
These three methods provide complementary information, so you need all three. Sometimes this step is called the explorative phase — the step where all the customer needs and resource concerns are captured.
Try to capture and describe the customer needs and resource concerns without distortions, misinterpretations, or the addition of your own evaluations. This information can be captured in many ways, but the most common method is in the form of short phrases. For example: "The product should require a minimum amount of service."
Step three is to compress all the value stories collected into a manageable size and structure without distorting, adding, or interpreting the information. We want to keep the customer’s voice alive and not replace it with internal voices. It is easy to lose the magic already here.
Customer needs and resource concerns (value stories) form the building blocks of the affinity diagram. When dealing with value stories it is also important not only to capture today's situation but also to create a picture of future needs and resource concerns. What will the customers require the day the new product, service, or software is launched?
As well as spoken needs and resource concerns, the customers also have hidden or unspoken ones that should also be pinpointed and taken into consideration. Use the affinity diagram to structure and compress the information to a manageable size. Overview and focus are essential.
In step four, you design your value cards, which are later used in the card deck dialogue with the customers.
You need a simple, fun, and accurate process for having the customers to prioritize value stories (customer needs and resource concerns) and benchmark your solutions ability as well as your competitor’s ability to satisfy them.
We use a simple method with Value cards, which has proven to be very effective in practice.
The method is based on gamification principles to engage customers and increase the quality of the data.
Five different game mechanics increase the customer's motivation, participation, and engagement. It is a fantastic way to overcome “questionnaire fatigue.”
In step five, you establish all the facts about the customer that should be collected during the card deck dialogue — this is your quantitative data. Simplified, we could call it facts about the customers.
It is not only important to know who said what, but also have additional facts about the customer, his/her experience, the usage or environment where the product, service, or software is being used.
In step six, a statistically significant number of customers perform the card deck dialogue.
Executed right, it is an appreciated and fantastic learning experience also for the customers. That is why some organizations have integrated this activity into the sales process. Simplified, we could call it the customer’s opinion about needs and resource concerns.
It is essential to select a balanced mix of customers to avoid bias in the data. There is an obvious risk that only the most faithful and loyal customers are invited to participate. This will bias your data and provide a false sense of security as your weaknesses will not be exposed.
The sample size required is a complicated question to answer. It depends, among other things, on the number of subgroups you want to analyze, the cost of each sample, the variability of the population, how many customers that exist in the segments, and what you are going to use the data for.
In general, the more precision you want, the larger the sample size. Sample sizes under 30 customers should always be avoided.
In step seven, you mine the collected data and create insights that will have a pivotal effect on the understanding of what needs to be done to reach unrivaled customer value.
In a VoC project, insight comes before data. Already in the first interview, months ago, learning´s started, and valuable insights were discovered. Now you get all the data required to back up the insights and better explain the underlying reasons why. It is time to become a truly data-driven organization.
You need good software support to be able to dig deep into the data and sharpen the analysis. We have developed several software modules that could help you with that.
Step eight is about turning customer insights into:
new sales strategies
a challenger sales message
ways to improve the customer journey
new products or services.
The concept we advocate for this is the Value Model. A proven method used by many organizations, globally. The Value Model books and Apps have been distributed in more than 10.000 copies, and thousands of people have been trained in the concept. You can buy the whole book or only selected chapters as PDFs by following this link.
Finally, if you have read this far in the post, I believe you also are prepared to take some actions to improve. My recommendations for the next steps are as follows.
Identify the key stakeholders in your organization that you need to convince. Set up a meeting, hand out the customer value posters, and get the discussion going. In short - Put customer value on the agenda.
Check out our VoC-packages on the following link and run a pilot. Nothing can convince people more than real data from customers. Using our packages is a fast, inexpensive, and straightforward way to get going.
If you want to learn more about customer value, follow "The customer value challenge". Several videos and posters on how to turn customer value into a concrete and practical tool to drive profitability, growth, and sustainability. Everything is free.