A few years ago, when companies wanted to know what their customers were thinking, they just asked. It sounds simple enough, but it was anything but. Companies painstakingly pulled together a large random sampling of their customers and then overwhelmed them with dozens of questions about anything they could cram into a half-hour telephone survey. They mailed out questionnaires they hoped customers would fill out and return. They brought a handful of customers together for focus group sessions that could last several hours. Then along came the Internet, and companies embraced email and the Web to poll their customers without incurring high phone or postage costs.
In any case, collecting customer feedback was a massive undertaking that few companies did more than once a year—maybe twice a year if they were lucky—and response rates were typically very low. Survey fatigue was rampant, mostly because surveys were not customer-friendly: They were absurdly long and structured with the company's interests—not the customer's—in mind.
Today, those outdated methods are too slow and infrequent and don't go nearly deep enough to keep up with modern business pressures. That's why companies today are turning to more complete voice of the customer (VoC) solutions. VoC solutions take a surgical approach to feedback, making it far more current and relevant and enabling companies to target different groups of customers much more tightly, improving the quality, quantity, and accuracy of the feedback they receive.
While typical surveying methods generally yield about a 10 percent response rate, VoC solutions have been tied to response rates of greater than 50 percent. Italian airline Alitalia, for example, has a 65 percent response rate to customer surveys since implementing the Confirmit Horizons VoC platform. Key to this software's success is that it ensures that customers only receive surveys that are directly relevant to them.
"Until now, the process of identifying our key customers has always been rather complicated and expensive," an Alitalia spokesman said in a statement. "The customer panel we've built using Confirmit means it's now possible to create and deploy a rapid survey to a targeted group of customers who we're confident fully understand the issues we need to talk about. This is a great advantage."
But VoC solutions go far beyond surveying. They take traditional feedback from siloed channels and create a unified approach that takes into account the entire customer journey across multiple channels.
VoC solutions are about "bringing all the data into one place, where a company can look at and understand everything the customer is saying about the company, its products, and customer experiences," says Duke Chung, cofounder and chairman of Parature.
That is done not only with tools to segment customers and collect their feedback, but also with analytics, reporting, and data management tools to derive insight from the feedback and share that insight throughout the company.
VoC, at its core, is an in-depth process designed to capture customer thoughts, expectations, preferences, and aversions; organize them into a hierarchy of needs; and prioritize them relative to particular business goals.
As a final stage, a VoC program also involves closing the loop with corrective action based on the feedback received. VoC goes beyond just hearing what customers are saying to actually listening, taking what is heard, deriving meaning and intent from that, and turning it into action. It should open numerous opportunities for companies to effect immediate change.
"It has to go far beyond simply collecting customer feedback and survey data. Collecting data is great, but unless you have a clear path for taking action, all you have is mounds of data," says John Maraganis, founder, president, and CEO of Omega Management Group, a customer service and support consultancy.
"A VoC approach puts more relevant information into the hands of people who can make a difference, influencing decisions about the business on a day-to-day basis," adds Andrew McInnes, director of marketing at Allegiance. "VoC is a more operational approach that is integrated into day-to-day operations."
Market Scope
And while VoC programs are becoming more prevalent, they are far from ubiquitous. Vendors and analysts agree that VoC is still in the early stages of adoption.
Karine Del Moro, marketing director at Confirmit, puts the split between early adopters and more advanced deployments at 50/50. "The majority of companies are doing VoC in one way or another, but there are not a lot of mature programs," she says. Maturity is achieved when the program is aligned with business objectives and corporate leadership is using the data to improve the business, she says.
"A lot of companies have dipped their toes in the water, but it's not very organized yet," says Oliver Siodmak, a partner in the Digital Transformation Practice, Consulting, and Systems Integration Unit at Infosys. "There is still a set of siloed activities, but there's a tremendous push to enhance CRM tools to capture more information."
Among those firms that are using VoC solutions, the top reason for doing so is improving the customer experience, followed by gauging the overall health of the business, retaining customers, selling on their successes, driving innovation, increasing demand, evaluating specific customer touchpoints, improving or creating products, improving marketing effectiveness, capturing customer referrals, evaluating marketing claims, and understanding brand perceptions, according to recent research by management consulting firm Peppers & Rogers.
McInnes values the VoC market at between $400 million and $600 million in revenue, with technology, marketing, and customer care services and solutions providers all fighting for their own piece of the pie. The vendor landscape is constantly growing, and so are the capabilities being included with new solution releases. "We're at the tip of the iceberg as it relates to the potential that companies can see from VoC programs," says Dave Capuano, vice president of solutions marketing at Verint.
Capuano notes that in most cases, current VoC deployments are tied to enterprise feedback management solutions, while a few more advanced adopters have linked feedback collection tools to speech and text analytics to derive insight.
Nonetheless, analyst firms Saddletree Research, Ovum, Forrester, and Nucleus Research have all identified VoC as a megatrend for 2012.
According to Forrester's "Navigate the Future of Customer Service" report, 2011 saw many companies still lacking formal methods to gather social feedback, analyze it, and set up process flows to act on it. "Many vendors offered customer service analytics packages but did not provide an easy way to separate the noise from actionable feedback or the ability to route feedback to organizational groups where it could be best addressed."
The report predicts a change in 2012, as companies "double down" on feedback processes across channels. "Vendors have been making it easier to link feedback to customer records due to the acquisition of social listening and enterprise feedback companies by CRM and workforce optimization vendors," it said.
Last year, for example, saw NICE Systems acquire Fizzback, and Verint acquire Vovici.
Saddletree Research says 2012 will be the year when speech and text analytics and customer surveying software—the key components of a VoC program—come to market at a remarkable rate. The analyst firm found that 25 percent of companies will evaluate speech analytics for purchase in 2012, while more than 23 percent will evaluate survey software, and more than 14 percent will evaluate text analytics.
Nucleus, in its "Top Ten Predictions—2012" report, said it expects to see "more investment in analytics, activity monitoring, and big data crunching as companies aspire to the perfect combination of targeting, touching, and treating their customers."
The investment is not just coming from large companies either. "Because of the technology to collect data quickly and the commoditization of mobile devices, [VoC] technology is even within the reach of SMBs," Maraganis says.
"It's now available to all sizes and types of companies."
And while the retail, telecommunications, banking, and insurance industries have been among the earliest adopters, the benefits that can be achieved from a VoC strategy span many verticals. "I can't think of any organization that wouldn't benefit from more firsthand information directly from the customer," Siodmak says.
Some firms are now marketing very industry-specific VoC solutions. Beyond the Arc, for example, is a customer experience consulting firm that in early May launched a VoC service to help financial institutions.
"As regulators take a closer look at customer complaints, our VoC service enables financial institutions to really understand where the most urgent problems are from a customer perspective," Beyond the Arc CEO Steven Ramirez said in a statement at the time of the release. "Banks and credit unions need new tools and new approaches to prioritize and strategically address their customer experience issues."
VoC in Action
Healthy Directions, a Potomac, Md.–based nutritional supplements provider, has traditionally used product sales and returns data to gauge customer satisfaction, supplemented with occasional print and email surveys. But these methods didn't tell the company what it really wanted to know: What was driving repeat purchases?
About a year ago, the company turned to the Allegiance Engage VoC platform to gather feedback, analyze trends and relationships, and take action to strategically influence customer purchase decisions. It started by customizing a product survey containing 28 questions, which it sends via email to targeted customer groups. It also sends out quarterly customer relationship surveys and transactional surveys.
"The insight collected is the basis of a number of corporate initiatives to get more repeat customers," says Julie Kaplan, executive director of customer experience at the company. "Now that we know what is driving sales, we can take initiatives to capitalize on that."
Southern States Cooperative, a Richmond, Va., farm supply and service cooperative, also hopes to boost sales through its recent deployment of the Vovici VoC platform from Verint.
In December, the cooperative, which serves customers through more than 1,200 retail outlets in 23 states, instituted a companywide initiative to become more customer-centric. "We quickly determined the first and best step was to invest in a voice of the customer platform that could systematically collect and analyze consumer insights and feedback, enabling us to make informed decisions to prioritize and drive our future plans," says Greg Bucko, manager of customer insights at Southern States.
"We knew very early on that we needed much more than just survey software," he continues. "The collective solution we invested in needed to handle intricate customer feedback across the organization. Our ongoing goal is to continue to grow, engage customers, and build loyalty."
That's already happening at Benchmark Senior Living, which operates 46 senior care residential communities in the Northeast. The Wellesley, Mass., company has already added more than $700,000 to its bottom line as a result of the Allegiance Engage VoC platform it put in place about a year ago.
It achieved that financial windfall by cutting down on the number of residents who move out after less than six months in a facility. The company had 12 fewer move-outs in 2011, which, at an annual fee of $60,000 per person, equates to $720,000 in revenue saved.
Traditional paper-based surveys administered once a year by an outside agency failed to explain why some seniors were leaving. "We spent six months analyzing the data," recalls Brenda Abbott-Shultz, vice president of customer experience at Benchmark, "and we were still very handicapped in our ability to understand what our relationship with our customers looked like."
Instead of polling random samples once a year, the Allegiance Engage platform now allows Benchmark to poll residents and family members seven days, 30 days, and 90 days after they move in. Surveys are conducted online, and response has been high. Of the 2,200 surveys sent out last year, more than 1,900 were returned, according to Abbott-Shultz.
The tool is also helping Benchmark evauate employees, improve internal communications with residents and their family members, and even revise the organizational structure. A residential advisory board was formed as a result of feedback received.
"Having real-time data to act on is vital to resident satisfaction," Abbott-Shultz says.
"We heard some things we did not like, but you have to be prepared for that," she warns. "And if you're going to take the time to ask, you have to be prepared to do something."
Corporate Culture
In each case, the success of the VoC initiative is tied to executive buy-in. It is universally agreed upon that a VoC program requires a change in corporate culture that has to be driven from the top levels of corporate leadership. "It has to start with the CEO and filter its way down," Confirmit's Del Moro advises. "You need to ensure that management is aligned with the same customer service goals. And the front-line employees have to understand how their behavior affects customers every day."
It also helps to outline clear goals for a VoC program. "No company starts its year without a clear sales, marketing, or ERP strategy. These are part of the corporate culture, and everyone accepts it," Maraganis suggests. "Today, companies need to treat VoC the same."
"Organizationally, one group needs to take charge and get the other groups involved in the process," Parature's Chung adds. "Someone has to take the lead in these efforts. Without some structure, it could easily become a free-for-all."
According to Chung, VoC is largely a marketing function now, but many companies are recognizing that the contact center definitely needs to be involved.
Even more companies are creating positions of chief customer officers or vice presidents of customer experience, whose function is to take charge of VoC initiatives, Verint's Capuano points out. These positions typically answer directly to the president or CEO.
And often, this person's compensation is tied to customer satisfaction, as measured by a company's Net Promoter Score or similar metric, Maraganis observes.
Build Buy-in with a Customer Tie-in
As with any resource allocation, to get executives behind a VoC initiative, companies will need to prove ROI, especially as it relates to the company's ability to drive revenue and deliver shareholder value. In the case of Benchmark Senior Living, that was simple—a $720,000 return is easy to quantify. But most benefits aren't quite that obvious.
McInnes says one of the most "straightforward" metrics is the change in customer perceptions after the full closed-loop process is executed. "By following up with a customer immediately after a bad experience, you can turn that person around to a customer who is loyal and will do more business with you in the future."
Companies can also stress the link between the retention of customers and their lifetime value to the company. "Obviously, today, customers who are happy with you are more valuable to the company," McInnes stresses.
Luckily, that mode of thinking is starting to take hold. "Customer service is being seen more today as a key differentiator," Del Moro observes. "Leaders in their fields have seen a direct correlation between their level of profitability and success as a company and a high level of customer service."
Conversely, if you're not doing VoC today, you risk losing customers and revenue," she continues. "You're not making the process improvements that you could, and so you're probably incurring more costs."
McInnes agrees. Without it, "you're leaving a lot of solid business improvement ideas on the table, impacting revenue, sales, and the cost to serve [customers]. You're opening yourself up to losing market share to companies that really listen to their customers," he says. "It's a key to business survival over the long term."
"It can be a huge competitive advantage, helping to make decisions faster and better," Chung adds. "Today, you always need to keep your ears open to what your customers are looking for and use that to improve your products and services."
But, like any CRM deployment, a VoC strategy has to be a long-term effort. "It's not something that you just implement once," Del Moro says. "It's something you need to do on a continual basis."
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