May/June 1998 FAQ: The trend in business today is definitely shifting toward the customer. What are the most important ways an organization can leverage the customer relationship?

First and Foremost ... Listen to the Voice of the Customer! The voice of the customer can be heard loud and clear ... if you're listening. The buzzwords today -- customer-centric, customer satisfaction, 1-to-1 marketing, relationship management -- are testimony to the day-to-day shifting in management view from internal operations to an outward orientation, toward the customer.

But saying you are focusing on the customer isn't enough. To take advantage and truly "leverage" the customer relationship, those words must be coupled with some kind of measurement system that really tells you how that relationship is going. You need to implement a system that measures:

• the customer's perception of your products/services ...
• as related to their expectations of product/services ...
• and as compared to your competitors' offerings.

Your system for "Listening to the Voice of the Customer" could be, at a minimum, a trouble log that is updated daily by people handling customer service and used in R&D and product manufacturing to identify quality control or design deficiency issues. Or it may mean sophisticated statistical analyses of regularly-measured customer data points distributed throughout the organization for immediate action. The fact is that many organizations are carefully managing their relationships with their customers on some part of the feedback spectrum in an effort to ...

Ensure retention (after all, it costs 5-8X more to get new customers as it does to hold on to current customers) Increase market share (a "very satisfied" customer is almost 6X more likely to be loyal and to repurchase and/or recommend your product/service than a customer who is just "satisfied") Enhance profits

For companies with multiple product/service lines, it's more fashionable -- and actually more profitable over the long run -- to increase your "share of customer."

For all this "buzz," don't think that if you haven't already got a system in place to measure and analyze customer satisfaction that you're too late out of the starting gate. Purdue University's Center for Customer-Driven Quality conducted an analysis of the 1994 annual reports of Fortune 500 companies. Their analysis failed to find any firm reporting the actual numbers of loyal and satisfied customers they serve, much less satisfaction trends among the customers. 87% of the companies with annual revenues in excess of $100 million listed customer satisfaction as one of their most important corporate initiatives, but only 16% of these companies had any method in place to measure their effectiveness in satisfying the customer. So don't fear ... it's not too late to get on the customer value bandwagon!

Some Best Practices ... So you're ready to get on the bandwagon and implement a system of measurement. But you may want to look internally first and compare your organizational practices to some of the best-in-class. And before you start measuring, make sure that your organization is positioned and willing to follow through and take action on what you find. Research indicates that the factors separating market leaders from the rest of an industry are designed to hear the voice of the customer and achieve customer satisfaction. In these companies: Marketing and sales employees are primarily responsible (with customer input) for designing customer satisfaction surveying programs, questionnaires and focus groups. Top management and marketing divisions champion these programs. Corporate evaluations include both the company's customer satisfaction ratings as well as those of their competitors. Satisfaction results are made available to all employees. Customers are informed about changes brought about by the results of listening to them. Internal and external quality measures are often tied together. Customer satisfaction is incorporated into the strategic focus on the company via the mission statement. Compensation of all stakeholders is tied directly to the customer satisfaction surveying program. A concerted effort is made to relate the customer satisfaction measurement results to internal process metrics.

As organizations reengineer, improve, redefine (or whatever verb you use for "change") customer service strategies into differentiating, competitive offerings, it is important to have a valid means of listening to the voice of the customer -- on the shop floor, in the lab, in the conference rooms and the board room. The good news is that you don't have to have a department of statistical analysis to hear what your customers have to say. PC-based tools are now available that enable managers with little formal training to use basic analysis techniques to improve the quality of their decisions.

So if you're ready to take the plunge and implement a customer satisfaction survey system, the following criteria may help:

The system must be relatively easy to design and understand. It must be credible enough that employee performance and compensation could be attached to the final results. It must be inexpensive to implement and monitor. It must generate actionable reports for management.

Once the customer information database/data warehouse has been developed, organizations can begin customer relationship market research to profile target customer groups and understand, in actionable depth, their wants and needs.

Customers base their purchasing decisions primarily on two sources of inputs:

The customer's own experience -- each time they experience the product/service, whether that service is great, neutral or terrible (known as MOTs = Moments of Truth) The experience of other customers -- each time they hear something about a company, whether it is great, neutral or terrible (known as WOM = Word-of-Mouth)

For instance, recognizing the demographic profile of your "delighted" customers might be a great way to find new customers with the same profile. Understanding the criteria that drive your target customer segments to purchase might be a great way to develop ancillary products/services that add value to your basic offerings.

It really boils down to some simple advice. First you must realize why your organization needs to be more customer-focused and identify the benefits to the organization of better leveraging the customer relationship. Second, find a way to listen to, measure, communicate and take action on what the customer tells you. After all, listening to the voice of your customer is a key step in keeping them that way -- your customers.

If you have a question or would like more information on Customer Relationship Management, ask Linda Wilson, our resident expert on the subject, 713.877.8130. Barry Robichaux can provide expert insight into the techniques of setting up Customer Satisfaction Surveys.

For a great read on this subject, check out Dr. Jon Anton's book, "Listening to the Voice of the Customer: 16 Steps to a Successful Customer Satisfaction Measurement Program" (ISBN 0-915910-43-8), published by The Customer Service Group, 212-228-0246.

As always, we would like your comments and suggestions on our FAQs and Hot Topics. Please give us your input by signing in on our guestbook.