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Value Chain Solution to VoC ROI 

Lynn Hunsaker | Mar 27, 2017 384 views No Comments

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customer experience value chainVoice-of-the-customer (VoC) ROI can be elusive unless you’re adamantly driving customer experience transformation. The key to VoC maturity and ROI is not sophistication or breadth of market research. It’s about viewing VoC itself and VoC actions and metrics as value chains.

What is a value chain? It’s a sequence of value-adding activities.

Value chain thinking is extremely valuable in customer experience management. You can easily see its power in a customer experience journey map: nothing is an island — everything has a sequence and a series of connections that build upon one another.

customer experience improvement model1. We need to be thinking of voice of the customer as a value chain: (1) customers have perceptions, (2) so we conduct VoC to capture perceptions, (3) so we act on VoC to make improvements our customer base will reward, (4) so we track our improvement plan progress metrics as predictors of what customers will soon perceive, (5) so we communicate what we heard, what we plan to do, and what we’ve achieved — to propel improvement plan follow-through and to reset customer perceptions, (6) so we monitor VoC to confirm customers’ perceptions of improvements we’ve made.

This is a flow, a sequence of activities where value is being added at each step. It’s a logical series of effort that generates change that everyone appreciates: customers, employees, and investors. That is mutual value creation.

(See the Applied Materials example: Strategic Action on B2B VoC)

In my earlier article on Why Only 15% of VoC Programs are ‘Very Successful’ the first reason given is “you get what you measure”. There were 2 key points to this reason: don’t treat VoC like SPC, and don’t emphasize transforming customers instead of transforming the company:

  • “Survey index scores are treated by most companies like SPC — statistical process control — where performance within a “safe range” means business-as-usual is okay.” 

(SPC is used in factories where automated machinery must perform within bounds (UCL = upper control limit, LCL = lower control limit) or be adjusted, otherwise junk is produced — SPC is also applied to many business processes for the same reason.)

While SPC is a valid technique, we should NOT view survey scores within a safety zone to excuse business-as-usual: we should be striving to respect customers’ time giving us feedback by continually making things better for them!

Critical moments of truth — any juncture between the company and customer where dissatisfaction may lead to customer defection — should be monitored to ensure safety zone performance, yet we should present them to business managers in ways that create insatiable appetite for VoC. We can do this in terms of the revenue and profit value and characterization of the percentage of customers that aren’t satisfied. While it’s impossible to satisfy 100% of customers, we have opportunities to learn from the percentage that aren’t satisfied. This is more than a statistic: it is a pool of revenue at-risk, it is a group of customers we can characterize to help managers understand opportunities not only to win-back defections, but also how they may simplify or expand features and make other adjustments to better serve this group. This holistic approach (as opposed to case management alone) is best for positive word-of-mouth and business growth.

2. We need to be thinking of VoC actions as a value chain: (1) VoC action alerts specify case management where we learn about individuals’ situations and close the loop with them, (2) VoC chronic issues — especially critical moments of truth — require cross-functional absorption of customers’ comments, collaborative identification of root causes, action plan progress metrics, and closing the loop with the whole customer base, (3) VoC expectations provide context and inform what each work team in our company does, (4) VoC goals inform corporate strategy and goals, culture (everyone’s thinking and doing, what gets people ahead or not), structure, policies, processes, business models and alliances.

When you are managing VoC toward the 4 applications listed above you are aligning the company to customers’ needs, and that is customer experience transformation. That is what customers reward. That’s how you drive ROI and sustainable growth.

(See the SunTrust example: Do Customers Experience Your Internal Collaboration — or Lack of It? and Customers First Drives Business Performance)

VoC strategy

  • “Emphasis on a survey index score focuses attention on what the customer is doing for the company rather than what the company is doing for the customer.”

3. We need to be thinking of VoC metrics as a value chain: (1) revenue, market share, and customer perceptions (VoC) are consequences of our business processes — they’re lagging indicators because our stakeholders see them when we see them, (2) what customers receive (e.g. timeliness, responsiveness, quality, accuracy, etc.) are outputs of our business processes — these are revealed through VoC correlation analysis as “key drivers of loyalty”, (3) in-process decision steps (e.g. early warning signals for re-work, scrap, delays) are leading indicators of outputs and consequences — these are the KEYS to managing the key drivers and predicting customer behaviors and business performance, and (4) inputs to our business processes (e.g. information, objects, skills, attitudes, etc.) are levers of our leading indicators.

Emphasis on leading indicators, as described above, is the key to focusing attention on what the company is doing to earn customer engagement through reliability, trust, and relationship strength. Earning customer engagement is more profitable and sustainable than the “resource hamster wheel” of enticing customer engagement.

(See the tw telecom example: Is Operations Involved in B2B Customer Experience?)

Voice of the customer is an essential investment! We should design it to inform our entire company about customers’ expectations and to monitor performance of moments of truth. We should design it to enhance customers’ experience in their VoC participation rather than to be a burden to customers. Like any other essential investment, (4) we need to be strategic and bold in what we expect from VoC: The model below shows the value chain that leads from VoC: (1) VoC data is combined from all sources for a 360-degree view of customers, and analyzed for pattern discovery and prioritization (Intelligence & Customer Lifetime Value), which (2) informs the company’s Strategy and Culture foundation, which sets the stage for (3) customer experience design, improvement and innovation that will be rewarded by the customer base, and (4) employees view their roles and responsibilities within a customer experience context, and are engaged in making changes that customers care about, which (5) earns customer engagement and channel partner engagement, which (6) drives retention, loyalty and business results.

Customer Experience ROI Model

This customer experience management (CXM) value chain reflects “laws of nature” — when you short-cut it you short-cut your results. When you proactively manage it, you transform customer experience and maximize ROI of VoC, CXM, and the business overall.

This is the 3rd of an article series, originally published on LinkedIn:

  1. Solving the Voice of the Customer Immaturity Conundrum
  2. Solving VoC Immaturity: Fast-Track to Customer Experience Transformation
  3. Value Chain Solution to VoC ROI

Feature image purchased under license from Shutterstock.

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