How Well Do You Really KNOW Your Customers?

Voice Of The Customer is a much-used term in the marketing discipline. Often this is accomplished utilizing formal and informal surveys. Non-quantifiable surveys leave much to be desired as a tool. The customer may tell you what they think you wish to hear or you may hear what you want to hear, in short they can be fairly subjective.

There is a technique that was taught to me by one of our consulting firms, Crossroads Development Group who graciously allows me to highlight the methodology, which provides quantifiable and actionable data. It also is rather benign and impersonal which hopefully leads to more objective answers.

THE STEPS

1) Develop a list of your most important customers. The group should be large enough in population to provide a good cross section of your business.

2) If you sell into different industries you want to make sure you get a good representation in all of the key ones.

3) The first question is rank the TEN most important factors in your purchasing decision rating each on a scale of 1-100. This response provides our customers EXPECTATION.

4) The second question is rate your experience with (your company name) in each of these factors on the same scale of 1-100. This provides our customers perceived EXPERIENCE with our company.

5) One could take it a step further and ask them to rate their experience with whomever they consider to be their best vendor but for our purposes here we will look at just our relationship.

6) If one divides their Experience into their Expectation you get an Experience to Expectation Index (Index). If Expectation is 100 and Experience is 95 then the Index is 95 as an example.

7) If you plot first Expectation graph where your vertical axis is Experience and your horizontal is Expectation (Importance) you will be provided a visual cue to how to manage your customer. Draw a straight line through the center of their data points. Now add two more lines, one 5% above and 5% below that line. The space between these two lines is THE IDEAL MANAGEMENT ZONE. Now mark your Index data points aligned vertically with their Expectation data points.1

USING THE INFORMATION

This method can provide tactical insight when looking at an individual customer. When the population of customers are averaged in developing the Expectation as well as the Index it can provide more strategic information, not just in sales & marketing but operational issues. If we break out our customers by multiple industries it can provide insight into the (sometimes subtle) differences in priorities according to each customer base.

If our Index is falling below the Ideal Management Zone then we are under-whelming and need to improve. If our Index falls above this Zone, then we are over-delivering on something that the customer does not value and is thus likely not willing to pay for. Anything falling in this region should be viewed as non-value-added and an opportunity to redeploy costs to either address those items that need improvement, to use in our pricing strategies or simply to drop to our bottom line.

Here is an example provided by Crossroads of the Index plotted from a group of customers. Note that there are more than ten factors. As in a group of customer responses, there will be some differences typically in the low end of importance between them.

Again, this is a tool that can provide valuable decision making data for cutting costs, redeploying resources, and plotting diversification strategies among other things. It takes some of the subjectivity out of just posing the questions of how are we doing, how is our service, and how is our quality.

Thank you to Dan Telep and Crossroads Development Group for their expertise.