iSixSigma

Knowing Who Your Customers Are

When a company has multiple types of customers, a key factor in generating accurate voice-of-the-customer (VOC) data is the development of a unified VOC collection process. In my article, “Nice Doing Business With You” (iSixSigma Magazine, January/February 2011), I discussed various methods to ensure that all types of customer information is gathered from various departments and analyzed properly.

Before a unified VOC collection plan can be implemented, however, organizations must understand who there customers really are. The following are five key questions and issues that must be addressed to assure that VOC information is used most effectively. ?

1. Who is the primary customer? – Companies that view the distributor as the primary customer are arguably making a huge mistake. If the end consumer is not happy, organizations will lose demand pull.

This is not to say that the distribution partner should be ignored – if their experience is not a “win-win,” they won’t push the company’s product with enthusiasm; if they have multiple brands, the company’s will not be successful. However, in most cases if the customer thinks an organization is easy to do business with, the distributor will be happy.

2. Where are there similarities and differences in the pain points of the different customer groups? – Understand where needs are congruent and where they are different. Often, the dealer wants efficient transactions, and the end user needs hand-holding and education. There may be problems that are painful for both “customers.” Quantify the revenue impact of each pain point and determine priorities.

A classic case involved Avis Rent-A-Car customers in Europe, who were angry when they had to stand in line to return their cars at the airport and missed their flights. Employees and station managers also hated the resulting ugly situations involving disgruntled drivers. The focus on this one transaction resulted in the innovation of the hand-held computers for check-in that are now the industry norm.

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3. Which customers have the greatest worth? – A single customer, in general, is seldom worth anywhere near as much as one distributor, dealer or financial advisor. However, the distributor will be much happier if the end customer is happy because unhappy end users cause much more cost and trouble for them. If a dealer sells multiple brands, they will start recommending the alternative brands that are “less hassle.”

In investment funds and medical institutions, financial advisors will stop recommending funds if the investor has multiple problems. Likewise, physicians will stop referring patients to a medical institution if they receive more than one complaint about the treatment of their patients. In such cases, the institution doesn’t lose just $4,000 from two patients, it could easily lose $600,000 if one referring physician shifts his referral habits due to those two patients’ complaints.

4. What are the issues with the largest impact? – A rule of thumb about VOC is that the problems you hear about most are often not the issues with the biggest impact. Multiple studies for several companies – including commercial copier and computer manufactures, as well as multiple brokerage and insurance companies – have found that sales and marketing problems are seldom articulated and often do four times as much damage to customer loyalty as operational errors. People will forgive occasional errors, but not misleading marketing or service that is considered unresponsive or disrespectful. Therefore, practitioners should collect VOC data that shows management the magnitude of revenue lost from customers who have not complained.

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5. What is the best way to rectify pain points and weaknesses? – The VOC process should provide guidance on three possible strategies for dealing with identified weaknesses:

  • Can you prevent the problems via process changes, or changes in marketing and customer education?
  • Do you need to get the customer to raise the issue before the situation gets out of hand?
  • Do you need to improve your response to the issue when it surfaces?

In most cases, prevention via proactive communication is almost always the most cost effective solution.

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