iSixSigma

VOC Gone Wild

It seems “Voice of the Customer” (VOC) is a label applied to almost any interaction between a business and a customer these days. Anything from direct interaction to the vaguest involvement along the periphery. Anything from highly structured, planned, and observed interactions to informal, anecdotal, and third-hand accounts.

Some VOC is certainly useful. But more and more, my experience with VOC as it is typically gathered and used causes me concern. For one thing, I find VOC usually ignores even the most basic statistical thinking – especially special cause/common cause and notions of representative sampling. But even if we assume the best VOC methodology, there are two additional problems:

  1. Customers usually aren’t well qualified to tell us what they want. What customer ever stood up and said they wanted an iPod? Or eBay? Or Facebook? And even when customers can accurately articulate what they want, it’ not always something that is practical or wise to deliver. For these reasons among others, direct VOC may be very useful for incremental innovation and improvement, but in my opinion it’s a unreliable pathto breakthroughs.

  2. The definition of “customer” is more difficult than it first appears. For example, are shareholders of public companies customers? Surely they are. And surely hearing their “voice” is not difficult. They vote each and every day on the markets. And we don’t have to conduct special studies to know what they want – most companies report to shareholders every quarter, and the shareholders make it instantly and extremely clear what they like and don’t like.
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This second issue is especially problematic. Take airlines. Traditionally we think of the customer of an airline as the person flying. But obviously airlines don’t care too much about the voice of these “customers” – if they did, air travel would be a lot different. Every seat would be roomy and comfortable. Food and drink would be plentiful and of high quality. Airlines would do everything in their power to take off and land every flight on time, including having extra planes and crews on standby at every airport.

So why aren’t things this way? Because the actual customer being served is the shareholder, who demands that airlines do only what is necessary to be profitable and deliver results quarter by quarter. The shareholders care nothing for the voice of the flying “customers” – indeed, the average shareholder almost certainly has no idea how to run an airline or serve the flying public. In fact, given the prevalence of mutual funds, pension funds, and similar investment vehicles, it is doubtful whether most shareholders even know they own a given stock. But even so, they definitely want their stocks to rise. And despite thier mostly irrational behavior, it is these customers that make their voice know most clearly, and drive the most behavior by businesses.

The thorny part is that the actions that will make the stock rise can be very different from the ones that would make flying passengers happier. Diametrically opposite, even. Of course, the airline can’t lose market share – no one involved wants that – but if all airlinesoffer equally poor serviceand the total number of people flyingstill increases each yearincreases, then the rate at which customers come and go from any particular airline isn’t likely to matter (at least among the big players). I have virtually no knowledge of the airline industry, but I’m guessing this is the situation we’re in. And because of this, the voice of the shareholders becomes much, much more important than the voice of the flying customers, and we get the kind of airline service we have today.

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As I said, I’m not an expert on airlines by any means, and anyone who is should feel free to pick apart my example. But the root cause stands, regardless of the specific example chosen: customers in general, whether shareholders or consumers, are unlikely to know anything about the business they patronize or own. And because shareholders demand only that stocks rise quarter by quarter, regardless of the good of the business in the long term, they are very likely to demand behaviors that directly injure “customers”. Examine any publicly held company and you’ll be certain to find similar tension between these different groups of “customers”, and neither group is particularly concerned about the long term well-being of the business. All of which means that reading too much into VOC is a very risky proposition.

Comments 2

  1. London MBB

    I think you have misunderstood some crucial aspects.

    When coaching my BBs & GBs, one of the most important points I endeavour for them to take away from our experience is around the criticality of VoC. I have seen many, many projects – even ones led by fully-trained MBBs! – fall foul of skipping the VoC steps.

    Collecting VALID VoC requires as much attention and care as any other data on your project. With careful considerations to sampling, bias, operational definitions, continuous/discrete etc. Unfortunately, it is quite rare for it to be done properly. It is often rushed and manipulated, if done at all. The irony is remarkable – rush to get a project going without sound case from the Customer, then invest a lot of time collecting and painstakingly analysing data… yet you’re already off on the wrong path because you didn’t listen to the Customer properly!

    Asking the right questions is critical; we would not expect a Customer to demand a product such as an iPod (solution). We want to understand their needs (e.g. access a variety of music on the move other than what CDs I could fit in my handbag as I rushed to work!)

    The Shareholder will always be the ultimate Customer. However, by focussing what the Business delivers on what the Customer actually wants and delivering that more efficiently, we can better satisfy our Customers, retain them and get more Business from them. Happy Customers AND happy Shareholders.

    Incidentally, I have worked in the Air industry. Whilst most offerings are pretty comparable in a competitive market, the Airlines that better understand their Customers needs, provide the differentiators. Different Customer segments have differing preferences and price isn’t always the deciding factor. Meals, lounges, stop-overs, flight schedules… even uniforms, are factors that can influence a Customer choosing between two Airlines offering flights to the same destination at similar prices.
    How can you know which?
    ASK THE CUSTOMER!

  2. Andrew Downard

    London MBB,

    I’m sure I have understood some crucial aspects. I was rather hoping someone with a better knowledge of the topic would set me straight.

    I’m still not convinced much true breakthrough innovation comes from VOC as a starting point. Incremental, sure. And there’’s nothing wrong with incremental innovation, expecially if it’s profitable.

    I understand your point about airlines, but I still think the tension between shareholders and cutomers is ignored in a lot of VOC work. Shareholders don’t care about satifying the customer, EXCEPT to the degree that it raises share price. And I think it’s increasingly true that shareholders don’t care whether the increase is sustainable in the medium-long term. Shreholders generally have no idea what needs to be done to run the business profitably, which make them irrational owners. But they are owners nonetheless.

    In situations where there is a high cost or regulatory barrier to entering the business and a few main players dominate a large market (e.g. airlines in the US, banks in Canada, HMOs in the US, Pharma manufacturers worldwide), I’d argue that the voice of the shareholder becomes MUCH more important to businesses than the voice of the customer. And the two are seldom aligned. Thus, no more peanuts on flights. If that causes customers to leave airline A for airline B, it’s no big deal because other customers are leaving B for A due to surly gate agents. In the end, customers really have nowhere to go – the amount of people flying keeps increasing, but the options for carriers don’t change too much. Thus, the logical thing for the business to do is focus on keeping the shareholder happy, rather than the customer. As long as the customers don’t have much choice, this will be profitable.

    Not saying that this thinking is right (look at Southwest, EasyJet, etc – carriers that did use VOC and changed the model, much to the benfit of owners), but I think there is a lot of it remaining out there.

    Andrew.

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