Delivering Customer Value through Six Sigma

Building an Effective Voice of the Customer System

Reg Goeke
Contributor: Reg Goeke
Posted: 10/29/2009

I recently delivered a webinar for the Institute for the Study of Business Markets (ISBM) explaining how to design Value-Driven Process Improvements in order to achieve superior business performance. Such initiatives are highly dependent upon an effective Voice of the Customer (VOC) system—one that is proactive rather than reactive, that uses the metrics of customer value rather than the metrics of customer satisfaction and that includes perspectives from the customers of your competitors in addition to your own. At the conclusion of that webinar, I received numerous questions about how to design and implement such a VOC system. After years of deploying VOC systems in manufacturing, service industries and consumer packaged goods, I’ve identified four simple criteria to guide the development of an effective VOC system in any industry.

  1. An effective VOC system must provide actionable results. We’re currently running an informal poll on our Web site to determine the biggest problem people are having with their VOC systems, and the overwhelming response is "Making the data actionable" (61 percent). If your VOC system is to have any credibility, it must provide clear direction for competitive marketing strategies, and it should direct specific improvements in people, products/services, and processes in order to deliver superior value. Of course, no one wants to take action based on data that is not demonstrably predictive of business performance. This means that you’ll have to abandon the metrics of customer satisfaction and replace them with the metrics of customer value, as we’ve noted here previously. You’ll also need questionnaire attributes that are performance-based, rather than agreement-based, and those attributes must provide sufficient detail to direct meaningful actions.
  2. Actionable results require a strategic focus. One of the problems of most VOC systems is that they tend to aggregate customer feedback across all market segments served by the organization, and across all product/service categories the organization provides. The result is an "average" perspective that lacks sufficient focus for any meaningful actionability. The solution to that problem is to stop trying to be all things to all people, and to start focusing on those product categories and market segments that provide the greatest opportunity for business growth. With that type of laser-like focus, the organization can deploy a VOC system that will enable them to understand value within those targeted product/markets better than anyone else—and therein lies the key to market share growth.
  3. The VOC system must provide results that are quantifiable. There’s no doubt that useful insights can be gleaned by a review of customer complaints, mall intercepts, focus groups, or depth interviews, but a truly robust VOC system will provide:
    1. A quantitative assessment of Critical-to-Quality factors (CTQs) and their relative importance
    2. The quantitative identification of competitive performance gaps on those CTQs
    3. Empirical evidence of both reliability and validity
    4. These conditions will require shifting your VOC system to a VOM (Voice of the Market) system—one in which the customers of both your own company and those of your key competitors are each rating the performance of their individual providers on specific quality, price, and image attributes. Those ratings can then be analyzed with statistical tools familiar to all Six Sigma practitioners in order to provide the information listed above.
  4. The output from your VOM system must be easy to communicate. As research companies work to differentiate themselves from one another, they often end up producing extremely sophisticated charts, graphs, and tables that require a Ph.D. in statistics or engineering to understand. The goal of an effective VOM system should be to generate output that is easily understood by the very employees who are providing the goods and services, as well as by shareholders and other stakeholders. Employees want to provide superior value to their customers, and they’ll work hard to achieve that goal, but they also want to know how well their work is "moving the value needle."

Developing and deploying the type of VOC/VOM system that can effectively drive Value-Driven Process Improvements is not as complicated as it may seem. Once you’ve determined which product/markets to focus on, there are just four key steps to complete.

  1. Determine what questions to ask. These are the quality, price and image attributes that are used by customers to rate the performance of their provider(s). It’s very important that these attributes come from customers themselves, and not just from an internal group of sales personnel and managers. In order to achieve that, you’ll need to conduct some individual depth interviews and/or focus groups (depending upon your industry) in order to capture the very criteria used by customers when making their purchase decisions. An actionable survey might very well include 50-70 such performance attributes.
  2. Determine how to ask the questions. Depending upon your industry, you may conduct the actual survey by telephone, over the Internet, or with a survey panel. The important thing is to ensure that you are getting the right person to complete the survey—either a decision-maker or a key influencer.
  3. Use the right tools to analyze the data. The basic tools to generate the appropriate value metrics include factor analysis, regression analysis, analysis of variance and cluster analysis—all tools very familiar to any Six Sigma Black Belt. The resulting value metrics should include:
    1. A Market Value Model—to identify Critical-to-Quality factors and their importance
    2. A Competitive Value Matrix—to map your competitive value proposition and value performance gaps
    3. A Customer Loyalty Matrix—used to enhance the loyalty of your current customers, and to move the needle on your Net Promoter Scores if you use those
    4. A Competitor Vulnerability Matrix—to identify the vulnerabilities of key competitors
  4. Link those value metrics to important action items. The value metrics listed above will enable you to prioritize your most important opportunities to provide superior value in your targeted product/markets. Those opportunities will typically consist of systematic improvements to your organization’s products and services, its customer-facing people, and the processes by which you create and deliver superior value.
Reg Goeke
Contributor: Reg Goeke
Posted: 10/29/2009

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