Despite the massive amount of customer feedback information available today, very little of it is being put to productive use. So why aren't firms using their customer insight to improve the likes of product development and processes?
By Neil Davey, editor
The collection of customer data has become increasingly sophisticated over the past decade, with new channels opening up to customers and new technologies to harvest information at the disposal of firms. But has the actual deployment of the data developed in tandem? The evidence seems to point to the contrary.
Posting on the Marketing Consortium weblog, Don Peppers stated his belief that despite the massive amount of customer feedback information available today, very little of it was being put to productive use. Furthermore, Peppers forecast that the problem would worsen as even more feedback channels opened up to customers.
Studies seem to support this assertion. A study conducted by CDC Respond in 2005 and 2006 into how the financial sector uses feedback to drive change quizzed some 130 of the top banks and insurance companies about customer feedback. The results were discouraging.
"95% of companies told us they were collecting information," says James Heavey, CEO of CDC Respond. "So like Don Pepper says, companies are using mechanisms to collect the data. However, only about 41% of firms actually use that information to alert staff to problems and to drive change. This then drops off to around 10% of organisations that are actually using that information to even drive quality assurance and continuous improvement programmes."
Gary Schwartz, Confirmit
The firms that are successfully feeding customer data into their internal processes only serve to emphasise just what an impact it can have on areas such as product development and process improvement.
Egg, for instance, approached its customer base twice during the process that created the Egg Money Card. Traditionally this process would have been outsourced to a market research agency, taking a minimum of a week or two to complete as respondents would be located and screened, several iterations of the questionnaire created and the data collated into a report. By carrying out the project internally, and by using customers (who were already primed to reply to feedback requests from Egg) from the moment of the decision, Egg was able to turn around the entire project in 24 hours. The company ultimately benefited from the feedback during the product innovation stage and also during the market introduction phase.
A lack of vision
But Egg would appear to be the exception, rather than the rule, and in the case of many organisations it would appear that data collection is completely disconnected from the processes that should be taking advantage of such rich information. Product development managers and process managers may be keen to use customer data but are simply not be receiving the information in a timely, quantifiable and/or understandable fashion - or indeed they might not be receiving any information at all.
"The main reason feedback tends not to be put to productive use is that companies generally don't have a clear and high-level vision for why they're collecting feedback, and no formal business process to ensure that the feedback collected is actionable," suggests Gary Schwartz, vice president of product marketing at Confirmit. "The way to ensure that feedback is actionable is to automate the process of soliciting it, collecting it and reporting on it through the business. Reporting needs to be at a granular level: alerts delivered when individuals' responses require escalation, as well as at an aggregate level, delivered in dashboards for senior management.
John Chisholm, CustomerSat
"The inexpensive tools don't allow for data to be delivered in a meaningful way to business owners, instead relying on export into Excel or PowerPoint. While those are useful, they are not real-time views of the data, and they require far too much manual intervention. These companies should implement software that enables automated data processing, alerting and dynamic, interactive reporting."
Certainly the presentation of the information is critical upon its arrival. John Chisholm, CEO of CustomerSat, believes that far too many businesses merely rely upon simple trend lines that vary little from week to week or month to month, making it difficult to know what responsive action to take.
"It's very important to provide not just a single way of looking at your business, but lots of ways," he says. "You never know when the data may be telling you something significant. An executive in particular has to look at his business from lots of different vantage points. Your overall net promoter score may not be changing, or your customer loyalty index may be pretty stable, but if you cut it by region, by product line, by sales office, you'll get some insights. You may find that there is a particular product line or sales office where scores are declining. And that is how you can focus your attention."
One strategy that is used by some organisations to facilitate the connection between customer demands and the development of product features is quality function deployment (QFD). A method to transform user demands into design quality, QFD helps planners to focus on characteristics of a new or existing product/service from the viewpoints of market segments by identifying customer needs/wants via voice of the customer research, identifying the engineering characteristics of products/services that meet the voice of the customer findings, and setting development targets for these products/services.
"QFD relies on organisations capturing the voice of the customer and the active involvement of all areas of the organisation to act upon it," says Andrew Aldred, marketing manager at Charter UK. "To do this, organisations must have a feedback system capable of capturing and delivering the information that they need – both proactively and reactively. Whether it's for increasing customer satisfaction, improving customer retention or delivering the products and services that customers want, customer feedback - whether via complaints information, surveys, focus groups, customer specifications, etc. - is key."
Indeed, despite Don Pepper's concerns, there are signs that gradual progress is being made. The use of customer feedback may be lagging behind the processes that have evolved to capture such data, but John Chisholm believes that several emerging trends point to it wielding increasing influence throughout the organisation.
John Chisholm, CustomerSat
"Traditionally customer feedback has been the privy of the front office and has been closely tied to CRM, but recently we are seeing it tied to the back office – ERP," he explains. "Apart from all of the product-quality and service-quality data that are important to manufacturing, what we're seeing is that the attitudinal information is starting to affect production planning and supply chain management. The significant part of the feedback that we gather has to do with future purchase intentions – how likely would you be to purchase our product/service again; how likely would you be to recommend our product/service; and are your purchases likely to expand over the next 12 months? These metrics and others like them are very relevant for sales forecasting, supply chain management and production planning.
"Basically the sales forecast drives the production plan which drives the supply chain management plan. And so what you're seeing is that output from the customer feedback system is becoming inputs to ERP. If likelihood of repurchase overall goes up, then that will slightly increase the sales forecast in the short-term. If there's a spike in willingness to recommend, then that will raise the sales forecast in the intermediate terms (although it depends on how long it takes for word of mouth to take effect in a particular industry). That's the leading-edge right now of how customer feedback is being used to drive or influence operations."
Nevertheless, at present, too many organisations are still wasting time and money going through the motions of collecting customer feedback and then failing to act on it - "Companies should be empowered with the information," emphasises Chisholm.
As if we needed reminding of the importance of acting on the customer information that we collect, the words of the great Jack Welch are worth recollecting: "There are only two sources of competitive advantage: the ability to learn more about our customers faster than the competition, and the ability to turn that learning into action fast." Enough said!