Reading Summary: Turning into the Voice of Your Customer

Increased data availability is changing the way the management treats its’ customers.
Larger the company’s market share, greater is the probability that it will treat the customers
casually. Conventional market research treats the customers as a source of data. Financial
software powerhouse Intuit experienced this phase inspite of having a history of excellent
customer service. Once a market leader, it introduced measures such as increased price of tech-
support calls and limited licensing of software products that led to its downfall.

Contrary to the view that companies hold about themselves, market research gives
surprising results. In a survey of 362 firms, 80% believed that they were providing their customers
with a superior experience, yet only 8% of the firms received a positive rating from their
customers. Companies with high market share believe that their customers are happy, however,
in reality, do they command that level of customer devotion? Most companies focus on product
or service design to improve customer satisfaction. The top 8% do it better by ensuring three
principals – design the right offers and experiences for the right customers, deliver their value
propositions through the efforts of every employee of the firm with significant cross-functional
collaboration and develop their capabilities to please the customer repeatedly.

Firms which provide excellent customer experience are unique right from the design
stage. They consider both – customers’ relative profitability and their interest to act as promoters
of the company. A new parameter that has come into place for judging the experience that a firm
offers to its customer is the ‘Net Promoter Score’. It is calculated as the percentage of customers
who would recommend the company to other members of their social circle less the percentage
of customers who would act as detractors. The topmost goal is to transfer customers into high-
profit, high-advocacy areas. Changing passive buyers into active promoters will require
facilitating experiences that vary by customer segment. U.K. based mobile phone company
Vodafone categorized its customers based on their attitude instead of demographics. It
segmented them globally into ‘young, active, fun users’, ‘occasional users’ and few others. The
‘young, active, fun’ group was offered Vodafone Live! which focused on games, sports and music
and the ‘occasional users’ group was offered ‘Vodafone Simply’, a plain-vanilla phone experience.

Group No. 4 | Consumer Behavior

 In order to ensure that value is delivered to the customers, leaders of firms should create
cross-functional teams from design to supply chain management. Data mining and Customer
Relationship Management (CRM) are valuable systems that contribute to value creation,
however, the most valuable resource is ‘word-of-mouth’. Successful companies find ways to
connect to their customers every day. Superquinn, an Irish grocery chain, works on customer
feedback. When the Founder of Quinn found that 25% of their shoppers were not buying from
the stores’ bakeries, the bakery managers and employees were guided to come up with ideas to
increase store traffic. People employed to work on the front-line were trained to deliver on
propositions.

The value proposition can never be static. It has to change dynamically with the needs of
the customer. Senior management of firms should use tools that help in customer-focused
planning and execution. Customer based metrics should be instituted to establish accountability.
Customer-focused management incentives like Net Promoter Scores need to be adopted and
utilized in performance reviews. This is how Intuit managed a comeback. They segmented
customers into promoters and detractors and found out ways to satisfy their requirements, thus
escaping the dominance trap and regaining market share.

Group No. 4 | Consumer Behavior