By George F. Brown, Jr.
The second goal of a solid program for
hearing messages from customers involves learning what customers
believe are the characteristics of a best-in-class supplier, one
that has the potential to become the subject of future supplier
success stories. Best practice approaches aimed at achieving this
objective focus on identifying the metrics that customers will use
in evaluating their suppliers, with those insights then translated
into internal action plans designed to ensure that targets are met.
At Blue Canyon Partners, our own
research has identified three clusters within such metrics are
concentrated � ones related to the relationship between the supplier
and the customer, ones related to the supplier�s implementation
competencies and their ability to meet customer expectations, and
ones associated with the supplier�s ability to bring high-value
innovations (in service as well as in product) to the customer.
Gaining these insights is a challenge,
especially in business markets. There are two characteristics of
business markets that make it so. First is the fact that the 80/20
rule almost always holds in business markets � a major share (e.g.,
80%) of any suppliers sales are concentrated with a relatively small
number (e.g., 20%) of significant customers.
And while the three clusters of
important metrics almost always apply, how they should best be
implemented can differ significantly from one major customer to the
next. A solid program of customer listening must be customized to
ensure that insights specific to major customers are gained, and not
amalgamated together, as doing so can yield an outcome that is right
on average, but missing the mark with each individual customer.
The second characteristic of business
markets is that it takes insights from many touch points to gain an
effective overall picture of the customer relationship. This is far
different from consumer markets, where each individual consumer can
give a solid picture of their own perspectives. (Did I enjoy the
sandwich or not? Did I like the movie or not?) In business markets,
a supplier�s relationship with a customer is shaped by the
collective experiences of many business functions: design,
engineering, manufacturing, logistics, sales, customer support,
purchasing, finance, etc.
Only rarely does any single individual
know all of the details relevant to each dimension of the supplier�s
relationship with their organization. It takes a lot of listening to
understand the metrics that matter to a major customer organization,
yet that effort is required if a solid portrait is to be developed
and this second goal achieved. But, like the first goal of gaining
insights about the opportunities and challenges that lay ahead in
the future, achievement of this goal is of enormous value.
The third goal is to identify
performance improvement opportunities through which the supplier can
remedy deficiencies that are determined as important to the
customer. In too many instances, this is the only goal that is
addressed by the Voice of the Customer program. It is important, but
ranked third of the three goals in terms of long-term impact.
Elements of a customer-listening program oriented towards this goal
should focus on both products and services. It should enable a firm
to learn what it can do better along all the dimensions of its
interactions with customers.
While this third objective inevitably
has a backwards-looking characteristic, we have found in our own
practice three important ways in which Voice of the Customer
initiatives can address this goal without the overall effort
degrading into a focus on �past sins.� The first insight is that
topics in this category should only be surfaced after discussions
about the future environment and the characteristics of
best-in-class suppliers have been completed.
The second is that it is important to
distinguish between generic wishes for �better,� from situations in
which current performance is bad vis-�-vis competitor performance or
some other meaningful benchmark. The third is that it is important
to learn whether customers will reward a supplier for improvements
in metrics where they say they want �better.�
We have seen countless examples of
satisfaction studies which point to areas for improvement in which
the sponsors have then invested, with no payoff whatsoever from the
gains that resulted from those investments. Avoiding situations in
which investments in product or service improvement that aren�t
rewarded by customers is as important as learning of improvement
needs that are necessary and that will be recognized and rewarded.
Every firm must eventually select a
few targets on which to focus investment and management attention. A
successful result of Voice of the Customer programs must be held in
narrowing the focus to those programs where improvement will make a
difference.
One of the ways in which firms have
successfully worked with their customers to narrow the list has
involved queries designed to learn what the customer would do
differently if a certain change were made to product characteristics
or service performance. If the answer is �nothing,� then the change
should be carefully scrutinized.
On the other hand, if the customer can
explain with clarity how they would be able to make changes that
leave them better off, then the change has the potential for value
creation and capture contributions to both firms. Economics rules in
ranking the opportunities for investments in product or service
improvements; if the impact isn�t real, the investment probably
shouldn�t make the short list that commands scarce resources.
Effective programs for gaining
customer insight can make a major contribution to a firm�s business
success, enabling them to develop and implement customer-written
plans for growth and profitability. While listening to customers is
hard, the payoff can be tremendous. Firms that focus on the future,
that work to gain insights about how to be a best-in-class supplier,
and that cull out those areas where performance improvement will
make a real difference will find that their customers have much to
say about the pathway to CoDestiny successes.
George F. Brown, Jr., is co-author with Atlee Valentine Pope of the
book,
CoDestiny: Overcome Your Growth Challenges by Helping Your Customers
Overcome Theirs. He is also the CEO and cofounder of Blue Canyon
Partners Inc., a strategy consulting firm working with leading
business suppliers on growth strategy.
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