Voice of the customer: Why you need it and how to start your VOC program
In this blog, we’ll discuss how to understand your Voice of Customer (VOC) insights and why this is important. What are your customers actually telling you and how do you analyze this information to get to meaningful insights? Then, how do you use VOC data to drive change in your organization?
A new take on Voice of Customer: driven by insights
There’s no denying that the focus on delivering great customer experiences (CX) has increased globally over the past few years. What once was a luxury that only a few companies had the resources to invest in (think Amazon and Netflix), has now become a staple on the CEO agenda.
In an extremely competitive world where customers demand a personalized experience, really knowing and understanding your customers is so crucial. But how do you do it well? This is where a lot of companies take a wrong turn.
We have more data than ever before, but drawing insights from that data to actually understand your customers “voice” is extremely difficult. Although people are certainly more aware of VOC these days, the level of VOC maturity across organizations differs greatly.
What is Voice of Customer (VOC)?
Voice of The Customer, or VOC” is the collection of customer wants, needs, expectations, likes and dislikes. These can be organized into a hierarchy and sorted by relative importance and impact.
MIT has a great overview which states VOC provides an “unparalleled insight into what your customers really want from your business and product”, as the feedback comes directly from your prospects.
Many organizations believe that by gathering feedback and executing surveys, they have a VOC program in place.
In reality, a VOC program is the entire process of collating customer feedback in one place, analyzing the data, and ensuring that the relevant people in the organization have the insights easily at hand and, crucially, to action the insights.
Only this will allow your organization to be wholly customer centric with a focus on increasing customer satisfaction.
6 reasons your business needs to hear the Voice of Customer
According to Gartner, “more than two-thirds of marketers say their companies compete mostly on the basis of CX. And in two years’ time, 81% say they expect to be competing mostly or completely on the basis of CX.”
So, knowing what your customers think about your customer experience and products/services, and how to improve them, is key.
The main benefits of VOC programs are being able to measure the experience of a customer at critical touch points in real time, therefore one of the best things you can do is to just to ask the customers what they want and go from there to be able to build a relationship.
1. Better customer experience
Listening to your customers ultimately means creating a better customer experience over time by driving change in the right places.
2. Better products and services
VOC provides good direction for product development as well as product innovation so that you can develop improved products that your customers will appreciate as they’ll better fit their requirements. As MIT say it provides a “common language for going forward in product development”.
3. Improved decision making
With VOC programs, organizations are able to make highly-informed strategic decisions that contribute to a positive return on investment and ultimately an improved customer experience.
4. Improved operational processes
In the long term, a VOC program can also reduce your internal costs by improving your organizational processes. How? By allowing you to focus your resources where it really matters and wholly focusing on the customers’ needs.
5. Grow top line revenue
According to Gartner research, collecting feedback can increase upselling and cross-selling success rates by 15% to 20%. In addition, with a well-implemented VOC program, you can better retain your customers – think higher customer loyalty scores, less churn, and a higher customer lifetime value, thanks to repeat purchases.
And, customer feedback can help lessen what it costs to retain buyers, as companies that actively engage in VOC programs spend 25% less on customer retention than those that don’t, according to Gartner research.
VOC is also a good complement to other insights. Says Lizzy Foo Kune, principal research analyst, Gartner for Marketers; “VOC analytics can serve as a useful addition to customer journey analytics, providing insight into the motivations and thoughts of individuals and segments”.
6. Improve your Net Promoter Score
VOC and Net Promoter Score (NPS) go hand-in-hand: by truly understanding your customers and addressing their biggest concerns, by managing your VOC program properly, you should expect your Net Promoter Score to be positively affected.
Who’s nailing VOC?
Most of us know of the big successful companies who have truly nailed CX.
We’ve read that Apple CEO, Tim Cook, receives up to 100s of customer emails every single day, and even responds to some of them. Imagine getting a personal response from Tim himself, that’s a pretty cool CX if you ask us.
And Jeff Bezos, a VOC data advocate, has been known to forward emails from unhappy customers to his team-members, requesting customer issues to be fixed immediately. That ought to speed things up!
So, no big surprises that both Apple and Amazon top the Forbes’ list of the most admired companies. Not to mention Zappos customer service!
These are great examples of companies that take their customer experience seriously. But it’s also about the message their actions send to the whole organization. If they care this much about their customers you better also, if you want to stand a chance in today’s competitive market.
Now we’ll talk about how you can actually capture those customer insights and respond to them in a way that works for you.
3 step process for implementing a VOC program
There are basically 3 steps that you have to successfully fulfil in order to make your VOC program work for you.
- Collection of customer feedback – Using methods like surveys, etc. to gather information from your customers
- Analysis – Analyzing responses to uncover trends, themes and customer expectations
- Implementation – Acting on the insights to improve the areas of the business that will drive the biggest change. Herein, we also group changes to organizational processes that are outcomes of listening to your VOC insights, which ultimately can improve your CX and speed of delivery, too.
1. Collection of customer feedback
Collection of high-quality customer feedback is the foundation of a successful VOC program. Make sure you avoid the most common mistakes when collecting feedback.
The greatest mistake of all is when companies make it difficult for people to provide feedback by limiting their options or on the flip-side, by sending long and complex surveys.
So, whatever you do, make sure you get specific improvement suggestions by asking customers to provide these to you in an easy and convenient way. For example, ask an open-ended question such as “What are some of the things we can improve as a company?”
Make sure you choose the right metric, such as NPS, but don’t focus on it too much. Ultimately, it’s those improvement suggestions and action to address them, what will propel your VoC programme.
If you don’t have access or the means to conduct a customer survey, don’t despair. You might have access to lots of customer feedback without realizing it!
For example, at Thematic, in addition to customer surveys, we also analyze feedback that comes through support tickets, chat logs, social media comments, call centre notes, chatbots interactions and online customer reviews etc. Almost any type of unstructured data will contain interesting insights.
We can group data into 3 different categories:
- Direct feedback: Feedback given directly to the company, when the customer knows that the organization is listening and is expecting a response from their efforts. This can be via surveys, complaints forms, market research or focus groups.
- Indirect feedback: When customers talk about the company but not necessarily to it. This can be social media messages, online reviews and text analytics used for customer care interactions.
- Inferred feedback: Operational, behavioral and transactional data that is associated with a customer experience, which can include website data, purchase history or contact center data.
The most important thing for companies is to gather data on a regular basis to maintain momentum and see insights over time.
Let’s look specifically at the analysis of unstructured data in the form of customer feedback responses, since that is where the hidden insights are.
Easier to analyze data with AI
Companies can adopt manual analysis, where an analyst manually analyzes the feedback and adopts certain rules, taxonomies and categorization to the data. Although these different types of approaches can have advantages, they are often plagued with human bias and take a long time to implement.
Thankfully, it’s now a great deal easier (and faster) to be able to understand your customers, with the recent developments in artificial intelligence (AI). By using AI, we can analyze large amounts of unstructured data.
To capitalize on these advances in AI, companies can either hire data scientists or buy software solution designed specifically to find insights in unstructured data. When it comes to data scientists, they can automate some of the analysis, but many struggle, as language analysis remains one of the hardest tasks in AI.
Bonus: For a run-down of different types of text analysis approaches, we have put together this comprehensive review of text analytics approaches (which includes a cheat sheet of their pros and cons).
How do you get actionable insights?
Many companies face the issue of gathering lots of customer data but don’t know how to actually derive actionable, meaningful insights from it.
To make sense of your customer data, getting actionable insights is essential. So what’s the difference between insightful and non-insightful data?
- Non-insightful data is something that you already knew was a problem.
- Insightful is everything that you didn’t know. Therefore, insights are findings that contradict your knowledge, confirm your suspicions or quantify the importance.
Actionable insights lead to either change and an action or confirm the fact that you don’t need to take any action at all.
So, how actionable are your insights?
Try to find examples of actionable insights in your business. Here we’ve come up with a few examples. Which out of these would you say are actionable insights?
- Our NPS score this month dropped by 15 points
- Passengers complain at missed flight connections
- 20% of customers talk about price
- Buyers say that clothes sold by a competitor are better quality
- People talk about our brand more positively following a ban on plastic bags
- Twice as many Detractors talk about Product’s ease of use
Answer: the first 3 bullet points are not actionable for the business, and not very insightful.
There are 3 types of actionable insights:
1. Insight > Adaptation > Action
- Requires critical thinking to turn insightful findings into actions. As an example, you could solve the lack of parking in a mall not by providing more parks, but by working with the city council to improve public transport options. Or, if customers say that they love the environment or design of the mall itself, the action could be to use this finding in the marketing material to attract more customers who care about this.
2. Insight > No Action Required
- Not everything is worth measuring, but data analysis can validate your assumptions. The analysis can lead to finding insights that important even if not actionable. For example, you may assume that the number of parking spaces in an issue, but if your customers don’t mention it, you don’t really need to focus on fixing this.
3. Insight > Rethink strategy
- Data analysis can help validate if the implementation of your strategy is working or not. So, for example, last year customers complained that mall staff weren’t very accommodating. After taking measures to change that, this quarter’s results should demonstrate if the measures worked or need further change.
So, you might be thinking, we collect lots of feedback and analyze it, what do we do with it – how do we drive change?
“Driving change” is not what it used to be. What was good enough five years ago is not good enough anymore. Although organizations have vast amounts of data collected, they simply don’t know how to use it drive change.
Often, organizations don’t know what the right change is (that is, change on a strategic level) and how to drive continuous improvement. If this is you, the 3 things you need to know are:
- Conducting only surveys isn’t enough anymore
- Insights in a vacuum don’t work – insights need to be shared and democratized, and reported upon across your organization in a relevant way
- To drive change you have to get strategic in how you look at insights – and action them correctly
How to use VOC data to inform change
Your VOC data can be used for various purposes, here are some examples of how you can use your insights to inform business activities:
- Customer experience: Understand how satisfied your consumers are at different touchpoints, and their willingness to recommend your brand to others.
- Product development: get feedback on new product ideas; understand price sensitivity, determine when to retire products
- Reputation management: Monitor your brand’s reputation in the marketplace
- Market and competitive intelligence: Understand consumer buying patterns and preferences; capture trends, social and environmental impacts on buying behaviors; discover what customers say about competitors
4 best practices for a successful VOC program – how to make it work
These are our top tips for VOC improvements you can do across the board in order to turn insights into action.
1. Strategy comes first
Make sure you have the basics right from the start. The first step is to set solid VOC strategy, that has buy-in from the CEO and board. Then, you create a VOC program that, in the ideal scenario, is owned by someone with the sole responsibility of making VOC happen. Correlate the VOC questions to actual, relevant goals and ensure they are obtainable; adhere to good survey hygiene; combine insights from across the business, and act and review.
2. Get the right insights into the hands of the right people
The only way you can drive real growth and change in organizations is by getting the right insights into the hands of every individual within the organization and monitoring what they do with it. This is not about sharing insights in a quarterly board presentation in a PowerPoint deck. That is not how you’re going to drive change.
This is about delivering really personalized insights and truly enabling everybody in the organization to ramp up their performance. And you can only do that with the right technology. The best practice is to find a tool or platform that key people in the organisation can use frequently, and access insights easily, then cascade the insights to everyone concerned.
3. Formalise VOC efforts
You need to formalise your improvement efforts internally. This can be agile or other methods, you’ll know what works best for your business. You’ll need a systematic approach to understand and learn from VOC feedback, so you can incorporate them into decision-making processes, and then take action to improve. Often, the actual structure of your business model needs to change, as well as the business philosophy.
4. Honestly assess your company culture
Company culture is one of the hardest things to change, But one of the most important ones. Even though you might think that your culture is great, in actual fact, reality tells a different story. Hence, you need to do an honest assessment of your company’s culture. Are you really putting your customers first in every instance?
If you’re not focused on the customer experience you’ll unlikely be able to deliver anything more than just average service. In the best case, companies can empower their employees to be flexible to meet the needs of customers and focusing entirely on improving the customer experience.
Are companies acting on their VOC insights?
According to organizations who use VOC, 60% rate their efforts at soliciting customer feedback as ‘good’, as per a survey of 169 large companies made by the Temkin Group, The State of VOC Programs report.
However, the same research found that only 24% of companies think they are good at making changes to the business based on VOC feedback. And, they also found that only 40% of enterprises think they are good at sharing feedback across the organization. These are the two most important factors when it comes to the effectiveness of VOC. Only 14% of companies have reached the two highest levels of VOC maturity (out of six levels), while 46% remain in the bottom two levels.
So companies clearly realize the need for VOC but overestimate their struggle to act on it.
Acting on your insights is of the utmost importance, what with the time and resources wasted by VOC programs that fail to deliver change. In addition, because of the long-term damage that it could have on customer relationships, if you don’t visibly act on feedback, in the long term, your customers will become hesitant to share their feedback if they believe it’s being forgotten.
Add to this the huge amount of survey requests that consumers today are being bombarded with, and the problem is real.
How are companies using VOC?
As per the Temkin Group’s The State of VoC Programs report, most companies find their VOC programs to be the most valuable for “identifying and fixing quick-hit operational issues” and least valuable for “identifying innovative product and service ideas.”
And the most common activity for VOC teams is defining customer experience metrics, and this became even more popular [in 2017].
Voice of Customer examples: two success stories
Sky TV identifies why their NPS dropped suddenly
Great examples of how companies have used their VOC insights include Sky TV who have used the insights derived from open-ended feedback to identify the negative impacts in their NPS caused by a price increase in the product, which they would not have been alerted to, had it not been for Thematic analysis.
They could easily see spikes in NPS, and what actually produced the biggest impact on NPS. They thereby could quantify how important the impact was on customers perception of the company.
‘We can validate changes in customer perception immediately and quantify their importance”, says Troy Stanton, GM Customer Insight, Sky TV.
Greyhound identifies issues where it matters
Greyhound found that by focusing on VOC insights rather than the collection, they were easily able to detect performance issues in the terminal stations (and know exactly where the issues were happening) and fix them promptly. One of their biggest Aha! moments was picking up lots of positive feedback for their bus drivers which they would never have known of otherwise.
Says Matthew Schoolfield Senior Customer Insights Analyst, Greyhound:
“My favorite part is […] seeing the way that customer service is mentioned [in Thematic]. We had always thought of customer service being mentioned in a negative term, but this showed us that it shows up as positive.
We didn’t realise that people were SO happy with our bus drivers, and that was a great insight to see! That’s been great to pass along the info to our bus-driver training to let them know they’re doing a great job. We knew our drivers were great, but we didn’t realise how great, until we started using this tool”.
“And the correlation piece is really fascinating for us. Take New York. Customers get very frustrated when waiting for a late bus, but, in Kansas City, people don’t care as much. And that really shows us where we need to focus our time and efforts, and that’s something that we definitely were not doing before.”
How to get buy-in for your VOC insights
This section is courtesy of our webinar with Lynn Hunsaker.
Getting buy-in from the stakeholders in your company is often the most important component of a VOC programme. Because, what’s the use of having the best plan in the world if no one is going to assign you budget for the project. And, if the CEO does not buy into it, VOC is never going to be at the top of anyone’s priority list.
When you create your pitch or board presentation, it’s pretty standard to focus your VOC goals on sources of revenue such as repeat purchases, upsell and cross-sell and customer lifetime value.
1. Highlight the up-front costs
But to really create a sense of urgency, look at what unexpected costs your customers can incur – and explain why this is important.
- Look at how much it costs to acquire customers. Costs to consider are sales collateral, conversations and the efforts around getting customers onboard.
- Point out what it costs to serve your customers, including the daily management of their orders and delivery as well as tech support and customer support.
- CX professionals often forget taking escalations into account. There are certain customer segments that have more escalations than others and that’s something to include for when calculating how valuable certain customers are in relation to others.
- Next, consider the returns and actions needed for those particular situations. Don’t forget about enticements such as a loyalty program or volume discounts and warranty extensions launched to maintain certain customers or to attract others, or to make up for any operational discrepancies.
- Finally, there’s the cost of negative word-of-mouth. Certain customers might hold a grudge or have experienced something that can be a further cost that often is not quantified or kept track of.
Anything in your VOC insights that might impact these costs is good to quantify as risk elements that your data represent. And yet another reason for your stakeholders to take action using your VOC insights.
2. Demonstrate strategic ROI for customer experience value
Financial ROI is simply the equation of the growth from an investment, minus the cost divided by the cost.
As you can see in the example below, say you can get $500 from an investment and the investment costs $400 to acquire. So you would get $100 over $400 for 25% gain. Or, something is going to be 3 hours but it used to be 4 hours so this is a one-hour saving or a 25% reduction.
For financial ROI the main point is that you have a finite time horizon and you are only looking at it for a particular period of time (this quarter, for example), so it’s a “siloed” scope. It doesn’t necessarily take into account any other implications around it.
In real life, you have many factors that come into play. Strategic ROI takes into account the broader picture of your overall growth and cost. It’s not always cut-and-dry quantified in a specific number such “positive 25%” or “negative 25%”. It’s usually more of a story.
You may be able to show exact quantities, but you’re bringing to your managers’ attention that not only is there a specific immediate financial implication, also there’s a longer-term play here with specific implications– which is what’s important to demonstrate strategic ROI.
Can you use customer lifetime value to motivate managers to really take notice of your VOC program? Use it as a way to develop conviction, to make changes and maintain momentum in what they plan to do, so that managers have the follow-through that leads to the actual results that you want your VOC program to generate.
Highlighting the strategic ROI is really important for understanding the big picture of customer experience value. Whilst a lot of managers seem to focus on the finite costs and the benefits, there’s a bigger picture and a longer time frame associated with the ROI of customer experience.
Every manager has one thing in common: money. It’s the universal language that managers speak and easily understand. So, any time we can transition our insights into how it affects revenue, in terms of growth, the churn of customers and employees, as well as market share; and, if you can convey the relevance of VOC insights to margin, costs or profitability, this will help them to see the opportunity.
And also, making a case for the volume that customers could buy in the future (or up-sell/cross-sell opportunities), is what really get managers’ attention.
3. What percentage of revenue at risk
As an example, you’re a fashion retailer and you’re looking at two pieces of VOC insights and compare them side by side. You’ve got these circles with VOC insight 1A and VOC insight 1B, in the picture you can see here below.
VOC insight 1A signifies the finding that “50% of your customers complained about lack of plus sizes in your range”. Say that VOC insight 1B is the finding that “25% of your customers complain about customer service”.
If you know who both these sets of customers are, then you know how much they spend; whether they spend more or less than others for. This way you can compare the findings with the amount of money they spend. Then, decide if you should prioritize actioning this or not.
If VOC insight 1B comes mostly from your VIP customers who spend a high amount with you yearly (and if for example VOC insight 1A is made up of complaints from your customers spending much less), you can see that it’s more important to fix the issue with your customer service.
So, it’s not just about the number of customers who are complaining but what type of customers they are and how much they’re spending.
4. State the amount of budget wasted on VOC analysis
Another way of looking at it is to take data that is static. For example, maybe you’ve been at an average of 8.1 for the past several quarters. A lot of managers will think, “Well, we are kind of in a safe zone, it’s good enough. We don’t really have to make any changes.”
But in fact, you can say that by not changing this upward or downward cycle, we’re actually tying up certain resources in our company on this static performance and if we were to make a change we could actually free up the resources that are associated with the ones on the other end of the spectrum.
Essentially, you’re showing people an opportunity to free up resources and future value by addressing something that has been static that is just a waste.
5. Calculate the total money represented
Thirdly, you can conduct a qualitative or quantitative analysis. For example, if there’s an index you can show some key drivers of it alongside the corresponding factors to those key drivers.
If you’re able to identify that X is a certain percentage of the customer base and Y is another percentage of the people associated with answering that question, then you can help to show them how much money is represented by each of those layers.
With these tips, we hope that you have more of an insight into what VOC is, and how you can use it practically in your business to drive change.
One of the big setbacks for companies initiating a VOC programme is to not circle back and connect their findings to changes in customer behavior. It’s crucial to link customer perceptions and behaviors with feedback collated. One of the most important things when initiating a VOC programme is to show how it is delivering ROI.
Often, a big mistake that companies make is to not act on the feedback that really matters. The sad truth is that some CX effort will just be a waste of money. Prevent this by doing the proper calculations as to what really matters to your business, and focus on that.
Ultimately, if you have a thorough understanding of your customer experience, a deep insight into the minds of your customers; through listening to VOC customer feedback, supported by providing regular reporting for the relevant stakeholders across the organization so that they can act on it immediately; and follow up with any at-risk customers and improving your services on a regular basis – you’re doing a good job of VOC.
This article was published here first.