Welcome to the October issue of ValueNotes Connect.
Much has been written about the value of satisfied clients, loyal customers and a glowing net promoter score (NPS). Research by Bain & Company revealed that increasing customer retention rates by 5%, increases profits by 25% to 95%; and companies that excel in customer experience can grow revenues 4% to 8% above their market. To quote Frederick Reichheld, the inventor of the NPS, “…no company can grow if its customer bucket is leaky, and loyalty helps eliminate this outflow… The tendency of loyal customers to bring in new customers – at no charge to the company – is particularly beneficial as a company grows.”
Yet, just a handful of companies gather granular feedback from their clients. Many resort to anonymous and largely quantitative surveys that are often worthless. After all, a high NPS or CSAT score do not always illustrate or indicate what needs to be done, ie they are not directly actionable. In reality, the opinions and comments that lie beneath that score are of greater value.
As global and local economies struggle to grow, traditional sales and marketing strategies are proving less and less effective. Hence there is a greater need for a scientific, yet largely qualitative process to understand the voice of each customer. In our experience working with several large multinational and Indian companies, this is best achieved by a formal and structured VoC process, ideally conducted by an independent third party as customers are often reluctant to be totally honest with people they normally deal with. But there is no one template when it comes to voice of customer studies; each one must be customised to suit the business.
ValueNotes conducted a survey of senior decision-makers in Indian and multinational companies to find out if they really knew what their customers thought of their products and services, how they gathered feedback, and how they used these inputs. The results were interesting. And lastly – here’s a case study of how our voice of customer study helped an engineering company develop a new service with high margin revenues.
As always, we hope you enjoy reading our newsletter, and we look forward to your comments.
Why structured “Voice of Customer” studies help in customer retention
by Arun Jethmalani
|As global and local economies struggle to grow, traditional sales and marketing strategies are proving less and less effective. New customers are few and far between even as sales costs are rising. At the same time, unhappy customers are more inclined to move to a lower-cost competitor. Research has shown that customer retention can do more for your top-line and bottom-line than traditional sales efforts. Hence there is a greater need for a scientific, yet largely qualitative research process to understand the Voice of each customer – given that solutions will be customer-specific.|
Customer perception: One size does not fit all
by Arun Jethmalani
|Typically, in a Voice of Customer (VoC) study, marketers seek to understand customer perceptions across various parameters; typically pricing, brand, quality, after sales service, and so on. And at the end of the exercise, they want aggregated scores on a numeric scale, often with comparative benchmarks for competitors. If they get a decent score or one better than the competition, they usually assume that things are fine. But are they? Aggregated or average ratings tend to hide problems, and potential opportunities. Numerically low ratings from a few can get overshadowed by the majority. Yet, these could be crucial early warning signals.|
Some client problems we have solved: