Thursday 19 September 2019

Listen to your customers when the heat is on

Companies have embraced new ways of gathering customer feedback that can provide important insights

'It's essential to have some form of a thermostat to gauge what you should adjust to meet changing needs and expectations.' Stock image
'It's essential to have some form of a thermostat to gauge what you should adjust to meet changing needs and expectations.' Stock image

Alan O'Neill

During the recent heatwave across Europe, I was working with a client in a Madrid workshop. The heat was intense but the air-conditioning unit was defective. Apparently, the built-in thermostat wasn't reading the temperature correctly so we had to play with the controls to get it right. We eventually figured it out by 4pm, just an hour before we finished at 5pm.

Businesses also need a 'thermostat' to give timely feedback. Right now, every business has a set of financial accounts that show financial performance against budgets and targets.

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It's simply ridiculous to imagine how a business would function without them. They show the results of the game, i.e. the outputs. By their nature, they are the lagging indicators of the business and by the time they appear on the scoreboard, you can't change them.

I want to make a case for oft-forgotten leading indicators, i.e. the inputs that determine how the game should be played. In particular, I'm referring to customer feedback as a way of identifying causal factors that will help to predict your financial results. As the world continues to change, we know for sure that your customers' preferences, likes and dislikes are also changing.

Regardless of whether you are a B2B or a B2C business, it's essential to have some form of a thermostat to gauge what you should adjust to meet changing needs and expectations.

Those changes might be to do with your products or services (quality, taste, size, pack-sizes, colour), your supply chain, your pricing, or even your people and relationships. What if your competitors are making inroads but you don't know why for sure? According to management guru Kenneth Blanchard, "feedback is the breakfast of champions". If breakfast is the most important meal of the day, then so is customer feedback essential to help you know how to play the game.

Trade shows and conferences are, of course, great for getting a sense of how your industry is trending. But they don't tell you how your customers particularly feel.

You may well have read research papers that give you macro results and trends, but there are always exceptions. For example, if you see a score that shows 73pc of customers feel this or that, don't forget the law of numbers and averages.

To achieve that average, there may well be some that scored in the 90s and others that scored in the 20s, etc. Shouldn't you know for sure what particularly concerns your customers?

Tips to Get Customer Feedback

Quantitative feedback is a survey-driven mechanism where customers rate your performance on a set of relevant questions. This is the scientific format which generates metrics for comparison purposes. Qualitative feedback, on the other hand, is where you get comments and opinions on a range of open questions, either in a survey or in dialogue. Here are the three main considerations when crafting your survey.

1 Ask the right questions

I have seen many home-made surveys that do little to get quality feedback, in terms of satisfaction levels or causes. Satisfaction questions are, of course, important (such as the happy/sad face electronic devices seen in airports and stores). But they don't tell you why customers feel the way they do. You should also ask 'driver' questions that establish what makes customers feel the way they do, e.g. think of your products/services, your pricing, pack sizes, etc.

Consider, too, questions about your route to market and, of course, your own people. In summary, include relevant questions about your products, your place and your people.

2 Gather the feedback

This can be done using online platforms, paper or by telephone. Be careful, as there are some software companies that focus on the software as the be-all and end-all, as if that was all that mattered in a survey. The online platform in my view is a given. An effective survey is more about steps one and three here.

I also want to make a point about confidentiality. Real, honest feedback is harder to get when you do the survey yourself. Regular customers might feel less awkward if you engage an external partner to administer it for you.

3 Extract insights

The scores and percentages are just the starting point of making sense of the results. Use them to identify trends and causal factors. If you also ask open questions, try to find a link between those answers and the scores. How do your scores compare across categories, departments and locations? And if you conduct re-surveys some time later, how have your scores moved since the last survey?

The Last Word

Net Promoter Score (NPS) is a measure that is gaining traction across industry and around the world. Behind this is the belief that the most important question in any survey is, 'would you recommend company X to your friends?'. Respondents are asked to give a score from one (totally disagree) to 10 (totally agree).

In the scoring mechanism, you subtract the percentage of defectors (those that score between one and six) from the promoters (the nines and 10s) to give an NPS score. The sevens and eights are ignored as they are considered somewhat ambivalent about company X. Consequently, NPS scores can range from -100pc to +100pc.

I'm amazed at how much NPS has been embraced by large corporates. There are a number of things I'm not convinced about. Firstly, the wider global jury is still out on whether this is the most important over-riding customer question.

Secondly, grouping respondents that scored an angry one in the same basket as the sixes doesn't sit well with me. And the internationalisation of the scoring doesn't allow for national cultural differences. For example, on a like-for-like basis, it's been proven that Dutch people are less likely to give 10s than Americans are. Finally, comparing a bank NPS score with that of Apple will always make a bank look bad.

Directors like to have a simple metric that they can compare against. The one thing I do like about the NPS is that it puts customer service on the agenda in the boardroom. And that's a good thing.

Alan O'Neill, author of Premium is the New Black, is managing director of Kara Change Management, specialists in strategy, culture and people development. Go to www.kara.ie

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