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Customer Feedback Management Leveraging the Voice of the Customer to Amplify Business Results

April 2012

Omer Minkara

~ Underwritten, in Part, by ~

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

April 2012

Customer Feedback Management: Leveraging the Voice of the Customer to

Amplify Business Results Findings from Aberdeen’s January 2012 research Customer Experience Management: Using the Power of Analytics to Optimize Customer Delight revealed that capturing the Voice of the Customer (VoC) is one of the top goals driving today’s customer engagement strategies. In September and October of 2011, Aberdeen surveyed 252 organizations regarding their use of Customer Experience Management (CEM) and VoC programs. An additional 203 organizations were surveyed in January and February of 2012, and of the 455 businesses in total, 271(60% of all the respondents) indicated that they are actively using customer feedback management programs to capture the voice of their customers.

Companies successfully leveraging VoC programs within their customer management activities accomplish year-over-year performance gains such as a 28.3% increase in annual company revenue and 14.5% increase in customer satisfaction. This Analyst Insight will identify how Best-in-Class companies among those 271 respondents in Aberdeen’s follow-on survey capture, manage and use customer feedback data in order to accomplish improvements in these key measures. The analysis will show that tracking, capturing and measuring customer feedback data across multiple channel as well as providing a unified view of this information are key ingredients of Best-in-Class VoC programs. It will also provide insights into the ROI impact of these successful VoC initiatives.

Accessing the Customers’ Mind through VoC Programs Customer feedback management programs enable businesses to access the minds of their buyers. The information gathered in the process is used by numerous stakeholders within the organization to develop marketing plans, launch new products, train service personnel and support sales conversations. Other internal stakeholders such as Human Resources (HR) and product design can also significantly benefit from this information within their own activities, including employee engagement and new product development. These activities are all aimed at understanding what each customer wants, ultimately enabling businesses to provide their clients with the best customer experience.

Pressures When asked about the pressures driving VoC initiatives, approximately half (49%) of all companies with active customer feedback programs indicated that they are struggling with the increasingly competitive business

Analyst Insight

Aberdeen’s Insights provide the analyst perspective of the research as drawn from an aggregated view of the research surveys, interviews, and data analysis

Aberdeen’s PACE Methodology

Aberdeen applies a methodology to benchmark research that evaluates the business Pressures, Actions, Capabilities, and Enablers (PACE) that indicate corporate behavior in specific business processes:

√ Pressures — external forces that impact an organization’s market position, competitiveness, or business operations.

√ Actions — the strategic approaches that an organization takes in response to industry pressures.

√ Capabilities — the business process competencies (process, organization, performance and knowledge management) required to execute corporate strategy.

√ Enablers — the key functionality of technology solutions required to support the organization’s enabling business practices.

http://aberdeen.com/Aberdeen-Library/7460/RA-customer-experience-satisfaction.aspx


Customer Feedback Management: Leveraging the Voice of the Customer to Amplify Business Results Page 2

© 2012 Aberdeen Group. Telephone: 617 854 5200 www.aberdeen.com Fax: 617 723 7897

environment (Figure 1). In a marketplace where buyers are limited, organizations are struggling to gain a greater mind share within, and wallet share from, their target accounts. Companies are turning to VoC programs to address this challenge as VoC programs help businesses better understand the needs of their customers, ultimately enabling these companies to craft customized messages in order to increase visibility and spend by each customer. In addition, organizations are also forced to cope with the rapidly changing expectations of their customers, as seen by 34% of organizations. This is a challenge that might wreak havoc in many organizations - as not being able to keep in tune with customers’ expectations might make them irrelevant in the eyes of their target buyers.

Figure 1: Top Pressures Driving VoC Initiatives

Source: Aberdeen Group, February 2012

The ability to provide a unified view of customer feedback and behavioral information helps organizations establish a consistent view of each account by each organizational stakeholder. Establishing such a unified understanding ultimately enables businesses to determine the most relevant data across numerous customer data silos within the organization. This supports companies in their pursuit to create “contextual” client interactions (targeting the right customer at the right time through the right channel with the right message) by using account profiles. One out of three companies with active VoC programs are currently under pressure to establish such a unified view of customer behavioral and feedback data, exposing them to the risk of targeting buyers with irrelevant messages. Data from this research shows that businesses struggling to create a unified view of customer feedback data (31% of companies with VoC programs) are experiencing a 21% greater erosion (69% customer retention rate vs. 57% customer retention rate) in their customer base each year, compared to companies that are able to provide a unified view of their customer feedback information.

49%

34%31%

25%

20%25%30%35%40%45%50%

Increasinglycompetitive

business landscape

Rapidly changingcustomer

expectations

Fragmented viewsof customers'feedback and

interaction histories

Need to engagecustomers withpersonalized

contentPercent of respondents, n=455

Companies with VoC Initiatives

“Our business model is based on customer-centricity. This demonstrates to our clients the respect, value and focus we place on delighting them as loyal clients. The rest of our business development activities are simply noise that influence the tactical activities of ensuring client satisfaction.”

~ LeTicia Hallstead, VP of Business Development, Triplefin

http://assessment.aberdeen.com/6Ow7CiT5EW/index.aspx






Best-in-Class Results Aberdeen used four performance criteria to study how VoC programs help Best-in-Class businesses differentiate themselves from Industry Average and Laggards (Table 1).

Table 1: Top Performers Earn Best-in-Class Status

Definition of Maturity Class

Mean Class Performance

Best-in-Class: Top 20%

of aggregate performance scorers

87% customer retention rate 28.3% average year-over-year improvement in annual

company revenue 21.3% average year-over-year improvement

(decrease) in response time to customer inquiries 14.5% average year-over-year improvement in

customer satisfaction

Industry Average: Middle 50% of aggregate

performance scorers

73% customer retention rate 11.7% average year-over-year improvement in annual

company revenue 4.9% average year-over-year improvement (decrease)

in response time to customer inquiries 3.8% average year-over-year improvement in

customer satisfaction

Laggard: Bottom 30% of aggregate

performance scorers

20% customer retention rate 0.2% average year-over-year decline in annual

company revenue 1.6% average year-over-year worsening of (increase

in) response time to customer inquiries 7.5% average year-over-year decline in customer

satisfaction


Why These Metrics? Aberdeen asked survey respondents to rate the value of specific measures in assessing the results of their VoC activities on driving performance improvements. The top measures identified were customer satisfaction (81% of respondents), customer retention (79% of respondents) and response time to customer inquiries (65% of respondents). The joint impact of these performance measures reflect an organization’s success in delighting its customers through attending to their needs and wants in a timely manner, resulting in improved customer loyalty. Success in accomplishing improvements in customer satisfaction and customer retention shows that organizations are able to understand and meet the exact needs of their customers, resulting in building a loyal clientele that generates repeat business for the company. Improvements (reduction) in response time to customer inquiries reflects the agility of VoC programs in

Defining Metrics

The definition of each performance criteria in Table 1 is as follows:

√ Customer retention: The percentage of a company's existing customers that have done business with the company in the prior year.

√ Annual company revenue: Year-over-year change in annual company revenue.

√ Response time to customer inquiries: Year-over-year change in the amount of time it takes for a company to respond to any customer inquiry, regardless of the channel. A decrease in this metric reflects annual improvement while an increase denotes worsening of annual performance.

√ Customer satisfaction: Year-over-year change in satisfaction of a company's customers. There are multiple ways to measure this metric, but as this measure is reported only on a year-over-year basis, it is agnostic towards the different approaches used to measure customer satisfaction.



helping companies determine a poor customer experience, and act in a timely manner to address the issues to avoid losing an account.

The fourth metric used in determining Best-in-Class performance (year-over-year change in annual company revenue) is indicative of an organization’s success in converting customers’ feedback information into top-line revenue results. Except the non-profit institutions, the majority of businesses are driven by a constant focus on improving revenue results in order to maintain and improve the financial health of their businesses. In fact, data collected from 822 companies participating in Aberdeen’s Q1 2012 Quarterly Aberdeen Business Review study shows that the top objective driving organizations 2012 business plans within 58% of all companies is generating organic revenue growth. This metric therefore helps to assess how Best-in-Class VoC programs help companies reduce customer turnover and improve spend by existing customers, ultimately resulting in growth in top-line revenue results.

The Best-in-Class PACE Model Integrating VoC as a strategic differentiator to achieve organizational goals and to mitigate the pressures mentioned above requires a combination of strategic actions, business processes, and enabling technologies summarized as shown in Table 2.

Table 2: The Best-in-Class PACE Framework

Pressures Actions Capabilities Enablers Increasingly

competitive business landscape (i.e. competitive threats)

Align activities of all customer-facing functions through providing a single source of information (i.e. customer feedback) accessible to all stakeholders Track, capture and

utilize customer feedback information (e.g. purchase history, service calls)

Information captured through VoC activities are utilized in new product development activities Key Performance Indicators (KPIs)

are used to measure effectiveness of VoC activities Collect customer feedback through

one or more channel(s) Each customer touch-point across

the organization is identified Share customer feedback data

through role-based reporting for relevant stakeholders within the organization

Customer Relationship Management (CRM) Customer feedback

management Database management Dashboards Workflow automation Live chat Customer analytics Web analytics


Best-in-Class Strategies One of the building blocks of a successful VoC program is the ability to support all relevant stakeholders with accurate and timely customer feedback. This is a strategy adopted by 41% of Best-in-Class companies with customer feedback programs (Figure 2). Establishing a single source of truth, in the case of customer feedback data, would help companies reduce and



potentially eliminate any redundant or conflicting information which might negatively impact the results of their customer-facing activities. For example, a sales rep searching the feedback database for information on a prospect might see two conflicting pieces of information: one showing that the buyer has expressed interest for a specific product and another showing that the buyer was not happy with a recent interaction with the customer service department. Lack of a unified view of customer feedback might lead the sales rep to assume that the account has expressed interest in the product after their previous dealing with the service department. The reality however might be the opposite, which would result in sending a wrong message to the customer at the wrong time. Companies that provide a single source of feedback data to all their stakeholders are less likely to suffer from inconsistent account interactions. Indeed, organizations providing a single source of feedback data enjoy a 36% greater average (19% vs. 14%) profit margin per each customer, compared to those that don’t - a validation of the business impact of this strategy.

Figure 2: Best-in-Class VoC Strategies


Tracking, capturing and using customer feedback information is a strategy that helps businesses alleviate the impact of the pressures illustrated in Figure 1. Capturing and using feedback allows companies to glean insights in key areas such as the specific products/services buyers are interested in, their spending intentions, etc. This information would enable companies to stay ahead of the competition by keeping in tune with customers’ needs. In addition, organizations could use available feedback information to develop targeted campaigns that are focused on relevant customer needs. Companies using this strategy within their VoC programs enjoy more than double the year-over-year improvement (5.4% vs. 1.7%) in Return on Marketing Investments (ROMI), compared to all other businesses.

Creating a holistic view of customer behavioral and feedback data helps businesses identify which content best resonates with the target audience. Findings from Aberdeen’s December 2011 Sales and Marketing Alignment: The New Power Couple research shows how Best-in-Class companies are able to create customer centric content; 71% of Best-in-Class organizations have a cross-functional process where marketing and sales teams work together to capture the voice of the customer. This enables these

41%35%

29%

21%

10%15%20%25%30%35%40%45%

Provide a single sourceof feedback data to all

stakeholders

Track, capture and utilizecustomer feedback

information

Create user / customercentric content

Establish a formal VoCprogram within our

business planPercent of respondents, n=455

Best-in-Class

Maturity Class Definitions

The following Key Performance Indicators (KPIs) were used to determine the Best-in-Class for the Sales and Marketing Alignment: The New Power Couple report:

√ Percentage of sales forecasted pipeline generated by Marketing

√ Year-over-year change in annual company revenue

“Integrating customer feedback information that resides in disparate data systems into a unified repository allows our company to improve customer experience metrics, and eventually resulted with increased buyer confidence in our organizations.”

~ Managing Director of Sales at Small European Industrial Equipment Manufacturing Company

http://aberdeen.com/aberdeen-library/7002/RA-sales-marketing-alignment.aspx


http://aberdeen.com/Aberdeen-Library/7060/RA-mobile-marketing-analytics.aspx






businesses with crucial insights that would support their sales and marketing activities throughout the sales funnel.

Observing the Best-in-Class strategies (from right to left) in Figure 2 reveals an interesting pattern. The flow of VoC activities in top performing companies begins with defining the meaning and scope of VoC initiatives, then continues with using customized content to engage customers, capturing feedback data, and making it available to all relevant stakeholders within a single system.

Where Does the Feedback Come From? The ability to build a comprehensive understanding of customers’ needs and wants requires businesses to tune into multiple interaction channels to capture the voice of their customers. To this point, aggregated findings from 716 companies participating in January 2012 Customer Experience Management and September 2011 Leveraging the 360 Degree Customer View to Maximize Up-Sell and Cross-Sell Potential research studies show that the source of most customer feedback data is divided between four channels (Figure 3).

Figure 3: Companies Use Multiple Channels to Capture Customer Feedback


As illustrated in Figure 3, 44% of companies with formal programs to manage their customer engagement activities use social media portals (e.g. Twitter, Facebook and LinkedIn) to capture insights about their target

44% 43% 42% 42%

38%35%

12% 12%

0%

10%

20%

30%

40%

50%

Socialmedia

Call Center VoC/CEMtools

Directsurvey bySales and

Servicereps

Dedicatedemail inbox

Webticket/form

Live chat Consultants

Percent of respondents, n=716

Companies with Formal Customer ManagementPrograms



http://aberdeen.com/Aberdeen-Library/7074/RA-cross-sell-sales-effectiveness.aspx




accounts. This comes as no surprise considering that Aberdeen’s January 2012 B2B Social Media Marketing: Are we There Yet? research shows that 78% of companies with social media marketing initiatives are integrating VoC activities within their social media programs. As the wealth of information shared across social media channels grows, organizations will be able to leverage these channels even more as a part of their VoC programs. One of the growing challenges resulting from the increase in the amount of data available through social media portals is the volume of unstructured data, and the ability to analyze it. Text analytics tools are a key part of being able to simplify unstructured data within social portals to determine the content of social conversations and capture customer sentiment.

The use of telephone to connect buyers and sellers has been in place long before the introduction of other channels such as social media and web. As a result, call center is established as one of the traditional mediums of capturing customer feedback. There are numerous ways of capturing feedback through call centers. One of them is conducting post-call surveys to learn about the customers’ experience. These surveys can be conducted by automated tools such as Interactive Voice Recognition (IVR) technology or by call center agents. Another method of capturing customer feedback through the call center is using speech analytics tools to determine insights hidden behind voice conversations. Speech analytics tools help organizations look for tones, words or phrases used in real-time conversations or call recordings to identify customer reactions within each interaction. They also help companies convert speech into text and analyze this information to capture the voice of customers.

VoC and CEM tools enable companies to create surveys to gather customer feedback through multiple channels. The findings show that, online surveys and email are used by 82% and 86% of companies respectively, with VoC initiatives. While 42% of companies use these tools to capture customer feedback, using sales and service reps to survey customers as a part of their normal selling and service activities is used just as widely. Other common forms of capturing customer feedback include creating a dedicated email inbox or web ticket/form on the company website where customers can report problems or share their experiences as well as live chat and use of third-party consultants.

Text Analytics

The CEM research shows that text analytics tools are currently used by 18% of companies to support their VoC initiatives. This indicates that these tools are currently in the early adoption phase. Data shows that 35% of companies with VoC initiatives are planning to adopt text analytics by February 2013, a sign of growing focus on integrating these tools within customer feedback management initiatives.

http://aberdeen.com/aberdeen-library/7548/RP-social-media-marketing.aspx



Case Study – Savvis

Savvis, a CenturyLink company, is a leading international provider of enterprise cloud computing, colocation and managed hosting that serves IT professionals across the world. The company had a formal customer feedback management initiative for more than 10 years. The main goal of the company’s customer feedback programs are focused on company growth and innovation. “Improving our customer retention results as well as our ability to cross-sell/up-sell allows our business to consistently deliver strong top-line revenue results,” said Stephenie Hoehndorf, Director of Global Client Loyalty & Retention Intelligence at Savvis.

The company’s customer feedback management program is built on a multi-channel approach where every touch-point with the customers has been determined. Savvis regularly surveys its customers to keep track of the trends in the marketplace as well as the changing needs and wants of its audience. Hoehndorf adds, “In addition to helping us understand what our customers want, surveying our customers enables our product development team to create new products that meet the evolving needs of the marketplace.” Once the company captures feedback, it automatically alerts a relevant stakeholder within the organization to determine the next best action. If the feedback is regarding a poor experience, a representative of the company follows-up with the customer to ensure any issues are resolved to client’s satisfaction.

The executive team at Savvis also provides strong support for the company’s customer feedback management initiatives. To this point, “We have a dedicated executive team that regularly meets to discuss feedback captured across any of the touch-points within the company,” states Hoehndorf. The insights gleaned during these discussions are then used to create follow-up business activities. The company also provides an environment where employees are encouraged to participate in customer feedback management activities. It involves employees within the decision making process in managing customer feedback, and as a result have observed strong employee buy-in and involvement.

Savvis used several key performance measures to determine the effectiveness of its customer feedback management programs, including customer satisfaction, customer referrals and customer renewals. Using feedback data as a strategic lever of its customer management activities helps the company to enjoy strong performance results in all of these metrics. “By listening to our customers carefully, and taking the appropriate actions based on the feedback we capture, we were able to reduce customer turnover, increase the number of referral customers and ultimately improve our ability to provide consistent and better customer experiences,” concludes Hoehndorf.



Key Capabilities As illustrated in Table 3, Aberdeen has identified nine key business processes and six technology enablers required to successfully implement the VoC strategies highlighted in Figure 2, and achieve Best-in-Class results.

Table 3: The Competitive Framework

Best-in-Class Average Laggards

Process

Collect customer feedback through one or more channel(s)

84% 78% 69%

Automated alerts to notify customer-facing functions of a poor customer experience

48% 39% 12%

Organization

Each customer touch-point across the organization is identified

79% 63% 53%

Playbooks to support employees streamline the management of VoC and address negative customer feedback

50% 32% 22%

Knowledge

Information captured through VoC activities is utilized in new product development activities

86% 64% 57%

Standardize the format (i.e. details) of customer feedback data across the organization

61% 50% 35%

Share customer feedback data through role-based reporting for relevant stakeholders within the organization

57% 43% 35%

Enabling Technologies

• 82% CRM • 73% Customer

feedback management

• 73% Database management

• 61% Dashboards • 55% Workflow

automation • 52% Live chat

69% CRM 67% Customer

feedback management 66% Database

management 42% Dashboards 35% Workflow

automation 34% Live chat

56% CRM 60% Customer

feedback management 48% Database

management 36% Dashboards 27% Workflow

automation 24% Live chat

Performance

KPIs are used to measure the effectiveness of VoC activities

85% 68% 63%

Compensation and/or incentives for employees in customer facing functions are tied to achievement of VoC objectives

52% 42% 17%




Capabilities and Enablers Based on the findings of the Competitive Framework and interviews with organizations supporting VOC programs, Aberdeen’s analysis of the Best-in-Class demonstrates that these top performers are dedicated to using a certain set of business processes and technologies (Table 3), which help them succeed at customer feedback management initiatives.

Process The advancements in technology tools and channels have been reshaping how buyers access and consume information. Customers today can use a myriad of tools and channels such as social media portals and mobile devices to learn about a company, its products, and services before they even visit the store or the company website. This dynamic, that shifts the power in buyer-seller relationships, is termed the hidden sales cycle in Aberdeen’s October 2011 Uncovering the Hidden Sales Cycle research. One of the main challenges organizations face within the hidden sales cycle is capturing and analyzing customer feedback through these new channels. Eighty-four percent (84%) of companies with Best-in-Class VoC programs remedy this pain by adopting a multi-channel mindset, compared to 74% of Industry Average and 69% of Laggard businesses.

In addition to leveraging a multi-channel feedback infrastructure, leading companies have also developed processes to support a proactive VoC strategy. A proactive VoC strategy is one where an organization closely monitors customer experience results in order to swiftly identify and address a poor experience before it results in the loss of an account. Consider two executives responsible from managing customer experience. The first is provided with automated alerts immediately after each poor customer experience, while the second one either has no visibility into this information or learns the issue only after the customer stops doing business. From a client perspective, which business would look more customer-friendly? The obvious answer is the former organization, where each relevant stakeholder is empowered with insights into the results of each client interaction, enabling them to respond to a poor customer experience in a timely manner. Best-in-Class companies are 66% more likely than all other businesses to have established automated alerts to notify customer facing functions of a poor buyer experience. Figure 4 illustrates the impact of this process on improving year-over-year organizational results.

http://www.aberdeen.com/aberdeen-library/7364/AI-marketing-agenda-technology.aspx



Figure 4: Automated Alerts Helps to Delight Customers


Organization The ability to listen to customers in an effective way requires businesses to identify each organizational touch-point used to engage with clients. While this might be a tedious exercise, especially for large businesses, the results will help organizations determine key source(s) of customer feedback. One of the ways to accomplish this objective involves creating a dedicated cross-functional team involving key individuals across multiple departments in order to map out all the interaction points, and any potential linkages between these touch-points. Best-in-Class companies are 49% more likely than Laggards to have established such organizational visibility into how each touch-point might be integrated within their VoC initiatives. Companies without this process might spend more time trying to identify where and how to capture customer feedback data resulting in wasted operational resources. Therefore this process would also help businesses with reducing their operational costs.

Determining all the buyer touch-points helps companies streamline the processes used to capture customer feedback. What happens when a company captures feedback? Fifty-percent (50%) of the Best-in-Class companies have built playbooks to help their employees manage any negative or positive feedback. This is contrasted with only 32% of Industry Average and 22% of Laggard businesses. Consider a contact center where an agent has to act in real-time to a client’s negative feedback or concern. Supporting the call center agent with such playbooks allows them to determine the best next step action to effectively handle negative feedback. This would also help to reduce the average handling time of a call and ultimately ensure customer satisfaction. Indeed, data shows that companies with this process achieve 2.5-times greater year-over-year improvement (6.4% vs. 2.5%) in customer satisfaction, compared to those without this process.

9.6%

6.9%5.7%

0.8%

2.4%

0.3%0%

2%

4%

6%

8%

10%

Customer retention Customersatisfaction

Customer win-backrate

Year

-ove

r-ye

ar p

erce

nt c

hang

e, n

=455 Companies using automated alerts

All Others

“Using VoC programs within our customer engagement activities allows us to identify common themes across all our stores. We used this information to understand operational issues and rectify them on a real-time basis.”

~ Britt Innes, VP of Marketing, JOEY Restaurant Group



Knowledge Management In addition to helping their employees with guidance on how to effectively handle customer feedback, top performers within this study are almost twice as likely than their Laggard counterparts to standardize customer feedback data. This means that the feedback information these businesses capture is consistent regardless of the channel, timing or device. This capability is closely correlated with the leading VoC strategy; providing a unified view of customer feedback information. By adopting this process, companies are able to populate all the internal systems with consistent information on each customer. The end-result is improved efficiency in using customer feedback information within all relevant interactions. Considering that organizations with this process achieve 2.7% year-over-year increase in customer profitability, compared to a 1% decrease for all others, the benefits of this process become even more clear.

Standardizing customer feedback data also helps organizations with greater consistency in creating linkages between customer satisfaction results and the company products and services. Businesses develop new products and services for a myriad of reasons. Creating new sales opportunities as well as enhancing the existing ones are some of the primary reasons why organizations pursue those activities. The ability to improve selling results through new products and services requires these outputs to resonate with the target buyers. Findings from this study validate the effectiveness of this strategy; Best-in-Class companies are 51% more likely to integrate insights gleaned from customer feedback data when creating new products or services. Furthermore, those businesses where VoC is a crucial component of new product or service development initiatives enjoy a 17.4% year-over-year increase in their annual company revenue, compared to 6.4% for other businesses. Figure 5 illustrates several other performance measures that highlight the business impact of customer-centric product development.

Figure 5: Customer-Centric Products Drive Success


6.9%

5.2%

4.1%3.7%

1.5%2.2%

0%

1%

2%

3%

4%

5%

6%

7%

Revenue from net-new customers

Customer satisfaction Revenue fromcustomer referrals

Year

-ove

r-ye

ar c

hang

e, n

=455

Companies integrating VoC activities with New ProductDevelopmentAll Others

“Our customer feedback management activities are an integral piece of the new product development cycle. We use the feedback to determine the needs of our customers and develop innovative products that meet those needs.”

~ Clare Husbands, Marketing Communications Leader – Tool Products, Ingersoll Rand



One of the struggles facing today’s employees is the increase in the volume of information. Employees have access to a wealth of information but what is the most relevant ones to which they should pay attention and dedicate their limited time? This becomes even more challenging considering the growing volume of information shared across channels, such as social media. Using role-based reporting systems to disseminate customer feedback information by role, allows companies to help each stakeholder with the most relevant data they need to perform their activities. Best-in-Class companies are 33% more likely (57% vs. 43%) than Industry Average and 63% more likely (57% vs. 35%) than Laggard businesses to establish a role-based reporting mechanism as a part of their VoC programs.

Technology When it comes to leveraging technology tools to support existing VoC deployments, Best-in-Class companies focus on six key technologies illustrated in Table 3. These technology enablers can be analyzed in two groups.

The first group of technology tools includes CRM, customer feedback management and database management systems. CRM tools help companies store all the relevant account information within an enterprise system that can be easily accessible for any relevant stakeholder. Customer feedback management tools help companies track, measure and analyze what their customers are saying about their products or services. Database management tools help companies classify and manage feedback data in an appropriate manner. The adoption of customer feedback management tools is particularly interesting. While more than half of all companies with active VoC initiatives have already deployed these tools, approximately one-third of Industry Average and Laggard organizations are currently not using these tools. Considering the Best-in-Class adoption of this technology as well as the performance benefits highlighted in Figure 6, more businesses should consider integrating customer feedback management tools within their VoC activities.

“Businesses have all the tools they need to effectively capture and manage customer feedback. The problem is that these tools are not being used in a way that allows these companies to achieve full-potential from their deployments.”

~ Sales Manager at Mid-size Travel & Hospitality Company



Figure 6: Customer Feedback Management Tools Improve Year-over-Year Performance Results


The second set of technology enablers include dashboards, workflow automation and live chat. Dashboards allow employees to monitor customer feedback data in various formats; by time, by channel, by call center agent, etc. Analyzing feedback data in different formats provides companies with increased opportunities to reveal insights or trends that might impact buyer behavior. Workflow automation tools help companies map the processes involved in customer engagement activities, allowing them to identify inefficiencies or bottlenecks and fix them before they lead to issues with clients. Live chat tools serve as a key enabler to connect companies with consumers through the web on a real-time basis. With channels such as social media and web becoming popular for customer engagement and discovery, live chat tools are becoming an essential component of contact center programs, helping businesses gather insights and serve clients in a personalized fashion. Best-in-Class companies are more than twice as likely (52% vs. 24%) to use live chat tools as a part of their VoC activities.

Performance Management The saying “You can’t manage what you don’t measure” holds true for VoC programs. Companies that are not able to understand if their customer feedback management initiatives are effective or not wouldn’t be able to take corrective actions to truly benefit from these efforts. Eighty-five percent (85%) of Best-in-Class companies have already determined and are actively using measures such as customer satisfaction and customer retention to assess the true benefit of their VoC activities. Companies with this capability in place are 21% less likely (31% vs. 39%) than all others to

13.4%

8.6%

4.9%

3.2%

8.8%

4.2%

-1.0% -1.2%-2%

0%

2%

4%

6%

8%

10%

12%

14%

Annual companyrevenue

Number of positivementions through social

media channels

Customer win-back rate Average profit marginper customer

Per

cent

yea

r-ove

r-yea

r cha

nge

n=455

Companies using customer feedback management

All Others



struggle with a lack of organizational buy-in to their VoC initiatives due to lack of perceived business value. This empowers organizations with greater mindshare and involvement across the numerous internal stakeholders within the business.

One of the crucial aspects of gaining buy-in and involvement by internal stakeholders is employee engagement programs. The CEM research has identified the impact of employee engagement in improving customer engagement results. Companies that tie compensation and/or incentives of employees into the achievement of customer-related objectives enjoy far greater improvements in several key performance measures, including annual company revenue, number of positive mentions through social channels and customer satisfaction. For example, these businesses achieve 15.0% year-over-year increase in the number of positive mentions through social channels as a result of successfully integrating VoC activities within employee compensation, compared to a 5.7% increase by those that are not yet focusing on employee engagement.

The ROI of VoC Programs As illustrated in Table 1, the building blocks of Best-in-Class VoC programs help these companies with performance gains in customer satisfaction, customer retention and annual company revenue. Though most companies understand the intrinsic value and importance of VoC programs, they are struggling to quantify the impact of these programs with ROI figures. In fact, only 21% of companies with VoC programs are able to analyze how their customer feedback management programs influence their costs and revenue. Aberdeen asked the survey respondents participating in this study about the average impact of customer turnover and retention on their top-line revenue results. Figure 7 shows three key elements that impact the ROI of VoC programs.

• Revenue loss due to customer turnover. This refers to lost revenue opportunities as a result of shrinkage in the customer base. This number has a direct correlation with the year-over-year change in the size of an organization’s customer base. Other factors such as the average revenue generated by these lost accounts also influence this measure but to simplify this measurement, for the purposes of this study Aberdeen focused on solely the change in year-over-year customer turnover. As illustrated in Table 1, the building blocks of Best-in-Class VoC programs allow these organizations to improve their year-over-year customer retention results. This means that these top performers are losing fewer customers or accounts with low lifetime value. As a result, the net revenue impact of erosion in their customer base is considerably less, compared to other organizations.

• Incremental revenue from existing customers. This measure refers to the change in revenue generated from each existing account. Typically, if companies are able to determine the needs and

“Implementing our global VoC initiative has empowered our business with greater visibility into the results of our investments and efficiency of customer-facing processes. The ultimate impact of these changes resulted with greater ROI on our VoC activities.”

~ Stephenie Hoehndorf, Director of Global Client Loyalty & Retention Intelligence, Savvis




wants of their buyers and address them in a timely fashion to nurture and improve their account relations then this number is expected to increase, contributing greater revenue from the existing customer base. Best-in-Class companies outperform all others in their ability to improve customer satisfaction year-over-year. This measure reflects their ability to provide customers with the products / services they need in an efficient and timely manner. As a result, these companies are far more likely to gain a greater wallet share from their existing customers as well as retain high-value customers through personalized interactions.

Figure 7: VoC Programs have a Direct Impact on ROI


• Net revenue impact. This measure is the net total of the two measures indicated above. It indicates the success of companies in reducing customer turnover to avoid lost revenue opportunities and engaging their existing accounts with personalized and relevant messages in order to gain a greater share of their wallet.

As illustrated in Figure 7, Best-in-Class organizations were able to contribute $33 million to their top-line revenue results by reducing customer turnover by 14% year-over-year and increasing spend by existing customers. This compares to $7 million loss by Industry Average companies with 3.1% year-over-year reduction in customer turnover. Even though Industry Average companies are able to improve their year-over-year customer turnover results, this improvement is much less compared to the Best-in-Class. Furthermore, they are not able to replicate the Best-in-Class success in increasing the wallet share of each customer, resulting in a net revenue loss. Laggard organizations experience a 7.8% year-over-year increase in customer turnover rate, and as a result they suffer from $155

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million in lost revenue which could have been avoided by adopting best practices required to implement successful VoC programs. The recommended actions below will provide a roadmap for all organizations to achieve Best-in-Class results in the ROI of VoC programs in order to maintain and improve the financial health of businesses.

Key Takeaways Whether a company is trying to improve its performance in VoC activities from Laggard to Industry Average, Industry Average to Best-in-Class or maintain Best-in-Class results, the following actions will help spur the necessary performance improvements:

Laggard Steps to Success: • Incorporate customer feedback into business decisions.

Only 49% of Laggard organizations are currently integrating customer feedback data within their strategic corporate decision making processes. This means that the insights captured through VoC activities are not transferred in how the executive management runs these businesses. Organizations that want to compete in today’s increasingly competitive marketplace don’t have the luxury of avoiding customer feedback information. The benefits of this strategy become even more clear considering that companies integrating customer feedback within their business decisions outperform all others by 78% in year-over-year increase (16.9% vs. 9.5%) of their annual company revenue.

• Listen to your customers in social media. As illustrated in Figure 3, social media ranks as the top channel companies are looking at to capture the voice of their customers. However, only 24% of Laggard organizations are able to determine the most relevant customers to follow in these channels in order to capture feedback. Businesses that listen to their customers within social media portals are less likely to struggle with challenges in being able to collect data on the needs and wants of their customers. This is primarily a result of their ability to tap into the wealth of information available within social channels and proactively use this data within their business activities.

Industry Average Steps to Success: • Synchronize your multi-channel activities. Sixty-five percent

(65%) of Industry Average organizations report that they are not able to implement VoC programs through multiple channels while ensuring consistency between these activities. Conducting customer feedback programs without ensuring consistency across different channels has numerous consequences, including inaccurate or contradictory information as well as clients who might be engaged multiple times by the same company asking for their feedback.

Demographics

Of the 455 responding organizations, demographics include the following:

• Job title: Senior Management (24%); EVP / SVP / VP (13%); Director (21%); Manager (25%); Other (17%)

• Department / function: Sales and Marketing (43%); Corporate Management (11%); Customer Service (11%); IT (8%); Operations (6%); Other (21%)

• Segment: Retail (19%); IT consulting / services (17%); Software (13%); Financial services (8%); Health, medical, dental devices/services (7%); Telecommunications equipment & services (7%); Industrial equipment/product manufacturing (6%); Other (23%)

• Geography: Americas (64%); APAC region (13%) and EMEA (23%)

• Company size: Large enterprises (annual revenues above US $1 billion)- 18%; midsize enterprises (annual revenues between $50 million and $1 billion)- 34%; and small businesses (annual revenues of $50 million or less)- 48%



Avoiding these mishaps requires Industry Average businesses to increase their focus on bringing in all the different elements involved in their VoC activities under a consistent and coherent program. Determining all the customer touch-points within the company and how they are linked with each other helps companies in their pursuit to establish consistency between activities taking place through these touch-points.

• Automate your VoC activities. The ability to have rapid visibility into a poor customer experience is one of the distinguishing aspects of Best-in-Class VoC programs. Currently 39% of the Industry Average companies are able to have such visibility through building automated alerts that notify customer-facing functions of a poor customer experience. Data indicates that companies with this process are able to reduce their response time to customer inquiries by 19.1% year-over-year, compared to only 3.6% reduction by all other companies. Adopting this process to enhance the VoC initiatives with such automated detection and response mechanisms, therefore would help the Industry Average stay tuned to the buyers and respond to clients’ needs swiftly in order to bring their performance to par with the Best-in-Class.

Best-in-Class Steps to Success: • Integrate customer behavioral and feedback data. As

companies are trying to optimize the timing, message and delivery of each customer interaction, the ability to understand buyer behavior becomes even more important. Businesses use a myriad of tools such as web analytics, customer analytics and social media monitoring to track and understand customer behavior. Integrating client feedback with behavioral data, such as how clients respond to specific marketing campaigns, allows companies to draw correlations between feedback and actual results. Analyzing the results of these correlations would help organizations determine specific patterns which might affect how they do business. Only 48% of the Best-in-Class companies are currently integrating customer behavioral and feedback data, which means that there is ample room for growth in bringing these pieces together in order to further improve their performance results. Standardizing on customer feedback data and analyzing these insights with reports from other systems (i.e. web analytics) would help companies connect the behavioral and feedback information of their customers.

• Determine the ROI of VoC activities. One of the areas that can take the Best-in-Class VoC programs to the next step is being able to determine the cost and benefit implications of the key activity results, including customer satisfaction and customer retention. This allows companies to understand the cost and returns associated with each customer feedback management



activity. Currently 64% of the Best-in-Class companies don’t have this capability in place. Establishing this process as an integral part of VoC programs, and would help these organizations understand which feedback tools and channels are most relevant and rewarding. As a result, they can allocate their limited resources to those activities that yield the greatest operational and financial outcomes.

For more information on this or other research topics, please visit www.aberdeen.com.

Related Research Multi-Channel Digital Marketing: Addressing the Why's and How's to Achieve Success in the New Era of Customer Engagement; February 2012

Social Collaboration Powers Top-Notch Customer Engagement Programs; February 2012

Social Compliance: Protect Brand Equity and Ensure Governance; February 2012

Customer Experience Management: Using the Power of Analytics to Optimize Customer Delight; January 2012

Web Analytics: Marketing Beyond Online Customer Data; January 2012

Customer Relevancy Drives Precision Marketing in the Mobile Channel; January 2012

The Marketing Executive's Agenda for 2012: Uncovering the Hidden Sales Cycle; October 2011

Leveraging the 360 Degree Customer View to Maximize Up-Sell and Cross-Sell Potential; September 2011

Social Media Connecting B2C Companies with Generation Y and Z Consumers; March 2011

The ROI on Customer Feedback: Why It Pays to Listen to the Voice of the Customer; March 2009

Author: Omer Minkara, Senior Research Associate, Customer Management Technology Group, ([email protected]), LinkedIn, Twitter

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Founded in 1999, Cvent is the world's largest provider of online survey, feedback management, and meetings and event management technology. Cvent’s solutions help over 90,000 users in 50 countries manage hundreds of thousands of surveys, events and e-mail campaigns annually. Organizations use the Cvent Web Surveys solution to create and manage highly effective customer feedback and Voice of the Customer programs that turn customer insights into business results. Hundreds of organizations have strengthened relationships with their customers, improved customer retention, identified key drivers of satisfaction, and enhanced product and service through customer feedback programs deployed with Cvent Web Surveys.

For additional information on Cvent:

Cvent

8180 Greensboro Dr., Ste 900

McLean, VA 22102

Telephone: 866.318.4358

www.cvent.com

[email protected]

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Aspect builds customer relationships through a combination of contact management, workforce optimization and Microsoft unified communications and collaboration platform solutions, enabling organizations to meet the expectations of today’s technology-savvy, socially connected consumer by bringing customer contact to every key area of the enterprise. Aspect is recognized by industry analysts for its successful track record of helping companies achieve strategic objectives, deliver operational efficiency and enhance customer satisfaction. Aspect enables organizations to meet their business goals with the combined power of time-tested software and professional services, including more than two-thirds of the Global Fortune 50. For more information, visit www.aspect.com.

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