A new Forbes Insights/American Society for Quality (ASQ) survey conducted in 2014 shows that while many companies solicit customer input, few really involve customers aside from simply receiving their surveys and complaints. Companies that genuinely involve customers are twice as likely to have world-class quality. This finding raises three questions:
- What is the difference between analyzing customer input and involving customers?
- Is the payoff worth the investment?
- What do I need to do to get started?
The difference between analyzing customer input and involving customers
Customer involvement mechanisms include online communities, focus groups, ethnographic studies and regularly scheduled discussions with the customer. Ron Lear, director of quality at Booz Allen Hamilton, said frequent discussions with customers include specifying the issues that are identified based on customer feedback and how the company plans to address them. Periodically, they circle back to the customers to learn if they actually saw improvement based on the company’s actions. The key to involvement is continual monitoring, continuous improvement and ongoing, two-way communication.
Only 24 percent of the Forbes/ASQ survey respondents strongly agree that they actively involve customers in formal quality discussions, rising to 47 percent among world-class businesses. Only 16 percent overall strongly agree that they use big data to gauge customer sentiment, compared with 41 percent of world-class organizations. Only 12 percent overall strongly agree that they use social media to gauge customer sentiment, rising to 30 percent among world-class organizations.
Is the payoff worth the investment?
My research, as reported in my recent book, Customer Experience 3.0, found that companies that provide great quality and customer experience have dramatically lower marketing costs because their customers do their marketing for them. For instance, restaurants The Cheesecake Factory and Chick-Fil-A both have marketing expenses totaling one-fourth that of their competitors because of positive customer word-of-mouth. Also, to the degree that your customers have fewer problems, attrition is lower and less needs to be spent to win new customers. Mine was the original research that demonstrated that it costs five times as much to win a new customer as to keep a current one.
Additionally, higher quality begets higher margins. Encountering a problem generally doubles customers’ sensitivity to price and two problems double it again. Quality is the most powerful differentiator for companies that wish to become world class and charge a premium. The message to the finance department is that if you want to charge a premium price, your customers better not encounter problems.
How do I get started with customer involvement?
Better a small success than a big disaster. Pick one known customer problem and have a two-way discussion with a focus group or segment of your customer online community. Ask how and when the problem occurs and what happens just before it occurs. You will find that customers have a much more complex understanding of your product than you think they do. Unpleasant surprises and unmet expectations are often the source of dissatisfaction because customers seldom read the directions or details of any offer. My research has found that customers generally create 20 to 30 percent of their own problems via mistakes and incorrect expectations.
One approach, suggested by the ASQ study, is to create a small group of involved customers, which they call “Qustomers” — customers who are involved in the quality of the product design, prototyping, production, delivery and use. While massive customer involvement is expensive, involvement at these five critical points throughout the customer journey provide great payoff. For instance, the study recounts the guidance of Airbus quality manager Thomas Joussen that the “the customer is at the assembly line doing quality checks for all stages from beginning to end.” In other words, the customer must have input opportunities throughout the entire product life cycle.
The most successful companies shared information on product quality and service with the customer. Sharing the quality metrics with your customers allows you to validate that you are measuring the right things. If you think quality is at a 97 and the customer says, “no it is a 67” – you know the metric is inaccurate. Quality metrics should be merged with or congruent with market success metrics, such as the value for price paid and willingness to recommend. Ask customers to share the problems, questions, frustrations and surprises (both positive and negative) they have had with your products and those of your competitors. Educating customers on product capabilities is also critical for ensuring they get the most out of products/services.
Customer involvement is the best investment for enhancing the customer experience. The Forbes/ASQ study shows that a significant majority of companies fail at involving customers in product design, production and delivery. Those that do are twice as likely to deliver world-class quality and customer experience, saving marketing costs, preventing customer attrition and achieving higher margins than their competitors.
— John Goodman is Vice Chairman of Customer Care Measurement & Consulting LLC. His latest book, Customer Experience 3.0, is available through Amazon. Follow him on Twitter at jgoodman888 or contact him via email at jgoodman@customercaremc.com.
