Ernan is recognized as the industry pioneer who created three important methodologies: Integrated Direct Marketing, Opt-In Marketing, and Voice of Customer Relationship Research.

He was named to “B to B’s Who’s Who” as one of the “100 most influential people” in Business Marketing by Crain’s B to B Magazine.

ERDM provides marketing consulting services for innovative Fortune and Growth companies such as Microsoft, NBC Universal, Walt Disney, Reliant Energy, Hewlett-Packard, IBM, MSC Industrial Direct, and Songza Media, Inc.

He is also the co-author of “Opt-In Marketing: Increase Sales Exponentially with Consensual Marketing” and author of “Integrated Direct Marketing: The Cutting Edge Strategy for Synchronizing Advertising, Direct Mail, Telemarketing and Field Sales”.

VOICE-OF-THE-CUSTOMER MARKETING

A REVOLUTIONARY FIVE-STEP PROCESS TO CREATE CUSTOMERS WHO CARE, SPEND, AND STAY

The McGraw-Hill Companies, Inc.

Contents

Excerpt

CHAPTER 1

Conduct VOC Relationship Research

EXECUTIVE SUMMARY

• The first step in the five-step process that connects a marketer to the wisdomof the customer calls for conducting VOC Relationship Research. Thisfoundational research is driven by in-depth interviews with customers andprospects.

• MSC Industrial Direct, a Fortune 1000 industrial supply company, identifiedcompetitively powerful strategies for strengthening relationships with customersand driving incremental sales using the VOC Relationship Research Process.

To turn customer feedback into an organizational asset, we must do more thansend out simple surveys based on what we think the most important businessissues of the day are. We must make listening to, analyzing, and taking actionon the Voice of the Customer an organizational priority. The listening must takeplace on an ongoing basis, in response to specific customer experiences. It mustalso take place on the basis of what my colleague Don Peppers refers to as"pulse monitoring"—that is, a systematic series of direct engagements withcustomers and other stakeholders designed to capture detailed reactions.

WHAT IS VOC RELATIONSHIP RESEARCH?

The VOC Relationship Research Process has been refined over a period of 20years, by means of over 125 research studies representing over 10,000 hours ofinterviews.

The focus of most of these in-depth research efforts has been to identifyactionable market intelligence that defines strategies for significantlyincreasing revenue—by better understanding customers. A deeperunderstanding of your customers will inevitably increase your likelihood ofwinning:

• More customers

• Customers with greater loyalty

• Powerful word-of-mouth referrals

VOC guidance enables you to achieve greater Customer Lifetime Value through thefollowing:

• Increased sales of new and existing products and/or services

• The development of more effective value propositions and messaging

• The creation of powerful "call-to-action" triggers

• The deployment of an integrated multichannel mix based on customerpreferences

• The development of effective and appropriate Opt-In/Self-ProfilingStrategies

• Reduction in wasted time and money spent on ineffective marketing initiatives

This process can be applied to any company. The results of companies profiled inthis book—Microsoft, IBM, MSC Industrial Direct, Palms Trading, and manyothers—prove that VOC insights can help large and small companies intechnology, software, media and entertainment, heavy industry, hospitality,energy, and virtually every other sector of the global economy.

VOC Relationship Research improves your marketing by uncovering in-depthmarketing information that answers critical questions such as these:

• How do customers view the strengths and weaknesses of your company?

• Do your customers feel that your company is providing the value they expected?

• What do customers expect from you in a deeper, competitively differentiatingrelationship?

• What are the critical issues facing decision makers as they evaluate yourproduct or service?

• What are the reactions of customers and prospects to your messages, tactics,and offers?

• How do customers define their unique messaging and information requirements?

• How do customers define the parameters for an opt-in/self-profiling,preference-driven relationship with your company? (You'll learn more about thiskind of relationship in Step 2.)

• What questions are appropriate to ask a prospect or customer as part of theopt-in/self-profiling process? And when is it appropriate to ask them to opt inand self-profile in the course of their relationship life cycle with yourcompany?

• How long does the decision-making process take, and who are the criticaldecision makers and influencers?

• What information is required at each step and via what mix of media?

• What is the optimal value-added role for sales channels?

VOC also helps you to do the following:

• Change from a relationship based on transactions between you and yourcustomers to a deeper engagement based on your deeper understanding of theirneeds.

• Understand the critical issues facing decision makers as they evaluate yourproduct or service.

• Understand the steps in the decision-making process.

• Identify the likely decision makers and the empowered influencers.

• Determine what information and offers are most effective at each step of thesales process, and via what mix of channels.

• Determine the optimal role for the following:

* Social media

* Internet

* E-mail

* Direct mail

* Inside sales and inbound/outbound telemarketing

* Field sales

* Tech support

* Stores

The VOC Relationship Research Process helps you develop powerful and actionablestrategies and tactics as a result of in-depth, one-to-one—voice-to-voiceor face-to-face—interviews, typically lasting one hour. These interviewsare not your organization's only sources of information about what yourcustomers expect from you, but they are an essential starting point.

Our company started with face-to-face interviews, and we continued them foryears. Eventually, however, we changed to telephone interviews due to feedbackwe received from interviewees during VOC research programs we were conductingfor clients. People we were interviewing face-to-face told us that phoneinterviews were less intrusive and more convenient. Switching to telephoneinterviews meant that we could eliminate travel costs, complete the researchmore quickly for our clients, and still have the benefit of the in-depthhour-long research interviews.

Companies use these in-depth VOC insights as internal marketing roadmaps—and, not infrequently, they also use them as authoritative argumentsettlers when internal turf or political conflicts threaten to takeorganizations off track.

Increasingly, we've seen that when organizations make changes that profoundlyimprove their strategic and competitive positions, they do so because ofsomething they have learned or stories they have heard directly from the mouthsof their customers.

The competitive advantages of the information that results from VOC research aregame changing, but those benefits will not materialize unless you follow aspecific process that will ensure you are asking the right questions for theright reasons. That process is the subject of this chapter.

COMMON OBJECTIONS TO CONDUCTING VOC RESEARCH

Among the objections we sometimes hear from companies who resist conducting VOCresearch are these:

• Customers don't say what they mean. They say one thing and do another.

• We already did this. We talked to customers at our [trade show/annualmeeting/other gathering], and we didn't really get anything we didn't alreadyknow.

• I talked to our best customer last night and got all the feedback I need.

• Keeping in touch with our customers is a key reason we have salespeople. Isn'tthat enough?

• Why can't we just send a letter asking for written feedback?

• Why can't we just send out an online survey?

We have learned empirically that customers do know what they want andare happy to take advantage of opportunities to tell marketers what they want.The problem often lies with the companies: companies don't always ask the rightquestions, don't always listen to what the customers are actually saying, anddon't always like the answers they get when they do, but that's another matter.

As for gathering off-the-cuff insights at trade shows and other venues, this isfine for anecdotal information. But keep in mind that this does not and cannottake the place of disciplined, systematic, in-depth discussions with customers.

Online surveys have their place, and they are certainly very easy to administer.The fact is, however, that they often do not yield the depth of insightsrequired to drive new solutions to the strategic challenges we face. Too often,surveys tend to reinforce our preconceptions rather than challenge them.

If our goal is to find out how and why the competition is securing a largerportion of a customer's total budget than we are, for instance, we shouldprobably begin by acknowledging that we don't know what we don't knowabout that customer's personal and operational experiences with us. These arelikely to be important gaps that are well beyond our current experience base,and we need to pose open-ended questions and engage in in-depth conversations ifwe hope to fill those gaps.

This is not to say that online surveys and other quantitative tools can't beeffective in helping us determine what's working or what's not. They can, but itis often necessary for us to go much deeper than these tools are designed to go.

IN-DEPTH INTERVIEWS: POWERFUL TOOLS FOR MARKETERS

Marnie Kittelson, Research and Marketing Expert

In-depth interviews, commonly referred to as IDIs, are an essential tool in anymarketer's toolbox. Basically, in-depth interviewing is a research method thatuses open-ended questions to elicit perceptions, thoughts, and feelings on aspecific topic of interest, and it allows interviewees to express these opinionsin their own words. IDIs can be conducted in any type of setting that offers anintimate connection between interviewer and interviewee—most often face-to-face or voice-to-voice via telephone. However, with the technologicalevolution, the industry is seeing Webcam IDIs becoming more popular, and weexpect there will be even more ways to conduct these types of interviews in thenear future.

The beauty of using this type of research is that it uncovers the "whys" of aparticular marketing or business issue. It's easy enough to get at the "what's"of a problem—anyone can fire off a Survey Monkey e-mail laden with "Howwould you rate ..." and "Which statement best describes ..." questions that getyou only to the realization that a problem exists, not what's causing it.

Because the interview is conducted one-on-one, there is no social pressure, no"group think"—just one consumer talking about his or her experiences withone trained interviewer. An experienced interviewer will establish a rapportwith the interviewee, guide him or her through the preselected questions, butthen probe and delve into areas that offer greater insights or differentperceptions than were expected. This level of nuance, laced with richdescriptive details, is the real value of an IDI—finding the informationyou didn't even know you didn't know.

Engaging customers in a conversation where they feel comfortable talking aboutthe business environment they are dealing with and how your company affects it,the particular challenges they are facing, and even how they want to connectwith your company provides information that marketers can't get with othermarketing or research methodologies. Other methods might (or might not) be ableto "check the pulse" of your customers, but IDIs will tell you what will gettheir heart racing.

Ultimately, IDIs offer marketers the ability to hear their customers' stories,told from their points of view, with their own words. It's then your job tolisten and apply these learnings.

HOW TO ESTABLISH THE CORRECT OBJECTIVES THAT WILL DRIVE THE VOC RESEARCH

Effective VOC Relationship Research depends on a number of elements. The firstand arguably most important element is the identification of the rightobjectives.

The products and services developed by marketers don't always connect with thetrue needs of their customers or prospects. The VOC provides an in-depthunderstanding of the straight line toward the "true North" that is the wisdom ofthe customer.

To help you in finding this true North, the objectives that drive effective VOCRelationship Research must be:

1. Generated and evaluated by a cross-functional team, so the VOC will reflectthe needs of the major stakeholders

2. Strategically sound and in alignment with the goals of senior management

3. Based on the unique conditions faced by your organization and your customersegments

Consider all three of these requirements nonnegotiable. Fulfilling them takestime. Given the complexity and importance of these three requirements, it's avirtual certainty that the right objectives for your research campaign arenot what tumble out of your mouth instantly the moment you start talkingabout what you'd like to learn from, and about, your customers or prospects.

WRITE CLEAR OBJECTIVES AND INTERVIEW QUESTIONS

• Define a clear set of issues or opportunities, and develop a concise set ofVOC research objectives to address these specific issues.

• Do not define your objectives too broadly. Stay focused on the major issues athand so you'll gain an in-depth understanding—and be able to develop thestrategies and action items that can improve customer experiences.

• Don't create too many objectives because each objective will require a numberof questions in the Interview Guide. If you end up with too many questions, youwill lose the value of the in-depth discussions and insights that the VOCRelationship Research provides.

• Create questions that involve and engage participants, and challenge them tothink. For instance, instead of simply asking, "How likely would you be torecommend our service to friends and family?" you might want to ask, "Whatimprovements would you need to see to be comfortable enough to recommend ourproduct or service to a friend?"

It takes a great deal of thought and discussion to determine the rightobjectives for VOC Relationship Research. You'll know you're dealing with goodcandidates for your campaign's research objectives when they touch on one ormore of these four strategic marketing imperatives:

• Attracting prospects

• Converting prospects to customers

• Selling more to existing customers through better levels of engagement andvalue

• Keeping the customers you've got

If something points you toward how one or more of these four strategicimperatives is actually happening right now—what's keeping one or more ofthem from happening, or what could allow one or more of these four factors tohappen more profitably and efficiently in the future—you're looking at apotential objective for your VOC Relationship Research effort.

To demonstrate how this first essential step of the VOC process works, let'sreview the following case study.

MSC Industrial Direct is a Fortune 1000 industrial supply company founded in1941. Like all the companies whose case studies we are sharing with you in thisbook, MSC has customers it must keep satisfied and loyal, and it faces real andever-shifting market challenges in doing so.

To resolve some of those challenges, MSC began by adopting a core principle ofthis book: in times of rapid market change, the wisdom of the customer is theonly reliable constant. While MSC prides itself on staying close to itscustomers and employs many methods to capture customer feedback, seniormanagement at MSC decided it was time to ask customers for guidance and help ina manner that would provide the most unbiased information.

To understand the company's decision, you will need a little background. MSCdistributes over 600,000 items to a broad, diverse base of customers that rangefrom small manufacturing companies to Fortune 1000 companies—as well ascustomers at many state and federal government accounts. MSC reaches its manycustomers through a variety of sales channels: direct mail, outside salespeople,telesales, and the Internet.

As Rich Bonfiglio, director of customer marketing at MSC, explained:"Culturally, MSC's internal priorities are clear: the primary goal, up and downthe organization, for everyone from senior executives to frontline associates,is to provide an extremely high level of focus on providing exceptional serviceto every customer, on every order."

Many companies claim to have this kind of customer-focused culture, of course,but MSC's actions in the marketplace show that MSC does in fact walk its talk:customer feedback is solicited at every level, in formats ranging from onlineand telephone surveys, to discussions with direct salespeople, to one-on-onecontacts with the CEO.

Given MSC's culturally reinforced connection to its customer base, and itswillingness to reach out in many media and listen to what it heard, one mighthave been tempted to conclude that the company "didn't need" VOC research. That,however, would have been a mistake because the challenge MSC faced was not onethat could be resolved with a survey or even by a call or two from the CEO.

Why Conduct VOC Relationship Research?

According to Rich, "The recession that bogged down the United States (and indeedthe global) economy beginning in late 2008 brought about a major change in aspecific, and significant, segment of the MSC customer base. The problem wasthat buyers in this segment abruptly changed their purchasing pattern."

Unlike many companies that faced the challenge of adjusting to the grimrealities of the recession, MSC didn't begin by assuming that it already knewthe answer to those questions. Instead, management worked from the assumptionthat they didn't know.

(Continues...)
(Continues...)Excerpted from VOICE-OF-THE-CUSTOMER MARKETING by ERNAN ROMAN. Copyright © 2011 by Ernan Roman. Excerpted by permission of The McGraw-Hill Companies, Inc..
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