The Ultimate

Guide to
Voice of the
Customer
a
Table of Contents
INTRODUCTION 1 6. HOW DO I BUILD A VOC PROGRAM? 22
The What-How-Now Model 23
1. WHAT IS VOICE OF THE CUSTOMER (VOC)? 2
+ What Do I measure? 23
- Step 1: Map the Journey 23
2. COMMON METRICS USED IN VOC 3
+ How Do I measure it? 25
CSAT 4
- Customer Feedback Channels 25
NPS 4
Solicited 25
CES 5
Unsolicted 27
3. WHY DO VOC PROGRAMS MATTER? 6 + Step 2: Identify Channels and Timeline 27
Micro Issues 7 + Step 3: Test and Iterate 28
Macro issues 7 - Reliability 28
- Validity 29
4. KEY ENABLING FACTORS FOR VOC SUCCESS 8
- Channels 29
Strong Leadership 9
+ Now What Do I do? 30
Vision and Clarity 10
- Step 4: Reporting 30
Engagement and Collaboration 10
Identify the Right Department 30
Listening and Learning 11
Identify the Right Individual 31
Alignment and Action 11
- Step 5: Goal Setting 31
Patience and Commitment 12
- Step 6: Take Action 32

5. WHAT IS THE RETURN ON INVESTMENT  Micro opportunities 32

FOR A VOC PROGRAM? 13 Macro opportunities 34
Repurchase/Renewal 14 Derived Analyses 35
Forgiveness 16 Overt Analyses 36
Referrals 18 Text Analytics 37
+ Conversions 19 Sentiment Analysis 38
+ Average Growth 19 Topic Analysis 38
+ Referral Baseline Revenue Contribution 19
7. IS MY COMPANY READY FOR A VOC PROGRAM? 40
+ Value Added 20
Bringing it All Together 21
8. HOW DO I KEEP THE MOMENTUM GOING? 44
Key ROI Takeaway 21
VoC Program Management 44
Internal Communication 45
+ Messaging and internal media 46
+ Target Audience 46

CONCLUSION 47

ABOUT THE AUTHORS 48

ABOUT QUALTRICS 49
Introduction
Sparked by the spread of affordable internet and access to technology, consumers are
now more informed than ever before. With instant access to information, every
individual, consumer and business is free to compare, contrast and eventually
purchase from companies across the globe. In the last decade, the entire balance of
power in the consumer-company relationship has drastically shifted towards the
customer—be they a business or an individual. This means competition for every
company and business is at an all-time high and growing by the day.

If companies want to keep up in this hyper-competitive environment, they’ll have to

create life-long brand loyalty by focusing on the people who purchase their product
and service. More than ever, companies must leverage the customer experience to
succeed. Why? Because customer experience creates higher value customers, more
referrals and lower churn. For many, customer experience has been largely overlooked
in recent decades, but strong customer experience separates industry leaders from
industry failures. And voice of the customer programs are critical for any company
looking to master customer experience. The pages that follow highlight key terms,
content and processes vital to the understanding, creation and implementation of an
impactful program.

1
What is Voice
of the Customer
(VoC)?
In the purest form, voice of the customer (VoC) is a process used to gather information
from and about customers that represents their likes, dislikes, expectations and any
other relevant information about their experience with a brand, product or service.
Voice of the customer is truly a mechanism that can be leveraged to improve a
company’s customer experience.

But VoC is much more than that. In more recent years the term VoC has become
synonymous with not just customer information, but also the tools and processes used
to gather, analyze and report this information in an effort to improve the overall
customer experience. In other words, voice of the customer and VoC programs have
become almost interchangeable. You also might see other terms or titles, like
customer insight, customer experience (CX) or customer feedback, that are essentially
synonymous with VoC.

2
 Common Metrics
Used in Voice
of the Customer
As with any organizational initiative, measuring the success of VoC is crucial to
developing a strong and scalable program. In this section we’ll introduce a number of
metrics to help you get started or improve your voice of the customer program.

Many organizations view voice of the customer metric selection as challenging. To

ease this fear, we’ve outlined and summarized a few common metrics to help you
determine which will provide the most impact for your VoC program. However, before
we jump into specific metrics we need to understand the difference between
transactional and relational metrics.

Transactional metrics are based on a specific customer experience and assess

customer opinions on the unique characteristics (e.g., customer service) of these
singular interactions. Closing the loop on individual experiences or correcting common
transactional issues are two common use cases for transactional metrics. On the other
hand, relational metrics are applicable when assessing aggregate experience with a
product or service. These metrics serve as an overall evaluation of a company or brand,
measuring things like customer experience, loyalty and advocacy.

Each type of metric listed below can be transactional or relational, depending on which
element of the customer experience you’d like to measure.

Customer Satisfaction (CSAT)

Three common metrics
2.1 Net Promoter Score® (NPS®)
used in voice of the
customer programs. Customer Effort Score (CES)

3
 CUSTOMER Customer Satisfaction (CSAT) is measurement that quantifies how well specific
SATISFACTION products, or pieces of a customer experience meet customer expectations. Questions
(CSAT) commonly associated with CSAT utilize 1 to 5 or 1 to 7 Likert-type response scales that
may run from ‘Very Dissatisfied’ on the low end to ‘Very Satisfied’ on the high end.

Overall, how satisfied are you with the service

provided by [your company]?
2.2
Very Very
CSAT questions
are commonly asked Dissatisfied Satisfied
using Likert response
scale questions.

Using the same general format, it is possible to examine any number of company
factors, whether they be people-, product-, or process-focused.

NET PROMOTER The Net Promoter Score, or NPS® is based on the fundamental perspective that
SCORE (NPS) every company’s customers can be divided into three categories—promoters, passives,
and detractors.

By asking one simple question “How likely is it that you would recommend
[your company] to a friend or colleague?” you can track these groups and get a clear
measure of your company’s performance through your customers’ eyes. Customers
respond to NPS questions with a 0-to-10 point rating scale and are categorized into
one of three categories:

DETRACTORS PASSIVES PROMOTERS

(score 0-6) are unhappy
customers who can damage
your brand and impede
growth through negative
word-of-mouth.
(score 7-8) are satisfied but (score 9-10) are loyal
unenthusiastic customers enthusiasts who will keep
who are vulnerable to buying and fuel growth by
competitive offerings. referring others.

2.3
Using a 0-10 point rating
scale, NPS sorts
%- % = NPS ®

customers into one

of three categories.

To calculate your company’s NPS, take the percentage of customers who are promoters
and subtract the percentage who are detractors.

4
 CUSTOMER Customer Effort Score (CES) is a single-item metric that measures how much effort a
EFFORT SCORE customer has to exert to get an issue resolved, a request fulfilled, a product
(CES) purchased/returned or a question answered. This measurement is quick and easy for
customers to evaluate, and it’s simple to implement across different service and
survey channels. A CES score also correlates with business outcomes and is easy to
track over time.

How much effort did you personally have

2.4
A customer effort
to put forth to handle your request?
score is a customer
metric that measures
how much effort a Very Low Very High
customer has to exert to
get an issue resolved.

5
 Why Do VoC
Programs Matter?
Happier customers buy more, stay longer and tell others about your product—and that
means higher revenue. Harley Manning and Kerry Bodine’s book, Outside In: The Power
of Putting Your Customers at the Center of your Business, provides strong evidence to
support the business value of customer experience management. In comparing
customer experience leaders with customer experience laggards, Manning and Bodine
found that customer experience laggards reported a negative return on investment to
shareholders of -46.3 percent over a set period of time, while customer experience
leaders reported a positive return on investment of +22.5 precent to their shareholders
over the same period of time.

-46.3% 22.5%
3.1
CX laggards saw a
negative return on
investment to
CX LAGGARDS ROI CX LEADERS ROI
shareholders, while CX
leaders saw a positive
return on investment.
0

Just like Manning and Bodine point out, collecting, analyzing and acting on customer
data gives companies a richer understanding of their customers’ needs, common
issues, product preferences and any number of other customer-centric information.
And it’s this understanding that empowers businesses to make well-informed
decisions and become more customer-centric.

The best VoC programs also provide the opportunity for businesses to address
customer issues on both the micro and macro levels.

6
 MICRO Micro issues can be thought of as single-customer, single-instance issues that a
ISSUES company fixes and moves on. For example, a dissatisfied customer could be flagged
through either self-report mechanisms (e.g., email) or solicited means (e.g., experience
survey). Once they’re flagged, this customer’s profile would enter a workflow which
leads to a proactive attempt by the company to correct the customer’s situation. This
process is commonly referred to as ‘closing the loop.’

MACRO Macro issues, on the other hand, are defined as many customers experiencing a
ISSUES recurring pain point that requires sweeping changes. For example, the checkout
process at a retail chain may be abnormally long due to a lagging computer system.
This issue impacts hundreds of thousands of customers and could potentially drive
away repeat business. Fixing this issue requires large-scale changes and effort on
behalf of the company.

With the ability to look at both micro- and macro-level customer issues, voice of the
customer programs allow companies to quickly identify widespread drivers of poor
customer experience, close the loop with individual customers and provide trend and
performance feedback to work groups throughout their organization.

Though VoC programs are essential to building a customer-centric company, they

don’t necessarily guarantee success. There are several other factors we’ll cover to help
you achieve customer-centricity.

7
 Key Enabling
Factors for
VoC Success
Introducing a voice of the customer program often leads companies to question their
readiness to shift towards a customer-focused culture. The model below helps
companies evaluate their readiness by offering six general factors that must align for
companies to produce the optimal customer-centric culture.

STRONG
LEADERSHIP
VISION &
CLARITY
ENGAGEMENT &
COLLABORATION CX
LISTENING &
LEARNING
ALIGNMENT &
ACTION
PATIENCE &
4.1
The six key factors

COMMITMENT
for building a
customer-centric
organization

In the following section, we’ll discuss each factor in-depth, offer guidance for
cultivating underdeveloped factors, and provide steps for you to achieve alignment.

8
 STRONG Establishing a customer-centric culture starts at the very top. Without executive-level
LEADERSHIP buy-in there is a low probability of creating maximum impact for any customer-centric
initiative. But while executive buy-in is necessary, it is not sufficient. You need the
support of lower level leaders to truly move the needle on improving the customer
experience. Leaders set the tone for their subordinates, so if a leader decides that
the customer isn’t that important, their direct reports will follow suit. Pay attention to
a leader’s actions and not just their words. Are they willing to put tangible personal
outcomes on the line (e.g., bonus), or do they stop short of demonstrating buying into
customer focus?

+ How Do I Get Buy-In?

So what happens if leaders don’t place particular emphasis on the customer?
Creating buy-in, changing opinions and upending conventional ways of thinking at
any level of a company can be a challenging task—particularly if there isn’t a sense of
urgency to do so. We’ve outlined several proven methods to help you gain and build
support for a customer-focused culture.

Return on Investment Outline

For companies that are hyper-focused on pure bottom line metrics, outlining
potential return on investment may be a necessary step to gaining approval for a
customer initiative For more information on the ROI of customer experience
programs, see chapter 5.

Trial VoC Program

Setting up a trial program offers another way of getting VoC buy-in. Start by
placing a definite scope on whatever you’re testing (i.e., feedback collection;
analysis and reporting; action and impact for a specific customer group, channel or
interaction) . Next, clearly define how you will measure the success or outcome,
and then get input from key stakeholders on those success metrics. If key
stakeholders play a role in defining success metrics, they will be more likely to
support a full roll-out once the trial is successful.

Potential trial metrics include:


Collection: Response rates; frequency of collecting feedback; ability to deep dive
a topic; ease of administration; cost per response.


Analysis and Reporting: Speed of getting reports; ease of accessing and viewing
dashboards; value of driver analysis.


Action: At a micro level, closing the loop with detractors is a powerful approach
to improving CX. By closing the loop with detractors, you protect the lifetime
value of that customer and the accompanying revenue. At a macro level, your
trial can give you the capability to identify large issues and take action.


Impact: Identify an impact that would benefit your stakeholders, such as a
reduction in customer service call volume. Use the trial VoC program to prove
that impact.

9
 Customer Case Study
Starting small can be a successful method for building buy-in among senior
leadership. To create a customer case study, start by implementing a limited
customer feedback program with a very targeted population. This could be as
simple as a closed-loop system that aims to identify potential customer ‘wins’ that
tell a compelling story. Curate three to five of these wins into a visual showcase
that can easily be shared. These case studies should set the stage with customer
profiles, problem statement, resolution process, and final outcome. The idea
behind a customer case study is to create a story that showcases the potential of
a full-blown customer-centric initiative while also being something that is easy to
remember and share in casual conversation.

VISION & As is the case with traditional goal-setting (see page 31), your vision for VoC needs to
CLARITY be specific. First, you need to specify the messaging and language you use to convey
your vision. Make sure your vision statement is short, simple and clearly conveys the
desired message. Doing this will increase understanding and buy-in from leadership.
You also need to be specific with your road map. Include details that support your core
vision statement and specify the steps and milestones necessary for achieving that
vision. The more specific a road map is, the more helpful it will be in reaching the
long-term vision.

+ How Do I Create a Vision?

Vision statements can range in length from a single sentence to a full paragraph.
The length really depends on the ideal end state. For example, if the long-term goal
is to “Provide our customers with a world class experience.” it is possible to get by
with a single sentence. Contrast this with a vision of “Create a unique and appealing
experience for our customers that results in lifelong loyalty. Cultivate and nurture this
loyalty through a continued focus on improving the customer experience...etc.”
This goal could yield a longer vision statement. The process of developing a vision
statement is iterative and requires input from members across an organization.

ENGAGEMENT & An engaged workforce is vital for the long-term success of a customer-centric
COLLABORATION company. And as employees become more engaged, cross-functional collaboration
and synergy will create more impactful and successful customer initiatives.

10
 + How Do I Engage Employees?
To truly engage your workforce, you have to understand them. The most tried and
true method for doing so is by implementing a formal employee engagement
program. Aimed to listen and act on employee feedback, the best employee
engagement programs are able to systematically diagnose key drivers of employee
engagement—both at a company level and a group level. These programs capitalize
on company strengths and flag areas of opportunity that the company can then act
on, ultimately resulting in a more engaged workforce that buys into the company
culture and direction.

LISTENING & A systematic method for monitoring and collecting customer feedback is key to
LEARNING improving the overall experience. Because customer feedback can be gathered via
multiple channels it is important to build any listening program on a robust platform
that is able to pivot with customers as their feedback preferences change. With a
world-class listening platform in place, companies will find that their capability to learn
from feedback is both expedited and enhanced. The ability to efficiently learn from
customers allows companies to quickly resolve areas of opportunity and address deep
seated issues that have wide-ranging business impact.

+ How Do I Set Up a Listening Program?

Please refer to Chapter 6 (page 22) for a detailed outline.

ALIGNMENT & Successful customer-centric companies build on strong leadership and a clear vision
ACTION statement by aligning cross-functional teams toward a singular objective. Alignment
means that all members of a company are marching towards the same vision, and each
work group defines what action they need to take to help realize that vision. Generally
speaking, action refers to the measurable steps taken to improve the customer
experience. This action component is described in greater detail on page 32.

+ How Do I Know What Actions to Take?

A properly designed root cause or driver analysis will help to inform what areas to
take action on (see page 35). In terms of what specific actions to take, there is really
no right or wrong answer. If a key driver is very process-focused, the corrective
action may be very clear. However, some drivers such as brand or value are a bit less
straightforward and will almost certainly require trial and error in the form of pilot
testing. That is, selecting a small population of customers to implement an action or
solution, followed by results monitoring. If an action has no impact, simply
discontinue and move on to another idea. If the action seems to be effective, develop
a full blown deployment road map.

11
 PATIENCE & The final key to success is arguably the most vital. As much as it pains companies to
COMMITMENT hear this, building a world-class customer culture is not an overnight exercise; nor is it
one that can be completely outsourced. Like it or not, the most successful customer-
centric organizations in the world are built in an iterative fashion over a number of
years. Customer culture is slowly altered, collection practices are refined, analyses are
increased in complexity, and action becomes widespread and aspirational. All along
this journey, leadership must demonstrate patience and commitment to the process
and vision. In the end, the reward is well worth the wait.

+ What If I Can’t Wait Years to Show Success?

Good VoC programs achieve short term ‘wins’ that drive the success of long-term
transformations. Along the journey, be sure to consistently examine new ways to
improve the customer experience and share success stories company-wide.
Leverage the methods discussed under the Strong Leadership section (page 9)
regarding buy-in creation and look for micro and macro issues to address along the
journey. These short term wins are a very powerful way to maintain company-wide
buy-in on even the most lengthy journeys. In the end, a customer-focused culture
and voice of the customer program is a never-ending journey. Each can be improved
and refined so that you can continue to grow and maintain an upward company
performance trajectory.

Simply reading and understanding these success factors could be enough for a
company to identify strengths and weakness. However, formalizing the readiness
evaluation process will help you track progress and identify immediate areas of
focus. Our short diagnostic checklist on page 40 will provide you with overall
readiness and individual factor readiness scores. An interactive version of the
checklist can be found at bit.ly/voc-checklist.

12
 What Is the Return
on Investment?
Improving the customer experience sounds like a great idea and the theory that
happier customers lead to increased revenue is hard to argue with. But given the
investment required to run a VoC program, companies (especially those who are just
launching customer experience initiatives) typically want to assign a hard value to their
program.

Happy customers are more likely to repurchase, renew, and forgive negative
interactions and create positive word of mouth. Each of these behaviors adds
incremental value to a company’s bottom line. To model the added value of each
behavior, let’s examine a fictitious company called TreadMade, a consumer goods
retailer with $100 million in annual revenue. For the purpose of this exercise
assume that TreadMade has the following customer profile:

40 NPS
55
PROMOTERS

30
PASSIVES

5.1
TreadMade’s 15
current customer DETRACTORS
NPS breakdown.

13
 REPURCHASE/ In a perfect world, every business would have a 0 percent churn rate, meaning
RENEWAL customers would never leave and businesses could count on revenue remaining
constant. In this perfect world, businesses would only need to attract new customers if
they wanted to increase revenue. However, as any business owner can attest, this
simply isn’t the case. It’s not uncommon to see attention rates as high as 25-30
percent for businesses with non-binding customer contracts (e.g., credit card
companies) and even businesses that employ some type of annual contract with
customers still see attrition rates of 5-7 percent1 (e.g., Software-as-a-Service
companies). Knowing that attrition rates directly affect revenue, companies place
great value on decreasing churn.

That’s where customer experience initiatives come into play. Research2 on consumer
purchase behavior indicates that promoters have a 81 percent likelihood of repurchase.
Looking at our TreadMade model, compare this 81 percent with passives and
detractors who have 44 percent and 16 percent likelihood to repurchase, respectively.

40 NPS
55 81% LIKELY TO
REPURCHASE
PROMOTERS
5.2
Research indicates that
promoters are 81 percent 30 44% LIKELY TO
REPURCHASE
likely to repurchase, PASSIVES
passives are 44 percent

15
likely to repurchase and
detractors are 16 percent
likely to repurchase.
DETRACTORS
16% LIKELY TO
REPURCHASE

1. http://sixteenventures.com/saas-churn-rate
2. http://www.forbes.com/sites/hbsworkingknowledge/2013/11/11/a-smarter-way-to-reduce-customer-churn/
Temkin, Bruce. (2013). The Economics of New Promoter. White Paper published by the Temkin Group.

14
 To determine the value that each of these customer segments adds to future revenue,
let’s multiply the distribution of each segment by the likelihood they will repurchase:

55 81% 44.6%
PROMOTERS LIKELIHOOD TO
REPURCHASE

5.3
For each respective NPS
category, multiplying the
30 44% 13.2% 60.2%
PASSIVES LIKELIHOOD TO RETAINED
distribution of customers REPURCHASE REVENUE
by their likelihood to
repurchase shows that
60.2 percent of
TreadMade’s current 15 16% 2.4%
revenue is likely to be DETRACTORS LIKELIHOOD TO
retained in the future. REPURCHASE

When we add up each individual revenue proportion we get 60.2 percent, which
essentially means that 60.2 percent of TreadMade’s current revenue dollars are likely
to be retained in the future. In a perfect scenario, TreadMade would have 100 percent
promoters who were 100 percent likely to repurchase, thereby producing a 100 percent
retained revenue figure—but TreadMade only has 55 percent promoters and they are 81
percent likely to repurchase. The good news is that 81 percent is greater than the 16
percent repurchase likelihood of their detractors. This means that TreadMade has an
opportunity to improve the customer experience for their detractors and, as a result,
increase the likelihood they will repurchase. To understand how this opportunity
manifests in financial terms, let’s compare the current state of TreadMade with a
hypothetical future state:

CURRENT FUTURE

40 42
NPS NPS
55 56
PROMOTERS PROMOTERS

30 30
5.4 PASSIVES PASSIVES
By increasing
TreadMade’s promoter
percentage by one
point, revenue dollars
15 14
also increase. DETRACTORS DETRACTORS

15
 If 1 percent of TreadMade’s Detractors become Promoters, their likelihood of
repurchase has now jumped from 16 percent to 81 percent. This increase in repurchase
likelihood shifts TreadMade’s retained revenue numbers from our original 60.2 percent
to 60.8 percent. In other words, we see a 1 percent increase in retained value—which is
nothing to brush aside.

56 81% 45.4%
PROMOTERS LIKELIHOOD TO
REPURCHASE

5.5
When TreadMade
increases the number
30 44% 13.2% 60.8%
PASSIVES LIKELIHOOD TO RETAINED
of promoters, and REPURCHASE REVENUE
decreases the number
of detractors by
1 percent, respectively,
we see a 1 percent 14 16% 2.2%
increase in DETRACTORS LIKELIHOOD TO
retained revenue. REPURCHASE

(60.8 - 60.2) 60.2 1%

To convert this retained value increase to a monetary amount, multiply the percent
increase by the current state revenue. As you can see in the graphic below, the
outcome is a dollar amount equal to the revenue increase from converting 1 percent of
detractors to promoters.

$100,000,000 1% $1,000,000

Though this revenue increase is impressive, we need to explore two additional factors
to understand the bigger picture.

FORGIVENESS The customer experience for any company is complicated, whether it’s driven by
product, service or experience. With so many moving parts and opportunities for
something to go wrong, wouldn’t it be great if every company could build in a buffer for
those times when the customer experience doesn’t meet expectations?

A voice of the customer program does this by giving you the ability to quickly identify
and correct these instances, ultimately resulting in more promoters and fewer
detractors. As research has shown, promoters have a 64 percent likelihood to forgive a
negative experience while passives and detractors have a far lower likelihood at 28
percent and 11 percent, respectively.

16
 Let’s model the positive impact of increased likelihood to forgive, by assuming that
TreadMade has experienced some type of product issue that impacts their entire
customer base. Given their current customer profile and applying the benchmarks
mentioned previously, we get the following:

55 64% 35.2%
PROMOTERS LIKELIHOOD TO
FORGIVE

5.6 30 28% 8.4% 45.3%

For each respective NPS PASSIVES LIKELIHOOD TO RETAINED
category, multiplying the FORGIVE REVENUE
distribution of customers

15 11% 1.7%
by their likelihood to
forgive shows that 45.3
percent of TreadMade’s DETRACTORS LIKELIHOOD TO
current revenue is likely to FORGIVE
be retained in the future.

Just like we determined the value that each customer segment adds to future revenue
in terms of repurchase, we can do the same for forgiveness by multiplying the
proportion of each segment by the likelihood they will forgive TreadMade’s service
outage.

When we sum the individual revenue proportions we arrive at 45.3 percent, which
means that TreadMade is likely to retain 45.3 percent of their current customers in the
event that they each experience a negative event. TreadMade has an opportunity to
improve the customer experience for their detractors and increase the likelihood those
detractors will forgive the service outage that occurred. To understand how this
opportunity plays out in financial terms, let’s compare the current state of TreadMade
with the hypothetical future state outlined previously and restated in graphic 5.4.

17
 All we have changed for this hypothetical future state is that we have moved 1 percent
of detractors up to the promoter bucket. For this 1 percent, their likelihood to forgive
has now increased from 11 percent to 64 percent. This increase in forgiveness
likelihood equates to an increase in retained customers, and therefore revenue, from
our original 45.3 percent to 45.8 percent. In current state terms, this amounts to a 1.17
percent increase in retained customer value.

56 64% 35.8%
PROMOTERS LIKELIHOOD TO
FORGIVE

When TreadMade
5.7
30 28% 8.4% 45.8%
PASSIVES LIKELIHOOD TO RETAINED
increases the number
FORGIVE REVENUE
of promoters, and
decreases the number of
detractors by 1 percent,
respectively, we see a 1.1
percent increase in
14 11% 1.5%
DETRACTORS LIKELIHOOD TO
retained revenue. FORGIVE

(45.8 - 45.3) 45.3 1.10%

Before you conclude that 1.17 percent in revenue retention isn’t worth the trouble, let’s
convert it into financial terms. To do so, multiply the percent increase by the current
state revenue.

$100,000,000 1.10% $1,100,000

As was the case when calculating the added value of increasing customer repurchase
likelihood, converting just 1 percent of detractors to promoters can have a profound
impact to the bottom line. In the case of TreadMade, this impact is in excess of one
million dollars.

REFERRALS One of the greatest benefits of happy customers is that they increase your brand
awareness and buyer count by encouraging their friends or colleagues to purchase and
use your products or services. But measuring the benefit of word of mouth referrals is
challenging if you don’t have a method of calculating how many referrals convert new
customers.

The return on investment for word-of-mouth conversion can be difficult to model

because, unlike repurchase and forgiveness, it is a behavior of potential customers and
not current customers. As such, we have less information to work with and must be
more creative in the way we approach our solution. We’ve created this four-step
process you can use to model word-of-mouth value.

18
+ Conversions
The first piece of information we need to calculate is how many actual customer
conversions promoters, neutrals and detractors make. Knowing how many
recommendations each customer segment makes isn’t very useful since the only
recommendations that add revenue are those that result in new customers.
Net promoter score research1 focused on conversion behavior has shown that
the average ratio of conversions is as follows:

+1
PROMOTERS
0
PASSIVES
-2
DETRACTORS

Promoters typically convert one new customer per year based on positive word-of-
mouth, while detractors actually repel two customers per year based on negative
word-of-mouth. Passives, as their name indicates, do not have significant impact
one way or another. Take note that these numbers are only a rule of thumb used for
this hypothetical model and can differ greatly depending on the industry or business.

+ Average Growth
The second piece of information we need to model word-of-mouth value is average
revenue growth (year-over-year). Businesses should be able to calculate this on their
own financials, but for the purpose of this example let’s use an average figure. For the
S&P 500, the average revenue growth is somewhere in the 4-6 percent range2. For
this model, lets use 5 percent as a hypothetical number. Applying this to
TreadMade’s current revenue gives us the following average growth:

$100,000,000 5% $5,000,000

+ Referral Baseline Revenue Contribution

Once we calculate the average growth, we can calculate the average revenue
contribution expected from referral conversions. Again, for an actual business this is
something that can be calculated from true data. In this example we will rely on
research3 that suggests referrals contribute around 13 percent to total new revenue.
If we apply this figure to the number we calculated for Average Growth we can arrive
at the average word-of-mouth revenue figure:

$5,000,000 13% $650,000

1 Nowinski, V. (2009). Net Promoter Economics: The Impact of Word of Mouth. White Paper (10-11).
2 FactSet.com
3 Return on Word of Mouth. MediaBizBloggers.com (November, 2014).

19
 + Value Added
The final step in calculating word-of-mouth value is to put all the pieces together
and compute the revenue increase from moving 1 percent of our detractors to
promoters. In our current state we have the following profile:

55 1 55
PROMOTERS PROMOTERS

5.8
Promoters typically
30 0 0 25 ADDITIONAL
CUSTOMERS
(PER 100 CUSTOMERS)
PASSIVES PASSIVES
convert one new
customer per year based
on word-of-mouth,
passives convert no new
customers, and detractors 15 -2 -30
repel two customers. DETRACTORS DETRACTORS


When we convert 1 percent of our detractors to promoters we also change the
number of customer conversions that 1 percent makes from -2 to +1 (net gain of +3
conversions). This shift is depicted in the following graphic:

56 1 56
PROMOTERS PROMOTERS

30 0 0 28 ADDITIONAL
CUSTOMERS
(PER 100 CUSTOMERS)
5.9 PASSIVES PASSIVES

By converting 1 percent
of detractors to
promoters, TreadMade
increases word-of- 14 -2 -28
mouth conversions. DETRACTORS DETRACTORS

Normalizing this increase results in a 12 percent gain in word-of-mouth conversions.

(28-25) 25 12%

Applying this 12 percent increase to the current word-of-mouth revenue contribution

provides us with an estimate of the added value.

$650,000 12% $78,000

20
 BRINGING IT ALL At this point we’ve calculated the additional revenue value that can be added by
TOGETHER converting 1 percent of our detractors to promoters across three metrics: repurchase,
forgiveness and word-of-mouth. The last element of calculating the ROI of increasing
TreadMade’s promoter count is summing the individual contributions of these metrics
to arrive at our total revenue value added. This produces an increase in annual revenue
in excess of $2 million!

$1,000,000 REPURCHASE
+

5.10
$1,100,000 FORGIVENESS
+
By adding repurchase,
forgiveness and
word-of-mouth value
$78,000 WORD OF MOUTH
projections, we can =
calculate TreadMade’s
total revenue increase. $2,078,000 TOTAL REVENUE ADDED

KEY ROI Our calculations with TreadMade highlight the return on investment a company can
TAKEAWAY expect when they focus on improving the customer experience. Returns like this mean
organizations can easily eclipse any upfront or recurring costs associated with the
program.

21
How Do I Build a
Voice of the
Customer Program?
By this point you should have a clear understanding of what a voice of the customer
program is, why companies have them and how they can add hard value to a
company’s bottom line. Understanding these points is vital to setting a foundation for
creating a world-class voice of the customer program. Now comes the fun part–
actually building the program. While there is no singular “correct” method for creating
a customer feedback program, there is a wealth of best practice information that we
have curated over the years.

When confronted with the question “How do I build a voice of the customer program?”
people are often paralyzed by the unknown. They start asking questions like, How do I
start? What do I measure? How do I drive outcomes that are important to me? The net
outcome of these unknowns can result in companies looking to full-service
consultants to simply “do it for me”. However, if you break down the overarching
question (how do I build my own VoC program?) into digestible pieces and steps, it
becomes clear that constructing your own world-class voice of the customer program
is not only manageable but preferable.

In fact, as we’ve worked with many of the top brands in every industry, we’ve found that
they want the speed, power, and flexibility that comes with owning their VoC program.
Customer experience is in their DNA. They don’t want to outsource their customer
experience; it’s a part of them. They simply want the best technology and support to
enable them to run it.

To learn more about VoC programs in action

take a look at our webinar with 1-800 CONTACTS
visit bit.ly/voc-in-action.

22
 The following section will detail a six step model, called the “What-How-Now” model.
We’ve used this model to build and guide others in building world-class customer
experience programs.

The first piece of this model contains one step and aims to answer the question, “what
do I measure?” The second piece contains two steps and ask the question, “how do I
measure it?” And the final piece has three steps and asks, “now what?” In other words,
now that I have the right information, measured in the right way, what do I do with it?
Let’s walk through these questions and steps one by one.

THE WHAT-HOW- Six Steps to Building a VoC Program

NOW MODEL

WHAT HOW NOW

1 MAP THE
JOURNEY 2 IDENTIFY
CHANNELS
& TIMELINE
4 REPORTING

3 TEST &
ITERATE 5 GOAL
SETTING
6.1
The What-How-Now
Model offers a
six-step approach to
building a voice of the
6 TAKE
ACTION

customer program.

+ What Do I Measure?
The starting point for building any feedback program is taking a systematic approach
to identifying what you need to measure. This applies to both new (or from scratch)
programs as well as existing programs in need of a refresh.

Step 1: Map the Journey

With any organization, there is an almost innumerable amount of metrics that
leaders can dream up. In order to organize and determine the most valuable metrics,
you can adopt a journey mapping process. Though there are countless examples of
how to create and conduct a customer journey mapping session, the following
overview will provide a simple process to follow.

23
 Before you begin mapping, you’ll need to decide which mapping approach you want
to take. Many journey mappers start by producing a rough draft on their own or with
the help of a small team and solicit feedback on that draft. Others aim to create a
holistic journey mapping team from the beginning and aim to take one run through
the exercise. Either method is fine as long as the end product has received input
from the necessary parties. Ideally, you want a customer journey map that has been
vetted by members from all applicable areas of a company and actual customers.

Once you have solidified your strategy you can start the actual exercise by identifying
your most common type of customer. Customer types are often referred to as
personas and any organization could potentially have several personas. However, I
suggest focusing on the most common customer persona. At this point, you want to
walk a mile in your customers’ shoes and think of how most of your customers
experience your organization. This is an iterative process so do not feel like you need
to collect every detail your first time through.

We have included a fictitious example of what a basic, first-pass customer journey
map might look like.

ENTER Finalize
products
STORE selection
Complete
checkout
process

Use
Greeted fitting
by sales room
6.2 staff
Journey maps are EXIT
diagrams that map the STORE
steps and contact points Browes
you have with customers, products
from initial contact to
sustained relationships.

As you walk through the customer’s experience, start at the first contact (e.g.,
entering store) and end with product or service delivery. This customer process
could take place over a very short period of time (as is the case with some B2C
companies) or it could take place over several years (as is the case with some
B2B companies).

Don’t get caught up in the “am I doing this right?” phase. Instead focus on putting
pen to paper. Capture as much as you can and move along. After you and your
colleagues believe you have an adequate map of the customer journey, vet your map
with internal stakeholders and if you can, gather feedback from actual customers.
Running your journey map past a diverse group of internal and external sources helps
you ensure that the details are accurate.

24
 With your journey map complete, we now move to identifying what you need to know
about each touch point. If I were mapping a customer journey for an undergraduate
college student, I may feel as though that student’s first day of class is an important
touch point—one that sets the tone for the entire semester. Within that touch point, I
might be interested in a number of things: how easy it was to find the classroom, if
there was enough seating in the classroom, what condition the classroom was in
upon arrival, etc. This part of the process is very simple, walk through the entire
journey and note what information you would like to know about each touch point.
There are really no right or wrong answers here. The goal is to document everything
that you want to know about the customer experience in a logical format. Similar to
the actual journey mapping process, you’ll want to include outside resources during
this portion of the VoC build process. After all, it is unlikely that you personally will be
using most of this information. As such, seeking out those that will use this
information and adding their insight will prove invaluable.

+ How Do I Measure It?

Once you’ve identified what you need to measure, you’ll need to determine how
you’ll collect feedback for each touchpoint. As was the case with defining what you
want to measure, taking a systematic approach will insure your voice of the customer
program is optimally collecting feedback.

Customer Feedback Channels

There are really two types of customer feedback channels: solicited and unsolicited.
Solicited channels are methods used by companies to proactively seek customer
feedback. Unsolicited channels are methods of collecting feedback initiated by
sources outside of a company’s control. We’ve included descriptions of each
customer feedback method below.

SOLICITED

Contact Forms- Contact forms are an excellent way to capture customer feedback
from website visitors. Primarily used by customers to submit questions or report
issues, contact forms help companies easily gather open-ended feedback.


Email Survey- Emails are the most common method for proactively gathering
customer feedback and there are a few good reasons for this. For starters, on a per
response basis, emailed surveys are the cheapest way to gather customer
feedback because it allows companies to collect a massive number of responses
with minimal effort. Secondly, email is almost universally used across the
consumer domain, which makes them an accepted method for a diverse consumer
landscape. And finally, modern survey design and rendering engines make the
survey experience engaging. This allows companies to optimize the brief period of
time customers are willing to dedicate to the feedback process.

25
 Short Message Service (SMS) Survey- SMS surveys are an excellent option for
companies that have access to customer cell phone numbers and are looking for a
way to gather a limited amount of feedback. The cost associated with SMS is
slightly higher than emailed surveys due to the cost incurred with sending text
messages, but the open rate (percent of customers that start a survey) is
significantly higher.

Short Message Service (SMS) Shortcode- SMS shortcode is a blend of the

previous two channels in that respondents receive an SMS message with a link to
a survey. With SMS shortcode you get the benefit of high open rates with the
ability to gather in-depth feedback offered from emailed surveys.

Interactive Voice Response (IVR)- IVR is a technology that doesn’t require human

interaction, but rather, allows a person to use their touch-tone phone to enter
information into a database and receive information back. IVR technology is often
used for telephone surveys.

Web Intercept- Companies that have a high volume of visitors on their website use

web intercepts to push or pull information to users based on their activity on their
site. Intercept surveys are best implemented to gain responses from visitors
browsing your website or using your online application.

Kiosk/Offline App- Offline apps are useful when you want to collect feedback

remotely or in a location where you might not have an internet connection. There
are generally three main use cases for these feedback methods: event surveys,
kiosk surveys, and consumer surveys. Event surveys help you collect survey data
from event attendees right after the event itself and while the event is still fresh in
their minds. Consumer surveys are administered in public areas such as a mall or
out on the street. Kiosk surveys are typically set up at a trade show, with or without
internet access.

QR Code Survey- While QR code usage has declined in certain areas of the world,
they’re extremely effective and popular in other areas. Typically, QR code surveys
are found on a flyer or sign, offering a discount or deal if the survey is completed. A
survey conducted through MGH found that an astonishing 72 percent of
smartphone users would be likely to recall an ad with a QR code, which indicates
QR codes have the potential to help you break through the clutter and gain real
insights from customers.


Phone Interview- There are two primary types of phones interviews: calls made by
an actual person and automated polls. Automated polls offer the benefit of
ensuring consistency across all polls, while interviews done by actual people have
the benefit of a higher completion rates. People answering the phone are best for

26
 companies with a lot of human capital and that aren’t on a set timeline because they
can be slow in collecting data since there is some unpredictability in people
answering the phone. Phone interviews also make it tough to gather information that
could be seen as personal or controversial. For example, someone might not feel
comfortable telling another person about certain tendencies whereas they would
have no problem checking a box with an online survey collecting the same
information.

Mailed Survey- Mailed surveys typically ask recipients to complete a short survey
and mail it back. These surveys work best when mailed to current customers that
aren’t likely to be reached through the internet or SMS. They can also be useful in
reaching out to long-time customers since they are often administered with a letter
thanking them for their business. On the other hand, mailed surveys aren’t likely to be
very effective in reaching out to millennials and can be costly.

UNSOLICITED
Email: Unsolicited email can be a great source of feedback from customers that may

not partake in solicited channels. It should be noted that this form of feedback tends
to be negative as customers are more likely to engage after a negative experience.

Social Media: Due to its popularity, social media can be a powerful tool for collecting

customer feedback. This feedback can come in the form of likes/dislikes on a post,
comments left on a post, or just simple tweets. However, pinpointing and
interpreting the exact source of an issue can be difficult and you might need specific
tools to interpret and analyze social data.

+ Step 2: Identify Channels & Timeline

After you’ve mapped your customer journey, step 2 requires you to walk through your
customer journey map and identify how you are going to collect feedback on each
touch point. The most efficient way to do so requires you to determine what
feedback channels are available to you prior to walking through the journey map.
Determining this may be something that can be completed rather easily. For
example, your budget may only allow for emailed surveys. In this case, the only
decision that needs to be made is how to most effectively design your survey(s).

On the other hand, if you have unique situational constraints (e.g., no access to
customer email addresses) it may take more time to figure out what channels are
reasonable for your use case. This situation might require you to walk through the
customer journey and map channels to touch points in an ad hoc format. Prioritize
which channels are most impactful, given your resource constraints and, determine
which feedback channel is possible for each touch point.

27
 The second element to Step 2 is determining when you will measure each touch
point. Similar to the feedback channel decision, this could be a very simple process
or a complicated one. For example, if the entire customer experience is contained in
a relatively short time frame or measurement is conducted at a high level (e.g.,
overall satisfaction) you might be able to get away with a singular time point
measurement. On the other hand, if you are looking to collect very granular
information on each touch point and/or the customer experience is very drawn out, it
may be necessary to include multiple measurement points.

A related topic that bears consideration is the sampling strategy you will use. It is
very common for customers to experience survey burnout so you might consider
taking steps to minimize customer exposure. This could include rules around how
you survey your customers (e.g., once per quarter). When determining what your
sampling procedure will be, it is important to also consider your industry and type of
business. For example, if you are in the healthcare industry where each interaction
could potentially carry serious implications, you may decide that every interaction
calls for proactive feedback. On the other hand, a company in the retail industry may
decide that limits need to be placed on proactive feedback channels, due to the high
likelihood of multiple interactions in a short timeframe.

+ Step 3: Test & Iterate

Now that we’ve identified possible distribution channels we’re ready for the next step:
testing and iterating. Unfortunately, people often overlook this step in building a VoC
program. The purpose of this step is to actually test the performance of the
questions and channels you designated in the previous steps. When gauging the
performance of your survey questions there are two key factors to check: reliability
and validity.

Reliability
Reliability is important if you’re asking groups of questions relevant to a similar
topic. For example, if you have a group of four survey items aimed at gauging
website design you would want to test to see if those items are, in fact, reliably
measuring the construct of website design satisfaction. Poor reliability signifies
that the items may be poorly designed and you should either consider revising
items or remove items that are the least reliable. Note that reliability is generally
only applicable if you are measuring groups of items as opposed to individual
items. While it is quite common to have groups of items in social science or
employee-centric surveys, customer surveys are less likely to have item groups
due to their abbreviated nature. In other words, customer surveys are typically too
short to have multiple items aimed at measuring identical constructs.

28
 Validity
Validity is a measure of how well survey items measure what they are intended to
measure. There are a few methods that each offer incremental evidence of overall
validity. The first two, face and content validity, are assessed by having customers
as well as content experts examine survey questions to insure that they are easy to
understand and appear to measure what they are intended to measure. These
forms of validity are fairly easy to test, but due to their subjective nature, can be
seen as soft forms of validity.

The other two forms of validity are more difficult to assess, but also vital in
producing evidence of overall survey validity.

The first of these, construct validity, is determined by examining how unique items
actually measure unique constructs in practice. For example, a question(s) about
website design satisfaction should not be, in theory, related to a question(s) about
issue resolution. However, to ensure this is the case you need to formally examine
the construct validity of these items. The most common method for doing so is by
way of factor analysis. In short, factor analysis is a procedure included in most
standard statistical software packages used to test how well unique items
differentiate from one another. If unique items clump together it is an indication
that items are either poorly written or redundant. In the case of redundancy, factor
analysis is a powerful tool in reducing the size of your survey.

The last form of validity, which is the most difficult to assess, is criterion-related
validity. This form is a measure of how well survey items predict actual behavior. In
order to test this you must draw a link (e.g., correlation/regression) between a
customer’s feedback and behavior. For example, if you measure overall satisfaction
under the assumption that more satisfied customers are more likely to repurchase,
testing the criterion-related validity of this question(s) would require you to show
that higher scores do in-fact lead to more positive repurchase behavior. The
difficulty with testing this type of validity is that it requires linking multiple data
sources and can require an extended period of time to prove a connection.

Channels
Examining feedback channel performance is less sophisticated than testing
question performance in that measures of success are more subjective. Whereas
question performance can be examined via statistical methods that rely on
universal truths, channel performance metrics can vary widely depending on the
industry, company and customer type. As such, channel performance is best
monitored through a few common metrics such as response rate and completion
rate. An often-mentioned rule of thumb for conventional surveys is a 10 percent
response and 5 percent completion rate. Dip beneath this and there may be
something wrong with the design or choice of feedback channel. The most
common issue that leads to poor response/completion rates is an inappropriately
high number of questions. Completion time can be a great way to monitor this.

29
+ Now What do I do?
The final portion of the What-How-Now model is arguably the most important.
These final three steps highlight the point at which true value is driven through a VoC
program. In other words, the design of measurement methods is essential to having
valid, actionable feedback data, but unless this data finds its way into a robust
reporting and action program, there is little value in collecting rich customer data.

Step 4: Reporting
The first three steps in this process are intended to guide practitioners towards
measuring the right things in the right ways. Step four takes this one-degree further
and actually puts metrics into the hands of stakeholders. In order to do this, and do it
well, you will need to carefully consider where data should flow in your company.

When developing a reporting structure for customer feedback data, you don’t want
to simply distribute all the data to everyone within your organization. There may be
certain positions in the company that benefit from seeing every customer-centric
metric, but that is generally the exception to the rule. Remember that for the vast
majority of employees in any company, improving the customer experience is
typically viewed as a ‘nice to have’ as opposed to an absolutely essential element of
their job. There are outlier industries and companies that run counter to this
argument, but they are certainly not the norm. In light of this fact, best practice
standards for reporting customer feedback suggest that making data as meaningful
as possible to the end recipient is the way to go. Doing so requires two key
considerations, department and level, that will enable you to align your customer
feedback.

Identify the Right Department

The first consideration is how applicable each piece of customer information is to
the various departments that reside within a company. This sounds simple enough
in theory, but in practice it can be difficult to organize the data flow in a meaningful
way. You can alleviate this by applying a process that matches data with the
appropriate departments. First, reference the journey map that was created in
Step 1. Next, walk through the various touch points included in the journey map and
determine which pieces of customer feedback will greatly impact certain
departments. You may be able to accomplish this based on your own knowledge of
the company or you may need to conduct an internal focus group with
representation from the major departments. Understand that over time, as the
company changes, you will want to alter which departments receive what
information so your program can attain optimal effectiveness. Your goal is to
establish a link between each piece of customer feedback and a department(s) so
that you can tailor your reports. That way, you’re only sharing the most relevant and
actionable data to the right departments.

30
 Identify the Right Individual at the Right Level
Mapping customer data to departments will result in an adequate reporting
structure, but to truly make customer feedback actionable and impactful you need
to consider the hierarchical position that employees hold within each department.
Each job level requires certain duties and responsibilities that may need either
more or less granular information. Additionally, certain job levels may require data
to be filtered by geographic location or some other demographic variable.

For example, the Vice President of Product for TreadMade may be very interested
in customer feedback that is specific to product design, but this data can likely be
reported at a higher elevation than it would be for an analyst on the product team
who is interested in comparing product satisfaction across various customer
segments (e.g., males vs. females). By tailoring data to job level, you can build a
reporting structure that provides more valuable and relevant data. Note that this
reporting structure, particularly as it applies to job levels, will almost certainly be in
a constant state of flux as the business and consumer change over time. Setting
an annual reporting structure refresh session is a great way to insure your
reporting remains aligned with the company.

Step 5: Goal Setting

Building a world class voice of the customer program requires buy-in from cross-
functional teams; particularly those who directly impact the customer experience.
Measuring the right things in the right way and distributing customer data to the
right people in a way that is meaningful to them are all necessary elements of
creating buy-in. However, to take the next step towards company-wide buy-in you
need some type of formalized goal setting focused on the customer experience.

Step five of building a voice of the customer program shifts attention from program
design to actually creating influence in your organization. With a systematic and
proven goal setting framework in place, you can eliminate the confusion that often
surrounds goal setting processes. The most widely used framework is referred to as
the SMART1 method. Outlined below, the SMART method serves as a useful
guideline to ensure goals are as widely accepted and motivating as possible.

SMART Method
SPECIFIC goal should be clear and unambiguous

6.3 MEASUREABLE goal progress is quantifiable

The SMART Method goal is challenging, yet realistic and attainable
ACHIEVABLE
outlines steps for
achieving objectives and goal is aligned with existing roles and duties
RELEVANT
can be applied to setting
goals around a customer goal has a target date for completion
TIME-BOUND
experience program.

31
 Even if you are in a position of authority that allows you to dictate customer-centric
goals to the organization, you’ll first want to focus on internal customer champions
that are already bought into the value proposition of improving the customer
experience. You may find that the majority of leadership is on-board with a formal
goal setting process or you may find yourself in an uphill battle. While alignment with
leadership allows you to scale your goal-setting process company-wide, don’t be
discouraged if you aren’t there yet. Adopting a process that formally holds employees
responsible for the customer experience requires true buy-in and is not something
that develops over night. However if Steps 1-4 have been carried out in a thoughtful
manner, you’ll be more likely to develop widespread buy-in.

Step 6: Take Action

The final step in creating a voice of the customer program focuses on addressing
opportunities. For companies that are resistant to formalizing customer-centric
goals, Step 6 may actually come prior to Step 5. That is, it may be necessary to
create ‘wins’ around addressing opportunity areas prior to formally setting goals.
However, for companies that are quick to adopt customer-focused goals, having an
action process on the back end is an important step to ensure you’re making
progress towards those goals.

When referring to an action process there are two primary categories, micro-level
and macro-level opportunities, that each carry specific tools and considerations to
help you optimally design an action process.

Micro Opportunities
Typically the most straightforward customer opportunity occurs when a single
customer has a negative experience and the offending company engages them to
correct the customer’s situation. This process is simple because it does not require
heavy analytics. Addressing micro issues can be as simple as refunding a purchase
or issuing an apology. The only prerequisites for closing the loop is a set process
defining what customers will be engaged (e.g., detractors), a channel to flag
customers that meet the engagement criteria (e.g., survey distribution platform)
and a tool capable of tracking customers as they go through the closed loop
process (e.g., ticketing system).

Doran, G. T. (1981). “There’s a S.M.A.R.T. way to write management’s goals and objectives”. Management Review
(AMA FORUM) 70 (11): 35–36.

32
 Most companies make it a customer experience practice to close the loop with
customers. In these instances, passive means of collecting feedback such as
unsolicited email often serve as the channel for flagging dissatisfied customers.
How companies handle passive channels could vary from the most basic (e.g., read
every email) to something very technical such as using a text analytics platform to
flag only the most negative emails.

Less common, but still fairly widespread, is closing the loop on solicited feedback
(e.g., surveys). In these instances there are two primary methods. The first method
is to close the loop on customers that meet engagement criteria on a high-level
metric such as NPS. In other words, companies engage with customers who report
having an overall negative experience. Depending on the volume of customers a
company handles each year, the engagement criteria could be very conservative
(e.g., only customers rating the company a 0 on a 0-10 scale) or more liberal (e.g.,
customer rating the company a 0-6 on a 0-10 scale). The second method, which
often aligns more with goal setting, is closing the loop on lower level metrics such
as touchpoint satisfaction. In this instance, it may be the duty of the offending
party within a company to personally close the loop with a customer. For example,
if a customer reports a negative score on the sales experience when purchasing a
car, the sales representative who handled that customer might be the one to close
the loop.

33
 Macro Opportunities
Macro opportunities typically rely on a large amount of feedback that is primarily
quantitative in nature, and as such, analytical and statistical methods are almost
always at the center of identifying macro opportunities. Addressing macro issues
can take a significant amount of resources both in terms of time and financial
investment due to the large scale nature of these issues, but there are proven
action processes that each take a slightly different approach to exposing key
drivers and root causes. The overall experience, as depicted in the following
graphic, is a link between NPS, CSAT and more granular drivers of that overall
rating. These types of driver analyses prioritize where companies should pool their
resources to get the biggest bang for their buck in terms of improving the
customer experience.

NPS
®

Customer Service Product Store/Location Checkout Value CSAT

6.4
Overall customer Drivers
experience is
affected by touchpoint
experiences as well as
more granular drivers.

34
 Derived Analyses
The first, and most often used, type of key driver analyses are called derived
methods. These type of analyses rely on common statistical procedures such as
correlation and regression to examine relationships between customer variables.
The most common type of derived driver analysis results in the creation of an
opportunity plot or quadrant. This quadrant helps to prioritize customer experience
drivers based on measures of importance and performance.

LARGEST OPPORTUNITY LARGEST STRENGTH

Staff Helpfulness

IMPACT (item-level correlation with NPS)

Quality

Price Store Layout

SMALLEST OPPORTUNITY SMALLEST STRENGTH

Color(s)
Checkout Speed

Size Availability
6.5
Derived driver analyses
plots help sort and
prioritize customer
experience drivers
according to importance
and performance. PERFORMANCE (item-level mean score)

In the example shown above there are seven customer variables that have had their
mean score calculated. Each of these mean scores are then correlated with some
outcome variable; NPS in this case. As this plot indicates, quality and price are the
biggest areas of opportunity. In other words, these factors are performing poorly
as indicated by their low mean score while also having a high impact on overall
customer NPS. As such, increasing performance on these factors will provide the
biggest bang for the buck, so to speak. To create the plot, the average
performance (mean score) and average correlation coefficient across all items
are used to set the crosshairs that separate each box. Finally, individual variables
are plotted according to their performance (mean score) and impact (correlation
with NPS).

A common alternative is to use regression in place of correlation.

35
 Overt Analysis
While derived methods can be thought of as implicit, overt driver analysis is an
explicit method for identifying the most influential pieces of the customer
experience. Stated simply, overt methods help you avoid complicated statistics
when you’re identifying key drivers. As with any driver analysis, overt methods
require some measure of performance and some measure of importance/impact.
Most voice of the customer programs will already be capturing some type of
performance metrics (e.g., survey item ratings), but in order to capture a measure
of importance, overt methods require either additional survey questions or a
secondary survey. In either case, most overt analyses can be accomplished in 3
questions, creating little burden or inconvenience for the customer.

To construct a overt driver analysis survey, start by including some high-level
outcome metric such as NPS. Follow this with a second question that contains
high-level touchpoint choices for the customer to choose from. Finally, end
with granular options for each of the high-level touchpoints. Feel free to
be very granular in the final questions as branching logic will limit customer
exposure to the deluge of options. The resulting survey should have the
following general setup:

Q1 How likely are you to recommend...?

Not Likely Highly Likely

0 1 2 3 4 5 6 7 8 9 10

Q2 Which part of your experience

was most influential?
Customer Service Product Store/Location Checkout Value

6.6
Overt driver analyses
can more explicitly
identify influential pieces
Q3 Which part of your product experience
of the customer
experience. Above is an
was most influential?
example of an overt
analysis survey setup. Color(s) Price Quality

As depicted in the above graphic, question 1 is a standard for every customer.
Question 2 can either use the same stem for every customer or could be tailored to
the customer’s response from Question 1. Finally, question 3 leverages the item
selected in question 2 to tailor the stem and response options for the individual
respondent as shown in the example.

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 Text Analytics
When discussing driver analysis, a premium is typically put on quantitative data
due to the structure and ease of analysis associated with that type of feedback.
However, in recent years there has been an increasing emphasis on using
qualitative, or open text data to systematically supplement traditional quantitative
metrics. For example, qualitative data could be used as a more granular level of
feedback that accompanies traditional driver analysis as shown below. Note how
the basic methodology for identifying key drivers hasn’t changed, but has merely
been built upon with the addition of a qualitative element.

Q1 How likely are you to recommend...?

Not Likely Highly Likely

0 1 2 3 4 5 6 7 8 9 10

Q2 Which part of your experience

was most influential?
Customer Service Product Store/Location Checkout Value

Q3 Which part of your product experience

was most influential?
Color(s) Price Quality
6.7
Driver analyses can also
include open-ended
questions that capture Q4 What about the quality led to this?
qualitative data and offer
a broader view of
individual customer {Insert open-ended text}
experience drivers.

Using qualitative feedback in conjunction with quantitative feedback provides

coverage of topics and issues that may otherwise go unmeasured or unnoticed. As
discussed previously, there are limits on how much quantitative feedback can
reasonably be collected at a single point of measurement. This results in
compromises where topic coverage is concerned. Qualitative feedback is a great
way to circumvent this shortcoming.

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 While qualitative feedback can prove invaluable to identifying root causes and is
very easy to include in a measurement program, there is one pressing issue that
must be discussed. Namely, for companies with a large amount of customers, how
is qualitative feedback best addressed? Quantitative data is easy to summarize
and analyze, but qualitative data is more complicated. Thankfully there are
methods that have been developed to specifically address this type of data.
Broadly speaking, these methods can be categorized as either sentiment or
topic analysis.

Sentiment Analysis
The general idea behind sentiment analysis is that a large amount of free text data
can be loaded into an analysis tool to determine how customers feel about various
preset topics. Common methods for assigning sentiment include a +1/0/-1 or
+2/+1/0/-1/-2 system where linguistic processing analyzes written statements to
determine if they are positive, negative or neutral and to what degree. In order to
make sense of sentiment scores, customer experience categories are used to
organize free text into usable buckets. By marrying sentiment scores with category
assignments, sentiment analysis makes sense of large amounts of qualitative data.

Though preset categories can prove useful, it is best practice to include any
language or jargon that is unique to a company. In fact, there will always be some
amount of work to setup and maintain categories as a company’s products and
services change. If care is not taken to maintain categories, companies run the risk
of miscategorizing comments or having a large amount of uncategorized
comments. Sentiment analysis tools aren’t a magic box that text can be freely
dumped into, but rather a powerful tool to help make sense of qualitative feedback.

Topic Analysis
Topic analysis is similar to sentiment analysis in that both aim to assign a positive/
neutral/negative score to a piece of text and then marry that score with a category
assignment. Net outcome is a structured breakdown of sentiment scores by
category or topic. However this is where the similarities end.

The general theory behind topic analysis is that qualitative customer feedback is
often accompanied by some type of quantitative data. For example, an emailed
survey may contain quantitative markers such as overall satisfaction or NPS.
As such, these markers can be repurposed to assign sentiment to qualitative data
that accompanies them. By using these existing markers, the need for sentiment
scoring is eliminated. To complete the category assignment, topic analysis
methods use natural language processing, examine free text statements and
assign them to a preset menu of categories. As with sentiment analysis, it is
best practice to update the category menu to ensure all statements are
categorized properly.

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 The major drawback of topic analysis is that it isn’t universally applicable. While it
is very useful when quantitative data is present alongside qualitative data, this
method of text analytics fails to provide useful insight for pure free text such as
email web forms. Unless a quantitative marker is present, topic analysis has no
way of assigning a sentiment score. This can be avoided by requiring customers to
provide some type of quantitative score or high-level category (e.g., comment = 0,
compliment = +1 or complaint = -1) when submitting free text feedback.

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Is My Company
Ready for a
VoC Program?
Scoring
1 Strongly
Disagree 2 Disagree 3 Neither Agree
nor Disagree 4 Agree 5 Strongly
Agree

Leadership Score

Company leaders are committed to customers

Company leaders fully understand the value of customers

Company leaders understand customer needs and priorities

Customer insights drive leadership decisions and actions

Leaders prioritize and invest resources in customer initiatives

LEADERSHIP TOTAL

Vision & Clarity Score

A clearly stated customer vision drives my company’s strategy

and activity

All employees in my company understand the customer vision

Our Company has a strategy to achieve our customer vision

There is a roadmap of activity to deliver on the customer strategy

Every department has customer centric goals

VISION & CLARITY TOTAL

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Engagement & Collaboration Score

My company measures employee engagement

Insights from employee feedback are acted upon systematically

A “meet the customer” program is in place, enabling employees to

interact and create relationships with customers

Each team regularly receives relevant customer feedback and metrics

Employees are recognized and rewarded for customer–

centric collaboration

ENGAGEMENT & COLLABORATION TOTAL

Alignment & Action Score

Customer insight helps us identify potential customer projects

Customer projects are prioritized based on customer impact

and value tier

Cross-functional teams work together to deliver customer projects

We track progress, delivery and impact of customer projects

An executive monthly customer forum holds owners accountable

for delivery

ALIGNMENT & ACTION TOTAL

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Listening & Learning Score

This company listens to customer feedback in all channels, for all

segments, at key moments of truth

Our company continuously measures and reports on customer metrics

Alerts are sent to appropriate managers about feedback relating

to their area

Customer targets are built into the performance management process

Customer feedback is stored with other customer data in our

CRM system

LISTENING & LEARNING TOTAL

Patience & Commitment Score

VoC is one of my company’s top three priorities

This company views VoC as a strategic transformational program

This company stays committed to its customer strategy despite

market challenges

This company is prepared to change in order to deliver its

customer strategy

Employees in this company are recognized and rewarded for

customer centric action

PATIENCE & COMMITMENT TOTAL

OVERALL COMPANY TOTAL

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 Looking at the Results
Section Totals

5–11 Beginner

12–18 Improver

19–25 Expert

Overall Company VoC Phases of Maturity

30–53 Set Up Rookie (don’t yet have a functioning VoC)

54–77 Collect Lots of data—no insight

78–101 Analyze Lots of insight—no action

102–125 Act Some action pockets around the organization

126–150 Impact Driving change

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 How Do I Keep the
Momentum Going?
Getting a voice of the customer program established and running is merely the
first step in creating an on-going, flexible program capable of adapting to the
changing needs of customers. This means that maintaining momentum after your
program launches is critical. Generally speaking, there are two principles that help
accomplish this:

Program Management
& Communication

VOC PROGRAM Successful VoC program management includes each of the following elements:
MANAGEMENT

1 VoC Executive Governance

2 Executive Sponsor

3 Program Manager
8.1
The four key ingredients
for successful VoC 4 Cross-functional team
program management

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 VoC Executive Governance
Holding a monthly governance meeting, ideally chaired by the CEO with the senior
leadership in attendance, will help keep the VoC momentum going in the organization.
This meeting should accomplish the following objectives:
• Update the leadership on customer metrics (actual vs. target)
• Report progress on customer program delivery and highlight challenges
• Report on deep dives and recommend action
• Leverage the power of the leadership to remove program roadblocks

Executive Sponsor
Establishing an executive sponsor for the program, ideally a member of your company’s
leadership team, will also help you build, sustain and grow VoC successes. With this
executive sponsor taking personal ownership of the program and championing VoC
throughout the organization, you’re more likely to communicate success across the
organization and maintain buy-in.

Program Manager
An essential factor for success is the appointment of a program manager responsible
for program delivery. This person ensures that the VoC program is delivered on-time,
within budget, through a cross-functional organization.
The program manager will complete the following tasks:
• Hold weekly project meetings
• Maintain and update a detailed implementation plan
• Enforce correct governance
• Provide regular, accurate reporting to all stakeholders on progress and metrics.

Cross-functional team
Cross-functional alignment and collaboration is necessary to deliver improvements for
customers because the customer journey is almost always impacted by a number of
different departments. A cross functional team is responsible for delivering selected
customer impacting projects.

INTERNAL Many companies, despite what they might say, have a default setting to focus on
COMMUNICATION internal issues like products, finances and technology, rather than customer needs.

Keeping the customer front and center on the organization’s agenda requires a
comprehensive internal communications plan. In this section we will outline some brief
guidance on VoC messaging, media and target audiences.

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 Messaging and Internal Media
VoC messaging themes should include:

 he value & importance of customers (why customers are key to

T
commercial success.)

Our VoC program discoveries and wins

- What customers told us
- What we prioritized
- What we delivered
- How it impacted customers

 xamples of customer experience that impacted the performance of our business

E
- e.g., “Customers told us that when they call to get help they are often put on hold,
only to be transferred and put on hold again. This can be so annoying to
customers that many will hang up and call back again, hoping to reach the
correct person. With this feedback, we fixed our call routing so that customers
are routed to the correct team, and as a result the volume of calls has reduced by
3 percent and the call center NPS has increased
by 5 percent.”

Monthly progress on customer metrics versus targets

Customer Stories—both good and bad

 necdotal feedback from Meet the Customer sessions where executives and
A
employees take part in a structured activity, listening to customer complaints and
meeting customers to discuss their experience.

 ecognition and awards for employees who deliver outstanding experience

R
to customers.

Part of an effective internal communications plan should include a range of media

such as company intranet, company internal blogs, townhall meetings, employee
briefings, leadership meetings, management meetings, company on-line forum,
email, customer events, and notice boards.

Target Audience
As you communicate VoC initiatives, efforts and results across your organization,
keep in mind that communications should be targeted at different internal
audiences. In other words, messages will need to be tailored depending on the
audience (i.e., senior leadership, executive sponsor, middle management, front line
teams, program team members, all employees, etc.)

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Conclusion
As customer experience has grown to become the key differentiator between industry
leaders and laggards, the need to collect, analyze and act on customer data is at an
all-time high. This handbook acts as a guide, outlining the fundamentals necessary to
create a customer-centric organization. With these tools in hand, practitioners
everywhere can capitalize on customer demands and drive customer-centric change
across their organizations.

For additional information or to find out

how Qualtrics can help take your company’s
customer experience to the next level,
visit qualtrics.com/vocalize.

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About the
Authors
Kyle Groff, Ph.D.
PRINCIPAL CONSULTANT, CUSTOMER EXPERIENCE (CX), QUALTRICS

Kyle Groff has over 10 years of experience building, maintaining and improving
measurement programs in both the employee and customer experience (CX) domains.
Most recently, he launched the Employee Engagement program for JetBlue Airways
and led a ground-up redesign of their voice of the customer (VoC) program. For these
efforts, Kyle was named 1to1 Media’s 2014 Customer Champion, joining a distinguished
list of practitioners who have demonstrated industry-leading methods and results. He
has consulted with dozens of companies ranging from Fortune 500 members to
academic institutions. Kyle holds a doctorate in Industrial and Organizational
Psychology and has expertise in a wide-range of statistical methods and principles.

Catriona Sheil, MBS

PRINCIPAL CONSULTANT, CUSTOMER EXPERIENCE (CX), QUALTRICS

Catriona is an accomplished, marketer with extensive experience in

telecommunications in Ireland and abroad. Over the past six years Catriona has
focused specifically on customer-centric transformations, helping organizations build
voice of the customer programs, and working both as Head of Strategic Customer
Experience and in a consultancy capacity for many different organizations.

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About
Qualtrics
Qualtrics is a rapidly growing software-as-a-service company and the provider of the
world’s leading insight platform. More than 7,000 enterprises worldwide, including half
of the Fortune 100 and 99 of the top 100 business schools, rely on Qualtrics
technology. Our solutions make it fast and easy to capture customer, employee, and
market insights in one place. These insights help our clients make informed, data-
driven business decisions. Global enterprises, academic institutions, and government
agencies use Qualtrics to collect, analyze, and act on voice of the customer, customer
satisfaction, employee engagement, 360-degree reviews, brand, market, product
concept, and employee feedback. To learn more, please visit qualtrics.com.

Take Qualtrics Vocalize for a spin. Schedule your

free demo today, visit qualtrics.com/vocalize.

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