All Posts Tagged With: "customer knowledge"
Baldrige Model: How do you obtain information from your customers?
The Baldrige Model: How do you obtain information from your customers?
Item 3.1 in the Baldrige Criteria asks key questions about how your organization listens to your customers. The following processes, best practices, and problem areas look at critical issues in this part of the Baldrige model.
Your organization needs processes for:
Listening to each key customer group and market segment across the entire customer life cycle, to former and potential customers, and to customers of competitors to obtain actionable information
Following up with customers on product/service quality, customer support, and transactions to acquire immediate and actionable feedback
Determining customer satisfaction, engagement, and dissatisfaction
Using data and information about customer satisfaction, engagement, and dissatisfaction to exceed their expectations and improve loyalty
Obtaining information about your customers’ satisfaction with your organization, products, services, and support relative to their satisfaction with your competitors and other organizations providing similar products and services
Best practices to consider:
Using established processes, the organization knows exactly what each of its customer groups and/or market segments requires and communicates that knowledge throughout the organization.
Listening posts are established for all customer groups and segments with processes for collecting, analyzing, and sharing the information from those posts.
Follow-up with customers typically includes relationship and transaction surveys and frequently involves focus groups, customer advisory panels, and involving customers in internal processes such as strategic planning, new product development, and process improvement.
Organizations go beyond the annual customer satisfaction survey by surveying customers more frequently, using tools like Net Promoter Score to determine engagement and loyalty, and validating survey results through focus…
16May2011 | Steve George | 0 comments | ContinuedWhat Do Your Customers Require?
It’s a fundamental question that demands a profound knowledge of who your customers are and what each individual customer is seeking. B. Joseph Pine II, one of the pioneers of the mass customization concept, recently wrote an insightful article for HBR that bashed the notion that most organizations are customer-focused. “They focus on markets rather than on any real, living, breathing individual customer,” he wrote here.
Pine offers a fresh perspective on what it means to be truly customer-focused with a list that could be a how-to for understanding what your customers require:
- Every customer is his own market. Every customer deserves to get exactly what he wants at a price he’s willing to pay, and companies must make that happen in a way that makes them money.
- Recognize that every customer is multiple markets. Customers want different offerings at different times under different circumstances.
- You must modularize your capabilities. Break your offerings apart into modular elements like LEGO building blocks, and then create a design experience that helps each customer figure out what he wants.
- Don’t overwhelm your customers with choice. “Fundamentally, customers don’t want choice,” says Pine. They just want exactly what they want.”
- Recognize that mass customization is not being everything to everybody; rather, it is doing only and exactly what each individual customer wants and needs.
- Remember your customers’ preferences. Create a database of customer profiles so that, with every interaction, you can lower our customers’ sacrifice—what they have to settle for or buy from you versus what they truly want and need.
To read more about…
4May2011 | Steve George | 0 comments | ContinuedMeaningful Innovation
One of the great strengths of the Baldrige model is that it starts at the beginning. How do you set your mission and vision? How do you determine what your strategic plan should address? How do you identify your key customer groups and markets? How do you know what motivates your employees? How do you design your work processes?
These are foundational questions: If you don’t have rock-solid answers for them, everything that follows will be shaky.
The same is true for innovation. The most innovative organizations start at the beginning with a rock-solid understanding of customer wants and needs, organizational capabilities, and transformational trends that could disrupt their markets and give them a competitive advantage.
The transformational potential of innovation is the subject of “On Tracking Transformational Trends” by Scott Anthony (HBR, January 17, 2011). From his experience, he identifies three areas to assess whether a trend is or is not transformation, using the iPod and 3-D television as examples:
- Market fit. The innovation makes is easier and simpler to do what people are already doing. The iPod provides music on the go. The 3-D television prioritizes something that wasn’t that important. “Do people really want to make the effort to watch 3-D television?”
- Performance. “Strategically sacrifices raw performance in the name of simplicity or affordability.” The iPod deliver lower fidelity but greater convenience, but the 3-D television offers no performance compromises.
- Innovation focus. The innovation is not limited to the product or service but includes distinct business model elements. The iPod spawned iTunes and 99-cent…
Baldrige Embraces Social Media
The 2011 Baldrige Criteria give a shout-out to social media with a new question added to the Customer Focus category: “How do you use social media and Web-based technologies to listen to customers, as appropriate?”
A lot of organizations will hide behind that “as appropriate” qualifier, arguing that social media has nothing to do with them. According to David Armano (“Six Social Media Trends for 2011,” HBR, December 6, 2010), a global survey indicates that only 29% of companies have a social media policy. That puts 71% well behind the curve.
Everybody uses Google, right? Last year, Facebook had more weekly site traffic than Google. And it’s not like even the most Luddite of companies ignores social media all together: Some surveys report that 95% of companies use LinkedIn for recruiting.
So it’s not just about using social media and Web-based technologies to listen to customers, as the Baldrige question addresses, but how you use them to acquire and keep customers. With that in mind, here are Armano’s six social media trends for 2011:
- It’s the Integration Economy, Stupid. The challenge is to integrate social media into all facets of business from marketing to crisis management and beyond.
- Tablet & Mobile Wars Create Ubiquitous Social Computing. Cheaper, smarter phones and tablets will move technology consumers closer to being connected 24/7, and in more powerful ways.
- Facebook Interrupts Location-Based Networking. Facebook is about to roll out a location-based service that promises to make location-based networking useful to businesses.
- Average Participants Experience Social Media Schizophrenia. Having to maintain too many social profiles will…
The Post-Industrial Marketplace
If your organization is interested in serving the post-industrial marketplace (if it’s not, you’re in trouble), Seth Godin is as good a guide as you’re going to find. Not only does he know what’s going on, he understands the impact of rapid technological change on business. As he writes, “the world is being remade again and again, and the agents of change are the winners.”
The quote comes from “A post-industrial A to Z digital battledore,” which lists his 26 favorite neologisms (even though most are not newly-invented words). Several thought-provoking definitions relate to meeting customer requirements including:
- C is for Choice: “Digital commerce enables niches” because “given the choice, people will take the choice.”
- F is for the Free Prize: “People often don’t buy the obvious or measured solution to their problem, they buy the extra, the bonus, the feeling and the story.”
- I is for Ideavirus: “Ideas that spread win, and you can architect and arrange and manipulate your ideas to make them more likely to spread.”
- K is for kindle: Not the ebook reader. “The internet responds better to bonfires that are kindled over time, to ideas that spread because the idea itself is the engine, not the hype or the promotion.”
- O is for the Orangutan: “The primate is the best way to think about how people interact with websites. They’re like monkeys in a psychology experiment, looking for the banana. If your website offers a banana, people are going to click on it.”
- R is for remarkable: “In a world without effective, scalable advertising,…
Think Like Your Buyers
In the 1980s, four out of five American car buyers were loyal to the company that manufactured their brand. I remember growing up in a Chevy family and we had friends who were Ford people and we were as loyal to our car brand as we were to our religion.
In 2009, only one in five Americans was loyal to the same car brand.
In “The Manufacturer’s World Has Changed Forever” (IndustryWeek, July 14, 2010), Robert Bloom provides this contrast in customer loyalty to point out that the purchasing behavior of customers has changed, which is old news to any company that’s managed to keep its head above water the last two years, but his case study is interesting. Italy’s Fiat Auto reported a net loss of nearly two billion euros in 2002 and experts thought it would not survive. In 2008, it reported a trading profit of more than 1.1 billion euros—a three billion euro turnaround in six years.
How did Fiat Auto do it? Bloom lists several key actions:
- Terminated a failing venture with General Motors to gain full decision-making autonomy
- Eliminated an entire floor of executives to reduce costs and bureaucracy
- Cut Fiat’s product development time in half to get products to market quickly
- Reorganized and re-energized its dealer organization to assure sell-through
- Redesigned every Fiat product to create Customer Preference for the Fiat brand and products
According to Bloom, manufacturers can take several steps to compete in today’s global marketplace—and those steps coincide with Baldrige core values (in parentheses):
- Think like today’s buyer, not like yesterday’s seller…
Be Careful How You Measure Customer Satisfaction
In a recent webinar conducted by ActiveStrategy, Mark Graham Brown, author of a number of Baldrige and performance measurement books, talked about key customer metrics. He advised people to be wary of the most common measurements such as customer surveys (usually fail to ask the most important questions and employees figure out how to “game” the survey), customer complaints (only about one in ten unhappy customers complain), customer loyalty (based on faulty assumptions since loyalty is driven by many factors other than satisfaction), focus groups (expensive and time consuming), and net promoter score (satisfaction doesn’t equal loyalty and the people in the middle aren’t addressed).
Instead, Brown suggested two great customer metrics:
- Customer Aggravation Index. Use focus groups to identify the things customers hate, rank them according to severity, and keep track of how you perform on them. It’s a meaningful metric that predicts loyalty and it’s being used by such companies as FedEx, DTE Energy, and Midwest Airlines.
- Matrimonial Index. Rate customer relationships on a scale of 1 to 10 based on how “married” they are to you or to your competitors.
According to Brown, you can consider a number of factors for an index including satisfaction levels, aggravation levels, length of relationships, level of relationships, willingness to give a referral, monetary value and scope of business, connections to the company (friends/associates at your company), and the price of “divorce” (what it would cost for the customer to find a new supplier).
With quality customer satisfaction and loyalty data in hand, the next step is…
24Mar2010 | Steve George | 2 comments | Continued
