Customer-Driven Strategy

Is your strategy based on the perception of your management team or your customers? Make sure it’s the latter.
One of the most effective ways to ensure your strategic plan remains relevant and viable is to make sure it is hard wired to the needs of customers. In fact, most “best-in-class” organizations use aggressive and varied ways to locate and listen to the “Voice of the Customer.”
For effective customer-driven strategic planning organizations, the status quo is simply not good enough. This disposition can be driven due to extreme market changes or from a leadership directive. Regardless of impetus, a great Voice of the Customer program is an important source of insight for both strategic and operational excellence.
Having timely, accurate, and complete information both from and about customers provides organizations insight for improvements to the existing customer base and expansion into new service or product lines. Customer feedback combined with product/service use, revenue spend and various demographics give organizations a holistic picture that often times precludes significant customer actions (i.e. spending patterns, success of new initiatives, longevity).
To be useful for strategic planning, the questions asked should give insight into how training, processes and policies impact the customer experience. In this way, information can provide continuous SWOT insights into the balanced scorecard strategy framework. Later in the planning process, you’ll use your SWOT to make strategic decisions.

Phase Duration

Capture customer insights to be readily available when key meetings are already taking place. (i.e. Integrate into operations or performance management reviews.) This can be monthly, quarterly, or at the very least annually. The quicker your environment is changing, the more frequently you should be inserting customer insights into decision-making.

Questions to Ask

• What are our strengths and weaknesses as experienced by our customers?
• What strategic goals would be clearly measured best with customer feedback metrics?
• How well do we understand our customers?  Do we know who our 80/20 customers are?
• Are we delivering what customers expect of us?
• Of the customers we now have, how many are at-risk?

Data Needed

• Accurate customer database records, optimally with fields for customer revenue spending, customer origination date, geography, service/product usage, customer representative, etc.
• Internal HR records with insight into trainings, certifications, etc.

Outcomes / Deliverables

• Examination of products, services and processes through the eyes of customers.
• Input revealing customer preferences, requirements and standards.
• Validation of value/mission delivery.

Action Grid

Action	Who is Involved	Tools & Techniques	Estimated Duration
Identify customer feedback methods	Executive Team	Email surveys, in-system messaging, focus groups, advisory boards, telephone interviews	2-4 weeks
Determine customer segmentation	Executive Team	By the 80/20 Rule, by location, by service line, by customer representative, etc.	1-2 days
Craft questions	Executive Team	Net Promoter Score, Customer Effort Score, Customer Satisfaction, etc	2-4 weeks
Obtain up-to-date customer data file	IT	Tab separated or comma separated output- important for segmentation	1-2 weeks
Optimize response rates	Director of Communications	Survey distribution timing & rules, pre-notification emails, internal message points, internal competitions	1-2 weeks
Schedule outreach (survey, event or interviews)	Executive Team	Select dates for outreach and coordinate logistics if needed	1 week
Mobilize and train individuals/team For for rapid esponse	COO	Outreach to customers who are unhappy/at risk (captures weaknesses)  Outreach to very satisfied customers for case study (captures strengths)	1 week
Design & execute the customer outreach	Researcher	Reference best practices for design and quality tests	1-2 days
Collect Data data for analysis	Researcher	Regression analysis, cross tabs, segmentation, factor analysis	1-2 weeks
Communicate the findings	CEO, Executive Team	Speeches, newsletters, emails, videos	2-3 weeks
Thank and report back to customers	CEO, Director of Communication, Customer Representatives	Email, telephone calls	1-2 days

Customer Driven Organization

An organization that maintains a focus on the needs and expectations, both spoken and unspoken, of customers (both present and future) in the creation or improvement of the product or service provided.
Customer driven organizations track all points of engagement with customers, from initial contact, to selection of products/services, to spending and combine these activities with feedback taken from surveys, complaints, and other types of interaction.
By collecting this insight organizations are well-positioned to engage with customers in a more meaningful way. When sourcing feedback from customers comes the responsibility to acknowledge and act. There are three points in which customer feedback needs to be acknowledged and acted upon:

1. Promptly after the customer provides feedback. This can be a simple thank you, or for those customers who are unhappy about something this means contacting them directly about their experience with a commitment to address it.
2. When operational decisions are made based on customer feedback, communicating back to customers is validation that their opinions and expectations are taken seriously and that their relationship with the organization is respected.
3. When strategic plans are renewed or re-assessed, customer feedback is a ‘proxy executive’ to guide long-term decision-making. Any decision made, in fact, should be assessed from a customer perspective to determine if or what type of impact strategic efforts will have on their experience.

The 80/20 Rule or the Pareto Principle (also known as law of the vital few, and the principle of factor sparsity)
This concept is a rule of thumb, in that roughly 80% of effects come from 20% of causes. The distribution is claimed to appear in several different aspects relevant to entrepreneurs and business managers. For example:

1. 80% of a company’s profits come from 20% of its customers
2. 80% of a company’s complaints come from 20% of its customers
3. 80% of a company’s profits come from 20% of the time its staff spend
4. 80% of a company’s sales come from 20% of its products
5. 80% of a company’s sales are made by 20% of its sales staff

Therefore, many businesses have an easy access to dramatic improvements in profitability by focusing on the most effective areas and eliminating, ignoring, automating, delegating or retraining the rest, as appropriate.

At-Risk Customers

At-risk customers are those who are experiencing a breakdown of value, or trust, that leads to weakened engagement, reduced transactions or churn. This state could be the result of a negative outcome using a product or service, or a series of them (at least as perceived by the customer). If not addressed, otherwise “secure” customers will begin to exhibit specific behaviors and actions that indicate reduced levels of faith or trust.

The sooner intervention begins with an at-risk customer, the easier and less expensive it is to fix the problem. The best plan is to have a system in place for identifying these customers and addressing their issues.

Segmentation

The goal of segmentation is to target high-value customers with product and service offerings tailored to their needs. To achieve this capability, organizations segment their customers into groups based on information that provides insight into their expectations and purchasing behavior. Segmentation helps provide organizations a customer-level filter to view its own services and offerings.

Customer Loyalty

Customer Loyalty is a business model used in strategic management in which company resources are employed to increase the loyalty of customers and other stakeholders in the expectation that corporate objectives will be met or surpassed. A typical example of this type of model is: quality of product or service leads to customer satisfaction, with consistency in delivery this quality leads to customer loyalty, which generates repeat and scaled transactions that ultimately leads to more profitability.<

Net Promoter Score

Net Promoter® Score was developed by loyalty expert Frederick Reichheld of Bain & Company and Satmetrix Systems through rigorous data analysis to measure the customer experience. It is also referred to as a metric that captures Customer Loyalty.
In research studies around the world, word of mouth is widely acknowledged as the most effective and trusted marketing channel.  NPS taps into this by asking one important question to customers or constituents – “How likely is it that you would recommend [Company here] to a friend or colleague?” Participants answer on a scale between 0-10, and based on their response they are categorized into one of three groups: Detractors, Passively Satisfieds or Promoters.
NPS is based upon the premise that loyal, not satisfied, customers are the ones who drive profitable growth – growth that is based upon word of mouth advertising, less emphasis on fixing customer issues, more emphasis on understanding the voice of the customer, and stronger customer relationships. Due to this progression, NPS has been considered by some to more straightforward to understand than satisfaction as it has been tied more directly to the economics of growth.
A major criticism of NPS is that it is just one question and does not yield enough information to act on the findings. To preserve the value of the question and add strategic and operational insight, additional ‘driver questions’ can be developed to give organizations feedback and will help guide operational and strategic action. Additional questions should be carefully crafted to:

1. Validate the value expectation customers have.
2. Validate how well the value is being delivered.
3. Give insight into how well employee training, processes and policies are enriching the customer experience.

By paying attention to these three criteria, feedback can be strategically relevant from a mission delivery perspective and a balanced scorecard perspective.
When setting up any customer feedback system, the ability to tie feedback into various regions, branches or departments will help ID areas of customer experience excellence and areas of customer experience challenges. Additional effectiveness to act upon the data comes when feedback can be grouped according to customer segments, account teams and even individual representatives.