Perfecting Service Management

Issue #61

Tuesday, January 5, 2005

VoC Presentation Available for Download

Material from
Craig Bailey's presentation at the 7th Annual Voice of the Customer Conference in San Francisco is available on the Customer Centricity website. Click here to download the presentation.

Becoming Customer Centric - Observe Customer Actions and Behaviors
Kurt Jensen

We continue our series on leveraging the Voice of the Customer as a key element to becoming customer centric with a discussion of the next aspect within the step of "obtaining the pulse of the customer": Observing customer actions and behavior.

Observing customer behavior, which can involve monitoring activities and transactions online or through direct observation, is one of the "indirect" approaches to understanding customer sentiment as relates to their experience with the firm. It should not be confused with analyzing purchasing behavior (which will be discussed in a subsequent newsletter edition). Instead, it involves assessing the customers' experiences in terms of:

  • How easy it is for the customer to do business with the firm
  • Identifying barriers to doing business
  • Identifying opportunities to better meet customer needs (including common cross-sell and up-sell opportunities)

How easy it is for the customer to do business with the firm
Most web reporting software has some form of visitor tracking. Reviewing customer navigation records and reviewing click-through paths can point to web site areas which cause customers confusion or otherwise create a perception of being difficult to do business with.

Along these same lines, direct observation of customer interaction (including listening to or viewing recorded tapes, or listening in on live calls) provides the opportunity to witness non-verbal communication, such as smiles, head shakes or sighs. These non-verbal cues can say far more than the customer is actually speaking regarding ease of doing business.

Identifying barriers to doing business
Noting observations which characterize a company as being difficult to do business with provides the opportunity to identify specific barriers. For example, are customers being required to log in twice, double enter information or read fine print? These types of nuisances, which may be viewed as minor internally, can translate into barriers as perceived by the customer. Essentially, it is important to identify each step that a customer must take to purchase a product or service and eliminate those that add no value to the customer and/or create a barrier to them doing business with the firm.

Identifying opportunities to better meet customer needs
By watching customer activity (including non-verbal actions), listening to what customers are saying (including tone, demeanor, etc…) and reviewing the individual circumstances, you are generating a blueprint to better meet their needs. Additionally, such observations lead to natural opportunities for cross and up-selling that may become a standard part of customer-facing training programs.

In our next edition we will present our fifth and final approach for "obtaining the pulse of the customer" and in subsequent editions we will discuss how to take appropriate and responsive action.

View previous articles in this series.

Supply Chain Synchronization - Adding Business Priorities to the Planning Process
by Peter E. Ventola

Now that your company has invested in the latest software and your staff has been trained in best practices in your industry, do you still hear these quotes?

  • From Business Management: "Our on-time service is mediocre"
  • From Manufacturing: "Sales makes unrealistic commitments"
  • From Sales: "Manufacturing ignores our most profitable customers"
  • From Supply Chain: "Sales demand forecast is not accurate"
  • From Customers: "My order is always late"

The answer may be that your functions are not aligned around the franchise customers and products that are critical to ongoing success. Instead, the supply chain may be focused on historic data and may not have enough business context built into their process. A focus on "Where you've been" vs. "Where you are going" can be a root cause of misalignment.

While some business areas are focused on the predictable demand, sales and marketing are often focused on the unknown; these show up as new business opportunities. These new opportunities may involve new prospects or new product offerings to existing customers. Without an alignment process in place, these opportunities will always appear as disruptions to the supply chain.

Finding your "Franchise" Customers and Products
Customer segmentation is a common practice, allowing companies to invest different levels of resources commensurate with customer "importance." For example, customers might be segmented into the following categories: Franchise, Bread & Butter, Nice to Have, Dogs.

Though most organizations are familiar with customer prioritization, few combine this with a prioritization of products as well. There are always products that manufacturing prefers to make; these usually provide high capacity utilization. Conversely, there are always products that marketing prefers to sell; these usually provide a high profit margin (and low capacity utilization). Implementing a process that finds the right balance is critical.

Use Quantitative AND Qualitative Criteria
Most organizations use total profit margin to prioritize customers; many forget to look at profit margin per unit as well. You may find that you are turning away some of your most profitable orders and ignoring small, but potentially profitable customers.

What is a good measure for prioritizing products? I suggest a measure that incorporates both cost and profit, like profit contribution/per manufacturing line/per day. Finance should be involved with this measure to ensure that costs are spread equally across manufacturing units. In captital intensive industries, a measure that uses only variable manufacturing costs may be preferred, for example.

Another critical point is to use qualitative criteria along with numeric data to rank your customers and products. What are the top ten attributes for desirable customers? How would you weight these attributes? What product attributes fit well with your capabilities? These attributes can be unique to your business and market.

In the next article, I will present a Service Matrix that allows you to utilize your customer segmentation and product prioritization to segment and manage your service capacity.


+ Becoming Customer Centric
+ Recommended Reading
+ Supply Chain Synchronization


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Recommended Reading
This week we recommend an article from CRM Magazine on the topic of maximizing the effectiveness of your CRM initiatives with quality data. Shielding your CRM Initiative from Bad Data by Tony Fisher presents a 5-step process for eliminating the systemic problem of bad data, thereby allowing your CRM initiative to achieve its full potential.

Happy New Year!
CCI wishes you and your families a happy, healthy, and prosperous New Year!

About Customer Centricity, Inc.
We strengthen overall company performance through better service delivery and management.

We boost efficiencies in front-line customer service and technical support teams, order processing, fulfillment, field service, logistics and other key operations functions.

In short, we align the resources of your organization to exceed your customers' expectations in the most effective and efficient manner possible.

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