1. Creating a Voice of the Customer
Process That Has Impact
Customer Management Conference
October 23, 2012
Moscow, Russia
John Goodman
TARP Worldwide
www.tarp.com

2. Agenda
• The Opportunity: How the VOC leads to CE impact
• Eight factors leading to an effective VOC
• Critical data sources and integrating them (surveys,
contact centers, operations and employee input)
• Creating the economic imperative for action
• Myths about service
• Grade yourself
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3. About TARP
• Founded in 1971—41 years of customer experience leadership
– White House Complaint Studies 1970s-80s (instigated 800#s and GE
Answer Center)
– Assisted 6 Baldrige Winners and 43 Fortune 100 Companies
– Initiated concept of “word of mouth” (TARP/Coca-Cola 1978 Study) and
“word of mouse” (eCare and Click & Mortar studies 1999)
• Credited with developing the approach
for quantifying the impact of quality
on revenue, cost & WOM for companies
like McDonalds, Toyota/Lexus, IBM,
Harley Davidson, Cisco Systems, Xerox,
3M, HP, Honda, Hyundai, Pepsi Cola,
Apple, Frito-Lay, Coca-Cola, Mercedes-
Benz, Merck, Amway, Lexmark, Allstate,
Cathay Pacific, Shell Oil and Qualcomm.
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4. Context of VOC within the Customer Experience
DOING
EFFECTIVE
THE RIGHT JOB MAXIMUM
RIGHT THE FIRST
TIME
+ CUSTOMER
CONTACT
MANAGEMENT
= CUSTOMER
SATISFACTION
& LOYALTY
Respond to
Individual Customers
Customers will:
Improved Identify Sources Use again
Product & Service of Dissatisfaction
Buy other
Quality products
Conduct Root
Cause Analysis Tell others to
buy
Feedback on
Prevention
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5. Firefighting Mode
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6. Building an Effective VOC: Six Big Ideas From
Strategic Customer Service
1. Staff doesn’t cause most customer dissatisfaction –
sales, products, processes and customers do
2. It is cheaper to give great service than just good
service, the revenue payoff is 10-20X the cost
3. People are still paramount – make the front line
successful with flexibility and clear explanations
4. Deliver technology that customers will enjoy –
delivering psychic pizza via any channel
5. Sensibly create remarkable delight
6. An effective Voice of the Customer includes all kinds
of data describing the overall customer experience
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7. Recent Survey of CE & Service Strategy Executives
Survey Results: Data Collected by VOC
Overuse of “rearview mirror”:
Most companies primarily use
traditional survey & complaint data
Underutilization of early warning devices:
Only 25% use operational data – Chicago bank
Only 30% currently monitoring Social Media for VOC
Only 13% are using Speech Analytics
(Study Method- N=160, Nov 2011)
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8. Recent Survey of CE & Service Strategy Executives
Survey Results: Analysis & Reporting
About 33% produce an end-to-end view of the Customer
Experience using data that is integrated into a single picture
These 33% of companies were more than twice as likely
to have significant improvements in customer satisfaction
than those who didn’t integrate multiple types of data
 Over 50%: 3 or more FTE Customer Experience Analysts
However, the size of the analytical staff had no
correlation with the impact of the VOC!
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9. Recent Survey of CE & Service Strategy Executives
Survey Results: Business Case
CFO buy in to business case is critical
Where buy-in existed, 40% of VOC processes were very
effective in getting things fixed and 55% had significant
increases in customer satisfaction
Where buy-in did not exist, only 8% of companies were
very effective and only 23% had significant increases.
Business cases can include four dimensions:
Loyalty
Margin – great experience and innovation
Word of mouth
Risk reduction (Liability, warranty, regulatory and PR)
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10. Departments With Interest in an Effective CE
1. Marketing and Sales– retention and word of mouth from
customers and shelf space from channels
2. Finance – higher margin and lower costs
3. Operations – reduce costs, more accurate execution
4. Risk – better service reduces claims
5. PR, Legal & Regulatory – better online reviews and publicity
6. HR – less problems leads to happier front line and lower
turnover
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11. Why Most VOC Processes Lack Impact and Are
Cost Inefficient
• No unified picture of the customer experience
• Does not estimate revenue damage by granular
issue
• Doesn’t focus on root causes and why problem
occurred or why responses were not effective
• Requires expensive additional surveys to indicate if
action had impact
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12. Effective Voice of the Customer Process
8. Process
supported by
company-wide
incentives
6. Formal
5. Clear 7. Formal
processes for
revenue systems for
translating data
and profit tracking
into actions and
implications impact
targets
1. Well-defined 2. Unified data 4. Visible,
3. Integration
ownership of collection granular,
of multiple
process and across whole actionable
data sources
issues lifecycle reporting
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13. Behavioral Basis: Employees Don’t Cause Most Dissatisfaction
The majority of customer dissatisfaction is NOT caused by employee error or attitude but
by products and broken processes*
Customer expectations Customer Employee
must be set to avoid 20%-30% 20%
problems and surprises. -Fails to follow
- Wrong expectations- Fails to follow
- Customer error policy
policy
-Attitude
At least Company 40%-60% Poorly designed products,
30% of - Products and services processes, and marketing
contacts are
don’t meet expectations create unmet expectations.
preventable
- Marketing miscommunication
- Broken processes
*Finding based upon TARP analysis problem cause
data in over 200 consumer and B2B environments.
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14. The Tip of the Iceberg Phenomenon
1%-5% Complain to
management
Most that complain (5-
25%) go to front line
person who can not or
will not help
75%-95% Encounter a
problem but don’t
complain
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15. Understand Impact of Problems
I II III IV
Question/ Contact Contact Market
Problem Behavior Handling Impact
Experience
%
Definitely/Probably
Recommend/repurchase
from same organization
No
No
problem 90%
problem
experience
experience Satisfied11
Satisfied 93%
60%
60% 50%
50%
Customers
Customers Complainers Mollified22
Mollified
Complainers 50%
5-50% 30%
30%
5-50%
Problem
Problem Dissatisfied33
Dissatisfied 30%
experience
experience 20%
20%
40%
40%
Experience suggests Non-
Non-
three strategies: Complainers
Complainers 60%
Prevention, 95-50%
95-50%
Solicitation of
Complaints, and Proprietary © 2012 TARP Worldwide
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Response

16. Economic Model of Service Impact
• Assume each customer is worth $1,000
• Average drop in loyalty 20%
• For every five customers with a problem,
one is at risk
$1,000
(5 x .2 = 1) $1,000
$1,000
5 Customers 5 Customers
with with 1 Retained
1 Lost
Unresolved = Customer = Problems = Customer =
Problems Solved/
Prevented
- $1,000 + $1,000
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17. Customer Expectation: Factors Driving Satisfaction
• No Unpleasant Surprises
• If Trouble Encountered
– Accessibility – not average speed of answer, hours of
operation
– Taking ownership, apology
– Clear, believable explanation
– Creating an emotional connection rather than just
courtesy
– Money is often not the best solution
– Timeliness and keeping promises
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18. Creating A Data Foundation for The VOC
• Customer surveys
• Customer contact and interaction data: coded and
unstructured – key source of why it happened
• Internal operations process and quality measures
• Employee input – second source of why
Surveys of
Surveys of Customer
Customer Total view of the
customer
customer + contact and + Internal process = Total view of the
contact and Internal process customer
satisfaction and
satisfaction and interaction data and quality data customer
interaction data and quality data experience
loyalty
loyalty and employee experience
and employee
input
input
Take The Role Of Chief Customer Officer
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19. Estimating Number of Customers Impacted by Issue
From Contacts to Different Touch Points
2% to flight attendant
in
0.8% to consumer affairs/
pla
100 om customers relations**
20 %C
Airline 7% to local supervisor**
customers 5% to social media**
encountering a 80 0.2% to executive by e-mail**
rude gate agent %
Do 1% to frequent flyer 800#**
n’
tC 4% to reservations 800#
om
pl 1% airline web site
ain
3.5% Other
** For these channels, the consumer may have first complained elsewhere and then escalated
their complaint to this channel.
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20. Integrating Touch Point Data (Airline Example)
Total
Problem Estimated Best Estimate
Source Reports Multiplier Instances # Instances
Web Site 6 100 600
Social Media & 20 20 400
Unstructured Data
Reservations 14 25 350
555
Executive Complaint 2 500 1,000
Consumer Affairs 4 120 480
Survey 0.5% 100,000 500
# Customers Damage to Value of Monthly Revenue
in Month Loyalty Customer Impact
555 x .25 x $2,000 = $277,500
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21. 2. Quantify the Damage of a Poor Customer Experience
Demonstrating financial impact with the CFO, CMO and the General Counsel
x x x
50% Most
Satisfied Repurchasing = 2,500
25% 30% Some Not
Complain Mollified Repurchasing = 3,000
200,000
Customers 20% Many Not
with Dissatisfied Repurchasing = 7,000
Problems
75% Do Not Some Not
Complain Repurchasing = 37,500
Total Customers At Risk = 50,500
At $1000 per customer, $50,500,000 at risk
Three strategies: Prevention, Solicitation of Complaints and Improved Response
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22. Quantify the Payoff of Prevention of 25% of Problems
Demonstrating financial impact with the CFO, CMO and the General Counsel
x x x
50% 90%
Satisfied Repurchasing = 1,875
25% 30% 80%
Complain Mollified Repurchasing = 2,250
150,000
Customers 20% 70%
with Dissatisfied Repurchasing = 2,250
Problems
75% Do Not 75%
Complain Repurchasing = 28,125
Total Customers At Risk = 34,500
At $1000 per customer, $34,500,000 at risk or saving of $15,500,000
Three strategies: Prevention, Solicitation of Complaints and Improved Response
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23. Set Priorities Based on Revenue Damage
& Customers at Risk
Overall Problem % Won’t % Customers
problem experience freq recommend potentially lost
(45%) (%)1 Will not2
Meeting promised delivery
27 10.5 1.3
dates
Product availability within
23 0.0 0.0
desired time frame
Meeting commitments/follow
21 30.0 2.8
through
Equipment/system fixed right
20 22.2 2.0
first time
Adequate post-sale
19 10.0 0.9
communications
Returning calls 16 33.3 2.4
Minimum customers at risk 9.4%
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1 Based on multiple problem
selection
2 Based on will not repurchase only 23

24. Show The CMO That Negative Word Of Mouth
Can Trump Marketing
Example calculation of potential impact
10% Tell
two = 2,000
delighted
10,000
customers 70% Tell
one = 7,000
satisfied
20% Tell = -12,000
dissatisfied six
-3,000
20% dissatisfaction can counter 80% satisfaction
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25. Great Service Is A Word of Mouth
Management Mechanism
10% Tell
two = 2,000
delighted
10,000
customers 80% Tell
one = 8,000
satisfied
Tell = -6,000
10%
dissatisfied six
4,000
10% decrease in dissatisfaction results in net positive WOM
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26. Problems Raise Sensitivity to Price,
Hindering High Margins
Percent of customers dissatisfied with fees rises with number of problems.
90%
80% 74%
% Dissatisfied with price or fees
70%
60%
46%
50%
40%
30% 22%
20% 10%
10%
0%
No problems 1 problem 2 to 5 problems 6 problems or
more
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27. Broaden the Range of Solutions to Issues
• Welcome kits, calls and emails
• Enhance response with empowerment and
explanations
• Create efficient emotional connection
• Use technology to deliver psychic pizza
– JIT education
– Anticipates
– Simplifies
• Delight sensibly
• Create accountability – CCO Paper
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28. Enhancing Report Impact
• Simplify to three issues to any one audience
• Eliminate of masses of data requiring interpretation
• Tailor report to each function
• Provide action plan and process metrics impacted
• Humanize data with quotes, stories and recordings
• Act as consultant – suggest lead functional leader
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29. Practical Exercise: Evaluate Your VOC System
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Grade 1 to 10, 10 being best Grade
VOC Process Owned by One Person
Unified Data Collection Plan
Understand Non-complaint Rate and Multiplier
Integration of Multiple Data Sources
Actionable, Visible Reporting
Understand Impact of Word of Mouth
Revenue and Profit Implications of Issues
Calculated
Issues Translated Into Targets
Tracks Do Issues Get Fixed
Tied to Company-Wide Incentives
If you rate less than a 75, you’re Total Score ___________
wasting 20% of your service budget 29

30. Summary
• Create a unified VOC including operational data to identify
best opportunities
• Understand root cause including customer caused
• Quantify the revenue and WOM so CFO accepts
• Take control of the VOC and then become the Chief
Customer Officer
• Proactively educate, connect, explain and deliver psychic
pizza
• Outlined in detail in Strategic Customer Service published
by AMACOM – on Amazon for <$20.
• For package of articles - jgoodman@tarp.com or 703-284-9253
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