Article

Tuning into the voice of your customer

Pay attention to customers, not customer statistics.

By James Allen, Frederick Reichheld, and Barney Hamilton

Published on October 01, 2005
min read


The full version of this article is available on Harvard Business Online (subscription required). The Idea in Brief CALL IT THE DOMINANCE TRAP: the larger a company’s market share, the greater the risk it will take its customers for granted. As the money flows in, management begins confusing customer profitability with customer loyalty, never realizing that the most lucrative buyers may also be the angriest and most alienated. Worse, traditional market research may lead the firm to view customers as statistics. Managers can become so focused on the data that they stop hearing the real voices of their customers. Financial software powerhouse Intuit briefly fell into this trap, despite a history of excellent customer service. In 2001, its TurboTax program commanded 70% of the retail market for tax-preparation software and 83% of the online market. But then it began doing things that annoyed customers, such as upping the price of tech-support calls and limiting software licenses to one computer. Store-based retail growth flattened, and as Web-based tax preparation sites sprang up, online buyers started jumping ship. In 2003, TurboTax’s share of the online market plummeted. A recent Bain & Company survey reveals just how commonly companies misread the market. We surveyed 362 firms and found that 80% believed they delivered a “superior experience” to their customers. But when we asked customers about their own perceptions, we found that they rated only 8% of companies as truly delivering a superior experience. Clearly, it’s easy for leading companies to assume they’re keeping customers happy; it’s quite another thing to achieve that kind of customer devotion. So what sets the elite 8% apart? We found that they take a distinctively broad view of the customer experience. Unlike most companies, which reflexively turn to product or service design to improve customer satisfaction, the leaders pursue three imperatives simultaneously: 1. They design the right offers and experiences for the right customers. 2. They deliver these propositions by focusing the entire company on them with an emphasis on cross-functional collaboration. 3. They develop their capabilities to please customers again and again—by such means as revamping the planning process, training people in how to create new customer propositions, and establishing direct accountability for the customer experience. Each of these “Three Ds” draws on and reinforces the others. Together, they transform the company into one that is continually led and informed by its customers’ voices. Read the full article on Harvard Business Online.

The full version of this article is available on Harvard Business Online (subscription required).

The Idea in Brief

CALL IT THE DOMINANCE TRAP: the larger a company’s market share, the greater the risk it will take its customers for granted. As the money flows in, management begins confusing customer profitability with customer loyalty, never realizing that the most lucrative buyers may also be the angriest and most alienated. Worse, traditional market research may lead the firm to view customers as statistics. Managers can become so focused on the data that they stop hearing the real voices of their customers.

Financial software powerhouse Intuit briefly fell into this trap, despite a history of excellent customer service. In 2001, its TurboTax program commanded 70% of the retail market for tax-preparation software and 83% of the online market. But then it began doing things that annoyed customers, such as upping the price of tech-support calls and limiting software licenses to one computer. Store-based retail growth flattened, and as Web-based tax preparation sites sprang up, online buyers started jumping ship. In 2003, TurboTax’s share of the online market plummeted.

A recent Bain & Company survey reveals just how commonly companies misread the market. We surveyed 362 firms and found that 80% believed they delivered a “superior experience” to their customers. But when we asked customers about their own perceptions, we found that they rated only 8% of companies as truly delivering a superior experience. Clearly, it’s easy for leading companies to assume they’re keeping customers happy; it’s quite another thing to achieve that kind of customer devotion.

So what sets the elite 8% apart? We found that they take a distinctively broad view of the customer experience. Unlike most companies, which reflexively turn to product or service design to improve customer satisfaction, the leaders pursue three imperatives simultaneously:

1. They design the right offers and experiences for the right customers.

2. They deliver these propositions by focusing the entire company on them with an emphasis on cross-functional collaboration.

3. They develop their capabilities to please customers again and again—by such means as revamping the planning process, training people in how to create new customer propositions, and establishing direct accountability for the customer experience.

Each of these “Three Ds” draws on and reinforces the others. Together, they transform the company into one that is continually led and informed by its customers’ voices.

Read the full article on Harvard Business Online.