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What is Six Sigma?
Six Sigma, created by the Motorola Corporation, is a five-step methodology used to understand customer requirements and to map, analyze, measure and improve processes in order to deliver 99.9997% defect-free products and services, improve cycle time and eliminate non-value added activities.
More information Glossary of TermsCEO ViewPoint Interview with John Goodman of TARP
Highly renounded speaker and exponent of the Voice of Customer strategies, John Goodman, Vice Chairman of TARP talks freely about his business and how Voice of Customer works...
Q.1: How did your company start?
TARP started out as a Client Satisfaction Survey non-profit company involved with Government programs in client handling and cross governmental surveys of how to increase loyalty.
We worked with independent bodies and are credited with creating “800” numbers to help improve customer services and improve customer loyalty.
More up-to-date we look at improving sales and marketing and using unique, problem oriented surveys to analyse the damage to loyalty of defects. We then avoid looking only in the rear view mirror by tying the surveys to real time customer contact data. We also feel that internal operations data should be part of your Voice of Customer as it tells what you have done or are about to do to the customer...
Q.2: So how do you Apply Six Sigma to the Voice of the Customer?
Today the application of Six Sigma directly to enhancement of revenues and customer service is of paramount importance.
The revenue implications of the power of “word of mouse”, that is word of mouth on the Web, where bad Web experiences are passed on by a 4:1 ratio – the importance of customer satisfaction on the bottom line are very clear…
Some obvious case studies on the power of word of mouth and mouse are Harley Davidson and Chick-Fill-A, both of whom gets 75% of their new customers through Word of Mouth referrals – the quality of experience is second to none.
Now here is the rub; your CFO finds the benefit of Word of Mouth and even increased loyalty too far in the future compared and speculative, the CFO needs to cut costs now, but is that the answer? The CFO would need more awareness of the revenue and word of mouth implications of customer service and select projects accordingly.
The pay off from higher product quality is good, but the pay off due to better marketing quality can be even better. If a product is marketed incorrectly (without at least understanding the information the customer needs) or is mis-sold the effects can be exponentially bad... The customer will forgive a broken product; they will NOT forgive what appears to be marketing dishonesty.
For example, Armstrong Industries, which won the Baldrige Award a few years ago, supplies flooring for customers who spend an average of $12,000 on flooring over their lifetime. They found that after installation, customers would often clean the floor with abrasive materials damaging it badly.
Now they print notification of the 800 number on the floor to obtain cleaning instructions. The customers are clearly informed how to properly clean the floor during the short call, leading to dramatically reduced warranty costs and customer dissatisfaction– it’s as simple as that. Marketing provide the correct information and everything is OK, great money is saved from not needing to deal with the phone calls and customer relationships are improved.
Another important point is the Voice of the Customer representatives within the business, are often compartmentalised, there may be 7 responsible for VOC all expounding a different voice of the customer!
Service processes are very important for quality of marketing; Amazon reduced their call ratios from 1.2 calls per order to 0.12 calls per order by applying a holistic analysis.
Once the information was delivered proactively (what I call “Psychic Pizza”, there was no need for the customer to call up to see if the product was ready, they had already been emailed to say the delivery had been packed, there was no need for the customer to telephone to see if the package was on it’s way, Amazon had emailed to say the package had been posted, etc.
The customer called as the supplier hadn’t solved the customers’ expectations or there was a break in the process (or an “unpleasant surprise”). Marketing need to identify where the customers might get a surprise or a question that may cost the supplier time and money in customer service unnecessarily.
AOL review their FAQ’s every week based on what people ask in their phone enquiries, they have a living FAQ!
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Marketing needs to inform customers proactively about the right solutions before the actual need arises – this is possible by applying Six Sigma principles to data from the Voice of Customer and the marketing function
If you can set your priorities based on the most serious “unpleasant surprises” and unmet expectations of your customers, you can then develop an end-to-end Voice of Customer quality improvement program…
Instead of concentrating on what makes customers happy find out the 50 problems that annoy then the most!
For one Copier Company one of the most visible problems was on repairs but the real problem (which did four times as much damage to loyalty) was the sales team over-selling which upset them the most.
The answer lies first of all in conducting a real survey to ask what are the things that most annoy your customers! None of these “feel good surveys” tailored to what customers are “happy about” with leading questions that get few responses really tell you how to improve your quality of service.
After understanding what annoys your customers most – a negative response survey where they tick to most annoying thing out of 50 will give you a far greater response and you can fix your empathy with your customers and you get tangible actionable resolutions to develop a Strategic Customer Service.
An effective Voice of Marketing; can also reduce your liability and regulatory costs by solving problems and expectations upfront.
Your Voice of Customer should feed into your customer data cube to produce the economic imperative for action on key problems. If you can quantify the cost of inaction on customer problems, you precipitate action. You can reduce risk by doing a pilot test to address the issues. This usually produces small successes leading to agreement with the process change. Then you can receive the mandate to set up a task force to study your customer’s “unpleasant surprises” and improve marketing information to meet customers’ expectations. Make sure your CFO buys in; get them to think about their personal experience of dis-satisfaction with something they bought and examine how they acted in terms of repurchase and word of mouth. Then they will agree that the concept of a Chief Customer Officer managing the end-to-end experience makes sense.
Great thanks to John Goodman for the exclusive interview, if you are interested in finding out more about Voice of Customer, Six Sigma in marketing and how this can help your business telephone: +(001) 703 284 9253 for further information.
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