Your Customers Are Talking, But Are You Listening?

CUSTOMER LOYALTY Your Customers Are Talking, But Are You Listening? by Russ Westcott I n our competitive environment, it is critical to listen for and hear the many voices of the customer (VoC). Most companies have no process to actively listen to customers, record what they ve heard, and analyze, disseminate and act on the information. The listen, collect, analyze, learn, improve (LCALI) 1 In 50 Words Or Less Most organizations don t actively listen to what customers are saying. Without training employees to listen for and take action on the voice of the customer, organizations open the door to competitors. The listen, collect, analyze, learn, improve process can help organizations gather and act on customers comments. process can help any organization capture pertinent customer data for analysis and action. In Moments of Truth, Jan Carlzon, then president of Scandinavian Airlines, wrote about the often unrecognized opportunities all employees have for gathering customer information. 2 Karl Albrecht further defined the moment of truth as any episode in which the customer comes in contact with any aspect of the organization and gets an impression of the quality of its service. A moment of truth is typically neither positive nor negative in and of itself. It is the outcome that counts. 3 Without training employees to listen for and take action on the VoC, your organization has no early warning system. If you don t have a measure of how satisfied your customers are, you are leaving the door open to the competition. Investigating reasons for returned product is only a small part of the picture. Early Warning Signs Though a customer s offhand remark to a sales or delivery person can appear insignificant, these comments can alert you to a potential problem before it turns into a formal complaint. A call from your customer s engineer to your engineer to clarify specifications, for example, can indicate present 22 I FEBRUARY 2006 I www.asq.org

or potential shortcomings in clearly identifying customer requirements. Scattered remarks from your customer s employees to different people at different levels and functions in your organization can, when collected and analyzed, form a pattern that points to needed preventive action. Earl Naumann says, A firm that has no customer satisfaction program and no interest in starting one should be the delight of the firm s competitors. 4 To capture these early warning indicators, combine the concept of moments of truth with the development of listening posts by taking the following steps: 1. Through training, build awareness of the need to gather all tidbits of information from your customers personnel, either directly or indirectly (a third party passes on what he or she heard). Every employee at your company should become an informal field listener on the job and in the community. 2. Develop a system to feed information to a central collecting place for analysis, correlation and dissemination. Designate people to take action and follow up. 3. Train personnel who have frequent direct customer contact to actively listen to the VoC and feed information back through the system. Tom Peters says, Use every listening post you can find.... Too few people, at too few levels, in too few functions, listen too little and too late and ignore what they hear too often, and act too late. 5 4. Create incentives for employees to communicate customer complaints so the same complaints can be avoided in the future. Caution: Performance awards for decreasing the number of complaints can encourage cover-up. Instead, provide incentives for increasing client satisfaction. Instill in employees the value that a complaint, while often viewed as undesirable, can trigger an opportunity for improvement and a chance to demonstrate a commitment to excellence. 5. Make the review of the VoC part of your quality management system s management review process. By capturing the VoC, your organization will create much more than a complaint management system. VoC can include customers suggestions, their dissatisfaction with a product or service, how they feel they were treated, their perception of quality, what they would like in future products or services, or their expressions of satisfaction. Naumann says, Corporate culture must evolve QUALITY PROGRESS I FEBRUARY 2006 I 23

CUSTOMER LOYALTY almost to the point where there is a pervasive fear of losing contact with customers. 6 A firm that has no customer satisfaction program and no interest in starting one should be the delight of the firm s competitors. The LCALI Process Before your organization begins the process to capture, analyze and act on the VoC, it must create awareness. Use orientation programs, training, unit meetings, continual reminders from management and positive reinforcement to make all employees aware of the value of listening for and reporting customer related comments, regardless of the message. Employees are your field listeners. Listen: Every employee, regardless of organizational level or function, is a frontline intelligence gatherer. A casual comment made to your truck driver, a discussion overheard in a restaurant or supermarket, and a complaint made by a caller to an inside clerical employee are all valuable inputs to the customer information system. Listening posts are designated employees who have consistent contact with your customers. They are the official deputies for funneling into the system the data they and the field listeners collect. Every employee needs to know who is a listening post and how he or she can be contacted. Collect: It s easy for field listeners to report VoCs to designated listening posts because comments, opinions, suggestions, accolades or complaints are reported without embellishment or quoted verbatim. Employees request customers names and contact information, when possible, and note the context or situation where and when the comment was heard. Listening posts collect and formally input data to a customer information system coordinator (CISC) on an established frequency, using a customer contact record (CCR) (see Figure 1). The CISC records each customer contact record in a customer contact log, which includes: Date logged. CCR number and date of record. Field listener s name and phone number. Listening post s name and phone number. Customer s name and phone number. Triage code. Person assigned for action, date assigned and date of follow-up. Additional follow-up dates. Closeout code, date and name. Analyze: If a field listener or listening post receives data that require immediate action, the listening post is authorized to initiate an immediate corrective action. This includes data reported in the CCR. The corrective action and CCR are appropriately cross referenced. The CISC analyzes accumulated CCRs to determine the frequency of each type of comment and identify problem patterns. The CISC prepares a summary of the information for review at the next quality steering committee meeting or management review. The summary should show a rolling three- or six-month trend and include the CISC s recommended actions. Learn: When the trend analysis indicates a negative pattern, the CISC initiates a preventive action request to improve the quality management system to eliminate these potential problem areas. In addition to the follow-up required by the preventive action process, the CISC is notified of the outcome of the preventive action. The CISC provides feedback and reinforcement to the listening posts and the listening posts to their field listeners, the contributors. In certain cases, a customer is informed of the action being taken. Improve: Procedures and processes are often changed as a result of preventive actions. The customer data gathering process is also continually reviewed, reinforced and strengthened. One Organization s Experience This example comes from an engineering consulting firm that provides structural design services and conducts field inspections of facilities. The firm is organized on a project basis, and multiple projects, each managed by a project manager, are under way at any one time. The firm s engineering, legal 24 I FEBRUARY 2006 I www.asq.org

FIGURE 1 Customer Contact Record (CCR) CCR number: A. Identification Contact from: Person s name: Title: Customer or client number: Location: Phone: Customer or client s name: Fax: Address: E-mail: City: State/province: Country: Field listener Name: Position: Department/location: Mail stop: Phone: Supervisor s name: Title: B. Context, situation or place of contact Complaint Compliment General observation: What: Letter: Date: Phone call: Date: Face-to-face: Date: Other: Date: Describe context in greater detail if other is checked: C. Quote or best recollection of words from customer or client and nature of the contact Related to specific order or product: Order number: Date: Product: Related to specific representative of this organization: Who: Date: Record words used by customer or client contact. If a direct quote, use quotation marks: Provide any details that will make the understanding of the customer or client s perspective clear to persons reading this CCR. Note if customer/client specifically requested notification of resolution or other feedback. Use back of form, if needed: Field listener s commentary (viewpoint, opinion, interpretation): D. Action activity Triage: Action needed now (corrective action) Investigate further (preventive action) Watch trend Action assigned to: Name: Location: Phone: Date: Follow-up: How: Date: Date: Date: Date: Status reports: How: Date: Date: Date: Date : E. Resolution and closeout State how problem or question was resolved: By whom: Date: Corrective action number: Preventive action number: Returned material authorization number: Other: Procedure or work instruction affected: Date to be changed: By whom: Forms or computer programs affected: Date to be changed: By whom: Status or feedback to be provided: How: To whom: By whom: By date: Closeout code: Closed by (please print): Signature: Date: QUALITY PROGRESS I FEBRUARY 2006 I 25

CUSTOMER LOYALTY The LCALI Process in Action Here are two examples of how different companies used the LCALI process to effectively listen to their customers. Electric utility company: An urban electric utility maintained a staff of experienced representatives whose duties included visiting major customers. During these monthly visits, the reps reviewed the account status with the customers, discussed any problems or complaints and evaluated any corrective or preventive actions recently taken. At one such meeting with one of the utility s top 10 customers, the rep detected the customer contact s negative attitude and asked if everything was all right. To the rep s surprise, the customer contact unloaded his personal concerns about the pending sale of his company and his potential job loss. The rep, as a field listener, quickly passed the information on to the designated listening post. This triggered notification to the appropriate utility company executives, who met with the CEO of the customer s organization. This heretofore unknown news would impact contracts, electric power production and distribution and many other areas of the utility. Fortunately, the field listener and listening post s proactive actions helped the utility assist the customer in transitioning to new ownership. Substantial cost savings and the ability to provide timely help to the customer were also possible because of the early warning. Pharmaceutical company: A pharmaceutical company s truck driver heard from a customer s receiving clerk that the customer s warehousing supervisor was upset because the product came in already shrink-wrapped. The slow moving product stored on unopened, shrink-wrapped pallets developed condensation, which caused some of the product to become unusable. The warehouse supervisor hadn t complained to anyone in his company because he didn t want to cause a problem. Lately, however, he had been criticized about the amount of product scrapped before its expiration date. So he casually griped to the receiving clerk, who passed on the gripe to the truck driver. The truck driver, having been trained as a field listener, duly recorded the information he heard and turned it over to the listening post at the pharmaceutical company. The listening post officially informed the shipping department of the problem by initiating a corrective action request. She also reported the comment to the person in charge of analyzing such comments. That person discovered similar comments had been made and initiated a preventive action request to review the packaging procedure. He informed the customer s sales rep so she could tell the customer the potential problem had been noted and action was being taken. He also updated the listening post and the truck driver s supervisor. 1 REFERENCE 1. Adapted from The Certified Manager of Quality/Organizational Excellence Handbook, third edition, edited by Russell T. Westcott (ASQ Quality Press, 2006). 26 I FEBRUARY 2006 I www.asq.org

and administrative resources are allocated according to project needs. Nearly everyone in the firm is, at one time or another, in contact with personnel in client organizations. Prior to implementing its ISO 9001 quality management system, the firm had no formal process for gathering client data and, therefore, no formal way to correlate data from multiple sources to evaluate needs for preventive action. A loss of nearly $1 million in revenue due to data not reaching the firm s management in time for action punctuated its need for the LCALI process. Now that the process has been implemented, each project manager serves as a listening post who accumulates and reports positive and negative data received from his or her assigned personnel, the field listeners. Even when an immediate action is required, the listening posts funnel all their CCRs through a CISC (one of the firm s VPs) who trends the data, reports on the trends and initiates preventive actions resulting from the quarterly management review. A number of positive reports have even been funneled through the system, enabling management to provide an increased level of positive reinforcement to the persons or project teams responsible for the customers satisfaction. For more examples, see sidebar The LCALI Process in Action. Why Bother? There are myriad reasons it pays to know what s on your customers minds: Customer retention: Wouldn t you like to know and fix a developing situation before it results in a lost customer? Customer satisfaction: Wouldn t it be beneficial to have a methodology for gathering and processing customer feedback, a process that will enable your organization to obtain and retain a leading position in the marketplace? And wouldn t it be better to not have to rely entirely on informal hearsay and surveys with their low response rates? Employee satisfaction: Wouldn t it be useful to be able to directly reinforce your organization s customer focus through measurements, feedback and positive reinforcement of your responsible employees? Quality management system requirements: Wouldn t it be nice to implement, as part of ISO 9000 s preventive action requirement, a customer data collection, analysis, measurement and reporting process that fully meets the intent of the standard? Cost avoidance: Wouldn t it be a decided advantage to know you have the best possible approach to avoiding costly mistakes that could result from failure to hear the voices of your customers? The message is clear: Much can be done to improve an organization s ability to really listen to the many voices of its customers. Make sure your organization heeds the message. REFERENCES 1. LCALI 2001, R.T. Westcott & Associates. 2. Jan Carlzon, Moments of Truth, Harper Business, 1987. 3. Karl Albrecht, At America s Service, Warner Books, 1992. 4. Earl Naumann, Creating Customer Value: The Path to Sustainable Competitive Advantage, ASQ Quality Press, 1995. 5. Tom Peters, Thriving on Chaos, Alfred A. Knopf, 1988. 6. Naumann, Creating Customer Value, see reference 4. RUSS WESTCOTT, president of R.T. Westcott & Associates, Old Saybrook, CT, guides clients in strategic planning, implementing and obtaining registration of quality management systems, applying for Baldrige-type awards and applying management concepts such as lean manufacturing and benchmarking. He is a Fellow of ASQ, a certified quality auditor and manager of quality/organizational excellence, a certified manager of quality/organizational excellence refresher course instructor and speaker on quality topics. Westcott is the editor of the Certified Manager of Quality/Organizational Excellence Handbook, third edition (ASQ Quality Press, 2006). Please comment If you would like to comment on this article, please post your remarks on the Quality Progress Discussion Board at www.asq.org, or e-mail them to editor@asq.org. QUALITY PROGRESS I FEBRUARY 2006 I 27