To listen effectively, avoid the qualiquantification trap

Measuring expenditure on listening to customers should be standard practice for any marketing team, health as answered in my previous post.  But not all listening is equally effective in improving customers’ experiences.  Listening is shaped by the questions we ask and the questions businesses want answered typically fall into three categories:

  • How valuable is a customer or group of customers to us?
  • How can we improve the service we provide to customers?
  • How well are we doing with customers?

All three are important, prostate so a balanced approach is required.  But frequently the distinctions are ignored and too much investment is made in one to the detriment of investment in the others.

The first question promotes what might be termed selfish listening – the mindset it reflects is ‘what’s in it for us?’  Its aim is to help a business allocate resources to where they will obtain the best return.  This category would include expenditure on ascertaining which markets, segments and customers are most attractive for the business to serve, such as market research into the size, growth, profitability of particular geographies or segments.  It would also include expenditures on analyses of customer profitability and life time value.

This type of listening provides little if any benefit to customers.  It may result in some customers – the more financially attractive – receiving more attention.  Equally the least financially attractive will experience a reduction in service levels.  Calling it selfish listening is not intended to demean it, merely describe it accurately.  All business relationships involve conflict between what is in the business’ best interests and what would deliver greatest value to customers – most directly with regard to price – and managing that trade-off successfully is critical.  Overemphasis on the business’ interests will result in a declining customer base.  Insufficient emphasis will result in lots of customers but not much profit.  If all listening is selfish, profitability in the short term may improve but the long term ability to serve customers is diminished.

The second question is a prompt for service listening, the most important form of listening for generating revenue growth.  It encompasses all efforts to understand customers’ needs – both stated and tacit – so the products and services provided can be improved.  This should benefit both company and customers, better understanding of needs resulting in a better experience for customers and increased revenue for the business.

Into this category comes expenditure on different types of research into what customers find valuable such as surveys, focus groups and observation by user-centric design experts.  It also includes investments made in analysis to better understand customer needs through mining transaction, interaction and social media data.  Finally aspects of competitor research – understanding which doing well and why – can also be characterized as service listening.

The other aspect of competitive intelligence – benchmarking performance against competitors – is scoring listening which is prompted by the third question: ‘how well are we doing?’  Expenditure on scoring listening includes investment in systems to determine performance on the key customer outcomes – acquisition, retention and growth – and the key internal metrics identified as driving those results: number of leads generated, lead conversion ratio, timeliness of deliveries, completeness of deliveries, the number of complaints, the frequency of first time query resolution, average resolution time, etc.  The compound effect of this performance is also measured in the annual customer satisfaction score – for many businesses the sum total of the customer research that they do.

Customer satisfaction research frequently falls into the qualiquantification trap – translating qualitative information into quantitative data to enable analysis and graphical display, a process which destroys the valuable insights on how to improve.  In part this stems from a desire to capture the maximum amount of data in the limited interview time that is typically available and it is quicker to collect scores than insights.  But to be valuable – i.e. provide a-ha insights – customer research needs to include a feedback loop by collecting qualitative insights that explain performance. Quantitative data will explain ‘what’ happened but can never ‘why’ something happened.  Far better to ask for one score on one critical dimension and an explanation of why that score has been given than ask for ten scores that will never properly be explained.  Taken on its own, quantitative data resembles Shakespeare’s description of alcohol.  “It provokes, and unprovokes; it provokes the desire, but it takes away the performance.”  Customer satisfaction scores reveal a need to do better without necessarily explaining how.

Any business that takes what its customers want seriously needs to understand how it is allocating its listening spend between the three categories.  Calculating a marketing talk-listen ratio is a start, but understanding the composition of listening expenditures is also critical to improving your customers’ experiences.

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About Jack Springman

I am a consultant with experience in business strategy and customer strategy development, customer management and customer service transformation.

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