Voice of the Customer for Recurring Revenue
Most people agree that focusing on customers is crucial for lasting growth. However, only a few believe they are doing it well, if at all. Intentional repeat customer businesses (think: subscription, membership, loyalty) are more connected to their customers by default, but not necessarily by design.
We’ve found there are common barriers to overcome, continuing with this series we’ll dig into the fifth item below and tackle the rest in future newsletters…
Building a Common Understanding - Clarify what real customer centricity entails across the organization.
Incorporating Employee Experience - Your people create your customer experiences, make it good for them to make it better for customers.
Breaking Down Silos - Enable collaboration on customer journeys across teams. Share insights cross-functionally.
Rethinking Metrics - Incentives and KPIs need to align to customer retention and lifetime value, not just short-term revenue.
Long(er)-Term Mindsets - Resist pressure to over-optimize for immediate revenue at the cost of CX.
Closing the Feedback Loop - Act on robust voice of customer programs and inform strategy discussions.
Accountability and Consistency - Set customer-centric goals and track them. Audit practices across the organization.
Power from the people
On a recent Lex Fridman podcast episode, Jeff Bezos shared his belief in anecdotes over data when the two conflict. An interesting statement from a man who pioneered much of today’s data-driven management doctrine.
Data-dependancy has its pitfalls, being a proxy representation for IRL experiences at scale, it’s actually quite easy for the data to mislead. Jeff’s point here is that the voice of the customer is the appropriate checks and balances to the dashboard report.
I’ll go a step further and say that the voice of the customer, and qualitative customer insights generally, are an asymmetric opportunity in business right now. Far more than a check and balances to quant data, it’s the most tangible way to create loyalty & advocacy above and beyond the alternatives in the market. And with AI intermediation on the horizon, it’s a now-or-never moment for many consumer products.
Quant is manageable and controllable. It’s about getting as close as possible to binary interpretations of good and bad, yes and no, more and less, by eliminating the messy middle, the grey area of nuance. On the other hand, understanding people is all about the messy middle — the complexities that make up our emotions which dictate our actions (that are later justified with the evidence that’s most confirming).
Peter Fader of Wharton and leading expert on customer centricity points out:
Nearly every company on the planet is product centric. You look at their organizational chart, and it’s broken up by different kinds of products. You look at the incentives. You look at the language they use. You look at the performance metrics that they rely on. It’s all based on different kinds of products. The whole business model is based on producing something or a set of somethings in really high volumes and at really low costs, and that’s going to drop to the bottom line.
That’s more or less business as usual. I’m not suggesting that it’s easy, and I’m not suggesting that it’s going away tomorrow. But I am suggesting that there are alternatives. If you organize the company around different types of customers and have customer segment managers who are just as powerful as today’s product managers are — giving them the right incentives and the right resources and tools — that can actually be a more profitable way for many companies to go to market.
💜 Empathy & 🐪 Adaptability
Through many market cycles up and down, and from new product launches to mature product optimization, what we’ve learned is that sustainable growth boils down to two priorities and how well they’re practiced - empathy & adaptability.
Empathy is truly working to understand your customers by their discrete differences, and the ways you can improve their lives with your product. Without customer empathy, it's difficult to build and maintain customer loyalty.
Adaptability isn’t responding to change, but constantly testing variations that allow you to thrive in the face of change — be it customer behaviors attitudes, or market conditions. Without business adaptability, consumer products can quickly become irrelevant.
So what does a good empathy program look like?
Executive Buy-In and Support: VoC programs require support from the top levels of the organization to be truly effective. This includes not just budgetary support but also a commitment to a customer-centric culture.
Aligned metrics: Start with ensuring that you’re planning to measure things that represent success for both the customer and the business
Set up for the long-term: Measure consistently over time for the ability to keep pace with customer sentiments as your adaptations are implemented and evaluated
Employee-driven: When employees and customers collaborate, the success is much more sustainable
Closing the loop: Engage with customers where they speak out, whether in private CS channels or public forums, don’t just be a wall-flower.
Actionable Insights: Go beyond analysis to derive actionable insights and develop hypotheses for optimization.
Thankfully, it’s cheaper and easier to gather customer insights than ever before, the challenge is redirecting a portion of ongoing investments in quant dashboards by demonstrating the advantages of such an effort.
This approach helps organizations prioritize the customer goals and ensure alignment between the customer and the business. It provides a repeat-customer-centric perspective to transition from organization-centric silos to valuable customer-centric outcomes that build more sustainable businesses.
