Technological advances in ERP and CRM systems have nearly eliminated guesswork and provided unprecedented muscle to operations.
But one thing technology can’t do is read customers’ minds. The good news, though, is that if you know where to look, there’s no magic needed. You can use voice of the customer (VoC) analytics within the right ERP system to find out what customers want and make sure your company is the one to give it to them.
Why Listen for the Voice of the Customer?
There’s no debate as to the value of quantitative data analytics. Without it, you wouldn’t know – or be able to share with stakeholders – exactly what is happening with your company when it comes to metrics like revenue, profit margin, or even click-throughs on online ads.
“While there’s no doubt that quantitative analysis can play a powerful role in telling you what happens, even the most robust, granular data won’t tell you why something happens,” says Drew Calvert in Insights, a blog from the Kellogg School of Management at Northwestern University.
That’s where more qualitative data such as VoC analytics comes in.
If you are a SaaS company, for example, quantitative data analytics can tell you how many customers canceled their subscriptions to your graphic design software in a given month. VoC analytics can tell you why those customers canceled.
It could be that a percentage of subscribers had been working as freelance graphic designers and, amid the tight labor market, were offered full-time employment opportunities that were too good to pass up. There’s little point in pouring time and money into pursuing customers who no longer have a use for your product.
On the other hand, VoC analytics might tell you that a number of customers canceled because they felt the price of the software was too high or because they found another graphic design software with more robust features. In these cases, it might be worth exploring pricing adjustments or the addition of new capabilities.
Where Can You Find the Voice of the Customer?
Data for VoC analytics can be gathered in three main ways, according to Gartner:
- Direct: Solicited feedback, such as surveys or focus groups, that the customer provides with the knowledge that the company is listening.
- Indirect: Feedback in which “the customer is speaking about the organization but not necessarily to the organization.” This can include social media posts, online reviews, and direct communications such as emails to customer service on a subject unrelated to solicited feedback.
- Inferred: Operational, behavioral and transactional data associated with a customer experience, such as website clickstream data, purchase history or contact center data that can be extracted from your ERP system.
In recent years, Artificial Intelligence (AI) has played a role in obtaining VoC data, specifically in the areas of indirect or inferred feedback. AI can be used for VoC analytics-related tasks such as mining text for terms indicative of consumer sentiment and for analyzing how upsell and cross-sell attempts are perceived. Ahead of 2021, Forrester predicted that firms would shift 10% of their customer insights budgets toward the previously uncharted frontier of emotions analytics.
Netflix: VoC Done Right – and Wrong
Streaming giant Netflix provides both a shining example of a company that has woven analytics into the fabric of its operations with great success and a cautionary tale of a company that once failed spectacularly in the VoC analytics realm.
Netflix uses extensive amounts of viewer data – demographics, amount of time users spend scrolling the main page, when they pause, fast-forward and rewind content – to provide a highly-personalized experience for each user and to inform the company’s content decisions. VoC analytics also plays a role, with users asked to rate content at various points in their viewing experience.
As a result, according to Entrepreneur, the company boasts a 93% success rate on new content.
Perhaps the enterprise has learned from past mistakes. In 2011, it lost 800,000 subscribers upon word that it would split its DVD rental and streaming businesses. At the time, VentureBeat attributed this to the company’s failure to heed both direct and indirect feedback.
“All it really had to do was review over 11,000 mostly negative comments on the company’s initial blog post about the announcement and/or check social networks like Twitter and Facebook,” the transformative tech site said.
Netflix ultimately walked back its decision, but the reputational and financial damage was already done.
While VentureBeat’s piece doesn’t speculate as to how such a “wildly unpopular” decision came to be made, there’s enough available technology to avoid similar scenarios. VoC analytics tools are an integral part of the equation. Also necessary is an ERP system that provides organization-wide visibility so the data reaches the right hands.
What’s the Best Way to Utilize VoC Analytics?
When it comes to VoC analytics, as with any other type of data analytics, simply gathering and interpreting data is not enough. It must be combined with decision-making followed closely by tangible action.
That process starts before you even begin collecting data, says an Insights post featuring Kellogg School of Management faculty member Florian Zettelmeyer.
“Too often, Zettelmeyer says, managers collect data without knowing how they will use it,” the post reads. “Like all scientific inquiries, analytics needs to start with a question or problem in mind.” Once collected, the VoC analytics information must be put into the hands of people who can use it to move the enterprise forward.
According to EY’s Robert Holston, companies that win at data analytics have “paid full attention to the capabilities that enable people in their organization to actually use those analytics.”
This entails not only identifying analytics experts and embedding them in key roles throughout the organization, Holston says, but also building the skills of those who are not analytics experts so that they, too, can use data to drive value.
“By developing a culture that puts analytics at the heart of everyday business operations, companies can achieve the balance they need” between the technological element and the human element, Holston says. In other words, businesses must balance the science of data gathering with the art of decision-making.
Why Crestwood?
At Crestwood Associates, we have been advising clients in a range of industries for more than 20 years. Through over 5,000 ERP implementations all over the globe, we’ve learned how to help companies like yours avoid pitfalls and achieve success.
- We have a strong and deep team to support the complexity of an ERP implementation.
- We have experts in various avenues who can help solve problems on complex projects.
- We do not outsource any aspect of the project, saving time and money.
We help key stakeholders select technology solutions that will have the greatest impact on your business goals by reviewing your system and processes. Contact us today for an ERP Discover and Advise Consultation Request.
