How good are your Voice of Customer (VOC) targets?
Customer satisfaction management has long been a strategic imperative for many firms. Your company may be heavily invested in Voice of Customer (VOC) survey programs that track customer sentiment at multiple touchpoints of the customer’s journey. Realising that improving the customer experience has a direct impact on customer loyalty and advocacy, which in turn drives ROI, most firms today have moved beyond simply measuring customer satisfaction to leveraging insights that directly inform strategic planning.
Given the impact of improving the customer experience on the bottom line, VOC targets are typically an integral component of corporate performance dashboards, and often included in employee bonus and compensation plans as well. Including measurable VOC targets directly in strategic planning provides many benefits:
- It instills a customer-focused mindset
- It motivates employees to prioritise impactful initiatives
- It rewards actions that improve the bottom line
- Having measurable objectives ensures accountability
At the extreme, poor target-setting can result in mis-aligned resource allocation and demoralised employees
A data-driven approach to target setting
It is easy to be lulled into setting targets that rely heavily on subjective judgment. Often it seems easier to simplify the process by taking this year’s performance as a baseline and surmising that “adding 1-2 points” to next year’s target seems sensible. Facing pressure to improve short-term performance, senior executives often push for aggressive targets that are not realistic considering their firm’s current business environment, resources, or capabilities. On the flip side, managers and employees who are compensated for reaching objectives often lobby for targets that are too conservative and don’t require thinking outside the box or challenging the status quo.
How can you assess how effective your targets are? Your company may be employing a judgment-based approach if you find it difficult to articulate the rationale behind the targets selected.
Setting targets that are objective, challenging yet achievable, and easy to explain might seem like an insurmountable task. However, objective statistically based approaches to target setting exist that are not unduly difficult to implement and are far more defensible to senior management and employees alike.
Data-driven target setting
- Ties directly to ROI or bottom line corporate objectives
- Adjusts as needed to account for mitigating factors such as changes to your VOC survey or method, shifts in customer profiles or product mix, or seasonality
- Establishes thresholds that correspond to statistically significant change, differentiating “true” improvement from random variability
- Incorporates a long-term planning horizon that connects annual goals to 3 or 5 -year strategic planning cycles
Targets that fit these criteria are far more likely to garner the buy-innecessary to motivate employees to stretch enough to meet your company’s strategic objectives. Beyond these fundamentals, the ultimate value your company will derive from establishing targets increases exponentially when the target-setting process incorporates linkages across VOC metrics and organisation levels, competitive positioning goals, and a mechanism for making midcourse adjustments to ensure that annual goals can be met.
Key implications - a roadmap for success
While successful target setting considers business implications such as the organisational culture, investment initiatives, and the competitive climate (e.g. stable, disruptive, new entries), it remains fundamentally a data-driven process. This article has outlined key tenets of the roadmap for target-setting success:
Once you have determined your overall VOC measure for target-setting and established the time horizon:
- Establish a corporate target for overall VOC measure - how can strategic target-setting help achieve best-in-class industry performance?
- Link the corporate target to business units and KPIs - how should targets be set for each operating unit?
- Track performance to targets - when is it time to re-assess your target?
Today’s challenge – both for those tasked with developing corporate targets and those who rely on them for strategic planning – is to establish actionable, data-driven targets that will be championed by employees at all levels of the corporation. Investing the time to develop robust, defensible VOC targets will have a huge pay-off to your company. It will direct attention to improving the customer experience and ‘rally the troops’ around challenging, yet achievable goals that drive the right business initiatives and optimise bottom-line results.
[WEBINAR] Innovation through the consumer lens
November 12 - Even established financial brands are at risk of losing influence and market share as innovative new entrants begin to inspire and occupy the attention of consumers. So, what is it that is appealing to consumers, and why aren’t we listening to them more?