Capturing & Using Customer Insights

1. The GBC Presents… Capturing & Using Customer Insights

2. Study Overview Every company must answer the question: “How can we use customer insights to drive improvements, growth and profits?” This study probes how to benefit from customer insights through the following: Study Objectives Key Topic Areas • Listening Post Use & Competencies • Most Valuable Listening Posts & Types of Information • Tracking Improvements • Success Stories • Using Listening Posts; • Collecting Different Types of Information; & • Integrating Customer Insights

3. Key Definitions Benchmark partners answered the survey based on the following definition of a listening post and what it means to be highly skilled. • LISTENING POST: a specific channel or touch point where a company formally captures customer insights & feedback. • HIGHLY SKILLED: employ formal listening mechanisms to regularly capture and use feedback to improve the business

4. Benchmark Class 57 benchmark partners responded to this benchmark survey. About one half participated from the perspective of their whole company. The remaining (shown with *) participated on behalf of a group/department. • Eastman Kodak^*: Digital & • AppliedImaging • Eastman Kodak^*: Health Imaging • Euro RSCG Life Worldwide • ExxonMobil Chemical • Fletcher Wood Panels • Florida Department of Revenue • Florida Power & Light^ • Gap Inc*: Customer Services • Gaurdian Life Insurance*: Group Profit Center • Glanbia*: Nore Freeze Ltd • Guangzhou Esso Petroleum • Service Co.*: Customer Service • 3M Thailand Limited*: TelecomMarket • Aliant • Almacenes Exito, S.A.*: Marketing/CS • Appleseed's, Inc • Aspect Medical Systems*: Marketing • AXA PPP Healthcare*: Services • Blue Cross Blue Shield of NC • Carlson Wagonlit Travel* • Celanese (Chemicals)*: Marketing • Celanese Acetate*: CustomerService • Deluxe Financial Services*: Marketing • Drake Beam Morin • DSM Pharmaceuticals^ • Durable Value Marketing • Durham Convention & Visitor Bureau ^Also GBC Member Company

5. Benchmark Class (continued) • This represented 16 core business/industry areas. Respondents represent companies from nine countries in 23 industries. • Ontario Lottery and Gaming Corp.*: Lottery Business Unit • P.J. Wallbank Manufacturing Co. Ltd. • Precision Fabrics Group • Public Service Enterprise Group^ • Raytheon^ • Raleigh-Durham Airport Authority • Republic Windows & Doors • Revcor (Manufacturing): Marketing • Rock-Tenn Co. (packaging)*: Laminated Paperboard Division • Shell Chemical*: Solvents Business • Siemens ICN*: Enterprise Networks • Smith & Nephew (Healthcare)*: Wound Management • Sundaram Industries • Thermo Electron*: Scientific Instruments • Trammell Crow Company^ • Texas Instruments, Inc^*: Semiconductor Division • Hewlett-Packard^*: Strategy and Planning • Hollister (Healthcare) • ICICI Onesource (Financial) • IIRC (Internet Recruiting) • Johnson & Johnson Health • Care Systems Inc^*: Customer • Support • Landstar System, Inc. • Levolor Kirsch • LI-COR Biosciences • Lucent*: Services • MAMSI (Insurance)*: Southern Region • Medtronic*: Neurological • Modine Manufacturing • Nabi Biopharmaceuticals • Nationwide Insurance^ ^Also GBC Member Company

6. Global Perspectives on Customer Insights From Canada to New Zealand, benchmark leaders – primarily managers and directors -- hailed from nine countries on five continents. Europe: UK (2) & Ireland (1), Netherlands (1), & Germany (3) Canada (2) United States (46) India (2) & Thailand (1) Columbia (1) New Zealand (1)

7. Customer Insight Experts Over half of all respondents were in marketing and customer service. Job titles in these areas include Services Marketing Director, Manager of Customer Satisfaction, Director of Marketing Communications, Manager for Marketing Intelligence, Call Center Director and more. Strategy or Planning 4% Quality Process 11% Marketing Other 35% 12% 12% General or Business Operations 26% Customer Service

8. Benchmark Industries & Functions Benchmark partners were in 23 industries, with almost half in health products & services, manufacturing, diversified services & chemical. Telecommunications Retail Leisure 5% 5% Consumer Products Other 5% 33% 5% Chemicals 9% 10% Diversified Services 17% 10% Health Products & Services Manufacturing

9. Key Findings Key findings in each of the three study areas emerged from the survey data analysis. • I. Listening Posts: Customer service/call centers, field sales & account management are viewed as the most valuable listening posts. However, only 30-40% of respondents consider themselves skilled or highly skilled in these areas. Respondents also highly value satisfaction surveys. • II. Information Types: Customer satisfaction, complaints, problems and new product or feature ideas are viewed as the most valuable types of information to collect. However, only 39-55% consider themselves skilled or highly skilled in these areas. Respondents also value business needs. • III. Integrating Customer Insights: Successful companies secure buy-in to make customer-based decisions and design central databases to collect and report the aggregated results.

10. I. Listening Posts Categories along the Customer Path Companies can choose to listen to customers at several touch points along their customer path or lifecycle. An approximate order is below. Sales: Field, Store, Call Center, & Internet Marketing: Advertising & Communication Installation & Registration Billing & Collections Customer Service & Account Management Returns, Repairs & Maintenance Renewal & Repurchase

11. Marketing Communications: Listening Post Use & Competence Ratings Marketing is the most frequently used listening post, but only 11% consider themselves highly skilled at capturing & using insights from this channel. More rate themselves below rather than above competent. Marketing Communications 96% Use Less than Competent More than Competent 31% 36% 11% 25% 20% 11% Novice Learning Skilled Highly Skilled *Excludes Competent %

12. Marketing: Value as a Listening Post When asked what their top listening posts were and why, the most respondents (53) indicated various marketing tools. Of these, satisfaction surveys are a cornerstone for collecting customer insights. • All Marketing Tools (53), including: • Customer Satisfaction Surveys (24) • Transactional Surveys (6) • Customer Feedback • or Advisory Panels (6) • Observation (like mystery shopping) (4) • Market research (3) • One-on-one Interviews (3) • Trade shows/conferences (3) • Focus/user groups (3) • Reasons for Valuing: • Surveys: “Anonymous,” “standardized,” & “cover our client base.” • Transactional Surveys: “…can provide timely, measurable feedback on our performance.” • Customer Panels: “We have a quarterly meeting with our senior management and the senior management of our key accounts. This is valuable because they are all in one room at one time.”

13. Sales: Listening Post Use The vast majority of companies listen to customers through field sales. About half listen through call center or Internet sales, and only one in four gather customer insights through the store sales channel. Percent Using as Listening Post Field Sales 88% 57% Call Center Sales Internet Sales 51% Store Sales 25%

14. Sales: Competence Ratings Companies are most skilled at listening through field and store sales. Over twice as many are less than competent compared with more than competent in call center sales listening. Internet sales listening has the greatest room for growth. Less than Competent More than Competent 30% 34% Field Sales 24% 20% 10% 10% 28% Store Sales 50% 14% 36% 14% 14% Call Center Sales 18% 47% 38% 9% 9% 9% Internet Sales 14% 59% 41% 28% 14% Novice Learning Skilled Highly Skilled *Excludes Competent %

15. Sales: Value as a Listening Post Field sales wins strong favor over the other sales channels as a valuable listening post. Only a few respondents indicated that other sales channels are a top listening post. • All of Sales Channels (26), including: • Field sales (15) • During bid/proposal process (3) • Field staff (3) • Sales (3) • Store sales (2) • Reasons for Valuing: • Field Sales: “..are in daily contact with customers. Their in-person contact allows for ‘show and tell’ to understand client needs.” • “Field-initiated interviews with key customers stimulate beneficial discussion and reinforce the customer relationship.”

16. Customer Service & Account Management: Use as a Listening Post About 80% or more of companies listen to customers through account management and customer service, while only two-thirds have found formal ways to listen through Internet customer service. Percent Using as Listening Post Account Management 91% Field Customer Service 82% Call Center Customer Service 79% Internet Customer Service 66%

17. Customer Service & Account Management: Competence Ratings Longer-term relationships matter for listening. Companies were much more highly skilled in collecting customer insights in account manage- ment (18%) than call center & field customer service than Internet customer service -- where about two-thirds of companies were below competent. Less than Competent More than Competent 2% Account 40% 31% 22% 18% 29% Management 4% Call Center 38% 33% CusterService 27% 11% 29% Field 6% 32% CustomerService 37% 28% 9% 26% Internet 65% 19% 30% 35% 19% CustomerService Novice Learning Skilled Highly Skilled *Excludes Competent %

18. Customer Service/Account Management: Value as Listening Posts Customer service/call centers is second only to all marketing channels in its perceived value as a critical listening post. Account management is viewed as the fourth most valuable – after field sales. • Customer Service/Call Center (27) • Call center (11) • Call center customer service (9) • Customer service (3)/Field (4)/ Internet (1) Account Management (12) • Reasons for Valuing: • Call Center: “…handles 99% of customer contact.” “They capture feedback by customers in a database.” • Field Customer Service: “…is our first line of direct visibility to recurring quality problems.” “We can learn about customers’ use of products to resolve problems & identify new applications.” • Account Management: “… is a key tool in gathering insights across • a client company & developing strong ongoing relationships.”

19. Most Valued Listening Posts When respondents were asked, “What are your top three channels or listening posts for gaining valuable customer information?” – they revealed large differences in the perceived value of each listening post, channel, or tool. Half of the most valuable posts are in marketing. Number Valuing Each Listening Post Customer Service/Call Center 27 Customer Satisfaction Surveys* 24 Field Sales 15 Account Management 12 Transactional Surveys* 6 Customer Feedback/Panels* 6 *= Marketing Tools Exit or Post Mortem Interviews 4 Observation (mystery shopping)* 4

20. II. Types of Customer Information Benchmark partners evaluated how well they capture and use 12 types of customer information, which fall into five categories below. • New Features Desired • Recommendations NEW PRODUCT/ SERVICES • Process Errors • Product/Service Problems • Competitor • Observations PROCESS IMPROVEMENT IDEAS MARKET COMPARISONS TYPES OF INFORMATION • Satisfaction/ • Loyalty Levels • Customer Referrals • Up-Selling & Cross-Selling • Price/Value Perceptions • Complaints • Confusion • Points of Pain SATISFACTION & LOYALTY CUSTOMER EXPERIENCE

21. Listening for New Product or Service Opportunities Almost every company collects ideas about new product or service opportunities, but only half track whether these ideas result in improvements. About equal numbers are skilled or novices in each area. Percent Who Collect Percent Who Track Features Desired 91% 49% Recommendations 91% 42% Less than Competent More than Competent 42% Features Desired 39% 12% 29% 31% 8% Recommendations 46% 13% 6% 33% 29% 35% Highly Skilled Novice Learning Skilled *Excludes Competent %

22. New Product or Service Opportunities: Informational Value Collecting customer ideas on feature additions or new products or services are among the top five most valued types of insights – with 12 respondents selecting it as their most valuable type of information. • New Product/Service Feature Ideas(12) • New Products or Services (3) • Input into New Product or Service Development (2) • New Features or Uses of Existing Products or Services (7) • Reasons for Valuing: • New Uses of Existing Products: “There are many creative minds among our customers, who suggest new ways to get product value.” • New Features: “Requests for enhancements to products and services helps us 1) identify gaps in our previous product development processes on what the clients value; and 2) understand how they perceive our product and give us opportunities to differentiate our products.”

23. Listening for Problems & Process Improvement Ideas Almost everyone collects problem and error data, and most track it. The highest percentage of respondents –55% – view themselves as more than competent in collecting & using product/service problems. Percent Who Track Percent Who Collect Product/Service Problems 88% 98% Process Errors/Improvements 74% 96% Less than Competent More than Competent 4% Product/Service Problems 39% 16% 20% 55% 16% Process Errors & Improvements 13% 29% 29% 42% 5% 24% Novice Learning Skilled Highly Skilled *Excludes Competent %

24. Problems & Process Improvement Ideas: Informational Value Respondents view product/service problems as an important area in which one must quickly respond and in which the payoffs are great. • Product/Service Problems (11), including: • Product/Service Issues (9) • Enrollment or Claims (2) Process Errors or Improvement Ideas: (5) • Reasons for Valuing: • Service Problems: “These are huge opportunities to address issues and build confidence in our abilities to respond.” • Product Problems: : “Product problems are any firm's most potent (and deleterious) branding tool.” “Damages or errors are a big risk in our business.” • Process Errors: “By responding to process issues, we make life easier for both customers and our company and demonstrate support for our customer's business challenges.”

25. Listening for Complaints, Confusion and Points of Pain Complaints are the most frequently collected and frequently tracked type of information, and the greatest percentage –51% – are more than competent in collecting and using them. Percent Who Collect Percent Who Track 100% 93% Customer Complaints 86% 32% Customer Confusion 93% Customer Points of Pain 49% Less than Competent More than Competent 4% 51% Complaints 15% 30% 21% 11% 10% Confusion 32% 22% 35% 6% 29% 29% Points of Pain 25% 42% 23% 19% 4% Highly Skilled Skilled Novice Learning *Excludes Competent %

26. Complaints, Confusion & Point of Pain: Informational Value In the customer experience area, complaints were by far the most valued type of information to collect. Complaints (15) Points of Pain (3) Experience/Usage (3) Confusion (1) • Reasons for Valuing: • Complaints: “…alert us to where there are problems that may cause customer risk or incur product liability.” • Experience/Usage: “We have focused research and testing on usability across our products, services, & channels to leverage user inputs in our requirements phases before we develop solutions.”

27. Listening for Customer Satisfaction and Loyalty Indicators Satisfaction/Loyalty Levels Price/Value Perceptions Up-Selling/Cross-Selling Customer Referrals Customer satisfaction-related types of information were collected at about 90% or more, with the exception of up-selling-cross-selling. Only satisfaction and loyalty levels are frequently tracked for improvements. Percent Who Collect Percent Who Track 100% 74% 95% 46% 82% 23% 89% 19%

28. Listening for Customer Satisfaction and Loyalty Indicators A plurality of companies are more than competent compared with less than competent for satisfaction and loyalty levels. The reverse is true for all other customer satisfaction and loyalty indicators. More than Competent Less than Competent 28% 18% 11% 21% 46% 31% Satisfaction/Loyalty Levels 21% 48% 31% 17% Price/Value Perceptions 10% 31% 15% 13% 58% 30% 28% Up-Selling/Cross-Selling 28% 6% 46% 6% 28% 18% Customer Referrals 12% Novice Learning Skilled HighlySkilled *Excludes Competent %

29. All Customer Satisfaction/Loyalty areas (35), including: Overall Customer Satisfaction Levels (15) Service Satisfaction (8) Relationship Satisfaction (7) Price/Value Perceptions (5) Customer Satisfaction and Loyalty Indicators: Informational Value Tying for the most valued type of information – with complaints – is the overall customer satisfaction level – at 15 respondents. • Reasons for Valuing: • Customer Satisfaction: “… to understand where we add value and were we don't, and target improvement activities to address those issues. • Service Satisfaction: “…. helps us to identify inconsistencies between the service level we believe we are providing and what customers experience.” • Relationship Satisfaction: We can identify most important factors of our customer relationships - so that we could develop customer satisfaction measures & activities to improve it.

30. Most Valued Types of Information When respondents were asked, “What are your company or division’s top three types of information that have been most valuable to collect from customers and why” – they collectively agreed that the following types of information were most valuable. Number Valuing Each Information Type Overall Satisfaction 15 Complaints 15 Business Needs 13 New Products/Services Ideas 12 Product/Service Issues 9 Service Satisfaction 8 Competitor Observations 8 Relationship Satisfaction 7

31. III. Integrating Customer Insights Capturing Insights Benefits Challenges

32. Insights from Multiple Listening Posts Store in Database Sort Organize Analyze Product or Service Improvements Capturing Customer Insights Many respondents emphasized the importance of databases and automated systems to assist in organizing and analyzing data. • “Use automated data gathering methods (2) – it cuts down on resource time to manually analyze the client data, which results in faster return of information.” • “You must have a central database for customer feedbackto identify trends. Use a database that tracks customer problems and has excellent reporting capabilities (2). Keep the interface simple and focused.” • “Organize & sort data by issues.”

33. Challenges in Getting Customer Insights Through to Company As one benchmark partner said, “It's challenging to (a) receive a constant flow of feedback from customers, (b) turn that data into actionable knowledge, and (c) distribute it to the appropriate internal organizational constituents so they can use it to make better decisions.” Obstacles include failure to: • Manage change to customer-based decisions • Empower staff to be proactive with customers • Gain user buy-in & involve the right people • Have management monitor/own the feedback • Share the results throughout the organization • Tie insights to improvements • Shift from R&D to customer-driven decisions • Focus on enhancing the customer experience Customer Insights

34. Customer and Company Benefits Customer Benefits Customer Insights • Improve customer satisfaction(4) • Provides measurable benefits and savings to the customer (1) Benefits Customer Benefits Entire Company Company Benefits • Decreases gap between company & customer perceptions (7) • Prioritizes areas of improvement (4) • Allows for proactive anticipation of market trends (3) • Builds relationship with customers (2)

35. About Best Practices, LLC Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics and winning strategies of world-class companies. This benchmarking survey was conducted as part of a quarterly research project for Best Practice’s Global Benchmarking Council. It is intended to be a directional indicator of service expansions. We encourage teams to use this survey as an impetus for further discussion and investigation. If you have any questions about this survey or would like to request additional analysis or a report on this topic, please contact Tracy Hollister, Analyst, at: Best Practices, LLC 6350 Quadrangle Drive, Suite 200 Chapel Hill, NC 27517 919-767-9225 thollister@best-in-class.com www.best-in-class.com