(This article appeared as the cover story in the April 1995 issue of Marketing Management, a magazine published by the American Marketing Association and directed at an audience of marketing executives. This is the author's draft copy and does not reflect the copy edits in the published version.)
Executive Briefing
Customers visits can seem like such a simple, obvious activity that it's easy to forget how powerful they can be. The biggest payoff comes when engineers and others from outside marketing participate in visits. Technology firms like Hewlett-Packard have pioneered the use of cross-functional customer visits as a market research tool. The article discusses many "best practices" gleaned from the study of leading firms.
Only a few firms take full advantage of customer visits in their efforts to retain existing customers, expand markets, and develop new products. At the other extreme are firms where customer visit practice is stagnant and backward, contributing little. How do your customer visits compare? Here are five danger signs that indicate a firm is stuck in old practice.
DANGER SIGNS
1. Only high level executives visit with customers. First and second level managers receive customer input second hand.
2. Only marketing executives regularly travel to the customer site. Managers in Manufacturing and R & D get memos.
3. Only large, national accounts receive visits. Within this group the same customers are visited over and over.
4. Most visits occur in isolation. Rarely is there a program uniting multiple visits under a single objective. No one in the company has any idea how many visits took place last quarter.
5. Marketing guards its prerogative to visit
customers jealously. Attempts by other functional areas to get
direct customer feedback are discouraged.
Why are these practices dangerous?
· If only general managers and the
like visit customers, then the idea of empowered work teams has
not taken hold. Worse, product managers, project managers and
program managers--the people who make the day to day
decisions--became cynical about "customer focus."
Horror stories are swapped about how a senior executive,
responding to a vivid remark made by a single customer, knocked
an entire development effort askew.
· If only marketing executives
visit customers, then cross-functional harmony is unlikely.
Particularly in technology companies, marketing staff may lack
credibility in the eyes of key technical people. Claims by
marketing that "the customer wants this" may be less
credible than having R & D managers hear customers say
directly, with heat, "If it doesn't do this I won't buy
it."
· If you only visit large national
accounts, then you may be restricting yourself to incremental
revenue gains. Large national accounts, although extremely
important to retain, tend to be buyers for whom your current
products are quite suitable (that's why they buy a lot). What
about those firms who buy a lot of this product category,
but don't buy much from you? There's probably something wrong
with your product, at least as seen from their perspective. If
you can discover what that is, you have the potential to make
substantial revenue gains.
· If in addition you only visit
the same small group of accounts over and over, you may run into
the problem experienced by one electronics company, whose
management strongly believed in the value of customer visits.
They couldn't understand why their customer satisfaction ratings
kept rising even as their market share kept falling. Finally it
dawned on them: they had fallen into the trap of developing
products that ever more exactly suited an ever smaller number of
people -- the ones they visited all the time.
· If customer visits only occur in
ones, twos, or threes, you miss the opportunity to take a
systematic approach to getting closer to your market. Two dozen
visits, united by a common goal, are going to yield a depth of
understanding and degree of illumination that goes well beyond
what can be gained from a few scattered visits. Properly managed,
customer visits can be more than a means of grooming customer
relationships-- they become an important market research tool.
Business-to-business and technology firms have found customer
visits to be an important supplement to focus groups when doing
exploratory market research (Exhibit 1).
· The problem of haphazard visits goes
beyond opportunity costs. If no one manages the large number of
visits that typically occur in a mature firm, you run the risk of
alternately confusing and irritating your customers. In some
cases, firms have been barred from making future visits because
the customer felt so pestered by the ill-coordinated barrage. In
another case, a vendor discovered that it had eight different
levels and departments making visits to a dozen different levels
of an important customer, with predictable "Tower of
Babble" results.
If only marketing is allowed to visit
customers, a very inefficient and noisy communication channel is
created. We hear today that customer satisfaction is the job of
everyone. If so, then everyone -- designers, manufacturing
engineers, Quality staff -- needs to have the opportunity to
directly interact with customers in a suitable forum. Marketing
cannot be the middleman, filtering customer input. It just won't
work.
KEY OPPORTUNITIES
What does best practice look like? Firms that derive the greatest benefit from customer visits typically do three things. First, these firms arrange for a wide variety of people, including but not limited to marketing management and staff, to have the opportunity to dialogue directly with customers. Second, these firms exploit the potential of customer visits in diverse settings -- all kinds of visits take place. Third, these firms manage their customer visit effort in order to maximize the quantity and quality of information gained.
Few people reading this article would object to the idea that customer visits can be a powerful means of gathering market intelligence. However, the devil is in the details: what specific steps can you take, today, to improve your current practice? Here are six ideas.
1. Leverage the visits you already make
2. Take every opportunity to ask questions of customers
3. Get engineers in front of customers
4. Conduct programmatic visits
5. Visit different kinds of customers
6. Get out of the conference room
Read on to learn what leading companies have done to seize these opportunities. Most of the examples will be drawn from computer and electronic manufacturers, because this is the group I know best as a result of living in California's Silicon Valley. Quotes from managers will highlight the benefits of taking a leadership approach to customer visits (Exhibit 2). Although visiting customers might seem to be a simple matter of just talking to people, getting full value from these encounters turns out to be no easy matter.
1. Leverage Visits You Already Make
Every large business already makes many visits per year to its customers. These occasional customer visits are motivated by diverse purposes: business development, strategy presentations, troubleshooting, relationship management, intelligence gathering, etc. Managers from a variety of departments at many levels in the organization make these visits. Under old practice, no one coordinates his or her visits with those of anyone else. People plan and orient their visits according to their particular needs of the moment. Visits that take place in November bear little connection to those that took place in March.
This uncoordinated,
every-visit-for-its-own-purpose approach isn't good enough any
more. The business environment today--lean, mean, down-sized,
speeded-up, hypercompetitive--demands that you take better
advantage of low cost opportunities to gather market
intelligence. Two simple steps are required to seize the
opportunity latent in occasional customer visits.
Coordinate visits via perennial questions
Log and review customer profiles
Perennial Questions. Since no one knows exactly which visits will occur when, coordination has to have a light touch and be very general in nature. Try this: in advance of the next fiscal quarter, get together the managers who will be involved. Ask them to generate two or three perennial questions. A perennial question is a broad query that could be directed at virtually any customer that any vendor employee encounters. An example might be, "What things do we do particularly well, or particularly poorly, relative to our competitors?" or "If you could change any one thing about this product, what would it be?" or "What aspects of your business are keeping you awake at night?" A defining characteristic of perennial questions is that they are open-ended and exploratory. These questions can be likened to dropping a pebble into a pond -- they function as discussion starters. They act as an invitation to the customer to give us their perspective on fundamental strategic questions. Perennial questions resemble questions asked in focus groups more than questions asked in telephone surveys.
When asked of a single customer, the answer to a perennial question may mean very little. We often don't know whether this customer is idiosyncratic, uninformed, prejudiced for or against us, etc. The power of these perennial questions comes into view when answers begin to accumulate. If you can find a way to encourage everyone in a business unit or team to ask certain questions whenever they spend time with customers, then you will receive throughout the year a continual stream of customer input -- for no incremental out-of-pocket cost whatsoever. Occasional customer visits took place last year, and will continue to take place this year, for all kinds of good reasons. The issue is whether you want to begin managing these visits for market information over and above the specific purpose that motivated each one.
Although the costs are low, the obstacles remain real. Real leadership is required to identify perennial questions and motivate visitors from across the business unit to ask these questions. For example, here is the process recently followed at a division of CIGNA. The corporation as a whole was committed to becoming more customer-focused, and this direction was supported from the top. A new marketing executive at the division began to encourage specific activities, including customer visits, that would bring the division closer to its markets. From its beginning this effort was cross-functional in scope and directed at encouraging non-marketing managers to be more involved with customers. Presentations and workshops built commitment across the division to the idea that improving customer visit practice was both feasible and desirable. A key moment came when a good chunk of the division's management made a public commitment to one another to visit a certain number of customers over the next fiscal quarter. Between the managers present and their direct reports, it was clear that well over 100 customer visits could be expected. Following that meeting, participants suggested a variety of candidates for the perennial questions to be asked by everyone during these visits. Marketing staff collated, organized, and distilled these questions, which were then recirculated for a vote. Marketing staff also designed a customer profile form, using an electronics forms package, for capturing answers to the perennial questions (see below). In addition, several business teams undertook a more systematic program of customer visits in order to make a more intensive examination of issues involving repositioning parts of the business to meet changing conditions.
The difference between old practice and best practice in occasional customer visits can be summarized by means of an analogy with the difference between the behaviors expected of an individual contributor and of a manager. Old practice was for marketers to do visits themselves and then tell the rest of the firm what customers wanted. This is analogous to an individual contributor, who achieves results acting alone. By contrast, a manager achieves results by acting through others. Best practice in occasional visits means that marketing managers find ways to help the rest of the firm directly experience customer needs.
2. Take Every Opportunity to Ask Questions of Customers
Outbound visits to the customer site are only
one example of the many ongoing customer contacts enjoyed by
almost any firm (Exhibit 3). In addition, there generally occur
many inbound visits, where the customer comes to your visitor
center or headquarters. In addition, there are visits that occur
at neutral sites: trade shows, conventions, or anywhere else that
vendor employees encounter individual customers. Every one of
these contacts presents an opportunity to listen and learn and to
pursue one or more perennial questions. New opportunities to
listen are being devised even now.
Sun Microsystems sets up "listening
booths" at trade shows where customers can get the ear of
key managers. Although most encounters are brief, a large number
of these contacts occur, providing a concentrated dose of market
intelligence for very little incremental cost.
Hewlett-Packard and Apple Computer have
experimented with Adopt-a-Store programs. Here engineers spend an
afternoon in a retail store answering customer questions and
talking with customers. This provides an excellent source of
market intelligence concerning how a product comes across on the
shelf, in the midst of its competitors. It also confronts
engineers with the reality of ordinary people trying to make
sense of complex technology.
Any occasional visit provides an opportunity to ask perennial questions and thus enrich the marketing intelligence effort. The problem, unfortunately, is that even occasional outbound visits are both time-consuming and expensive. Focusing now on engineers in particular -- a crucial component of the core competency of any technology firm -- realistically, how many outbound customer visits can the typical engineer make in the course of a year? In particular, consider design engineers who are not managers. In the course of performing their tasks, each such engineer must make countless choices about what would be the better or worse solution to a design problem. Ideally, these choices will be made with constant reference to a mental model of customers' needs and priorities. However, when customer contact is minimal or absent, a very different reference point is often used: engineers may gravitate instead toward what is technically challenging, constitutes an interesting problem, or might impress esteemed technical peers. Such solutions don't always sell!
Given these constraints, the challenge for management might be phrased as, What is the most cost-and-time-effective means to increase the number of productive customer contacts on the part of engineering staff? Let me suggest that your visitor center is an enormously under-utilized source of market intelligence with the potential to provide a very cost-effective way of making customers more visible throughout the organization. The typical visitor center is designed to receive customers in comfort, showcase the firm's technology, and facilitate presentations. It is often used to extend VIP treatment to key customers and these visits are typically arranged by the sales force. Unfortunately, in too many cases every minute of the visit is scheduled to an unremitting parade of presentations and exhibits, forcing a relatively passive role on the customer, and making dialogue the exception rather than the rule.
Try this instead. Set aside one hour where the presentations stop. Move to a different room where the seating is arranged for dialogue rather than one-way interaction. Label this part of the agenda as "customer feedback," "exchange of views," or "customer issues." Make it clear at the outset of the hour that this portion of the day has been set aside to listen and learn. (It will help if you advise customers in the invitation letter as to the topics you hope to cover.) Signal the change of pace by having a different person host this session. Most important, arrange for key technical people who work on projects relevant to this customer and market segment to be present. The goal is to begin the hour by asking one or two perennial questions, and then to let the conversation develop as it will.
Firms that have tried this even once have told me that customers liked this part of the day best -- in fact, it almost always runs over the hour scheduled. A moment's thought shows why. Consider yourself: do you like to sit still and be talked at for an entire day? Of course not. You're an experienced manager and a skilled professional, and you have a great deal to contribute about topics within your domain. What makes you think your customers are any different? To cement the gains, schedule these feedback hours immediately after lunch, when presentations are in any case deadly. If nothing else, they will reenergize the customer for the presentations that follow.
To make better use of inbound visits to the visitor center is in some ways more challenging than taking advantage of occasional outbound visits, because more people, in more dispersed parts of the organization, have to be coordinated if the effort is to succeed. The sales team responsible for inviting this customer has to agree to release an hour on the agenda. The staff of the visitor center has to be informed of the particular interests of this customer, has to have the means of identifying relevant engineering and technical staff, and has to be empowered to invite and cajole their attendance. Directors of engineering have to see the benefits of this exercise and agree on the number and frequency of contacts to which they will commit engineering staff. Finally, marketing management may have to champion this change to make it happen.
If all of these people associated with visitor center activities could be coordinated, then at a minimum your firm would be able to increase the number of meaningful customer-engineer contacts by several hundred relative to last year -- for no additional travel cost whatsoever! Customers will get more out of the visit, engineers will expand their reference group to include a wider range of customers, and you will obtain a new stream of ongoing market intelligence.
Log Customer Profiles. Whatever the initial attractiveness of these
recommendations, the visit effort will soon wither away unless
there is follow through. Most important, the marketing
intelligence gathered through these outbound, inbound and neutral
site visits must be stored, shared and considered. The resulting
stream of market and customer information must become active
within the business. Ultimately, it must become clear to all
involved that information from occasional visits has influenced
the firm's decisions and made a difference to the business. It
takes only a handful of success stories on this count -- a new
feature suggested by a customer, an embarrassing flap averted, a
new source of revenue from an unsuspected application -- to
sustain the effort.
Example: Compaq
Computer just introduced a new "mainframe" computer
which consists of a number of PCs that can be stacked on a
rack--just like hi fidelity stereo equipment. This idea was
"suggested by a customer," and reflects the kind of
creative, metaphorical thinking that often results when you spend
time talking with customers in an exploratory, open-ended
fashion.
To get maximum value from customer visits, you have to provide a repository for information gained through visits and a simple way for people to transmit information to the repository with a minimum of effort. The key idea is to think in terms of developing customer profiles. The structure of each profile is straightforward, consisting of a header page combined with insightful commentary. The header information changes slowly if at all; it consists of descriptive data on the customer's business, along with data on how long they've been a customer, the nature of their purchases, the amount of these purchases, etc. This information generally already exists in some kind of corporate database. In fact historically such header information -- objective, "hard" data, predominately numerical combined with brief text -- has been the only kind of customer information collected into a database.
What customer visits allow one to do is to enrich these descriptive data in the header with the kind of insights that can only come about through direct encounters and sustained dialogue with customers. A typical profile will fit on a single page and include three things: 1) answers to the perennial questions asked of this customer; 2) additional insights vis-a-vis unmet needs, areas of satisfaction and dissatisfaction, or key customer requirements; and 3) a brief statement of the takeaway from this visit. In other words, the profile seeks to capture the learning that occurred for the visitor. The very fact of the existence of the profile encourages visitors to take a more systematic approach to conducting the visit and assessing what was learned. The request for a profile validates the importance of the visit and reinforces the point that this particular visit is part of a larger marketing intelligence effort.
The next step is to make sure that the accumulating profiles are read, shared, and discussed. If this doesn't happen, the number of profiles logged will slowly fade away as people lose motivation. Try scheduling a review meeting about three months after profiles begin to be logged. Have a member of marketing staff print and collate all the profiles that have accumulated. You want this staff member to be the brightest person you have. There's a great deal of information here and one person has got to immerse themselves in it for a few days, juxtaposing profiles, drawing contrasts, and grasping connections. Next, convene the people who have been filing these profiles for a brainstorming meeting. Ask them to review in advance the profiles filed by people other than themselves. Run the meeting from an agenda drawn up by the staff person.
The goal of this meeting is a creative
response to the customer data in the profiles. For instance, you
want people to:
· spot trends -- if 5 different customers made the same comment, something is going on. This is the kind of pattern recognition that logging profiles should stimulate.
· define segments -- the combination of header information with commentary may reveal why you do well in some markets and poorly in others. Better target marketing efforts should result.
· identify problems-- repeated complaints become very obvious and can now motivate change.
· glimpse opportunities-- new
product ideas, low cost enhancements, and new applications should
be plentiful.
Continue to schedule these meetings until people have internalized the habit of sharing profiles, commenting on each other's profiles, and using profiles to guide day to day decisions. When these activities become self-sustaining, you have a customer-focused organization.
Note that everything described so far can be accomplished without any reliance on computer technology. On the other hand, great strides can be expected over the next few years in the application of new software to the task of gathering and sharing customer profiles. For example, firms will take advantage of electronic forms technology to facilitate the entry of profile data. Upon conclusion of a customer visit, the visitor will pull up an electronic template on a laptop computer, enter the profile data, and send it by satellite to the central repository. These repositories will take advantage of client server technology to stay small, local and flexible. Opportunistic browsing of the accumulated profiles will be done using software such as Lotus Notes. The text retrieval capabilities of Notes-like software will allow design engineers to search the accumulated customer profiles for any mention of a particular piece of product functionality, or product marketers to search for all mentions of a particular competitor. Notes and similar groupware will allow customer profiles to be annotated and swapped with coworkers.
Even today, leading firms such as Sun Microsystems have begun to store customer visit reports on the network where they can be accessed online. Sun has also created semi-intelligent e-mail systems which provide templates for planning customer visit programs, examples of past customer visit efforts, and a repository of completed reports. Moreover, both Sun and Hewlett-Packard, among others, have recently taken steps to make secondary market research available online at individual managers' desktops. In time customer visit profiles will become an integral part of these on line market intelligence systems. Taken in its entirety, the computer technology just reviewed will assist firms in immersing themselves in the world of the customer.
3. Get Engineers in Front of Customers
In recent years Hewlett Packard has been acclaimed as one of the most successful high technology companies. Although there are many reasons for this success, one contributing factor may be a corporate culture that encourages key technical people to incorporate customer feedback into product design (for further information, see Kotter and Heskett, Corporate Culture and Performance). One of the devices that HP has used to a greater extent than most firms is the programmatic approach to customer visits. In a customer visit program, a dozen or more customers will be visited. Cross-functional teams conduct the visits. Each visit proceeds according to a discussion guide. The interviews with customers are exploratory and emphasize open-ended questions. These are "pure" visits where the dominant objective is to listen and learn.
To get some of the idea of the dimensions of
this practice, a survey was conducted in conjunction with HP
Corporate Engineering. We contacted the R&D manager in each
business unit (a total of 83) and requested a referral to an
R&D project manager who had recently conducted customer
visits as part of a new product development effort. The first
surprise was how widespread the practice of programmatic
customer visits proved to be within the new product development
process. We identified 54 business units where a program of
visits had recently been conducted. These business units spanned
the globe and ran the gamut of HP's diverse product lines. The
second surprise was the intensity and sophistication of these
programs. The typical visit program included the following:
Cross-functional teams. Generally one R&D engineer and one product marketing person comprised the team. In most cases the account representative for each customer also participated in the visit.
Adequate sample size. About 70% of the visit programs involved between 10
and 40 customers.
Diverse Sample. Some effort was generally made to select customers to reflect the different market segments the product was designed to address. Some of the more sophisticated programs visited competitor's customers as well as their own customers and visited customers worldwide rather than confining the visits to the home country.
Follow-up Market Research. Most of the programs recognized the preliminary and
exploratory character of customer visits and took pains to
supplement the visit effort with other, more formal market
research studies.
A high level of enthusiasm for customer visits was also apparent on the part of these R&D project managers. They indicated that programmatic visits were becoming more common within their business units, and made recommendations such as "Get as much customer contact as possible," "Go see the customers yourself," and "Take all project team members out to customers." The cross-functional nature of the visit teams was declared to be of particular value. "It cuts down on the shouting matches," as one engineer remarked. "Everybody owns and understands what the customer wants."
In another study, several hundred individuals at HP completed a survey concerning visit programs that they had recently conducted. These participants were first and second level managers drawn from diverse functional areas across the range of HP's businesses. A high level of enthusiasm was again apparent: 47% characterized their visit programs as extremely valuable, and another 49% found them to be fairly valuable. This general perception appeared to rest on the belief that specific benefits had resulted from the visits: 88% indicated that customer satisfaction had improved as a result of the visits, and 76% indicated that they had uncovered some new or surprising piece of information through the visits. Some 90% indicated that the visits had had a direct impact on the products or services offered to customers. Although these are only perceived benefits, they suggest that once people begin to visit customers the practice is sufficiently rewarding to be self-sustaining.
In analyzing the responses of those people who
reported deriving the most value from their customer visits,
three factors emerged as crucial.
Good teamwork between marketing and engineering. It doesn't work if only engineers visit customers, and it doesn't work if only marketers visit. They have to design and conduct the program together.
The people who have to use the information must be involved in designing the visit program from the beginning. Else, they tend not to accept the results.
There has to be a plan for how information
from the visits will be used. It's not enough to just sit down
with customers and ask, "How's it going?"
Implications for Marketing Executives. The point that emerges forcefully from the Hewlett-Packard data is that whenever possible marketing executives should encourage non-marketing employees to get out to talk to customers. No amount of sophistication in a marketer's own customer visit activity can substitute for a commitment on the part of the entire organization to customer visit efforts. Leading firms are distinguished by the fact that they encourage engineering and scientific talent to talk with customers. No longer is marketing tossing market information "over the wall" to engineering, and then waiting for engineering to toss back a new product design. Instead, both functional areas work together from the beginning to hear and understand the voice of the customer.
4. Conduct Visit Programs
Visit programs such as those just described can help firms to achieve objectives such as:
1) Explore areas of satisfaction and dissatisfaction and generate possibilities for remedial action.
2) Identify and describe opportunities for new product development or market expansion.
3) Explore the needs and perceptions of a new
market segment
To round out the picture, here are two
examples of recent visit programs that took place at companies
other than Hewlett-Packard.
Sun Microsystems wanted to understand problems
associated with a customer's "first encounter" with
Sun; i.e., from the point where the shipment of computers first
arrived until the system was up and running. This effort was
spearheaded by the Quality function, based upon perceptions that
the first encounter was often more problematic than it ought to
be. Cross-functional teams were organized and a total of over 50
visits conducted world wide. The visits yielded a variety of
insights that would be difficult or impossible to obtain in any
other way. These ranged from the impact of the packaging used, to
international differences in desk layout and office
configuration, to subtle problems with the usability and
installability of various pieces of equipment. Because solutions
to many of these problems cut across departments and functions,
the cross-functional makeup of the visit teams proved crucial in
securing a response to identified problems.
Earlier this year the Display Products
Division of Apple Computer wanted to explore the potential for an
entirely new product category that would expand the division's
offerings. The goal of the program of visits was to discover
unmet needs that present products did not satisfy, to describe
customer requirements that the new product would have to meet,
and to explore the fit between Apple's core competency and these
requirements. Over 30 visits were conducted in the United States
and Europe. A product manager from the marketing function
coordinated the visits, and a wide range of scientists and
engineers participated (the new product solution was much more
than an incremental change or twist on an existing offering).
Information gained from these visits was combined with secondary
and other market research to assist division management in making
a decision about whether to invest in the new solution. The
visits yielded a wealth of data about applications for the new
product, problems with existing solutions, and perceptions of
Apple's ability to deliver a successful solution. Each visit was
summarized in a profile. Individual design engineers came away
from the visits with a clear vision of what the product had to do
in order to succeed.
To conduct an effective program of customer visits, a large number of specific decisions have to be made, each one of which has the power to either enhance or undercut the discovery potential of the visit program. Exhibit 4 describes a series of best practices gleaned from visit programs conducted across a wide range of firms (for more information, see McQuarrie, Customer Visits: Building a Better Market Focus).
Customer Councils. Customer councils can be thought of as a programmatic approach to inbound customer visits. Many technology and business-to-business firms find it useful to set up Executive Councils (Sun Microsystems is an example). Companies that use distribution channels find it useful to convene Dealer Councils (Apple Computer and Hewlett Packard are examples). A Council will often meet quarterly. Members of the Council are executives from key customers. Depending on the purpose of the Council, these customer executives may have broad business responsibilities or more focused technical responsibilities. Historically IBM made heavy use of the latter kind of council.
In all cases the purpose of the council is
straightforward: get feedback and share perspectives. A typical
council session will last all day. In addition to the information
gathered, there is a secondary gain in terms of stronger customer
relationships. Perhaps the key benefit of Councils relative to
other types of customer visits is the potential for synergy
through group interaction. In this respect, Councils resemble
focus groups, but are distinguished by a caliber of respondent
almost impossible to recruit for a focus group, a lengthier
session, and more in depth discussions.
Best practice in Council management can be
simply stated: the Council sessions stand or fall as meetings.
Too many business meetings, particularly all day meetings with
more than a dozen participants, are bad meetings: boring and
frustrating. Here are a few suggestions for improving customer
councils:
Pay careful attention to seating arrangements. A U-shaped table allows customers to both face one another and to face a presenter. You will get much more interaction among customers with this arrangement then when everyone faces forward.
Have customers do things. Some firms have experimented with workgroup software on laptops; others have customers come forward and make presentations. Either way, you get a much livelier group. If you restrict customers to an audience or discussant role, the councils lose a great deal of energy.
Consider hiring a professional meeting facilitator.
Slave over the agenda. When it's too crowded, or too vague, or the time boundaries are poorly set, attendees get alienated.
The topics for discussion have to be relevant
and engaging, from the perspective of the customer. The
temptation, of course is to select the topics that are of most
interest to you the vendor.
An overarching rule is that presentation
should be minimized and discussion maximized. At the end of the
day it has to be clear to Council attendees that these issues
needed to be discussed and that a group had to be
physically convened for this discussion to bear fruit. Else, you
wasted their time.
5. Visit Different Kinds of Customers
National accounts are the safe, easy choice for visits and are an important element of many visit efforts. However, the freshest perspective and the greatest surprises often come from customers who are a little more unusual. Here are some examples:
Competitor's customers. Most businesses set growth objectives for themselves. Ask yourself whether you can meet your growth objectives by selling more products to people who already buy from you. If not, are you willing to assume that the people who don't buy from you today are similar to those who do? That, in a nutshell, is the argument for visiting competitor's customers. True, these people are much harder to reach and recruit; but you can retain a market research firm to do the recruiting if need be. Few buyers want to be tied to one single supplier, and that's your entre. Your goal in visiting competitors' customers is to discover how your offering appears to someone who didn't want it.
Global Customers. The famous bank robber Willie Sutton was once asked why he robbed banks. "That's where the money is," was his reply. I like to ask U.S. managers what percent of their sales comes from overseas. "Fifty percent" is a typical answer at a technology firm. Then I ask what percent of their customer visits go overseas -- and often the only answer is a few embarrassed coughs. If global markets are where the money is, then global markets have to be the object of market research, including customer visits. Be assured that the practice of customer visits -- unlike, say, telephone surveys -- is a worldwide custom.
Lost Leads. These people may offer a great deal of insight into subtle problems with your offerings. Because they invited you to bid, your offering must have been relevant to their needs. Yet, because they gave the business to someone else, you must not have had the best offer. Much can be learned about how you stack up against competitors and about the strengths and weaknesses of your total offering (product plus intangibles) from visits of this kind.
Power Users. In most technology markets there are some customers who are ahead of the curve, and who can be studied to see where the rest of the market is trending (see von Hippel, The User as a Source of Innovation, for more examples). These people are much more comfortable with questions about the direction of technology than most users. However, you have to be careful not to visit only power users. Stories are legion in Silicon Valley of firms who designed products that power users loved and no one else understood or wanted to buy.
Value Added Resellers, OEM's, etc. Channel partners are a useful source of information. They can distill the responses of a wide variety of small end users, who may be relatively invisible to you but with whom they work every day. Difficult to set up, but potentially rewarding, are joint visits where you and a channel partner collaborate to visit customers further down the value chain. For manufacturers of raw materials, who are several levels removed from the ultimate user, this may provide considerable insight into new ways to add value.
Internal Customers.
An important target for visit efforts may be your own field
staff. It's a rare program of customer visits that would not
benefit from a dozen phone "visits" with people in the
field sales organization and customer support function. These
people have lots of customer contact, but as often as not, no one
at headquarters or in product marketing ever gets around to
exploring their views. It's worth your while to try out questions
and solicit input from these people about what the burning issues
are for customers.
6. Get Out of the Conference Room
One of the great advantages of customer visits as a market intelligence tool is that they are field research. As someone once said to me, "a desk is a dangerous place from which to do business." To get the most value from customers visits, you must not spend the entire visit in the conference room or office of your host. Take a tour and observe. Here's an example:
Example. An HP
division that made test equipment used in factories found on its
tour that the testing area tended to be a very crowded place.
Customers had gone through many contortions and tried a number of
makeshift approaches to get all the equipment they needed into
the test locale. That team went home and designed a new version
of that instrument called Skyhook because it had a metal hook
welded to the top of the case. This allowed it to be suspended at
any height anywhere in the testing area. The new version was very
successful with customers.
The point of this example is simple: imagine yourself seated in a conference room asking one of these customers, "What could we do to make this instrument more useful and valuable?" How likely is it that that customer would reply, "Put a 2-inch hook right about here"? That's not going to happen! The customer himself does not realize and cannot vocalize this need; but you, knowledgeable about your equipment and intently observing its use at the customer site, may well clap your hand to your forehead: "Of course!"
To get the full benefits of observation, however, the right people have to make the visit. For instance, Raychem sent a team to visit the factory of a major customer, a manufacturer who incorporated a Raychem component into its own product. While walking around the plant, logistics manager on the team remarked, "Gosh, I can't believe that." He had observed the parts of a competitor being unloaded, and remarked on how they were using the wrong kind of truck with a poor stacking arrangement. As a result, the unloading process was prolonged and made more difficult and more likely to cause breakage. That logistics manager went home and designed improved shipping procedures to enhance customer satisfaction.
The point of this example can be brought out thus: I'm a marketing professor and consultant, and I haven't got a clue about logistics. Would I have even looked at the unloading process, much less noticed that something was wrong? Would you? Again, if marketing is everyone's responsibility, then many different kinds of people have got to have the opportunity to encounter customers. Furthermore, conversing with these customers isn't enough -- it's important to watch them as well (for further information, see the articles by Guillart and Sturdivant and Holtzblatt and Beyer).
Of course, you can't send everybody all the
time. Hence, what some companies now do is take along cameras as
well as the more conventional tape recorder. A couple of dozen
photos viewed together can drive home key points about the
environment in which a product must function. HP did this in the
design of its newest Deskjet printer for home use. Observation
and photographs revealed that space was at a premium in the
typical home office, and that an annoying feature of earlier
printers was the fact that the power cord came out the back,
forcing the printer out at least 2" from the wall and
unnecessarily consuming desk space. The new printers, in addition
to being smaller, have the power cord coming out the side,
eliminating this problem. Photographs can be so powerful that Sun
Microsystems scans them and stores them on line, keyed to
sections of the associated customer visit reports.
CONCLUSION
It seems today that everyone talks about the importance of getting close to customers and staying market focused. Expanding your repertoire of customer visit techniques provides a concrete and relatively low cost approach to acting on these imperatives. It should be clear from this article that customer visits cannot be the exclusive province of marketing management and that marketers ought not to attempt to own or control the firm's customer visit effort. Marketers who are team players can do a great deal to advance the sophistication of customer visit practice at their firms. Marketers who demand to run the show will likely fail.
The practice of customer visits developed at
technology firms in particular because no other market research
technique provides quite the same direct, immediate experience of
the full complexity of customer problems and needs. In fact,
customer visits represent a kind of home grown market research
developed in response to the challenges faced by firms such as
Hewlett-Packard. As one Quality manager remarked,
"We're going to do some surveys that will give us a measure of how we are doing. Chart the trends. But I think as much as we try to measure things, the most important thing we can do is learn how to listen to the customer and just hear what is going on."
Exhibit 1
______________________________________________________________________________
Why Use Customer Visits for Market Research?
______________________________________________________________________________
1. Face-to-face Communication
Technology products, especially those that are
new to the world, benefit from the unique capacity of
face-to-face communication to facilitate transfer of complex,
ambiguous and novel information.
2. Field Research
Many customer visits take place at the
customer's place of business. You can see the product in use,
talk to people who use it, and grasp the product's role within
the customer's total operation.
3. First-hand Knowledge
Everyone believes his or her own eyes and ears
first. Key players hear about problems and needs directly from
the most credible source--the customer. Learning is enhanced
because of the vivid and compelling quality of first-hand
knowledge.
4. Flexible, interactive
You can ask difficult challenging questions,
clarify, follow up, or switch gears as necessary. Visitors can
capitalize on surprising and unexpected answers and probe key
issues in depth.
5. Inclusion of multiple decision-makers from
the customer.
Many technology products, because they are expensive and mission-critical, are not purchased by one person but by a group of people filling the roles of user, influencer, gatekeeper, etc. In a customer visit you can interview all of the players and gain some understanding of the different needs and desires that come into play.
Exhibit 2
____________________________________________________________________________________
How Managers View the Benefits of Customer Visits
____________________________________________________________________________________
When I was in Production, sometimes the
customer was more of an adversary rather than a friend. He has
complained about everything, he is not realistic, he just demands
things. Back then we had an attitude that here is what we can do,
here is when we can do it, take it or leave it. I was in the
company for several years before I met a customer. Before that, I
didn't look on customer contact as necessary, I looked at it as
an evil. I know that's not right, but ...
Marketing Manager
Materials firm
In the health care business, you have claims
people, administrations people, the managed care people. If those
people are not in the game, there is no game. They will not be
motivated to try to understand the customer perspective, and they
will fail.
Marketing VP
Financial services
There's a lot I get out of visiting customers.
I get unfiltered information. In addition, I have a different set
of eyes, I can hear things that are different from what my
marketing and sales counterparts hear. The customer is the one
who has the information I need to design products.
R&D manager, technology firm
It's important to know how our products are
being used and who is using them. The most direct way, the most
efficient way to get that knowledge, is face-to-face with
experienced, knowledgeable people talking directly to users in
their place of work -- not in an artificial environment, but in
their place of work.
Take a scientist out of the laboratory, take
the supervisor out of the manufacturing facility, and have them
spend two days with our colleagues in Chicago, going through five
or six different accounts. That one experience will do more for
them than almost any other experience in terms of knowing where
the products are going and how they are being used.
Applications Manager, technology firm
The customer's perception is that new product development is a mystical process that they don't understand or have control over. We made the customers feel they were an extension of our development team. We were including their opinions and allowing them to mold this product into whatever shape would work best for them. And the tie that was created by doing that was invaluable.
Market analyst
Electronics firm
We've learned that sometimes the communication
gets confused. A sales rep may tell the development people what
the customer said they wanted, and then by the time you make what
you thought you were told, it may not be exactly what the
customer said. Having development there does speed up the
response to the customer. You hear it first hand. You get the
understanding. You have the opportunity to ask questions.
Development manager, materials firm
Standard market research does a pretty good job of answering what is important, but in almost all cases it does not do a very good job around the why. It is not enough for customers to tell you what they want unless they can tell you why.
R&D manager
Materials firm
__________________________________________________________________
NOTE. The source of these and other quotes was a study sponsored by the Marketing Science Institute to explore how businesses regard the activity of visiting customers. Quotations have been edited for style, and ellipses have been removed for readability. Portions of this material appeared earlier and are reproduced here by permission.
Exhibit 3
______________________________________________________________________________
Typology of Customer Visits
______________________________________________________________________________
I. Occasional Visits
A. Outbound: visit occurs at customer site
B. Inbound: visit occurs at the vendor site
C. Neutral site: visits occurs on neutral
ground (e.g., trade show)
II. Programmatic Visits
A. Outbound (a dozen or more visits to a
carefully selected sample)
B. Inbound (e.g., customer or dealer council)
Exhibit 4
____________________________________________________________________________________
Best Practices for Customer Visit Programs: 20 Tips
____________________________________________________________________________________
Preparing for the Visit
1. Send a confirmation letter to customers who
have agreed to participate and attach an agenda (the agenda
should contain only the major topics from your discussion guide).
This helps the customer understand that
the visit is for research purposes and allows him or her to
prepare for the interview.
2. Send cross-functional teams.
A two person team representing two
different departments or areas will bring 'stereo vision' to bear
on the customer's response.
3. Select customers according to a plan and
visit at least a dozen.
This is a matter of "garbage in,
garbage out" -- you have to visit the right number of the
right kinds of customers to have any confidence in what you hear.
4. Don't visit the same small group of favored
customers over and over. Visit competitors' customers, lost
leads, lost customers and any other group that might provide a
valuable perspective.
Customer visits work best as a
discovery tool.
5. Try to interview several different people
at each customer representing the different influences on the
purchase decision.
In technology markets it is particularly important to interview both technical and managerial individuals.
6. Enlist the support of local account
management. Make sure that they understand the research purpose
of the visit. Seek their perspective on the customers situation
and their interpretation of customer response.
Else, you may find yourself a victim of
the "set up," wherein an account representative steers
you toward a particularly irate customer, on the theory that
corporate never listens anyway and needs to be hit over the head
when they do deign to visit.
Conducting the Visits
7. Use a discussion guide
Just as agendas make for better
meetings, a 2-3 page, organized list of key topics and important
questions will help keep interviews on track and consistent
across the program.
8. Assign roles to team members
In any interview, or at least in each
part of it, one person should lead the discussion while the other
concentrates on listening and taking notes.
9. Emphasize open-ended questions
Open-ended questions maximize discovery
and best take advantage of the possibilities inherent in
interactive, face-to-face communication.
10. Don't ask customers to give solutions --
get them to identify problems. Emphasize task requirements and
business goals, not product features.
Implementing profitable solutions is
fundamentally a vendor responsibility. Whereas, the customer is
the authority on what the real problems are.
11. Don't talk too much. Make any
presentations after the research interview, not before.
Dialogue, dominated by the customer, is
the goal. Beginning with a presentation "poisons the
well," diminishing the odds of discovery and surprise.
12. Probe customer answers. Elicit second,
third, and fourth answers to your open-ended questions. Seek
clarifying examples and additional elaboration.
The number one failing of beginning
interviewers is a failure to probe. It's like leaving money on
the table.
13. Use visual aids -- sketches of equipment,
network configurations, bullet points describing key aspects of a
concept.
These help the customer address all the
issues that concern you.
14. Don't confine yourself to a conference
room. Walk around. Watch the product in use. See how it's set up.
Observation can reveal needs and
opportunities that the customer is unable to vocalize.
15. Accept criticism gratefully. Demonstrate
unconditional positive regard -- that you acknowledge the
legitimacy of what the customer says, whether painful or pleasant
to hear.
There's no reason for the customer to
believe your claim that you're there to listen and learn--normal
vendor behavior is by turns aggressive and defensive, not
receptive You have to earn the customer's trust.
Following the Interview
16. Debrief immediately after each visit.
Interviews yield a large number of
tacit and subtle impressions that quickly fade. Plus, you'd be
surprised how often team members come away with different
impressions. These need to be integrated lest they become
divisive.
17. Highlight verbatim quotes from customers
in reports.
Customers tend to speak vividly with no
holds barred. Use of verbatims can be particularly helpful when
the visits have yielded bad news (they can't fire the customer!).
18. Every visit team should produce a trip
report. Organize these reports by theme, not by customer, and
lead with the big news.
Research leaves a record. On the other
hand, fat reports won't be read. A thematic organization that
highlights the most newsworthy discoveries addresses this
problem.
19. Use matrices to analyze and interpret the
results of visits.
A basic matrix where customer
requirements identified through visits are the rows, and product
features are the columns, is often illuminating. Such matrices
can reveal features that don't correspond to any customer need,
and conversely, requirements not addressed by any feature.
20. Archive trip reports on line with other
marketing intelligence.
Regular review of accumulated reports can identify trends, suggest opportunities, orient new employees, and in general keep the customer visible.
Additional Reading
Barabba, Vincent and Gerald Zaltman (1991), Hearing the Voice of the Market: Competitive Advantage through Creative Use of Market Information, Boston: Harvard Business School Press.
Bailetti, Antonio J. and Paul D. Guild (1991), "Designers Impressions of Direct Contact Between Product Designers and Champions of Innovation," Journal of Product Innovation Management, 8, 91-103.
Griffin, Abbie and John R. Hauser (1992), "The Voice of the Customer." Cambridge, MA: Marketing Science Institute, Report No. 92-106.
Guillart, Francis J. and Frederick D. Sturdivant (1994), "Spend a Day in the Life of Your Customer," Harvard Business Review, January/February, 116-125.
Holtzblatt, Karen and Hugh Beyer (1993), "Making Customer- Centered Design Work for Teams," Communications of the ACM, 36(October), 93-103.
Kohli, Ajay K. and Bernard J. Jaworski (1990), "Market Orientation: The Construct, Research Propositions, and Managerial Implications," Journal of Marketing, 54 (April), 1-18.
Kotter, John P. and James L. Heskett (1992), Corporate Culture and Performance, New York: Free Press.
McQuarrie, Edward F. (1993), Customer Visits: Building a Better Market Focus, Newbury Park, CA: Sage.
Narver, John C. and Stanley F. Slater (1990), "The Effect of a Market Orientation on Business Profitability," Journal of Marketing, 54 (October), 20-35.
Shapiro, Benson (1988), "What the Hell is 'Market-Oriented?'" Harvard Business Review, 66(Nov.-Dec.), 119-125.
Slater, Stanley F. and John C. Narver (1994), "Market-Oriented Isn't Enough: Build a Learning Organization," Cambridge, MA: Marketing Science Institute, Report No. 94-101.
von Hippel, Eric (1986), "Lead Users: A Source of Novel Product Concepts," Management Science, 32, 791-805.
Webster, Frederick E. (1992), "The
Changing Role of Marketing in the Corporation," Journal
of Marketing, 56(October), 1-17.