• April 1, 2009
  • By Sid Probstein, chief technology officer, Attivio

Listen to the Voice of the Customer

In the current economy, most companies are focused on cutting costs as they watch revenues retreat. But it's important not to let cost cutting undermine customer retention and further erode revenue, since long-term relationships represent the highest value and the best prospects for cross- and upsell opportunities.

During downturns, it's more important than ever to focus on improving customer satisfaction and retention because:

1.     Acquiring new customers can cost five times more than satisfying and retaining current customers (Alan E. Webber, "B2B Customer Experience Priorities In An Economic Downturn: Key Customer Usability Initiatives In A Soft Economy," Forrester Research, February 19, 2008)

2.     A 2 percent increase in customer retention has the same effect on profits as cutting costs by 10 percent

3.     The average company loses 10 percent of its customers each year

4.     A 5 percent reduction in customer defection rate can increase profits by 25-125 percent, depending on the industry

5.     The customer profitability rate tends to increase over the life of a retained customer (2002 Emmett C. Murphy and Mark A. Murphy, Leading on the Edge of Chaos, Prentice Hall 2002)

Once customers are lost, it's both challenging and expensive to win them back. If you could institute practices that reduce customer attrition, you'd protect revenue today and enhance long-term loyalty. Consider that:

  • 62 percent of customer defections can be modified if discovered in advance (Michael Lowenstein, "Model modelers in predictive churn," SearchCRM, June 2002)
  • 68 percent of customer defections occur because customers perceive "an attitude of indifference." (1000ventures.com. Data source: American Society for Quality)

Since most customers defect because of vendor behavior, you have the opportunity to reduce defection if you detect customer dissatisfaction while there's still time to act.

A 360-degree view of each customer

What if you could listen to every customer-even when they are talking about you instead of to you? What if every customer-facing employee had immediate access to complete customer profiles at every interaction? This level of insight would not only let you better serve customers-it would also help you gather information to make strategic decisions.

Today, companies are establishing Voice of the Customer (VoC) initiatives to ensure a focus on building a customer-centric corporate culture that assures deep and durable relationships with customers. A well-designed VoC initiative can protect your company in slow economies and nurture loyalty by enhancing your customer-centric perspective.

Improving your insight, improving your results

How can you gain an advantage in customer satisfaction and retention? Obtaining-and maintaining-this 360-degree customer view depends on several actions: making a commitment to identifying what to search for and where, discovering and connecting useful information, aggregating the information, and presenting it in a usable format. One key obstacle is the diversity and broad distribution of the information you need-compounded because the sources include servers you don't control and outside market influencers.

For the information you assemble to be most useful and cost-effective, you need analyze what the information means and what actions need to be taken. While some of this analytical processing can occur at any time, some of it needs to occur on demand-when the customer is in contact with your company. Of course, your analytics are only as good as your access to all the relevant information.

How mature is your company's customer loyalty initiative?

Where do customer loyalty and retention fit in your corporate strategy, and how are you addressing this? Do you expect to both reduce costs and improve customer management? Can you identify processes that could be automated to lower costs without alienating customers?

Before you engage in any plan to improve processes for managing customers, you should establish goals and assess your company's current maturity in terms of the people, processes, and technology. An effective Voice of the Customer initiative:

  • Is proactive
  • Aligns with business strategy
  • Offers an up-to-date, 360-degree view of each customer
  • Gathers and analyzes customer information from all available resources-not just databases and surveys, but emails, attachments, call center logs and external blogs
  • Empowers each customer-facing representative to know the customer and how to efficiently manage a transaction or resolve a situation
  • Relies on well-planned processes, allowing automation and analytics to ensure consistent best results that control costs


You can drive retention and loyalty improvement by ensuring a 360-degree view of every customer in a well-planned Voice of the Customer initiative that:

  • Incorporates data and content from all relevant sources-from databases to call-center transcripts, blogs and emails
  • Gives immediate, accurate insight
  • Uses analytics and alerts for quick response
  • Identifies and focuses on highest-priority customers

A well-planned Voice of the Customer initiative strengthens your business in difficult times and ensures more effective and efficient operations for managing customer concerns when the economy flourishes and the number of customer demands grows.

About the Author

Sid Probstein is chief technology officer at Attivio, an information management provider that brings together enterprise search and business intelligence capabilities through its ability to combine structured data and unstructured content into one universal index.

Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. If you would like to submit a Viewpoint for consideration on a topic related to customer relationship management, please email viewpoints@destinationCRM.com.

CRM Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues

Related Articles

Can You Hear the Social Media Conversation?

Because it's going on all around you, and your customers are talking.