Editor's note: Jim Jubelirer is vice president, Burke Customer Satisfaction Associates, Chapel Hill, N.C.

Most companies know that in today's booming economy, it's a customer's world. Customers have more access to more product information and more choices of where to obtain products than ever before. Companies are trying to stay ahead of their customers by understanding their needs and providing quality service at a price that doesn't compromise financial results.

To make the situation more complex, leading management thinkers have articulated new concepts such as one-to-one marketing, customer loyalty, customer learning, knowledge management, customer relationship management, mass customization and permission marketing. It is easy to feel confused today!

Why customer intimacy matters

Customer intimacy is based on knowledge. If you are a business-to-business supplier, it means getting to know the inner workings of your largest accounts. For consumer products companies it means understanding the needs and desires of individual consumers and the segments they represent.

Companies have more competition than ever, which makes purchasing decisions more complex and stressful. On the flip side, people have less time, less patience and less flexibility in dealing with mistakes. This "more and less" equation results in an increased demand on businesses. This increased need seems unfair and unrealistic - it is not always in the best interest of companies to respond to these demands.

What?! Not respond to a customer's needs? The Wall Street Journal recently cited the American Customer Satisfaction Index (ACSI) study, a quarterly survey conducted by the National Quality Research Center at the University of Michigan. The study reported that as customer satisfaction increases, business results improve. Research has shown a positive relationship between measures of customer loyalty and financial outcomes.

However, numbers don't tell the whole story. For example, take computer companies. PCs are a commodity dropping in price every day. With more consumers buying computers, there is an increased demand for technical support, which is expensive to provide. So if a computer company is exceeding its customers' needs for technical support, it is probably spending too much on technical support. Bottom line: Just because customers want it doesn't mean it's good for business.

Take this test: When was the last time a customer called and asked how profitable you were last quarter?

Many companies understand that managing relationships with their customers leads to a competitive advantage and a sharper company focus. Therefore, it is necessary to "fire" unprofitable customers or customers whose expectations are not consistent with your philosophy and strategy.

Numbers don't tell the whole story

Once an organization has made a real commitment to get closer to its customers, how does it go about achieving this intimacy? Companies striving to achieve customer intimacy would be best served by developing an integrated architecture. This method allows organizations to:


  • capture and analyze inbound customer comments and complaints;
  • use qualitative and quantitative methods;
  • link relationships/products/ processes with transactional or event surveys;
  • link customer and employee metrics to internal tactics and financial results.

An integrated architecture combines inbound, unsolicited information, and outbound solicited market research. It is necessary to use multiple methods to understand the complexities of the marketplace.

Inbound methods

Inbound methods require that the customer initiate contact with the company. This feedback is usually based on customer problems and is not representative of the true picture. However, inbound methods are an opportunity to respond to and recover from these issues.

Inbound methods also can be driven by the employee. Therefore, employees play a vital role in the integrated architecture. It is best to look not only at how unsolicited feedback is gathered about an organization's products/services, but also the relationships that are driven by customers and employees. Oftentimes consumers complain to customer service representatives or take the complaint one step further and write "Letters to the President." All of this feedback should be taken into consideration. In addition, employees have an opportunity to share customer feedback at internal management forums or regular staff meetings.

Now that all the inbound information has been collected, what does a company focus on first when conducting outbound market research? For starters, consider the customer life cycle. Over the course of the service an organization provides to a customer or the product it offers, there are seven distinct phases that need to be explored.


  • Choosing. How do customers get information on an organization's products/services and how do they choose them?
  • Ordering. How do customers acquire an organization's products/services?
  • Installing. What must customers do to get work done after receiving an organization's products/services?
  • Learning. What does it take for an organization's customers to become proficient with its products/services?
  • Using. How productive and effective are an organization's customers once they know its products/services?
  • Supporting. How do an organization's customers keep its products/services up to date and running?
  • Repurchasing. How do an organization's customers recycle/dispose of its products and upgrade or repurchase?

Many companies know the criteria by which customers first purchased its products/services. However, do they know why a person considers repurchasing? It may be quite different than the criteria used in the initial purchase decision. It is common for sales-driven companies to focus on the choosing and ordering phases, while an engineering-driven company may focus on use and support. Rarely do companies gather extensive customer data about every phase in the customer life cycle. Therefore, it is necessary to use both inbound and outbound methods to gather meaningful feedback across the entire customer life cycle.

Outbound methods

Outbound methods include both qualitative and quantitative processes. Unlike inbound methods, outbound methods are all driven by the company and can be implemented on a product/service level and on a relationship level with the consumer.

- Outbound qualitative methods. Outbound qualitative methods include focus groups, site visits (used to understand the requirements and needs of specific individual customers), executive interviews and employee roundtables - useful for understanding the perspective of front-line workers. In addition, observational research is another method that many large consumer companies are using. For example, Hewlett-Packard engineers observe the "out of the box" experience of installing new hardware and software at customers' homes.

Due to the complexity and variety of qualitative responses, companies typically do not analyze qualitative information in a rigorous manner. However, new software tools allow for content analysis of text files to identify themes and patterns.

Because companies are usually looking for that single number that tells them how they are doing and what they should focus on, quantitative research also is needed to validate the directional information captured from qualitative research.

- Outbound quantitative methods. There are several quantitative methods that companies can utilize - ranging from surveys to third-party consortiums. Relationship surveys address issues regarding satisfaction with sales, products, services, etc. Transactional (event-based) surveys are usually a follow-up to a company/consumer interaction. For example, when you take your car in to get serviced, you may receive a survey in the mail several days latter asking about your experience. Market level or benchmarking surveys usually involve all customers in a particular product category. The sponsor of the study is not identified and the focus of the study is on several companies within a particular product/service category industry. Syndicated research/third-party consortiums, like J.D. Power & Associates, conduct their own product/service or industry research and then sell the findings to those companies of interest. In addition, there are third-party consortiums like the ACSI that conduct research across many industries.

In order to utilize the results of quantitative processes, it's important to implement a monitoring program - repeating the surveys with valid sample sizes and meaningful analysis. Many companies make potentially erroneous management decisions because of poor research - usually due to an insufficient number of samples.

If you look at virtually any winner of a quality award (such as Malcolm Baldrige National Quality Award), you'll find that these companies have extensive customer surveys and a closed-loop process to ensure accountability.

Without a closed-loop process to make sure that changes are made, many measurement programs fail to meet their objectives. The largest shortcomings usually occur because managers don't hold employees responsible for making changes, or because the company is distracted by too many other initiatives. It is critical that all employees agree with, and then act on, collective decisions.

For example, one company was known for its "company nod." When a decision was being made in a meeting, all employees would nod their head yes, then they would go back to their desk and shake their heads no. That company, once a leader in its industry, is no longer in business.

Linking relationships with transactions

There are several opportunities for an organization to survey its consumers - on a macro and micro level. Calendar surveys, also known as relationship surveys, are triggered by a passage of time (e.g., distributed quarterly or annually) and usually cover the business's entire line of products and services. These surveys are used to establish target issues to improve customer loyalty.

Event surveys are triggered by a specific service event, like a call to a help desk. The survey is focused on the specific event and transaction. These surveys are then linked to target issues identified by the calendar surveys.

Dashboards are individual customer specific surveys. The company supplier provides the customer with a results report -- jointly agreed upon measures and frequency. For example, each quarter a supplier like GE Light Bulbs sends a report to a customer like Home Depot and details what percentage of shipments to Home Depot were partial or full.

Linking customers, employees and financial performance

Because the investment in a customer relationship management program is so great, it's critical to demonstrate to senior management the value of the program and how it is linked to employee commitment and financial performance.

Studies have shown that employee satisfaction is a strong predictor of employee retention, which in turn is a good predictor of customer satisfaction.

Many clients also have validated the link between customer survey scores and financial results. For instance, a health insurance company found that 100 percent of its customers who were classified as "at risk" from their customer loyalty tracking program did not renew their contracts when they expired.

For a large commercial bank, Burke conducted surveys with customers from more than 1,000 branches and with thousands of employees. This data formed the basis of a modeling project. The highest correlations between employee responses and customer loyalty were found in four primary areas:


  • the organization's customer service commitment;
  • having effective processes that empower employees to deliver service;
  • providing adequate training and processes to deliver quality service; and
  • adequately rewarding employees for their contributions.

Another aspect of the modeling project was to correlate individual bank branch profitability with a measure of customer loyalty called the Secure Customer Index (SCI). The branches with the greatest profitability also had the highest SCI scores.

This type of validation can provide the burden of proof that management needs to maintain the financial and emotional commitment to an ongoing customer loyalty-tracking program.

Not a true picture

Too many companies rely only on unsolicited feedback such as comment cards and therefore do not have a true picture of their performance in the marketplace. Genuine customer-intimate companies have a competitive advantage by focusing on the vital few issues that matter most to key customers or segments. Qualitative methods can provide insight and direction into key customer requirements and marketplace trends. Rigorous surveys also are essential to validate performance and provide a sound basis for decision-making. Market research alone, however, does not lead to action. A closed-loop process to ensure accountability is critical.