Voice of Customer (VOC)

Customer segmentation is an important task in any voice of the customer (VOC) strategy. During the Define stage, Six Sigma teams deal with a variety of customers, both directly and indirectly. You need to be able to categorize these customers in a way that focuses on who produces the most value for the product being improved. If your customer base is large, you might feel overwhelmed at the thought of segmenting them. Typically, you categorize your customers using three criteria: position, profile, or market.

The first customer-segmentation criterion is the customer’s position. When customers are segmented by position, it’s based on their role in your company’s supply chain and whether they’re part of the company or not. In other words, are they internal or external customers? Your company’s internal customers are the people in your organization who are impacted in some way by the products or services you provide. Your external customers, on the other hand, are those who are outside your company or division. They can include distributors, transport companies, or the customers who buy your products. When the term “customer” is used in Six Sigma, it almost always means the external customer.

After segmenting your customers as internal or external, they can be further grouped into three classifications based on their use of your product or service. They can be primary, secondary, or indirect customers. Your primary customers are the immediate recipients of your product or service, or the output of your process. They decide whether to buy what you’re offering. Secondary customers acquire your product or service for their own use, quite often through an intermediary. Indirect customers don’t purchase the product or service, but they are impacted by it in some way.

As an alternative to grouping customers as primary, secondary, and indirect, you can also group them as intermediate follows:

1. Intermediate customers buy the product from a manufacturer and then either sell it as it is, or modify it in some way for resale.
2. End users purchase products and services for their personal use. In this way, they’re much like secondary customers.
3. Impacted parties don’t buy or use a product or service, but they are impacted by it in some way.

Your project may not have cut-and-dried customer types, and one of your customers may fall into more than one of the three categories. After position, the second customer-segmentation criterion is the customer’s current profile, or state. Your customers can be categorized more specifically into five current states:

1. Customers who are currently happy or satisfied are sometimes hard to identify – they’re not complaining to management or threatening to take their business elsewhere.
2. Current dissatisfied customers still buy your product or service but might not be happy with some aspect of what you offer. These customers can also be difficult to identify because they often don’t complain. Instead of expressing their dissatisfaction, many just leave.
3. Defected or lost customers almost always start out as dissatisfied customers. These customers have most likely taken their business elsewhere. Many companies don’t know about these customers because they often fail to follow up. If they’d take the time to talk to these customers, companies would find out why they, and other dissatisfied customers, left.
4. Your competitor’s customers are just that: customers who buy products or services from companies in direct competition with you.
5. Potential customers are those who are dissatisfied with their current provider of products or services, or who have a new need for a particular product or service.

You should keep in mind that these categories aren’t mutually exclusive. A customer who defected can now be your competitor’s customer, and definitely a potential one for you. When you’re identifying customers, don’t forget to look beyond those who are obvious. If you do, you could miss some important ones. The final criterion you can use for segmenting customers is the markets they belong to. Customer markets can be grouped into four categories

1. Demographics refers to the physical characteristics of a group of customers, such as income, ethnic group, gender, or marital status.
2. The product or service category helps you segment customers by their status relative to your product or service.
3. Grouping customers by geography can include factors like where they live or the climate in their locales. It could also refer to cultural considerations or the time needed to ship them products.
4. The purchase category helps you organize customers by how many sales they generate for your company.

As with the current profile criterion, these categories aren’t mutually exclusive. Your Six Sigma team might segment customers by age and income at the same time. Mutual exclusivity may exist within categories, though. Knowing about the ways you can segment customers helps you meet their needs and requirements. This information is vital when you perform a customer-segmentation analysis, which gives you the tools you need to meet the requirements of the customers who are key to your company’s success. When you segment customers by position, you can use a 3 x 2 grid to classify each customer as either internal or external, and as primary, secondary, or indirect. Of the three segmentation criteria – position, current profile, and market – position is by far the most frequently used by Six Sigma teams.

You can follow certain best practices to help identify your key customers:

1. Create and maintain a customer information system. This is a valuable source of customer data, including customer identity, needs, expectations, and potential segmentation criteria.
2. Perform a strengths, weaknesses, opportunities, threats – or SWOT – analysis to determine your competitive position. This can help you develop segmentation strategies that will leverage your company’s strengths and minimize its weaknesses.
3. Align your organization’s segmentation strategy with its strategic intent, which will help your team maintain focus. This is especially true of opportunity. If you pursue an opportunity that doesn’t align with your company’s business strategy, you risk failing to satisfy any of your customers.
4. Use customer and market surveys to measure customers’ perceptions of your company. This can help you identify areas of improvement, and also to compare your company’s perception against that of its competitors.

During the Define stage, Six Sigma teams must be able to categorize customers in a way that helps them identify the ones who produce the most value for organization. Customers can be segmented by their position, current profile, and market. Once you’ve figured out who your key customers are, you can perform a customer-segmentation analysis. Then, you’ll be in a much better position to improve your product, service, or process to best meet their needs.

VoC Strategy

Gathering and analyzing customer data is the foundation of any Six Sigma improvement initiative. Think about it – without customers, your company wouldn’t exist. So it’s vital that you seek the voice of the customer – or VOC – very early in a project and build your improvement strategies around that.

You need to have a clear, effective VOC strategy in place to keep up with your customers’ changing requirements. An effective VOC strategy should consist of five key tasks

1. define your VOC process goals
2. identify customers, customer types, and segments in relation to your projects
3. plan and collect your data
4. analyze the data you’ve collected
5. determine customer requirements and use these as action goals

The first task – defining the VOC process goals – involves creating a purpose statement. This helps you answer such questions as “Why is this VOC project being launched?” and “What information is needed from our customers?” Defining VOC process goals forces you to think about such things as whether it’s valuable to go to the effort of finding out how customers actually use products, or how to win back lost customers. It also allows you to convey the project objective to management and ensure all your team members are on the same page.

The second task in a VOC strategy is identifying the customers you wish to gather data from. This involves grouping customers into types, identifying market segments, and pinpointing which customers you’ll interview. Some customer groups will be more profitable for your company, and these might be the segments your project will focus on. Using customer segmentation to group customers can help your team figure out which groups create the most value for your improvement efforts.

After you’ve specified what the purpose of your project is and which customers will be interviewed, it’s time to start gathering information. The third task in your VOC strategy is making a plan and then collecting your data. Collection methods can include focus groups, surveys, interviews, or questionnaires, to name just a few. This step involves first planning what outcome you hope to achieve and how to collect your customer data. Different data collection methods will help you achieve different results. For instance, if you want an in-depth understanding of a customer’s experience, you’d use a face-to-face interview.

During the fourth task in your VOC strategy, you analyze the data you’ve gathered. This will help you identify key customer concerns and requirements. Using tools such as the Kano model, Quality Function Deployment, or a Critical to Quality tree can help you make sense of the data and figure out what satisfies your customers. When you analyze your VOC data, you should be able to spot trends. Which customer attitudes have changed? How do requirements differ? Is your company still meeting customers’ needs? These are examples of the questions your analysis can answer.

Finally, the fifth task in a VOC strategy requires you to determine customer requirements as action goals. If your requirements are well defined and precise, you won’t need to guess what customers really want from your products or services. Once you have a firm grasp on your customers’ needs, you’re ready to translate them into actionable project goals. The Six Sigma team works with customers to specifically define the requirements and uses this knowledge to make improvements.

Customers are your company’s greatest assets, so it’s important that you carefully listen to their needs. Having an effective VOC strategy in place will help your Six Sigma team focus its improvement efforts on projects that result in satisfied customers.

Your customers are the foundation that your company is built on, and gathering accurate voice of the customer (VOC) information is the key to successful Six Sigma projects. You need to have a clear, effective strategy in place to help achieve this objective. A VOC strategy is an effective tool to help your Six Sigma team focus its improvement efforts on projects that result in satisfied customers. A VOC strategy should consist of five tasks. First, you have to define the goals of your VOC process. Next, you identify customers, customer types, and segments in relation to your projects. You then have to plan and collect your data. The next task is to analyze the data you’ve collected. Finally, you determine customer requirements and use these as action goals.

Key areas to consider when building VoC program

1. Capture: It’s important to identify customer listening posts both internally and externally. Surveys are the easiest and most common way to establish listening posts across all customer touch-points and departments.
2. Analyze: After capturing key insights, you can then analyze feedback in real-time. It’s important to deliver clear and actionable insight to the right employee stakeholders.
3. Act: Successful VoC programs put you in the best position to act on real-time insight. Knowing where the problem areas are allows you and your team to take corrective action.
4. Monitor: Continuous monitoring helps you to track your results over time. Having a real-time pulse on your customers helps you uncover patterns to see where you are making improvements across the enterprise.

Characteristics of the Best VoC Programs

1. Connect multiple types of feedback across data channels
2. Provide automatic collaboration across functional departments
3. Incorporate the voice of the employee
4. Leverage dashboards and reports that integrate and display information from multiple customer voices regardless of source, survey or time
5. Deliver clear ROI and business results

VoC Data Collection

Six Sigma is fact-based by nature. So data collection must be done often, and it must be done in an organized and rigorous manner. You should be aware of the three key considerations associated with data collection: data sources, data collection levels, and customers. Data sources can be either primary or secondary, and the type you use will depend on the information you want to collect, are

1. Primary (direct) data sources are those that are derived from direct interaction with customers. Interviews, surveys, focus groups, and observations are all primary data sources. When you’re using primary sources, you go straight to the customer to collect your data.
2. Secondary (indirect) data sources are those that already exist. This information might have been collected for another purpose. Examples of sources of secondary data include industry experts or market watchers.

The second consideration in any data collection effort involves the levels where customers have an impact on the organization. You should consider three organizational levels:

1. The customers at the business level generally include shareholders and employees in top management positions. These customers typically provide you with financial information. Your Six Sigma team will usually measure this data on a quarterly or annual basis.
2. The operations level can include both internal and external customers. Internally, customers are usually those who manage production operations. Externally, they’re the people who purchase products or services. It’s at this level that you measure overall process performance. Your Six Sigma team might measure this data on a daily or weekly basis.
3. The process level mainly involves dealing with internal customers, which include employees who work on the process under study, as well as those who work on the next set of processes downstream (those who take the output from your process and then apply their own processes to work on it further). At this level, you normally measure the key process variables using statistical methods for process capability, improvement, and control.

The four most common data collection methods are

1. Observations allow you to watch your customers in “real life” environments. Because you have no control over their actions, you’re more likely to get a more realistic, first-hand understanding of how they interact with your process, products, or services. Use observations when you want insight into what it’s really like to be one of your company’s customers or if you need to see specifically how something is being done or used. This is information that you might not be able to get from an interview, for instance. If customers aren’t aware that you’re gathering information, you’ll be more likely to secure accurate insights for improving products, services, or processes.
2. Interviews are best used when you need an individual’s perspective, rather than a group’s. They can be conducted in person or over the telephone, and each method has its advantages. Both allow you to get unique customer perspectives, pursue unexpected lines of questioning, and learn insights that may lead to innovation. Face-to-face interviews give you the opportunity to create rapport with the interviewee that might not be possible over the phone. Face-to-face interviews allow you to make eye contact and pursue more complex questions and in-depth discussion. Interviews conducted over the telephone allow you to gather information from customers widely dispersed over a large geographic area. They also allow you to gather a lot of data quickly and at a low cost.
3. Focus groups allow you to gather small groups of customers – usually fewer than ten – in one place to obtain feedback. This provides an ideal setting for brainstorming and watching your customers bounce ideas off each other. This data collection method is especially useful when you want to gather information from customers who have similar product and service needs. You can conduct a focus group with several people in a particular segment. Focus groups are not as restrictive as a survey – you can ask more open-ended questions. You can also meet with groups of several participants at once; it’s not as time consuming as a series of individual interviews. You can introduce props such as products, prototypes, or marketing materials, which allows you to watch customers interact in a way the other methods don’t allow for.
4. Surveys allow you to collect extensive information from a large group of customers, unlike the other data collection methods. The responses you gather will be quantifiable and have statistical meaning. Surveys can be used in conjunction with other data collection methods. If you want to gather quantifiable data in a consistent way, you’d use a survey, since every survey is exactly the same. Before you conduct interviews or focus groups, you could create a survey that would pinpoint areas for in-depth consideration. Conversely, at the conclusion of an interview or focus group, you could use a survey to quantify patterns in participants’ responses.

Data Errors

Reliability refers to the consistency of your data collection method. Say you collected customer data, analyzed it, and got certain results. If you performed the test again, and got the same or similar results, then your data collection method must have been consistent and your test can be considered reliable. It’s the consistency of your data collection method that helps ensure reliability. Validity refers to the accuracy of your data collection efforts, which helps ensure validity. If your chosen data collection method actually measures what it’s supposed to measure, then it can be considered valid. Reliability and validity are cornerstones of quality data collection – which is needed to guide Six Sigma improvement efforts. If your data is consistent, stable, and repeatable, you know you can rely on those results. You also need to know that the method you use to collect data is actually measuring what it’s meant to measure. Otherwise, you’re wasting your time.

All surveys are subject to some uncertainty about how well the sample represents the population. The measure of this uncertainty is known as margin of error. Margin of error answers the question: How trustworthy are the results? There are two types of error that contribute to the margin of error:

1. A nonsampling error is statistical in nature and is caused by human error. For example, if people choose not to participate in a survey or don’t understand the questions, the human error is most likely in the design of the survey, which may be unappealing, time consuming, or confusing.
2. A sampling error is always present and results from surveying only one portion of the population instead of the entire population. In other words, if one participant’s views represented the view of every single person in a population, then you would only need to interview that one person. Obviously this isn’t the case, so sampling errors are inevitable.

Customer expectations are what customers hope your product or service offers to make it valuable and worth buying. They’re sometimes classified in a hierarchy:

1. Basic expectations are the absolute minimum qualities that have to be present in order for a product to be acceptable.
2. Expected qualities are those that are generally a normal part of the product
3. Some qualities are desired by customers but aren’t always included with the purchase.
4. Unanticipated qualities are those that are unexpected – they go beyond what the customer expects.
5. Customer needs are always changing. This can be good for business if you’re able to provide products that meet these changing needs – but it can also be difficult to figure out exactly what it is customers require. Once customers’ basic needs are met, new needs are often created. Joseph Juran described customer needs as falling into five categories:
6. Stated needs are what your customers say they want.
7. Real needs refer to what customers actually need.
8. Perceived needs are what customers think they need.
9. Cultural needs refer to the status customers think they’ll attain from buying the product.
10. Unintended needs occur when customers use a product in an unintended way.

Implementing your VOC strategy can be made simpler by using a few key tools:

1. During the first step in translating customer data into critical technical requirements, you can use a customer requirement table.
2. Kano analysis and critical-to-quality (CTQ) analysis can be used during the second step.
3. During the final three steps, you can use quality function deployment (QFD) – also known as house of quality (HOQ).

The Kano model focuses your improvement efforts by grouping customer requirements into three categories:

1. Dissatisfiers are the customer requirements that simply have to be met because customers expect them.
2. Satisfiers are the customer requirements that aren’t expected as a regular part of the package. Customers can live without these features, but they help keep them happy and loyal.
3. Delighters aren’t expected by the customer, so they’re not a cause of dissatisfaction if they’re missing. But, they do excite customers when they’re present because they exceed expectations.