In 3 sentences: The document discusses the importance of listening to customers in today's marketplace where customers have more choices and power than ever before. It argues that companies should shift marketing efforts from broadcasting messages to gaining a deeper understanding of customers by listening to their feedback and using it to improve the customer experience. The role of the chief listening officer is discussed as leading this effort to truly understand customers and integrate customer data and insights across an organization.

1. LISTENING TO THE CUSTOMER’S VOICE
Focus
The chief
listening officer
God provided a great model for
communication when he gave us two FIGURE 1: WHO INFLUENCES CONSUMERS?
ears and one mouth. David Jackson 100
■ 1997 ■ 2001
preaches the lesson of better listening. 90
80
70
Take a look at the marketing department’s budget. 60
How much is spent on the different activities of 50
research, advertising, direct mail, sponsorship, PR and 40
events? In most companies, the marketing function 30
and the associated spend is dominated by 20
communications – getting the message out to the 10
prospective customers. 00 Family Friends Advertising
Communicating your message is of course a vital
Source: BT/Future Foundation (2002)
activity: even the best product in the world is of little
value if people don’t know about it. It is also true that
reaching that elusive audience is increasingly difficult and Customer needs have always changed, but they are
expensive. It is said that people are exposed every day now changing more rapidly, fuelled by significant
to 4,000 marketing messages from companies trying to changes in social and working patterns and shorter
influence their buying intentions. It is hard to make an product life cycles. Globalization provides customers
impact, especially as these impressions are just a small with greater choice, and the growth of the Internet has
part of the 50,000 thoughts we each have every day. made it much easier for customers to access that
To stand out from the crowd in this deluge of choice. Power is shifting from suppliers to customers.
marketing and mind games, companies resort to ever- People – consumers and employees – are also
more sophisticated and expensive campaigns – which changing. Looking across just three generations, my
are less and less effective. Family and friends are much father worked for the same company, doing basically
more influential than advertising in shaping consumer’s the same job throughout most of his life, using skills that
buying activities (Figure 1). Their recommendations changed relatively little over fifty years. For most
(good or bad) are much more likely to be based on first- people, a job involved hard, physical work. He knew
hand experience than on the adverts they have seen. exactly when he would retire, and he did not worry
This is not to say that advertising does not work; it about his pension because politicians, financial
does. But just how effective is it compared with other institutions and employers could be trusted. For Dad,
approaches? What would be the effect on sales high technology was a telephone that plugged into the
revenue of reducing advertising by 20% and investing wall and a TV with four channels.
that saving into improving the customer experience? My children, on the other hand, may well live to be over
What if, instead of bombarding customers with more a hundred and move in and out of work for seventy years.
advertising, we listened to them more and used their They will choose jobs that suit the lifestyle they want,
feedback to improve the service provided? Is marketing which will change according to their situation. Retirement
too much of a monologue? will be when they want it to be, and will probably not be
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2. LISTENING TO THE CUSTOMER’S VOICE
permanent. They may flit in and out of retirement and which customers do business with companies, as well
work as money and their whims dictate. They know that as the overall relationship. Monitoring customer
they will have to look after their own future, and will trust interactions provides valuable and actionable
people and institutions based on their performance, not information with which to drive continuous
their words. They will exploit the massive choice they will improvement. This cycle of feedback and improvement
have, remaining loyal only to those who demonstrate that underpins the success that many companies have in
they value their relationship.1 building a loyal customer base. Event-driven
In this chaotic and complex life, trust will become experience measurement also matches the approach
more critical and companies that can earn and retain a that the Financial Services Authority is taking in
customer’s trust will be in a privileged position. Trust monitoring how suppliers treat their customers fairly.2
spans both the rational and emotional elements of Where trust is important in a relationship, customer
customer relationships. At its most basic, trust is about feedback has to go beyond the rational elements such
confidence in the quality, availability and reliability of the as speed of response, quality of product and ease of
product or service. But it goes beyond that. It doing business. Understanding the emotional
embraces mutual respect, openness, honesty and connection with the customer will help to strengthen the
similar shared values. We prefer to do business with relationship. Whilst operational performance will affect
companies with which we have an affinity – companies customers’ views of a company’s efficiency, their
we like. In an uncertain world, those companies that emotional view is what really shapes their buying
gain and retain our trust will have an edge (Figure 2). decisions. Integrating experience and relationship data
As consumers select one supplier to be their trusted with operational performance measures provides
advisor and invest time in communicating their personal insights into the changes that will drive retention and
data and needs to that supplier, the barriers to entry for advocacy. Customers will rarely recommend a
competitors increase significantly. company with which they have had a bad experience,
In a rapidly changing world, particularly one in which or that they do not trust, to family or friends; their
the power is shifting to the customer, understanding reputation and friendship is worth more than that.
them is even more vital to success. Listening is set to To achieve a meaningful understanding of their
become crucial in the marketing mix. customers, companies will have to increase significantly
Much current market research is about informing the amount of listening they do. Marketing must
become much more of a dialogue, with the customer an
FIGURE 2: TRUST AS A COMPETITIVE ADVANTAGE active player. The resulting richer understanding of the
customer can then be used to improve operations and
tailor the content and timing of marketing messages
Have high impact
delivered to the customer. Providing actionable data
about individual customers and segments is the key.
Likely to happen
But customers are increasingly concerned about
privacy (Figure 3), and are likely to share personal
0 10 20 30 40 50 60 70 80 90 100
% Agreeing information only with companies that they trust and that
Source: Global Future Forum Pulse Survey, March 2005 enable them to make the best buying decisions.
Companies that do not act in customers’ best interests
strategic decisions – identifying customer needs and will be locked out of the opportunity to supply.
expectations, sizing market opportunities, and Concerns about privacy mean that more and more
understanding what shapes buying decisions. This people now refuse to share information with suppliers.
information is vital in shaping product strategies and With the possible exception of healthcare, nowhere is
routes to market, and more will be required as needs privacy more vital than in financial services. The data
and expectations continue to change rapidly. that banks and insurers hold about our lives is highly
If retaining customers and building relationships
based on trust matters, understanding how they FIGURE 3: PRIVACY CONCERNS
perceive the company and its products and services is
vital. People remain loyal and recommend a company
Have high impact
because they have had a good experience, and that is
down to operations – it is about products, processes,
Likely to happen
systems and, most importantly, people.
Research into customer experiences is often
0 10 20 30 40 50 60 70 80 90 100
simplistic and ineffective, based on the annual “Do you % Agreeing
love us” survey. To be really useful, experience-based Source: Global Future Forum Pulse Survey, March 2005
research must gather feedback at all the key points at
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3. LISTENING TO THE CUSTOMER’S VOICE
sensitive, and they often know more about our finances A brave new world? It is already here. Amazon and
than our life partners.3 Customer trust depends not only E-bay today rate suppliers on their track records and
on this information being held securely – and ask customers to score their satisfaction and
companies must have not only good intentions but recommend them to friends.7 Is it that big a leap to
effective systems – but also on confidence that it will not imagine getting the best deal for a savings product via
be used unfairly to exploit us.4 E-bay, with suppliers meeting your personal standards
So perhaps, in the not-too-distant future, the generally- bidding for your business? Or a price-comparison site
misnamed customer relationship management5 will be such as Kelkoo securing better deals for customers
reversed in a new paradigm, customer-managed based on their past purchases and potential future
information. The scenario set out in the box is, for the value?
moment, hypothetical, but technologies to exploit this Could you see a company like John Lewis being
new world are here already. trusted by customers in this way? Or Tesco? Or a
Smart cards can store data about the holders and their genuinely client-focused independent financial adviser?
purchase history, and commercial strategies are already But how do you think most people would react if this
being developed around this potential. But customers new service were offered by the big banks?
will be able to choose with whom to share this In this future, winning and retaining customers profitably
knowledge, so trust and empathy6 are key. On a small- and better than the competition will require a much richer
scale, highly-motivated customers already boycott understanding of customers, as well as innovative
companies that do not share their world-view on “big practices for delivering genuinely and meaningfully
issues” such as fair trade, the environment and arms personalized products and services. Understanding the
sales; but technology will make it easier for them to act customer like never before will require a whole new
on their motivations, so that far more people will exclude approach to listening to the customer – reflected by the
far more companies for far more personal and subjective emergence of the chief listening officer (CLO).
reasons. Customer-managed information, where customers
Two types of companies will benefit from this growth are equal partners in the marketing dialogue, will require
of customer power. Firstly, those that truly put the a significant change in the culture of most
customer first and develop innovative ways of delivering organizations, and the CLO will be a leading player in
the right mixture of product and service at a competitive driving that change. People and departments
price. Secondly, an emerging new breed of trusted throughout the whole company will have to rethink how
intermediaries that offer a secure, independently- and why they operate, and throw out many of the
verified home for customer data and share this only with beliefs that have shaped their actions in the past.
companies that fit each individual customer’s model of The jobs of CLOs will not be easy. They will face two
“acceptable suppliers”. significant barriers to success: fragmented marketing
and feedback systems; and (by far the biggest
AMAZON FINANCIAL SERVICES? challenge) legacy attitudes.
Few marketers or chief executives will want to give
In the not-too-distant future, customers will hold their own buying records electronically power of choice to their customers. Raised in
and use these to negotiate special deals with suppliers. Imagine shopping on-line for organizations used to paying only lip-service to
an investment product. You insert your smart-card or send a message from your smart- customer needs, many will not be willing or able to
phone with your purchase request inquiry. Attached is your personal purchase history make the required intellectual or attitudinal leap. “New”
for this type of product, with this and competitor companies. The supplier’s system companies such as First Direct and The One Account
recognizes you as a regular buyer of this product, with a history of recommending lead in this world because they do not have the
companies to friends and colleagues. Of course, this information is only shared with millstone of legacy cultures. Companies that have built
companies with an exemplary record on trust. their business model on service excellence, particularly
From the information on your card, Amazon, as a trusted provider, knows your buying in a real time or on-line environment, have had to face
record, which it uses to generate a special deal in recognition of your loyalty, lifetime value some of the issues discussed here from the start.
and advocacy. The latest transaction, coupled with knowledge of your visits to Amazon’s Legacy systems will also be a barrier. Customer-
website, triggers a satisfaction survey, part of which asks you for information about managed information requires the integration of
people that you have recommended Amazon to in the last three months.* With your disparate systems. Close links will be required between
approval, these people are contacted, in your name, with information about special marketing management, customer feedback,
offers. Once the transaction is complete (including experience/satisfaction feedback), the transaction management and management information.
smart card is updated, ready for the customer’s next inquiry. These systems will have to reach a much broader
audience, presenting a holistic view of the customer at
* Perhaps the last couple of years for longer-term products such as pensions, or the last month each and every touch-point.
for faster-moving products such as credit cards.
Integration of data is at the heart of the responsibilities
of a CLO. The future for many companies will require a
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4. LISTENING TO THE CUSTOMER’S VOICE
much quicker and more sophisticated response to WHAT DOES THE CLO DO?
opportunities that customers present. Few
organizations today hold a comprehensive record of She is a key member of the marketing leadership team – increasingly often, the marketing
their customers, despite the vast investments in CRM director – and the focus for all information about the customer, with responsibility for:
systems. The data required to build real insights spans:
• Segmentation: Defining context-based segments on which the company will build
• Transaction records. and tailor its value propositions. Individual customers will move in and out of
• Marketing campaigns (with responses). segments as their circumstances and needs change.
• Segmentation. • Measuring the customer experience: As product life-cycles shrink and products
• Intentions. and services become more and more homogeneous, the broader customer
• Buying preferences. experience will be an increasingly-dominant differentiator. Instead of suppliers
• Satisfaction and advocacy feedback. selecting customers on the basis of profitability and attractiveness, customers will
set criteria by which they will choose providers. Listening carefully to reactions
Only by integrating all this data will companies generate
along the customer journey will thus be crucial to winning and retaining a place on
the insights they need to serve the customer properly.
each customer’s preferred list.
This information will need to be shared much more widely
• Intentions management: As with investment, so with customer intentions – past
across the organization, with anyone serving the
performance is no guarantee of future returns. The CLO must ensure that each
customer having access to the same, complete customer
customer’s changing intentions are monitored and recognized, so that marketing
record. Only then can informed customer interactions
and face-to-face interactions focus on the issues and opportunities that are relevant
(through any channel) take place, increasingly influenced
to that customer.
by decision-support tools that guide customers, and the
• Data integration and mining: The CLO will lead the way in mining understanding
people dealing with them, to the best deal.
from the different seams of information gathered about customers and the
Many companies will seek to exploit this integrated
operations that serve them, seeking in particular causal links.
view of the customer. But in an environment in which
• Early warning systems: From this information, the CLO will develop predictive
trust is a vital component of relationships with customers,
algorithms and track buying intentions and customers at risk of being lost. This
what better way of demonstrating that trust than by
information will allow front-line staff to sell more effectively and to take appropriate
turning the power inherent in the information over to the
and focused action to retain a firm’s preferred customers.
customer? Listening is the new marketing.
• Campaign management: The information and insights gleaned by the CLO will be
used to personalize dynamically the content and timing of context-specific marketing
David Jackson is Chief Executive of Clicktools
messages for each customer, based on the integration of data about intentions,
campaign responses, satisfaction, past activity and general demographics.
1
This scenario is based on research by the Global Future Forum.
The author sits on its European advisory board.
2
For more information see the author’s paper “Treating Customers
Fairly – the role of feedback”.
3
They certainly hold more data, but family members can often just CORE LISTENING BELIEFS
sense when something is not right. It is the difference between
awareness and understanding, and also shows that real knowledge The listening organization will have at its heart a number of simple but vital beliefs:
is based as much on sense, context and informal signals as on hard
facts. Ed • Respect: Financial service providers must recognize and respect the desires and
4
Financial institutions do not, of course, do not have an exemplary aspirations of customers and deal with them in an adult-to-adult relationship – not
record on the former (see, for example, Identifying the problem by
talking down to them, as has been the case.
Tim Kitchin and Peter Massey in Argent 4.3, May 2005), and most
• Trust: Companies that cannot gain and retain their trust cannot hope to win and
people probably feel that they are taken advantage of in respect of
the latter. One key reason for the lack of customer enthusiasm for retain customers. Given a choice, would you put your future in the hands of a
account aggregation (despite some impressive advocacy – see, for company you cannot trust?
example, The service now arriving ... by Holly Mackay in Argent 3.3, • Mutuality: Whether member-based or not, only providers that seek to balance their
May 2004 is that most people’s perception – and it does not matter
needs with those of customers can succeed when information has shifted the
whether this is valid or not – is that the value of the customer benefits
power to the customer.
are far outweighed by the advantage that the aggregator might take
from the information that the customer has to surrender. Ed • Personalization: Whether it is the core product or the interactions across the
5
Most companies use CRM merely as a customer data-collection customer life-cycle, personalization must increase. In fact, contextualization is
system. probably a better description of what is required.
6
Empathy – the feeling, for example, that this company’s aims and
• Dynamism: Every interaction with the customer will be dynamic. Companies will
ideals are aligned with my own – is an increasingly-important factor
need to be significantly more agile if they are to respond quickly to customers
in a world in which the core elements of product and service
offerings are pretty indistinguishable. The Co-operative Bank, Body empowered by information and choice.
Shop, John Lewis and (at some stages of its rather chequered
record over the past thirty years) Marks & Spencer all offer strong
evidence of the power and value of empathy. Ed
7
And, of course, in the world of old technology, this recommendation
model was key to the success of companies such as USAA. Ed
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