Why Voice of the Customer Data Can Lead to 9.8X YoY Growth
Here’s Our VOC Process. Includes Tools, Templates, and Analysis to Build Your Own Voice of the Customer Program.
If the purpose of a business is to serve the customer, wouldn’t it make sense to, you know, talk to your customers?
Yet picking up the phone and talking to customers can be sooo scary. Not to mention time-consuming. Besides, what should you even talk to customers about if you had a chance?
Talking to customers to capture the voice of the customer has become the slogan of Silicon Valley.
But why is it important to know the voice of the customer?
Let me tell you a little trade secret.
“The top 20% of businesses who use the voice of the customer had 9.8x greater year-over-year revenue over the remaining 80% of businesses (48.2% vs 4.9%) (source).”
Would a 9.8x revenue year-over-year (YoY) increase be worth getting over your fears and making this a priority?
In this article, I’m going to share more details on why talking to customers is important. Then I’ll give you the 10-step process we use at Growth Ramp.
First, let’s define our terms to make sure we’re on the same page.
What Is the Voice of the Customer (VOC)?
Voice of the customer (VOC) is the process of getting customer feedback to improve your business.
Startups use VOC to:
- Improve their copy to increase sales conversions.
- Improve their product roadmap.
- Increase customer retention.
- Improve profit margins.
- Decrease customer service costs.
- Grow referrals.
- Decrease customer acquisition costs.
- Determine their price point and pricing strategy.
- Position their brand to dominate the market.
- Plan their marketing strategy.
And that’s just the start.
Now you can improve those 10 areas of your business without talking to your customers. So why is it worth investing in a VOC program?
Why Should I Invest in a Voice of the Customer Program?
Imagine you lived in an apartment with no yard. Would you pay for someone to mow your lawn?
It’s extremely unlikely because you don’t have that problem (an overgrown lawn). So why would you pay for something you don’t need?
Yet I see this mistake happen all the time when you sell products online without talking to your customers and capturing the voice of the customer.
To discover the core problem you need to solve, you need to talk to your customers.
Will adopting a VOC program magically transform your startup into the next internet sensation? Of course not. There’s more to running a successful business than a perfect VOC program.
What kind of performance improvements might you find applying VOC best practices?
In 2015, Aberdeen Group ran a survey on 207 businesses that collected VOC data. They compared the top 20% of businesses (“Best-in-Class”) with the bottom 80% (“All Others”) (source). Here’s what they found:
Using VOC allowed the Best-in-Class to retain 55% more customers too (87% vs 56%). Further, the Best-in-Class had 9.8x greater year-over-year revenue over the remaining 80% of businesses (48.2% vs 4.9%).
What led the Best-in-Class to increase their revenue so much? Consider these statistics:
- Revenue from net-new customers was 7.9X higher (5.5% vs. 43.2%). An increase in revenue may not mean much if the profit margin decreases. But...
- The average profit margin per customer was 17.4% higher (-1.7% vs. 15.7%).
- Revenue from cross-sells and up-sells was 19.3% higher (6.6% vs. 25.9%).
- Revenue from customer referrals was 6.9x higher (3.7% vs. 25.4%).
- Annual customer service costs were 23.6% lower overall and 19.6x lower in comparison (1.2% vs. 23.6%).
It would be ideal if this data also compared businesses that did not capture VOC. But the findings may not be that different. Businesses that collect VOC and do not apply the information are not going to be much better or worse than a business that doesn’t collect it at all.
Let’s look at how to collect VOC data and use it to improve your business and marketing strategy.
Can You Share Your Process for Capturing the Voice of the Customer?
Here is the 9-step process we use to capture the VOC.
Step 1: Decide on your business goals
If you take away one thing from this article, I would recommend you focus on this...
VOC data is useless if it’s not tied to a specific business goal.
You can talk to customers until you are blue-in-the-face. But if you aren’t connecting your customer conversations to your business goals, customer interviews will be of little value.
What’s important is focusing on asking open-ended questions about someone’s past, unless you are asking for specific facts.
Asking for someone’s age, job title, or hobbies is a fact you can use to shape your customer persona.
However, asking a subject question about the future will give you very little information. Let me show you why:
A common question used to measure net promoter score is, “On a scale of 1-10, how likely will you refer us to a friend?”
The NPS question by itself gives limited help for two reasons:
- The NPS question asking a question about the future. People cannot predict the future, even over their behavior. We may forget the past, but you know that person has done what’s mentioned.
- It’s subjective. One person’s score of 9 is another person’s 7. You and I could have the same value from the product but score it differently.
Instead, you want to use a past-focused question. For NPS, you might ask the question Netflix asked their early customers, “In the last six weeks, have you referred us to a friend or colleague?”
From that question, you can then ask your customers why they behaved as they did. This will give you insight into what you need to do to improve your product.
BTW, I’m not the only one noticing gaping holes using the future-focused NPS question.
There’s a lot of research showing that NPS is flawed (source). Jared Spool, Co-founder and Co-CEO at Center Centre pointed out that NPS is easy to game and hide the truth (source). And Patrick Campbell, CEO at ProfitWell ran a study showing that NPS does not accurately predict retention (source).
All said you want to ask questions about past behavior. And open-ended questions will allow you to get at the heart-and-soul of your customers’ needs.
Step 2: Create a list of questions to answer your business questions
Now that you know your business goals, you’ll want to create a list of questions that will help you arrive at your answers.
Put your questions into a Google Doc and save it as a template. This way you will save yourself time copying, pasting, and deleting the questions for every interview.
How many questions should you have beforehand?
My recommendation is 15-20 questions.
The goal of the total questions is to aim for a 45-minute interview. Some interviews will take around 30 minutes. Others may last 60 minutes.
If your interview goes beyond an hour, the customer may lose attention. This leads to shorter responses and increased irritation.
Keep in mind you may choose to skip questions that are not relevant. You’ll likely ask follow-up questions after your initial questions too.
What business goals can VOC help inform?
I’ve yet to find a business goal it cannot give you insights. Here are a few examples we use at Growth Ramp.
Here’s how to use VOC for creating a new product (or, product validation).
Ask questions that relate to your customers’ pain points.
Consider questions like:
- What is your biggest challenge you are currently facing? (This answer becomes $PROBLEM)
- How valuable is it for you, in terms of your current urgency and importance, to overcome $PROBLEM?
- What have you previously done to address this problem in the past? (This answer becomes $SOLUTION)
- How satisfied are you with $SOLUTION?
- What do you like about $SOLUTION?
- What do you wish were better about $SOLUTION?
- Have you hired anyone to help you $PROBLEM?
- Have you bought any other $SOLUTIONS to solve $PROBLEM before?
- What is your ideal outcome you would like to experience?
Note: $PROBLEM and $SOLUTION come from the response given in questions one and three.
Main article: Customer discovery interviews.
Here’s how to use VOC to determine your price point and pricing strategy.
First, ask these four questions to find someone’s willingness to pay for your product.
- At what price would you consider the product to be so expensive that you would not consider buying it?
- At what price would you consider the product to be priced so low that you would feel the quality couldn’t be very good?
- At what price would you consider the product starting to get expensive, so that it is not out of the question, but you would have to give some thought to buying it?
- At what price would you consider the product to be a bargain, a great buy for the money?
Afterward, you’ll want to continue asking follow-up questions on why they answered as they did.
You’ll also want to research what competing solutions your customers mentioned to you. This will give you another indication of what someone paid and the pricing model used.
Here’s how to use VOC to improve your brand messaging and positioning.
You will want to talk to your customers about how they feel about your brand. Then you’ll want to learn how they feel about other competing brands.
At Growth Ramp, we ask customers these questions:
- What other $SOLUTIONS have you used in the past? Please tell us their names.
- What did you like most about $COMPETITOR?
- What was your biggest complaint using $COMPETITOR?
- What are the top three reasons you chose our product instead of another product?
- How do you feel our product is different than other products out there?
Here’s how to use VOC to create a customer persona which will decrease acquisition costs.
Some of the questions we like to ask customers to get persona data at Growth Ramp includes:
- What is your age?
- What is your gender? (We don’t ask this question, but answer it for the person to save time).
- Where do you live?
- What is your job title?
- What are your favorite hobbies and interests?
At the end of the interview, I also ask, “Is there any other feedback you would like to give to us?”
This allows your customers to emphasize something they said earlier or make a new point.
Step 3: Get all the VOC tools for your interviews
Here’s my VOC tool list for video interviews:
- Web Camera - Logitech HD Pro Webcam C920, 1080p
- Microphone - Audio-Technica ATR2100-USB + Foam Ball
- Video Conference Room - Whereby
- Scheduling Tool - Calendly
- Email Outreach - Mailshake
(And if you’re wondering, there are no affiliate links on this website).
Step 4: Write your outreach emails
There’s a lot to consider when setting up your email outreach campaign. In fact, I wrote a series of articles on email outreach.
Here’s the TL;DR (too long, didn’t read) version:
- Your subject line should be short-’n’-simple. “Quick question, $FIRSTNAME” will work fine.
- The body text should be brief. I recommend no more than 100 words per email.
- End your email with a question. Questions naturally lead to an answer and help you build trust and permission with the other person. I’ve seen this double my reply rates (+166% to be exact).
- Create a follow-up email sequence. My recommendation after the first email is at least two follow-up emails. The first follow-up email going out 3-5 days after the initial email. Then the second one should go out 5-7 days later. I’d avoid weekends, Mondays, and common US holidays.
- Check your reply rates to benchmark success. I expect a 10% reply rate in 24 hours. You should also aim for 20-40% reply rates once your campaign is complete.
Your reply rate will change based on:
- Your industry.
- Your previous relationship with your email list.
- Your email subject line and body.
- The relevancy of what you’re asking for.
- Other factors outside your control.
You will want to use an email outreach tool like Mailshake. This will automate your email follow-ups and allow you to easily track your reply rates.
Step 5: Gather your customer list
For your customer list, all you need are the first names and emails.
The two most common and easy sources I use are customer databases and email newsletters. If that’s not enough, here’s how to find almost any email address.
How big should your email list be?
That depends on how many customers you want to interview.
I recommend an email list of 100 people. Assuming a 20-40% reply rate means you’ll get 20-40 VOC interviews.
Got a lot of emails to choose from?
If so, focus your email list on customers who are more likely to give you the best data towards your goals.
Step 6: Conduct the interview
Now for the real fun begins!
Start your interview with a brief 3-5 minutes getting to know the other person. This will allow them to feel comfortable and share important details to improve your business.
Once you get to know the other person, you’ll want to ask for permission if you record the interview via video or audio.
As you ask questions from your Google Doc you prepared in step 2, keep these items in mind:
- It may take time for someone to think of an answer to your question. Make them feel comfortable by not saying a word. Do not interrupt them, rephrase the question (unless they ask you to), or answer the question for them.
- Type out every word the customer says without stopping the flow of the interview. The more emotional phrases are copywriting gold. Do your best not to re-word what they say because what you write may be different than what the customer means. The customer wants to feel like you “get” them because you use their language.
- At the end of the interview, thank the person for their time. Ask if you can follow-up by email if you have any other questions.
You’ve got a ton of information. Now you’ll want to synthesize your notes to make it easier to use to improve your business.
Step 7: Synthesize your notes into a VOC template
Once the interviews are complete, you’ll want to put the information into a Google Sheet and Google Doc for easy access.
First, review your notes. Make sure everything looks accurate from what the person told you. Fill in any holes in your information.
Second, in the first row of the Google Sheet, create a header for each question you asked. Copy and paste every answer into the Sheet.
I like to freeze the first row and column to make it easy to see the answers (View -> Freeze -> 1 row + 1 column). I also change the row color for each person so I don’t mix up the information. Your sheet will look something like this:
Finally, you will want to create a Google Document. In this document, you will list out every open-ended question. Then you will list some of the sentences that summarize their thoughts and feelings. It might look like this:
The goal of the Google Doc is to take all of the emotional phrases and make it easier to find them.
I like to summarize this by using the following categories:
- The current situation the customer is or was in before buying your product.
- Their hopes, desires, and dreams they want your product to fulfill.
- The fears, frustrations, and pains they want your product to relieve.
- Alternative solutions they’ve tried in the past.
- Other questions they would like you to answer.
Again, you can color-code the answers to make it easier to know who answered and in what way.
Step 8: Decide on your next steps
After synthesizing and summarizing everything you’ve learned, you need to talk to your team about what you’ve discovered.
This allows them to get on-board because they feel part of the process. Further, they will often give you insight on items you may have overlooked. Then after talking to your team, plan out what your next steps are.
Step 9: Implement your strategy
As the Chinese strategist Sun Tzu once said, “Strategy without tactics is the slowest route to victory.” If you want to win faster by getting more customers, then you need to put into action what you’ve decided.
For every project, do your best to set a reasonable deadline and a timeline to finish it. If you want an accurate deadline, I recommend doubling whatever your deadline guess is because hiccups will happen.
What Should I Do Next?
Getting 9.8X more year-over-year revenue from talking to customers won't happen overnight. But once you take the time to master capturing the VOC, it starts to become second nature.
Here's a quick summary of how to capture your VOC data:
- Decide on your business goals. What do you want to accomplish in the next 90 days?
- Create a list of questions to answer your business questions. How can you ask your customers questions about their past to inform your business and marketing strategy? Make sure to have no more than 15-20 questions.
- Get all the VOC tools for your interviews. For a video interview, you'll want a web camera, a microphone, a video conference room or platform, a scheduling tool, and an email outreach tool.
- Write your outreach emails. You'll want to send at least three emails. You should aim for a 10% reply rate in 24 hours and 20-40% reply rates once your campaign is complete.
- Gather your customer list of first names and email addresses. I recommend 100 if you want 20-40 interviews.
- Conduct the interview. Aim for 45 minutes and no more than 60 minutes. Record all notes from the interview.
- Synthesize your notes. Review your notes for errors. Add the information into a spreadsheet and word document to make it easier to reference later.
- Decide on your next steps.
- Implement your strategy.
If you need further help doing this, our Gap Analysis™ will help you gather the voice of the customer. We'll also provide the synthesize and give you next-step recommendations.
For more articles like this, click here to check out our articles on customer psychology.