Listening to the Voice of the Customer in the Boardroom

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by Robert A. Stringer

No wonder senior executives are worried. In a recent global survey conducted by Mercer Delta's Executive Learning Center and the Economist Intelligence Unit, 52 percent of senior executives responding indicated that satisfying customer expectations was a top concern. Yet in most organizations, firing-line employees and managers are closest to the customer. Insights about market trends, shifts in brand loyalty, and emerging customer needs are usually found in the brand marketing group, the market research department, or the field sales office. Senior management often receives only summarized, digested, and incomplete marketing information — frequently out of date and scrubbed to eliminate controversy.

If a company's future depends on anticipating and responding to changing customer needs, something must be done to bring the voice of the customer into the executive suite. That presents a unique opportunity for the board of directors, which has an enviable amount of leverage to see that this happens. But here's the catch: Most directors say they have little time or inclination to seize this opportunity.

In a 2006 survey of more than 3,000 U.S. and Canadian board members, an overwhelming majority said they spent very little time in board meetings discussing customers' opinions about the company. Furthermore, most directors reported that they have little or no contact with customers and no real desire to listen to their concerns and ideas.

While it's understandable that directors may be focused on their role as financial watchdogs, their inability — and unwillingness — to devote time and energy to what's going on in the marketplace is a shocking admission and a waste of valuable expertise. The fundamental role of the board is to represent the owners of the enterprise, and there can be no better representation than providing high quality advice and strategic guidance to the CEO and the company's management as they deal with major business risks.

Bringing the voice of the customer to the board is a win-win-win situation. The board will win by being able to provide higher quality and badly needed advice, and it will be more connected to the company's strategy. Management will win by having better marketplace information and the board's perspective. And customers and shareholders will win when the company's strategy leads to exciting products and services that generate continued growth and profitability.

The best boards are actively engaged in the strategy-building process. In order to properly advise the CEO on corporate strategy, they must pay close attention to what customers are saying. In fact, both management and the board should be “hearing” the voice of the customer. Only then will the company's strategic decisions be based on real customer input — not historical practice, creative hunches, assumptions, gut feel, or personal experience.

The board's role, however, should be limited to enhancing the quality of the strategic thinking that goes into management's plans. Boards, and individual directors, should not be making major strategic decisions, getting involved in writing the plans, or executing the strategy. These jobs belong exclusively to management.

Involvement in strategic thinking is one of the highest payoff roles for individual directors. Brenda Barnes, CEO of Sara Lee, who has sat on numerous boards including The New York Times, Sears, and Pepsi Bottling Group, said, “We have a lot to add to most strategic discussions, even if the topic isn't directly related to our personal experience. The boards I've been on possess a great deal of strategic wisdom.”

The typical director is a wise and experienced resource. When you add the insights gained by listening intelligently to the voice of the customer, you end up with a significantly more informed and more relevant advisor. The trick is figuring out how to do this.

Customer input is different from financial or other kinds of operating or performance information. To be truly unbiased, timely, and even accurate, it must be a blend of quantitative and qualitative data. Four criteria must be met if busy board members are to hear customers effectively:

1. Customer data must come to the board through, rather than around, management. Customer insights, just like financial information, should be communicated through an articulate senior team member, such as a chief marketing officer (CMO).

2. Customer data must be easy to access, reasonably succinct, and well organized so that it can be easily interpreted.

3. Both qualitative and quantitative data should be shared. Although showing consolidated metrics such as “net promoter scores” is extremely valuable, board members will also benefit from reading representative quotations, hearing customer ideas, and seeing actual pictures or videos of customers in their own environments.

4. Board exposure to customer data should not be an isolated event. There should be a “customer report” at each board meeting that parallels the financial report.

Using these criteria for effective management-board-customer engagement, management can help educate the board by:

• Supplying directors with summarized customer data, including management's analysis. For example, the General Mills board periodically reviews material about its competitive position with its largest retail and food service customers.
  
  
• Sending the board “raw” customer opinions and responses to predetermined questions. In 2005, the EarthLink board requested and received unedited customer comments about unmet and unsatisfied needs.
  
  
• Arranging for directors to have direct exposure to customers through interviews, meetings, orchestrated customer visits, field trips, or customer panels. Both Citigroup and PepsiCo expose directors to major customers — Citigroup through Home Depot and PepsiCo through Wal-Mart.
  
  

There is no question that impatient and busy directors need to have access to summarized customer data. However, because of the complex and open-ended nature of the customer's voice, there is absolutely no substitute for firsthand exposure. Most directors will be savvy enough to glean their own insights from customer conversations if they are given the right opportunities.

As our research uncovered, too many of today's directors simply don't want to hear the voice of the customer. Real change will require a new mindset and the use of new technologies. These five steps can help bring the voice of the customer to the board in a meaningful way:

First, marketing issues need to be elevated more frequently to the board. If companies do not have a CMO, the CEO must act as the company's CMO and place marketing and customer issues more prominently on the board's agenda.

Second, the CEO should select specific directors to act as a customer sounding board. Not all board members need to be equally involved at this point. The key point is to create a sense of accountability on the board for listening to up-to-date customer research.

Third, a “dashboard” of customer and marketing information should be created for the board. Gail McGovern, David Court, John Quelch, and Blair Crawford outlined an impressive argument for such a dashboard approach in the November 2004 issue of the Harvard Business Review. The selected sounding-board directors can help put this together, but ultimately the entire board should have access to it.

Fourth, the filtered information found in the dashboard should be supplemented by greater direct exposure to customers. Given limited director time, this exposure should be by means of a private online customer community and periodic face-to-face customer events. (See “What is an online customer community?”)

Fifth, the entire process of elevating the voice of the customer to the highest levels of management and the board needs to be a learning and discovery process. Management may be gaining new insights into marketing. Outside directors most certainly will be acquiring a deeper understanding of the business. And a new level of customer consciousness will be built into the company's strategic plans.

Gathering the information is only one step in the process. The following guidelines can help the board use the information gathered from customers:

• The CEO and CMO must engage the board in reviewing customer information early in the strategic thinking process. Important planning assumptions that should be tested with the board include: why buyers buy the company's products; what aspects of the company's offerings customers value the most; and how purchase and/or use decisions will change in the future.
  
  
• Meetings should be with selected board members, not the entire board, preferably the night before the formal board meeting or at a special meeting. Primarily, the meetings should be for conversations and brainstorming. The CEO and CMO must ensure that board members contribute to, but do not dominate, the discussion.
  
  
• The objective of these early discussions is to surface new and important customer insights. If management and the board have access to the company's private online customer community, they should use it at this stage to test, validate, and refine these insights. Once again, the CEO or CMO must actively manage the dialogue to prevent long-held beliefs, assumptions, and sacred cows from escaping unchallenged.
  
  
• After the dynamics of the marketplace have been discussed and analyzed, the board should review the customer implications of the strategic options management is considering. Rather than passively sit through a strategic plan presentation, selected members of the board should have the opportunity to engage both the data and the people whose ideas are at stake. This is another opportunity to leverage the company's voice-of-the-customer database and the wisdom of the board.
  
  
• Before finalizing the strategic plan, the CEO and CMO should expose the “sounding board” directors to “live” demonstrations of the potential demand for new products, service proposals, initiatives, and business-building ideas. A private online community can be very valuable here by providing directors with the same sense of engagement that they had at the beginning of the planning process. If a community is not available, directors should have access to the results of pilot programs, consumer tests, and customer feedback. The CEO should orchestrate a process that encourages director input without sacrificing management's accountability for the quality of the final marketing and strategic plan.
  
  
• Finally, it is critical throughout the strategic planning process to get the CEO and the board on the same side of the table when it comes to customer perceptions and marketplace trends. Informal meetings between interested board members and management's strategic planners provide good forums for this. The goal of board involvement is to hear the voice of the customer more clearly.
  
  

To accomplish this, the CEO must lead an engagement process that arms certain members of the board with the right kind of customer information and encourages active collaboration between the board and management.

Given the turbulence of today's marketplace and the anxiety felt by the leaders of global companies, the strategic thinking and planning process is no longer a once-a-year event. CEOs need to look at their company's strategies every month or so. Boards need to help by discussing, reviewing, and revising strategy at each meeting to ensure its relevance. They will be better able to do this if both management and the board are continuously connected to the voice of the customer and they use this voice as a strategic asset.

Robert A. Stringer is a partner with Mercer Delta Consulting in its Boston office and a member of its Executive Learning Center. He has led a wide range of research and consulting assignments in the areas of organization design, executive coaching, leadership effectiveness, organizational climate, and business strategy.