When customers speak, EMC acts

EMC wants its employees to hear voices, but not the delusional or supernatural kind.

It wants them to hear the voices of customer execs who are seeking faster responses to technical problems... the voices of data center managers wanting simpler maintenance contracts... the voices of CIOs wishing to collaborate with EMC on technologies for the future.

Every quarter, a group of employees known as the Voice of the Customer (VOC) team taps into thousands of those voices via a unique survey program. The surveys they conduct aren’t meant to uncover marketing-related insights. These are customer loyalty surveys.

The team uses the results to recommend loyalty-boosting actions that various EMC business divisions can take. Then the VOC team measures how those actions, once implemented, are affecting customer loyalty.

The unique metric they use is called the Customer Loyalty Index. It is part of a groundbreaking multiyear loyalty program to bring about a cultural shift at EMC. Instead of focusing on managing the company from the inside out, people are managing it from the customer in.

That attitude evolved in line with EMC’s expanded responsibilities as an information infrastructure provider. “We drove ourselves to be much more consistently customer focused,” says Jim Bampos, vice president of Information and Quality Management. “We now use metrics to make sure we anticipate and exceed customers’ needs and expectations.”

Satisfaction versus loyalty

Making sure that customers are happy is definitely not a new concept. Most companies make some kind of effort to gauge customer satisfaction, particularly in economically difficult times. But EMC’s customer loyalty effort has several distinguishing features.

First, the program acknowledges that a big difference exists between customer “satisfaction” and customer
“loyalty.” Bampos explains that a customer may be quite satisfied with the way a particular EMC transaction has unfolded, but that satisfaction won’t necessarily make the customer feel inclined to repurchase from EMC rather than from a competitor, or even to recommend EMC to other users. Both responses are fundamental components of loyalty.

EMC received a lesson about that distinction in 2004, when it made strides to improve product quality but didn’t get the kind of customer approval it was expecting. Surveys at the time showed customers were very satisfied with EMC’s products. But they still gave the company poor grades related to feelings of loyalty.

“We were scratching our heads,” Bampos says. “We’d provided great products to them. We couldn’t figure out why customers weren’t seeing us as a single solution to their challenges. Clearly, we weren’t understanding the totality of what these customers wanted.”

That’s when Frank Hauck, executive vice president of the EMC Storage Division, Global Marketing and Customer Quality, launched the Voice of the Customer team. EMC was already in the midst of a push to be more customer-centric through its Total Customer Experience (TCE) initiative. TCE helps all employees create the best possible experience for customers in all facets of their interactions with EMC.

TCE, over time, grew to expand beyond a focus on products and features to emphasize nonproduct attributes that also might create more loyal customers.

But no one had a good way to measure TCE. No one had a way to redirect EMC’s customer loyalty strategies. Existing metrics measured product quality.

“We had lots of surveys, but they didn’t tell us what we needed,” Hauck says. “‘Satisfaction’ was not a good benchmark. We wanted to jump from satisfaction to loyalty. TCE is about the things we do to make people loyal.”

Hauck asked the VOC team to create consistent metrics that could drive TCE actions and measure results in terms of customer impact.

The right questions

Obviously, a new, better survey would be essential. The team first needed to consolidate 27 different customer surveys that various EMC divisions had been conducting in piecemeal fashion.

In those surveys, EMC was asking customers a lot of questions about satisfaction but not tying responses back to metrics, according to Global Accounts Senior Program Manager Wendy Kane.

The surveys also tended to pose close-ended questions that didn’t give EMC insights about why a respondent liked or didn’t like something, Hauck says.

And the surveys’ rankings and methodology varied widely. Senior Program Manager Ed Hardy says, “Some surveys used a 1-5 scale, others, 1-10. We couldn’t harvest results in any meaningful way.”

With help from a Lean Six Sigma team, the VOC team devised a quarterly customer loyalty survey capable of polling three groups: executives of EMC’s 200 largest customers, end users of EMC’s products and services, and representatives of FORTUNE 1000 companies, including non-EMC customers, to gauge EMC’s performance against competitors. The survey targets 5,000 people in all.

They’re asked multiple questions about their experiences, including some questions customized according to earlier answers. Responses are “mined” for information that can guide TCE.

The survey is the basis for EMC’s unique Customer Loyalty Index, or CLI. This index hinges on three questions: (1) Is the customer satisfied overall with EMC’s people, products, and services? (2) Is the customer likely to purchase EMC products and services again? (3) Is the customer willing to recommend EMC’s products and services?

Customers must answer “yes” to all three questions to be categorized as loyal. The CLI bucks the industry trend of looking at either “satisfaction” or “willingness to recommend.” It looks at both, plus intent to repurchase. “We wanted to get the full picture and a real understanding of customer needs,” says team member Helen Ham, Lean Six Sigma black belt, Enterprise Programs.

Another distinguishing feature of the loyalty program: It is conducted independently of EMC Global Marketing or any other EMC organization. That means survey data won’t be accidentally influenced by any particular group’s biases or focuses, Bampos says.

You ask; we act

The VOC team meets quarterly with every EMC business unit and organization to review survey results. Then the team creates a set of recommendations that becomes the focus of the quarterly TCE Executive Summit.

Any immediate customer concerns that show up in the surveys—called “hot alerts”—go to relevant business units for immediate action. This loyalty information is driving changes at EMC. The data is used to set goals for business units and organizations, but in addition, quarterly bonuses to many employees are directly tied to meeting specific customer loyalty metrics related to their area.

Tony Kolish, senior vice president of Problem Resolution and Escalation Management (PREM) program for EMC Global Services, says the loyalty program “has definitely shaped the way we do things in support.”

When he took over PREM two years ago, he and his team “were guessing” that a lack of consistency in remote support services was a customer concern. Due to EMC’s many acquisitions and expanded product portfolio, too many variations existed relating to service terms and conditions, response times, and sense of urgency in dealing with customer problems.

The loyalty survey confirmed it. Customers wanted us to “get our service act together,” Kolish says.

PREM set up a tiered system to standardize service practices across the portfolio, clearly defining a process for each customer category. PREM now tracks actions such as the speed with which staff answer phone calls from preferred customers and, of course, how quickly they fix problems. Each quarter, PREM must meet its service-level objectives before its employees receive their bonuses.

Recent loyalty surveys show that PREM’s efforts moved the needle in the right direction in terms of making customers happy. “We converted remote support services from dragging down customer loyalty to boosting it and giving us a competitive advantage,” Kolish says.

In this economy, creating loyal customers is more important than ever, Kolish adds. “We’ve got the opportunity right now to take market share. We’re betting we’ll see a flight to quality and a flight to loyalty.”

Loyalty also is an indisputable boost to revenue. Industry experts say that for every 10 percent increase in loyalty, annual revenue jumps 12.5 percent. Retaining a loyal customer is 10 times less expensive than finding a new customer. And loyal customers are 50 percent more willing to adopt a company’s new technology than nonloyal customers.

Climbing a pyramid of challenges

As EMC and TCE have evolved in recent years, so too have the challenges related to staying connected with—and meeting—customers’ needs.

EMC has identified a hierarchical “pyramid” of needs that drive loyalty. Products and services form the pyramid’s base, representing the fundamentals of performance and reliability. The middle of the pyramid involves getting customers to elevate their relationship with EMC by focusing on relationship-centric issues of account management (such as consistent communication). The tip of the pyramid, ease of doing business, is how EMC meets customers’ tactical needs through factors such as easier technology operation, easy upgrades, straightforward contracts, and adequate support availability.

The initial loyalty survey in 2005 revealed customers were focused on product quality. They quickly raised their expectation bar.

By 2007, respondents were honing in on both products and services. In 2008 and 2009, Bampos notes, customers’ priorities embrace an even more complex set of needs. In addition to demanding high-quality products and services, customers are looking to deepen their strategic partnerships with EMC to help control IT operational costs.

EMC’s closed-loop customer loyalty model appears to be working well, based on its success in pleasing customers regarding product and services. The team is still working on how best to measure long-term strategic initiatives and partnerships.

Credibility gains

Bampos says his team is receiving more requests from other business units for survey information. Customers, too, are pleased that EMC is listening and responding to their feedback.

The loyalty initiative is a hit with industry analysts, one of whom calls it “what may be the most powerful quality program in the technology market.”

Steve Bardige, EMC senior director of analyst relations, says many analysts who cover EMC realize this isn’t just a satisfaction survey under another name. “We track the impact of changes to products and processes through loyalty metrics. For an analyst, that fact separates EMC from competitors who don’t have this closed-loop process and are making decisions based on satisfaction surveys and anecdotal information.”

Bardige deems the loyalty program “critically important to EMC. It has had a profound impact on breaking down internal barriers and on making all of us much more sensitive to customer outcomes.”