In Dr. Reidenbach’s book, Listening to the Voice of the Market: How to Increase Market Share and Satisfy Current Customers, he makes a strong case that obtaining the Voice of Customer is just not good enough, it must be Voice of Market. He maintains that you cannot focus solely on your organization’s customer but on the market as a whole including your competitors’ customers. It is imperative that understand how the market evaluates competitive offerings, their strengths and weaknesses and the value gaps that exist whether positive and negative.
He goes onto to discuss, which I paraphrase below:
Many companies are still embracing a Product Orientation and others have only recently discovered the perceived benefits of a sales orientation. And because change takes place grudgingly and haltingly, many claim to the tenets of the production orientation with its emphasis on low-cost and its lack of focus on the customer. Others, who embrace a Selling Philosophy focus simply on selling the organization’s products and utilize sales and advertising to promote the product versus centering on customer needs. The Customer Focus model was a shift on what the company could sell to what the customer wanted. Their commercial organization existed solely to satisfy what the customer wanted or needed. Companies began to understand the importance and power of the Voice of the Customer. This orientation generated the key metric, or measure, of customer satisfaction and increasingly gave credit that a satisfied customer is a profitable customer.
The Voice of Market is a simple concept that expands on the Voice of Customer so that you’re not listening just to your organization’s customer but also listening to your competitors’ customer. Taken together, your organization’s customers and your major competitors’ customers constitute the market, or a good approximation of it.
Market-share is a function of both of retaining your own customers and adding new ones. These new customers come from two basic sources, new entrants into the market and your competitors’ customer base. Your competitors’ customers aren’t your customers for reasons. Assuming that your customers speak for the market is a major error. What they consider important is not necessarily what the market considers important. If your strategic focus is on cementing the loyalty of your own customer base, the Voice of Customer is essential. If however your strategic emphasis is on growing market share, including both retention and acquisition, the Voice of Customer is insufficient.
A second important reason to embrace the Voice of Market is that you need to understand what your competitors are doing. What successful general engages an enemy without first understanding the disposition of the opponents’ troops, their strengths, and weaknesses? Yet many a company plan is drafted the confines of an office without customer intelligence, resolving the process he calls strategic guessing. Many organizations that engage in strategic guessing think that they know what the market wants and needs, when they really don’t. Do you know who your competitors are? Are new ones emerging beneath the radar? Do you know how strong they are? Only by listening to the Voice of Market can you answer these questions with any validity a singular focus on your own customer base cannot and will not give you this information.
Voice of Market is essential and at the core of your marketing process. I have always promoted that it is imperative to manage your Work in Process (WIP) or your pipeline effectively and efficiently. This being the quickest way to increase revenue and decrease cost. This includes customer retention as part of the process. The next extension is acquiring new customers (It is also where we spend our most money). To do this, you must have knowledge of non-existing customers. For example, when you read a survey, do you learn more from a customer or a non-customer? Does both columns in a win-loss analysis look the same? .
Voice of Market information goes much deeper than this. It unlocks the mystery surrounding value. Value is such an abstract term for most companies because it is difficult to measure and can be somewhat subjective. However, the value gap between you and your competitors is not. It is real and can be quantified. These gaps whether positive or negative enables you to address real criteria in your marketing efforts. This is a great eye opener for most companies
Most companies have a tendency to look at additional markets in a recession (I think many of us believe that the grass is greener on the other side). However, seldom are they offering breakthrough products to this new market. Determining Voice of Market information and deciding the most attractive market(s) to pursue is imperative in a down economy. You cannot afford to enter markets that you have little chance of winning.
Understanding the key metrics certainly helps your marketing efforts but just think for a moment what it does for your innovation efforts. It opens up tremendous opportunities from a fact driven methodology versus a hunch or maybe a limited view of an existing customer. Voice of Market is a key strategy in driving market share and is imperative to understand in a down economy.
Disclosure: At this time there is a ongoing business relationship with Six Sigma Marketing Institute founded by Dr. Reidenbach.