Some years ago when the internet first began reshaping the retail landscape, one major international chain began to offer a new program designed to reward customer loyalty and increase sales. When we asked their store employees to explain the program's details, their headquarters emailed the reply shown here below.
"We surveyed close to 10,000 consumers to find out what they wanted most in our new customer reward program. The feedback indicated that customers wanted to be rewarded incrementally, so that the more they spend the more they save.
"A typical customer enrolled in a rewards program in our industry would spend $200 (sales) on an annual basis. A typical fee-based membership program would give a 5% discount per item, meaning that on an average a customer has to purchase 14 items to make the program beneficial.
"On the contrary, in our new program, a customer pays no yearly fee. He/she would earn up to three (3) specific personal shopping days, plus holiday discounts throughout a year, netting a total savings of an additional $15 plus a $5 off on every $50 transaction made on those personal shopping days. For example, a customer who spends $200 on an annual basis would get a 5% discount per item, while a customer who spends $400 annually would get a 10% discount, and so on. We've incorporated almost all of the customer wants and the features that they expressly requested in the survey.
"Thus, ours is a much better program than the competitor's, whose program has an annual membership fee and a flat percentage discount."
Only a few years after this, the company went out of business, closing all stores world-wide. In a Wall Street Journal nterview some time later, the ex-CEO conceded that the reward program was a disaster, being unable to attain any of the intended goals.
Business failure is often from complex reasons; hardly a single mistake can be blamed. Nonetheless, if we are to name one important lesson to learn from here, it is what I call the Bonehead Spec syndrome.
We developers must work to avoid this syndrome if we want both satisfied customers and business success.
How? By listening smarter to the Voice of the Customer (VOC). We must first discern the following differences carefully before doing anything else with the VOC data:
This can be easily done by using a few simple tools in Modern QFD such as the Customer Voice table.
Needs prioritization using sound math is also important, and so is alignment with your business/project goals. For that, use the tools like Project Goals table and the Analytic Hierarchy Process.
These steps should be done before translating the market research data directly into the product specifications and features, in order to avoid the trap of Bonehead Specs.
This approach can help you address both customer satisfaction and business deliverables, whether you are developing a new product, service, software/IT, or strategy.
Graduates of QFD Institute Belt® courses can review your training manual if you have forgotten these tools, or email your course instructor if you have questions.
For those who are new to Modern Blitz QFD®, these lessons have been discussed in this newsletter from time to time. Better yet, plan to get the proper training in the future QFD Green Belt® Courses.
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