FEATURE1 February 2010

Ground control

Enterprise feedback management puts research in the hands of people who can take immediate action on the ground. Amy Pressman, president of Medallia, fights the case for EFM and claims that researchers have nothing to fear.

Traditionally a staff function, market research is often narrowly defined. Researchers are the custodians of the data collection process, or the detectives tasked with answering specific questions. The focus of MR is frequently on methodological purity and its role is reflective and non-operational in nature.

But about a decade ago, a new category of software system called enterprise feedback management, or EFM, emerged. EFM systems let companies field feedback surveys on their own and report results through the organisation. This technology is democratising feedback from market research. By making data widely available, EFM turns everyone into a researcher. Typically MR is the warm-up band to the main event of operations, but EFM disrupts the status quo, and, we would argue, will make stars of those who can harness its power.

For many in market research, the emergence of EFM is alarming. The democratisation of research causes angst about research quality for methodological purists – the way blogging causes angst for old-time journalists. Researchers argue that, to accurately guide decision-makers, data collection and analysis should be left to highly trained professionals. Yet EFM puts raw data in the hands of operational users – who typically are not well versed in quantitative analysis – so they can start basing decisions on it. It’s a scary new world.

 Some also worry that EFM jeopardises the very existence of market research as a function. It takes away market research’s historical ownership of the voice of the customer by distributing access to customer feedback data and analysis more broadly through organisations. In an era that values hyper-acceleration above all else, EFM’s real-time responsiveness is clobbering market research, with its more steady methodical pace.

 But even while EFM removes part of the responsibility for customer feedback from market research and gives it to operations, it presents a tremendous opportunity for research. EFM represents an expansion of market research’s power: what MR loses in exclusive ownership of feedback analysis, it gains back many times over in elevated status and impact. To realise that potential, research must seize the opportunity and embrace EFM.

 In our experience most companies that successfully implement real-time EFM systems elevate customer insights and market research from a nice-to-have staff function to a must-have operational function. Within a year of implementing EFM, market research tends to become more central to the organisation.

EFM at work
With a real-time EFM system, data becomes ‘top-of-mind’ everywhere in the organisation. At many of our client companies, every business unit manager starts the day with a five-minute team meeting to review the previous day’s feedback. At Best Western, 93% of hotels log in and use the feedback system regularly.

When everyone in an organisation can see and analyse the raw data on their own and verify the research results of other parts of the organisation, then everyone starts to buy in. The data becomes credible and accepted. There’s no more scepticism about why market research chose to conduct one analysis versus another or whether the results are accurate. A branch manager for Fidelity described his team’s frustration with customer feedback prior to implementing an EFM programme: “It used to be I’d just share a number, say ‘85’, and not have much data behind it. The team would start to say ‘How accurate is this stuff?’ and ‘What can we actually do about it?’”

What happens next?
As an organisation becomes more data-focused and data-savvy, it will challenge market research to improve the analysis and make it more relevant to operations. The company increasingly understands and appreciates the contribution of market research. In a rising tide , even non-feedback-based research that market research conducts – segmentation, competitive analysis, non-buyer research, and so on – gains more traction.

The best business decisions are not made in an ivory tower with no direct access to frontline operations (that is, exclusively by market research) and nor are they made at the frontlines without access to the big picture of how micro-actions roll up to an overall company decision (that is, exclusively by operations). The best decisions – the best adaptations to the marketplace – are made as a result of the interplay between operations and MR, between action and analysis.

These interactions are as varied as the companies in which they take place. Hotel chain Hyatt Place hit the mark with its new brand, the genesis of which was in extensive market research but the success of which went beyond research.

Hyatt Place offers business travellers a contemporary yet casual environment that allows guests to continue their normal life on the road – on a guest’s arrival, employees provide a full range of services that mirror the experience of entering someone’s home: they welcome guests, give a tour of the premises and offer something to eat or drink.

Hyatt Place generated excellent customer satisfaction scores right from its launch, but it also implemented an EFM programme to gather real-time feedback and help it deliver and exceed its brand promise. In the year after launch, Hyatt Place increased its ‘top two box’ score (the number of guests rating an attribute 9 or 10 on a 10-point scale) by between 5 and 10 percentage points across all key categories. In other words, its EFM program helped turbo-charge Hyatt Place’s initial market research.

The literature shows that the best enterprises – in terms of sustained financial performance and leadership in thinking and innovation – combine sound analysis with a bias for action. According to Peters and Waterman’s book In Search of Excellence, excellent companies subscribe to the analytic model – segmenting markets, factoring in the time-value of money, and projecting cash flows – but they also understand the limitations of analysis. The analytic tools “are there to assist” – they can’t make or sell products. The mantra should be one of experimentation: do it, fix it, try it.

“EFM gives market research immediate access to the frontline to test hypotheses and improve analyses. At the same time it gives frontline operations access to dta to make micro-improvements”

Mind and body in harmony 
EFM coordinates this interaction between action and analysis, like a body’s central nervous system. As an enterprise-wide platform, it puts the whole organisation on the same page with regard to feedback. It gives market research immediate access to the frontline to test its hypotheses with end-users, and improve its analyses. At the same time it gives frontline operations access to data to make micro-improvements, the results of which can be captured and analysed by market research and shared across the organisation.

 In the retail trade, the experience at one store showed how EFM can be woven in with market research on the ground. The store’s EFM system showed that customer satisfaction was dropping day by day. The store manager dug into the data. According to the system’s word clouds, lower scores correlated with two words: ‘salesperson’ and ‘rude’. With one click, the manager pulled up one survey, then another, then another. A story emerged: customers were coming into the store in droves looking for support for a popular daily-use product that was defective. Rather than help, they were receiving rude treatment.

“Is this true?” the manager asked his staff. They replied, sheepishly, “Yeah, maybe.” Apparently, beleaguered employees were getting overwhelmed (and, frankly, annoyed) by the onslaught of complaints coming in on the store floor.

The next day, the store manager asked his employees to “walk a day in customers’ shoes” by temporarily giving up a product of their choice – something they used every day. Each of them tossed their selected items into a cardboard box and went a day without something they were used to having readily available. Shortly thereafter, customer satisfaction scores spiked to their previous levels. No more ‘rude’ and ‘salesperson’ in open-ended comments. Owners of the defective products were now being met with empathy: “You’ve been without it for how long?”

If market research had tried to solve the problem of declining satisfaction scores, the department would probably have correctly assessed the problem and evaluated a range of options: a replacement product, discounts on the next purchase and so on. But a frontline manager, armed with data from his EFM system and a gut instinct about what was happening on the ground, came up with a better, cheaper, less complicated, more authentic solution that he could try out on the spot. 
 And what did market research do with the EFM system? It researched why this one store was outperforming others on customer satisfaction, found the solution to the defective product problem, and shared the information across the organisation so the whole company could follow suit.

If you can’t beat them…
According to Gartner, EFM is here to stay. The industry will enjoy strong, annual double-digit growth in the next two years. Market researchers have a choice. They can resist EFM and cling to their traditional, siloed customer feedback approaches, which allow them to retain exclusive ownership of feedback programs. But they run a near 100% risk that they will be marginalised and, eventually, cede responsibility for feedback to operations.

For market researchers who embrace EFM, and guide it to the best possible use within an organisation, the results are dramatically positive. In our experience, after implementing a successful EFM program, market research increases its impact on the business by an order of magnitude, with its role expanding from answering specific narrow questions to helping the company make better business decisions generally. Its focus shifts from advice-giving to decision-making, with significant operational impact. To all of you in research, the choice is yours: stick with the status quo, or become a star.