Voice of Customer Towards Decision Making and Innovation
In 2020, businesses are facing intense competition that are tighter than ever. Therefore, a new winning edge is essential to capture a larger market share. Years ago, businesses were focusing their resources mainly to develop great products at the cheapest price possible. However, with the advancement of technology and a more efficient supply chain, boundaries on product diversification and price are nothing more than blurred lines.
As a result, various players in the market are able to produce products/services of very similar quality, sell through similar channels, fulfill the same needs, and even target the same audience. Furthermore, customers are also constantly evolving. More and more buyers are increasingly critical of the experience given to them and their expectations are higher than ever before.
According to a survey by Merkle, two-thirds of the customers claimed that experience mattered to them more than price when making a brand decision. It was also found that more than half of online shoppers stopped shopping on a brand due to poor experience. Churned customers suppresses growth because according to Clevertap acquiring a new customer is 5–25x more expensive than retaining one and by reducing churn rate by only 5%, it can boost your company profitability by 75%.
With that being said, the new battleground for business competitions is the customer experience. A study published by Walkerinfo showed that 86% of buyers will pay more for a better customer experience and by 2020, customer experience will become the key to brand differentiation. Many giant companies who are leading the market within their industry have adapted this strategy since a long time ago.
One of the most prominent ways to meet or even exceed your customer expectations in order to provide a top notch customer experience is by conducting voice of customers (VoC) analytics. As quoted by Lexalytics, “voice of the customer is how companies hear and listen to customer feedback about their brand, products and services” and turn those feedback into useful data and insights at scale.
Tokopedia is a prime example of a company that continues to place their customers at the center of everything they do. Customer centricity is embedded in the company’s DNA, and this is a trait that enables Tokopedia to be able to provide best-in-class services. The voice of customer analytics is a method that has been a constant staple for Tokopedia to better understand their customers needs and expectations, with hundreds of surveys distributed every year to gather customer insights. In addition, focus groups, phone calls, and other data collection methodologies are also performed monthly in order to gather well-grounded data. An example is the Net Promoter Score:
Net Promoter Score — The next level of Customer Satisfaction Survey
Net Promoter Score is a gauge of customer satisfaction and loyalty developed in 2003 by Bain and Company. As quoted from Qualtrics, “NPS is often held up as the gold standard customer experience metric” and is used by millions of businesses worldwide. The measure of Net Promoter Score lays on one simple question:
“How likely are you to recommend product or service [X] to your friends or family”
Respondents can give ratings between 0 and 10. 0 if they are less likely to recommend and 10 if they are willing to recommend. Theses ratings will then grouped into 3 categories as follow:
- Promoters: Respondents who give ratings of 9 or 10. These users are highly satisfied with the products/services provided and willingly promote them to their friends and family without being given any incentives.
- Passives: Respondents who give ratings of 7 or 8. These users are satisfied with the products/services provided however not to the extent where they want to promote them to their friends or family.
- Detractors: Respondents who give ratings between 0 and 6.These users are dissatisfied with the product/services provided and are unlikely to buy/use your product/service again. These users may even discourage their friends and family from buying/using your product.
The NPS score will then be calculated by subtracting the percentage of promoters out of the total with the percentage of detractors out of the total. The score ranges between -100 to +100. The benchmark for good NPS scores varies between industries which you can check on Relently or Surveysensum.
Tokopedia distributed the NPS survey for almost all products/services such as Pulsa (phone credit), Voucher Game, Reksa Dana (mutual fund), TopAds, and many more on a monthly basis to truly understand customer satisfaction levels, gauge customer loyalty, and most importantly, identify their pain points and explore measures to fix them. In our NPS survey, customers who gave low NPS ratings will be asked for their reasoning behind giving such a score. They are also encouraged to provide recommendations on how Tokopedia can improve.
These insights are then delivered frequently to the senior management and even the C-level. At Tokopedia, we value our customers’ feedback very seriously. We gather, categorize, monitor, and implement them to drive innovation to provide a better service for customers. To better understand how Tokopedia uses customers’ feedback for business decisions or innovations, take a look at the following example.
Example: How Tokopedia Uses VOC Analysis to Expand Cash-On-Delivery Payment Method to All Users
Early last year (2019), Tokopedia launched a Cash-On Delivery payment method exclusively for new users. The decision to target new buyers back then was because it is observed that new users were not yet familiar with the user interface or still tactless with the overall payment process at an ecommerce platform.
By providing Cash-On Delivery, instead of adapting to the payment process accustomed to Tokopedia, users’ experience will be similar to shopping in retail stores where they receive their items directly after payment is made as experience among newly onboard users is quintessential to ensure repeat purchase/usage. Through this initiative, thousands of new buyers per month made their first purchase in Tokopedia using this payment method.
The demand for Cash-On Delivery payment systems is rising eversince. During the COVID-19 pandemic, the demand is exacerbated as the government is imposing social distancing measures, creating barriers for people to go out, and in turn restricting users from utilizing offline payment methods. These comments are reflected in our April 2020 NPS survey, the following are some of the highlights:
As a customer-centric company, Tokopedia proactively tracks and monitors those comments. However, actions could not be taken tout de suite as analysis and observation are required to generate real value and ensure that the experiences delivered to users remain excellent. As quoted by Lexalytics, “Hasty decisions and rash actions lead to big failures, and acting on bad data can be worse than not acting at all.”
Despite the high and persistent demand since early 2020, Tokopedia circumvented the Cash-On Delivery payment method to be opened to all users, because Tokopedia believes that Cash-On Delivery is based on people who do not have a trust of the platform so they choose to pay on the spot. Instead of offering them with a Cash-On Delivery payment method, Tokopedia thrived to educate the customers and build trust so that they will feel comfortable and know that if things go south, Tokopedia will be able to resolve their issues immediately. Furthermore, Cash-On Delivery was also not ideal as it opens up greater risks for loss for the sellers in case the buyers do not want to pay unilaterally even after the goods have been sent from far away.
This is where the Customer Insights and Analytics team comes in. We traced the users’ comments regarding Cash-On Delivery and did various data analysis to better understand the customer needs related to Cash-On Delivery. One of the simplest analyses that was performed is by looking at the users profile and behaviors. Below are some of the behavioral or profiling questions to better understand our target audience:
- What payment methods have they been using for online shopping at Tokopedia?
We looked at the historical payment methods used by users who requested Cash-On Delivery to see their preferred payment method. We found that nearly 50% of these users have been paying their shopping bills through offline outlets such as Alfamart, Alfamidi and Lawson. This indicates that these users aren’t used to making digital payments or do not have enough trust with the payment system offered by Tokopedia. This also explains why the demand for Cash-On Delivery is rising during the pandemic where buyers are restricted to go out due to the social distancing measures imposed by the government.
2. Where are they located?
This information is also important to note because not all locations have Cash-On Delivery logistics available in their area, therefore hindering the feasibility of the project in the short term. Nevertheless, Tokopedia has partnered with couriers that are able to deliver goods to almost all parts of the country, including rural areas, where we have a large unbanked population. Therefore, by offering a Cash-On Delivery payment method, these users can still enjoy the e-commerce platform as it is imperative to retain these customers.
3. How long have they been using Tokopedia or shop online in general?
By understanding whether these users are new or existing customers, we can draw several hypotheses regarding their behavior to follow up further. Our data shows that despite buyers with an account age of less than 3 months being the pool of people who most often requested payments through Cash-On Delivery, more than 50% of buyers who demanded Cash-on Delivery payment methods derive those who had joined Tokopedia for more than a year. This indicates that existing customers who had used Tokopedia for some time also prefer to pay on the spot.
After answering the above questions and generating insights, we found that it is imperative for us to open Cash-On Delivery for all users as it may have positive business impacts due to the large opportunities. By reaching out to the untapped potential, it is expected that transaction penetration will rise, especially in specific categories. By opening this payment method, we are opening the gates to reach more Indonesian to use our platform, hence increasing active users and other business metrics.
Moreover, through the result of our NPS survey, it is observed that customers have high satisfaction towards the Tokopedia security system with an NPS score of nearly 80%. Therefore, opening a Cash-On Delivery payment system to all users wouldn’t open up a larger opportunity for fraud, as long as it is closely monitored and secured. These findings and recommendations are then delivered to the respective business units to fuel further discussions on why Cash-On Delivery should be considered for a larger user pool and generate a concrete action plan.
By taking into account the findings and discussions, on 22 September 2020, Cash-On Delivery payment method was finally made available for all Tokopedia users to attain the low hanging fruit. Robust observations were performed to understand how customers (both buyers and sellers) respond to this new feature and continuous reiteration was made to match the needs and demands of our customers towards Cash-On Delivery.
In conclusion, the voice of customers is an important tool and should be utilized by companies in leading their continuous innovations. This becomes increasingly important as more and more buyers value the experience they receive more than the price of the goods. One method to do the VOC analysis is by using the Net Promoter Score (NPS) survey to gather insights in regards to customer satisfaction and loyalty and also to explore room for improvement in order to provide better customer experience.
