Many years ago, in a course on information theory, I learned that one way to measure the value of information was by quantifying the quality of relevant decisions made with and without it. A few case studies suggested that the concept, while clear from a common sense perspective, was hard to apply in practice. But a recent project experience provided an example as to the relevance of the concept.

The organization that was involved was a major component supplier to the automotive industry, supplying both the new car makers and the parts and service aftermarket. Like many in that industry, they had for a long time invested in bringing the voice of the customer into their organization. The particular project that came under scrutiny was oriented towards the aftermarket side of the business.

This voice of the customer project had been in place for almost ten years, providing quarterly reports on almost thirty metrics that were summarized in a newsletter form and distributed quite widely throughout the firm. The marketing team responsible for this project had received negative comments about its value, and the effort was even on the table as a possible cost-saving measure. To evaluate options going forward, we tried to apply the information value concept.

The process we implemented involved a small team, including two from the marketing group that was responsible for the effort, a regional sales executive, a pricing specialist, a product development specialist, and an operations manager, all with experience in the relevant product and market segments. We took the last five years of the survey, question by question, and identified the largest two-period changes that had been measured. In a few cases, we exaggerated those changes to bring some additional drama to the process. We then asked the team to look at each question separately, and to tell us what decision options would be motivated by the changed results we presented to them.

The remarkable finding was that for eleven of the questions, even with exaggerated changes for several of them, the team reported back that they really couldn’t identify any changes that the firm would make based upon shifts in the voice of the customer metrics for each of those questions. As one of them commented, we kept looking at some of these questions and asked the familiar question from the TV commercial: “Where’s the beef?”

To further test the value of these questions, we constructed a few artificial scenarios and developed a voice of the customer profile that we thought would be seen if those scenarios developed. For example, in one scenario, we postulated that a competitor had achieved a technology breakthrough that improved durability for the product line by 20%. When we gave the same team these scenarios, they did easily come up with decision options, but reported back that the eleven questions under review made little or no impact on their analysis and recommendations.

The final test took place in the subsequent quarter. The team continued to ask all of the same questions, but in the internal newsletter, didn’t provide any data or mention of the eleven suspect questions. They got back about a dozen emails saying “Good job on the improved format”, but not a single question about the missing data elements.

The value of customer insights cannot be overstressed. Over and over, we’ve seen examples as to how firms were able to achieve market success by bringing customer voices into their plans and decisions. But, like any investment, it needs to be focused and to emphasize insights that make a difference. The simple review process that this firm employed, just asking what decisions would be impacted by each information element, is a straightforward approach to bringing the information value concept into play.

Author: George F. Brown, Jr.