LINKAGE ANALYSIS PLANNING Linkage Analysis Planning (LAP) is a group exercise that uses brainstorming and interactive techniques

to spur decision making and identify and prioritize strategies for realizing a vision. Originally developed by IBM Corporation, LAP allows users to recognize seemingly unconnected ideas, link them in a logical way and analyze them to help make sound decisions. LAP is well suited for use by community partnerships. It provides an effective way to identify and organize diverse viewpoints, while ensuring optimal participation. The exercise is flexible and can accommodate strategy development at varying levels of detail. When a partnership has completed the LAP exercise, it will have a diagram of prioritized strategies that may prove useful in developing a strategic plan. Why is Linkage Important? Linking key data is important because the goal is to integrate the voice of the customer into business practices and processes, resulting in a change in customer behavior. It builds on the premise that understanding customers needs is important and that there must be a structured process to identify, prioritize, and fulfill customers needs at the aggregate and segment levels. This provides a basis for improving performance within and across organizational boundaries and for managements decisions regarding investments. Driving these decisions is the assumption that leveraging the voice of the customer will deliver financial benefits, that customers are an investment, which should be managed so that financial return is maximized. This is important because senior management and stakeholders are increasingly demanding evidence that their investments in the companys customer-centered initiatives do indeed have a favorable impact on the bottom-line. One final point. We cannot really understand the business impact of decisions unless we link the customer inputs with the financial value of the account. HISTORY Business Case for Linkage Analyses Based on a recent study on customer feedback programs best practices (Hayes, 2009), I found that companies who regularly conduct operational linkages analyses with their customer feedback data had higher customer loyalty (72nd percentile) compared to companies who do conduct linkage analyses (50th percentile). Furthermore, customer feedback executives were substantially more satisfied with their customer feedback program in helping them manage customer relationships when linkage analyses (e.g., operational, financial, constituency) were a part of the program (~90% satisfied) compared to their peers in companies who did not use linkage analyses (~55% satisfied). Figure 1 presents the effect size for VOC operational linkage analyses. Linkage analyses appears to have a positive impact on customer loyalty by providing executives the insights they need to manage customer relationships. These insights give loyalty leaders an advantage over loyalty laggards. Loyalty leaders apply linkage analyses results in a variety of ways to build a more customer-centric company: Determine the ROI of different improvement effort, create customer-centric operational metrics (important to customers) and set employee training standards to ensure customer loyalty, to name a few. In upcoming posts, I will present specific examples of linkage analyses using customer feedback data. Linkage Analysis: A Data Management and Analysis Problem

Figure 2. Linking Disparate Business Data Sources Leads to Insight You can think of linkage analysis as a two-step process: 1 ) organizing two disparate data sources into one coherent dataset and 2) conducting analyses on that aggregated dataset. The primary hurdle in any linkage analysis is organizing the data in an appropriate way where the resulting linked dataset make logical sense for our analyses (appropriate unit of analysis). Therefore, data management and statistical skills are essential in conducting a linkage analysis study. More on that later. Once the data are organized, the researcher is able to conduct nearly any kind of statistical analyses he/she want (e.g., Regression, ANOVA, Multivariate), as long as it makes sense given the types of variables (e.g., nominal, interval) you are using.

Figure 3. Common Types of Linkages among Disparate Data Sources Types of Linkage Analyses In business, linkage analyses are conducted using the following types of data (see Figure 2): 1. Customer Feedback 2. Financial 3. Operational 4. Employee 5. Partner Even though I discuss these data sources as if they are distinct, separate sources of data, it is important to note that some companies have some of these data sources housed in one dataset (e.g., call center system can house transaction details including operational metrics and customer satisfaction with that transaction). While this is an advantage, these companies still need to ensure their data are organized together in an appropriate way.

With these data sources, we can conduct three general types of linkage analyses: 1. Financial: linking customer feedback to financial metrics 2. Operational: linking customer feedback to operational metrics 3. Constituency: linking customer feedback to employee and partner variables Before we go further, I need to make an important distinction between two different types of customer feedback sources: 1) relationship-based and 2) transaction-based. In relationship-based feedback, customer ratings (data) reflect their overall experience with and loyalty towards the company. In transaction-based feedback, customer ratings (data) reflect their experience with a specific event or transaction. This distinction is necessary because different types of linkage analyses require different types of customer feedback data (See Figure 3). Relationship-based customer feedback is needed to conduct financial linkage analyses and transaction-based customer feedback is needed to conduct operational linkage analyses.

Statistical Analyses The term linkage analysis is actually a misnomer. Linkage analysis is not really a type of analysis; it is used to denote that two different data sources have been linked together. In fact, several types of analyses can be employed after two data sources have been linked together. Three general types of analyses that I use in linkage analyses are: 1. Factor analysis of the customer survey items: This analysis helps us create indices from the customer surveys. These indices will be used in the analyses. These indices, because they are made up of several survey questions, are more reliable than any single survey question. Therefore, if there is a real relationship between customer attitudes and financial performance, the chances of finding this relationship greatly improves when we use metrics rather than single items. 2. Correlational analysis (e.g., Pearson correlations, regression analysis): This class of analyses helps us identify the linear relationship between customer satisfaction/loyalty metrics and other business metrics. 3. Analysis of Variance (ANOVA): This type of analysis helps us identify the potentially non-linear relationships between the customer satisfaction/loyalty metrics and other business metrics. For example, it is possible that increases in customer satisfaction/loyalty will not translate into improved business metrics until customer satisfaction/loyalty reaches a critical level. When ANOVA is used, the independent variables in the model (x) will be the customer satisfaction/loyalty metrics and the dependent variables will be the financial business metrics (y). METHODOLOGY Exercise Summary Depending on the number of attendees and the complexity or difficulty of the topics being discussed, the LAP process requires participants to meet for up to a full work day. The day is divided into two sessions of about four hours each. During the first session, the group will brainstorm strategies and organize them into common themes. The group then votes on the relative importance of those strategies, resulting in a diagram of the priorities.

During the second session, participants will use the same process to discuss and prioritize a more detailed set of strategies to support the top strategies developed earlier in the day. The desired outcome of this exercise is a set of diagrams containing information that may be useful for developing budgets, determining funding requirements, creating milestone charts, and forging implementation plans. See the sample diagrams below for more information. Preparing for an LAP Exercise Before holding a LAP exercise, the partnership needs to determine the goals and objectives that will be the focus of the process. Additionally, define any boundaries that may impact the development of strategies. Boundaries include any known expectations or requirements, timelines, milestones, deadlines or scheduled deliverables; e.g., We have a referral hotline launching in May, and must plan according to that deadline.

Youll also need the following materials: Meeting agenda Flip charts and markers, one for each subgroup and one for the facilitator Index cards (different colors for each exercise) or pads of adhesive notes Handouts containing any relevant background information on strategies to be discussed

Session 1: Developing Strategies (about four hours) At the start of the session, review the agenda, including the meeting objectives and goals, and how they fit with the overall vision of the partnership. When youre ready to begin, ask for volunteers to take notes and keep track of time. Part I: Brainstorming Step 1 Set up a flip chart with a blank LAP diagram (shown below). Along the top, write the strategic goal for the LAP process. In the center box, summarize the goal to be discussed. Step 2 Ask participants to write the strategies they would like the group to consider on adhesive notes or index cards, one idea per note or card. Step 3 Have participants share and discuss their ideas from Step 2. Help the group work toward consensus regarding the individual strategies, recording the results on the flip-chart diagram. (It may be necessary to combine some similar or related ideas to avoid having too many to work with effectively during the voting phase of the process.) Part II: Prioritizing Strategies by Voting

Step 4 Count the strategies the group identified, double that number and round up to the nearest 10. For example, if you have 11 strategies, doubling 11 equals 22, rounded up equals 30. This number 30 will be the total votes each participant can cast for his or her preferred initiatives. Step 5 Ask participants to vote for the initiatives they believe will best serve the goal stated at the beginning of the meeting. Use these voting guidelines: Each participant must vote for at least half of the initiatives. In the example above, participants must vote for at least six of the 11 initiatives. Participants may cast more than one vote for a preferred initiative, but may not use more than half of their votes on a single idea. This prevents stacking the deck or loading too many votes on one idea.

Step 6 Count the votes and write them next to the strategies listed on the flip-chart diagram. At this point, the partnership has identified and ranked in order of perceived value or importance the full list of strategies. The next step is to determine how the group would like to proceed with transforming the list into a strategic plan. Session 2: Developing Activities to Support Potential Strategies (about four hours) The second session uses the same process to separate strategies into smaller, workable units to better identify how to move the strategies from concepts to actual programs or tasks. Step 1 Divide the group into subgroups, each working on the prioritized strategies from the first session. The number of subgroups will depend on the total participants and how many top-rated strategies were selected by the entire group. Step 2 Assign leaders for each subgroup. Step 3 The subgroup leader will draw the LAP diagram on a flip chart, write the strategy under consideration in the middle of the diagram, and facilitate activities and discussions of the subgroup as described in steps 2-6 from Session 1. Wrap-up When the subgroups have completed the work for the second session, bring the whole group back together. Identify next steps, and divide the work among participants. Finally, pause to reflect on the days successes and challengesand celebrate the successes. Follow-up As soon as possible in the days following the LAP exercise, gather the data and provide it to the entire group. Then, plan subsequent meetings and ways for the partnership to build on the results. SAMPLE CASES

Electric Power Research Institute EPRI, which provides research to electric utilities, found itself with so much information that research products and understand what delivery was slow to the want in services members wanted and would future, and results were not accessible by members. EPRI installed an online system for use by analysis members, following its use of linkage planning.

http://www.synovate.com/consumer-insights/experience-growth/issues/201108/ http://www.customerimpact.com/linkage-analysis http://www.partnershipsforolderadults.org/resources/resource.aspx?resourceGUID=b52a2cfc-baa24117-9152-4bac336cde6f&sectionGUID=753922c9-ded1-4921-82cc-b087db71bc8c