Voice of the customer (VoC) programs have been popular from the moment that businesses first started having customers and in recent years the formality of these programs has increased and books have been written and many conference agendas populated with experts on the subject.

VoC is dead and social is the reason.

Paul Greenberg recently noted at the Enterprise 2.0 event that business technology is not undergoing a technology revolution, the revolution is one based in communication and as a result business is being forced to adapt and innovate.

Companies of all sizes are directly connecting with individual consumers and are now able to scale these interactions. The result of this is that methods built around sampling and proxy are no longer necessary or productive. Why would you collect data that you have to interpret, extrapolate, filter, and subject to latency when employees can directly tap into customer communities for direct and immediate engagement?

To be clear, voice of the customer is not an obsolete concept… Voice of the Customer programs are obsolete and will increasingly be co-opted and replaced by customer communities.

This is one of the more interesting consequences of the mass market adoption of social networks, they serve to break down the barriers that exist between customers and employees. Whether or not the firewall exists doesn’t matter, the fact remains that employees are becoming accustomed to interacting directly with customers regardless of whether they are in the customer service org or something entirely different.

Companies are themselves recognizing that their competitive strategy requires being attuned to customer needs and engagement, a point that Josh Bernoff recently made quite well in an outstanding research piece called Competitive Strategy in the Age of the Customer.

Bernoff’s key points are that competitive advantage no longer continue to derive from backoffice technology focused on productivity and efficiency but from customer facing technology that delivers customer insights which can then be acted upon from a market and product perspective.

Companies that obsess about customers end up investing in technology differently than other companies because they build their business around the one piece of intellectual property that cannot be replicated or commoditized, customer insight. As a result, Forrester is recommending that companies budget according to the following priorities:

1) invest in real-time insight to build products that customers will embrace.

2) Spend more on customer experience and customer service to build relationships.

3) Fund sales channels that deliver intelligence about customers, not just the push.

4) Shift marketing from one-way ads into useful content and interactive marketing.

[Cross-posted at Venture Chronicles]