For: Customer
Experience
Professionals

Sharpen Customer Experience Focus
With Employee Engagement
by Sam Stern, August 26...
FOR CUSTOMER EXPERIENCE PROFESSIONALS

AUGUST 26, 2013

Sharpen Customer Experience Focus With
Employee Engagement
by Sam ...
FOR CUSTOMER EXPERIENCE PROFESSIONALS

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Sharpen Customer Experience Focus With Employee Engagement

INTEREST IN EMPLOYEE...
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Sharpen Customer Experience Focus With Employee Engagement

Figure 2 Typically, ...
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Sharpen Customer Experience Focus With Employee Engagement

Figure 4 More Engage...
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Sharpen Customer Experience Focus With Employee Engagement

Figure 5 Employee En...
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Sharpen Customer Experience Focus With Employee Engagement

Figure 6 Adoption Le...
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Sharpen Customer Experience Focus With Employee Engagement

■ Craft a customer e...
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Sharpen Customer Experience Focus With Employee Engagement

Figure 8 Cleveland C...
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Sharpen Customer Experience Focus With Employee Engagement

Build Customer Centr...
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Sharpen Customer Experience Focus With Employee Engagement

R E C O M M E N D A...
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Sharpen Customer Experience Focus With Employee Engagement

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SUPPLEMENTAL MATERI...
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Sharpen Customer Experience Focus With Employee Engagement

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“Presenteeism” i...
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Sharpen customer experience_focus_with_employee_engagement

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KEY TAKEAWAYS
Engaged Employees Sustain Customer Experience Efforts
Customer experience professionals are typically part of very small teams. To succeed,
they need help from a broad base of engaged employees who are motivated to exceed
customer expectations.
Strong Employee Engagement Correlates With Higher Productivity And
Profits
Companies with higher employee engagement ratings have higher pro!t margins.
More engaged employees deliver better customer outcomes as measured by customer
satisfaction, loyalty, and likelihood-to-recommend scores.
Companies Can Create Highly Engaged Customer-Centric Employees
Customer experience teams must ensure that employees have the training, tools, and
autonomy they need to take control of the customer experience.

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Sharpen customer experience_focus_with_employee_engagement

  1. 1. For: Customer Experience Professionals Sharpen Customer Experience Focus With Employee Engagement by Sam Stern, August 26, 2013 KEY TAKEAWAYS Engaged Employees Sustain Customer Experience Efforts Customer experience professionals are typically part of very small teams. To succeed, they need help from a broad base of engaged employees who are motivated to exceed customer expectations. Strong Employee Engagement Correlates With Higher Productivity And Profits Companies with higher employee engagement ratings have higher profit margins. More engaged employees deliver better customer outcomes as measured by customer satisfaction, loyalty, and likelihood-to-recommend scores. Companies Can Create Highly Engaged Customer-Centric Employees Customer experience teams must ensure that employees have the training, tools, and autonomy they need to take control of the customer experience. Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140 USA Tel: +1 617.613.6000 | Fax: +1 617.613.5000 | www.forrester.com
  2. 2. FOR CUSTOMER EXPERIENCE PROFESSIONALS AUGUST 26, 2013 Sharpen Customer Experience Focus With Employee Engagement by Sam Stern with Harley Manning and Carla O’Connor WHY READ THIS REPORT Employee engagement drives both better customer experience and greater profit margins. What’s more, it’s essential for companies that want to sustain customer experience success over time. But most companies aren’t doing what it takes to engage employees and keep them engaged for the long run. This report describes the specific steps that organizations can take to motivate, equip, and empower their employees for customer centricity. Table Of Contents Notes & Resources 2 Interest In Employee Engagement Is High — As It Should Be Forrester interviewed 15 companies, including Allianz Life Insurance, Blue Cross Blue Shield of Michigan, BMO, CIBC, Cleveland Clinic, easyJet, FedEx, Ferrazzi Greenlight, Ingersoll-Rand, Penske System, Pitney Bowes, Rogers Communications, Root, RoundPegg, and Walker Information. But Few Firms Do What It Takes To Engage Employees 6 Best Practices For Engaging Employees Create An Employee Engagement Road Map Inspire Employees By Socializing Customer Centricity Build Customer Centricity Into Employee Tools And Ongoing Practices RECOMMENDATIONS 10 How To Start Improving Employee Engagement 11 Supplemental Material Related Research Documents CIOs Must Champion Engaging Employee Experiences May 7, 2013 Measure Workforce Experience Through Engagement, Productivity, And Customer Impact May 7, 2013 The Customer Experience Ecosystem February 28, 2013 How The Voice Of The Employee Empowers Customer Experience Efforts January 28, 2011 How To Build A Customer-Centric Culture November 19, 2010 © 2013, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please email clientsupport@forrester.com. For additional information, go to www.forrester.com.
  3. 3. FOR CUSTOMER EXPERIENCE PROFESSIONALS 2 Sharpen Customer Experience Focus With Employee Engagement INTEREST IN EMPLOYEE ENGAGEMENT IS HIGH — AS IT SHOULD BE When Forrester surveyed customer experience professionals about their spending plans in 2013, roughly two-thirds confirmed that they have budgets to bolster employee engagement (see Figure 1).1 Customer experience (CX) leaders who focus on employee engagement are right to do so because engaged employees: ■ Give customer experience teams greater reach. The majority of customer experience teams comprise 10 or fewer members (see Figure 2). But large companies deliver millions of interactions annually to increasingly demanding customers. That means CX professionals need the help of employees who’ll deliver the right experience, day in and day out, without close supervision. ■ Boost profits. Engaged employees are good for business. Towers Watson — a human resources consultancy — conducted an analysis of 50 global companies and found that companies with low engagement scores had average one-year operating margins of less than 10% (see Figure 3). In contrast, companies with the highest engagement scores had average operating margins of more than 27%.2 That’s not surprising when you consider that Towers Watson also found that more engaged employees are more productive (see Figure 4). ■ Deliver better customer outcomes. Dell found that customer Net Promoter Scores (NPS) were twice as high for experiences delivered by highly engaged employees.3 And a meta study of 7,939 business units in 36 companies, published in the Journal of Applied Psychology, found that higher employee engagement scores correlated with higher customer satisfaction and loyalty measures.4 ■ Are less likely to walk out the door. Towers Watson found that more engaged workers report that they are less likely to leave their firms. The data also shows that more engaged workers lose fewer days each year both to “presenteeism” (lost productivity while at work) and to absenteeism.5 Figure 1 Investments To Reinforce Customer-Centric Culture “Which of the following customer experience culture-related categories do you expect to spend money on in 2013?” Internal communications 68% Employee training and education 63% Informal reward and recognition programs None of the above 35% 16% Companies plan to invest in employee engagement. Base: 100 global customer experience professionals Source: Q4 2012 Global Customer Experience Peer Research Panel Online Survey 101141 © 2013, Forrester Research, Inc. Reproduction Prohibited Source: Forrester Research, Inc. August 26, 2013
  4. 4. FOR CUSTOMER EXPERIENCE PROFESSIONALS 3 Sharpen Customer Experience Focus With Employee Engagement Figure 2 Typically, Small CX Teams Need Help “How many full-time equivalents are on your customer experience team (including you, if you’re on that team)?” Fewer than 3 15% 3 to 5 25% 6 to 10 25% 11 to 15 9% 16 to 20 5% 21 to 29 5% 30 or more 65% have teams of 10 or fewer. 9% Don’t know 5% Base: 55 global customer experience professionals Source: Q4 2012 Global Customer Experience Peer Research Panel Online Survey Source: Forrester Research, Inc. 101141 Figure 3 Employee Engagement Correlates To Higher Profits Profit margins 27.4% 14.3% 9.9% Low engagement Traditional engagement Sustainable engagement Base: 50 global companies Source: adapted from the Towers Watson normative database 101141 © 2013, Forrester Research, Inc. Reproduction Prohibited Source: Forrester Research, Inc. August 26, 2013
  5. 5. FOR CUSTOMER EXPERIENCE PROFESSIONALS 4 Sharpen Customer Experience Focus With Employee Engagement Figure 4 More Engaged Employees Are More Productive Employee productivity and retention Absenteeism Presenteeism Likely to leave 15 50% 12 40% 9 30% 6 20% 3 10% 0 Low engagement High engagement 0% Low engagement High engagement Base: 50 global companies Source: adapted from the Towers Watson normative database 101141 Source: Forrester Research, Inc. But Few Firms Do What It Takes To Engage Employees Unfortunately, most companies don’t have engaged employees. A recent Gallup study found that 70% of US employees said that they were either actively disengaged or not engaged at work (see Figure 5). Why do companies’ investments in employee engagement produce such dismal results? It’s because firms aren’t doing what it really takes to engage employees. For example, they: ■ Don’t train employees on how to deliver a specific type of experience. Without the clarity that a customer experience strategy provides, employees struggle to understand fundamentals like why customer experience is important in the first place and what type of experience their company seeks to deliver. But Forrester found that only 21% of customer experience professionals say that their companies consistently train employees on how to deliver an experience that aligns with their CX strategy (see Figure 6). The result: a workforce that’s unmotivated and confused. ■ Don’t reinforce customer-centric behavior. Customer-centric cultures motivate employees by recognizing them when they do the right thing for customers. And yet only 25% of companies consistently use informal rewards and celebrations to highlight customer-centric behavior. That sends the message that delivering a positive experience isn’t as important as other activities that do earn recognition. © 2013, Forrester Research, Inc. Reproduction Prohibited August 26, 2013
  6. 6. FOR CUSTOMER EXPERIENCE PROFESSIONALS 5 Sharpen Customer Experience Focus With Employee Engagement Figure 5 Employee Engagement Among The US Working Population Engagement levels of US workers Actively disengaged 2012 18% 2011 19% 2010 19% 2009 18% Not engaged Engaged 52% 30% 52% 29% 53% 28% 54% 70% of US employees are not engaged. 28% 2008 20% 51% 29% 2007 20% 50% 30% 55% 30% 2006 15% 2005 15% 2004 17% 2003 17% 2002 17% 2001 2000 16% 18% 59% 54% 55% 26% 29% 28% 53% 30% 54% 30% 56% 26% Base: 991 to 23,572 full- and part-time workers (2000 to 2008) and 2,182 to 151,290 full- and part-time workers (2009 to 2012) Source: “State Of The American Workplace,” Gallup, 2013 (http://www.gallup.com/strategicconsulting/ 163007/state-american-workplace.aspx) 101141 © 2013, Forrester Research, Inc. Reproduction Prohibited Source: Forrester Research, Inc. August 26, 2013
  7. 7. FOR CUSTOMER EXPERIENCE PROFESSIONALS 6 Sharpen Customer Experience Focus With Employee Engagement Figure 6 Adoption Levels For Culture Practices “To what extent does your company do the following practices related to culture?” We don’t do this at all We do this sporadically or inconsistently Screen candidates for customer-centric values as part of the hiring process Screen candidates for specific skills needed to deliver on the customer experience strategy as part of the hiring process Provide training to employees to ensure delivery of the organization’s customer experience strategy Use informal rewards and celebrations to highlight exemplary customer-centric behavior 31% 31% 25% 21% We do this consistently 41% 17% 43% 51% 50% 17% 21% 25% Base: 100 customer experience professionals at large companies (percentages may not total 100 because of rounding) Source: March 22, 2013, “The State Of Customer Experience Management, 2013” Forrester report 101141 Source: Forrester Research, Inc. BEST PRACTICES FOR ENGAGING EMPLOYEES How can companies translate their good intentions into effective actions? To find out, Forrester interviewed 11 companies and four consulting firms to determine how they succeed at engaging employees. We found that they take three major types of action: They create an employee engagement road map, inspire employees by socializing customer centricity, and build customer centricity into employee tools and ongoing practices. Create An Employee Engagement Road Map Engagement initiatives need to be specific to the type of culture the company is trying to achieve. Therefore, effective efforts start with a plan that details where the company is today and where it wants to be in the future. To create this plan, customer experience professionals should: ■ Complete an engagement inventory. Customer experience leaders should start by assessing the level of employee engagement at their firms today. Many companies already measure engagement, and those that don’t can use surveys from companies like Kenexa, Gallup, and Towers Watson. With data in hand, CX pros can perform gap analyses to identify areas for improvement. For example, employees who don’t feel empowered to solve problems are unlikely to proactively fix customer experience failures. © 2013, Forrester Research, Inc. Reproduction Prohibited August 26, 2013
  8. 8. FOR CUSTOMER EXPERIENCE PROFESSIONALS 7 Sharpen Customer Experience Focus With Employee Engagement ■ Craft a customer experience vision. Employees need a clear, concise vision that communicates what’s expected of them. UK-based airline easyJet wanted to transform its airport and in-flight experience from one that was purely low-cost to one where its employees and partners deliver a consistent, friendly, and efficient customer experience at every stage of the journey. The customer experience team facilitated teams from all across the airline to create a one-page customer charter that described the new easyJet flying promise to customers and included clear statements that employees could understand and internalize (see Figure 7). ■ Set clear and explicit goals. The Cleveland Clinic conducted customer-centric culture training for 43,000 employees. During the planning process, facilitators wrote down four outcome statements they wanted employees to internalize as a result of the training (see Figure 8). The clarity of these statements helped them craft the curriculum and helped the organization assess the success of their efforts.6 Figure 7 EasyJet Customer Charter Source: easyJet website 101141 © 2013, Forrester Research, Inc. Reproduction Prohibited Source: Forrester Research, Inc. August 26, 2013
  9. 9. FOR CUSTOMER EXPERIENCE PROFESSIONALS 8 Sharpen Customer Experience Focus With Employee Engagement Figure 8 Cleveland Clinic’s Planned Training Outcomes Cleveland Clinic’s planned training outcomes What it means to put patients first and how to do that oster understanding that all employees are caregivers and all part of a larger team vice excellence — how to treat patients and how to apologize 101141 Source: Forrester Research, Inc. Inspire Employees By Socializing Customer Centricity Creating and maintaining employee engagement requires ongoing effort. To continuously reinforce the importance of customer focus, and the roles employees play in delivering the intended experience, CX professionals must: ■ Embed customer experience principles into employee training programs. Customer experience professionals need to incorporate new concepts into their preexisting training programs. For example, Bank of Montreal (BMO) integrated its highly successful “Brilliant at the Basics” program into training for new hires. The program reminds BMO staff members of core customer-centric values they can express every day in their jobs. ■ Reinforce training through ongoing communication. Blue Cross Blue Shield of Michigan’s (BCBSM’s) E4 program (educate, equip, and empower employees) engages all employees in delivering its new customer experience. The customer experience team at BCBSM employs a variety of formats for the training, including videos that articulate what customer experience is and why it matters. Its Clear and Simple program, aimed at improving communication with customers, includes an initiative called Movie Moments. It riffs off famous movie quotes as a way of reminding employees to use simple language. One example paraphrases a famous line from Jerry Maguire: “You had me at hello . . . you lost me at Adjudicate.”7 ■ Provide ongoing examples of customer-centric behavior through rituals and routines. Twice a day, at all of its hotels around the world, The Ritz-Carlton Hotel employees gather for 15-minute meetings known as Daily Lineups. This ritual includes storytelling where employees share great guest experiences they delivered the previous day. They also talk about what they need to focus on to deliver great guest experiences that day as well. These conversations facilitate employee ownership for delivering the hotel’s intended experience. Ritz-Carlton is so well known for great service and customer-centric employees that it now offers its training programs to other companies through the Ritz-Carlton Leadership Center. © 2013, Forrester Research, Inc. Reproduction Prohibited August 26, 2013
  10. 10. FOR CUSTOMER EXPERIENCE PROFESSIONALS 9 Sharpen Customer Experience Focus With Employee Engagement Build Customer Centricity Into Employee Tools And Ongoing Practices Companies need to ensure that their employee engagement initiatives won’t fade over time. They can do this by implementing operational changes that sustain improvements. CX professionals who want to ensure lasting impact should: ■ Equip employees with customer-centric tools and empower them to use the tools. Customer journey maps and ecosystem maps help companies find both strengths and opportunities for improvement in their existing customer experiences. When employees use these tools, they gain greater understanding of the end-to-end experience and what they can do to improve it. For example, Allianz Life Insurance’s customer experience team partnered with the claims department to map and improve the end-to-end experience for death claims. Claims department employees were empowered to make improvements to the experience like redesigning forms and creating a case manager role to improve communications. In part because employees felt a sense of ownership for these improvements, their engagement scores went up more than 30 points over two years. ■ Coach frontline managers to continuously reinforce employee engagement. Ingersoll-Rand has frontline managers take ownership of its engagement programs, which are focused around the needs of specific teams. The company’s customer experience team and human resources (HR) department work with managers to help them assess the results of their efforts, follow up with individual team members, and take broader actions to improve overall employee engagement. For example, Ingersoll-Rand’s engineering organization was entrenched in new product launches, innovation generation, and productivity initiatives and lost focus on its own employee training and development. Following last year’s engagement survey results, the Engineering Leadership team partnered with HR to assess employees’ training and development needs and roll out a series of Engineering Fundamentals as well as lunch-and-learn training programs. ■ Reward customer-centric behaviors, both formally and informally. Giving employees a customer-focused metric in their goals, as long as it’s specific enough that they feel control over it, is a good way to engage them in improving experiences. Last year, Pitney Bowes instituted a new satisfaction metric for all employees. It found that having this metric changed employee behavior and improved satisfaction scores. Pitney Bowes also awards gift certificates to employees recognized by name in favorable survey responses or feedback. © 2013, Forrester Research, Inc. Reproduction Prohibited August 26, 2013
  11. 11. FOR CUSTOMER EXPERIENCE PROFESSIONALS 10 Sharpen Customer Experience Focus With Employee Engagement R E C O M M E N D AT I O N S HOW TO START IMPROVING EMPLOYEE ENGAGEMENT CX teams can play a critical role in employee engagement initiatives. To start engaging employees in delivering better customer experiences, CX professionals must: ■ Make the business case for employee engagement. Culture change requires a commitment of both time and money. To secure that commitment, customer experience professionals need to prove that employee engagement programs are worth it. Fortunately, even modestly successful employee engagement initiatives pay for themselves with reductions in turnover, absenteeism, and “presenteeism.”8 To build a business case that proves this for your firm, model the downstream impact of your engagement initiatives. Start by identifying linkages and correlations among your business results, customer experience metrics, and employee engagement metrics. BMO went so far as to hire someone in its HR group whose primary responsibility is to strengthen the business case by better tying together employee engagement metrics, customer metrics, and business metrics. ■ Turn to outside experts for help crafting engagement training programs. Well- intentioned but naive attempts to create training programs can easily go wrong, especially when it comes to programs aimed at changing behaviors. Companies like Root and the Disney Institute have proven expertise at helping companies create training programs to engage employees in delivering the customer experience.9 Use tools like Root’s Strategic Learning Map modules to facilitate training and help employees understand how what they do contributes to the overall experience. ■ Uncover root causes of employee engagement issues by employing CX principles. Many of the tools and techniques currently used by customer experience professionals can be deployed to improve employee engagement. For example, Ingersoll-Rand conducted employee focus groups and in-depth interviews as a follow-up to its regular employee engagement survey. Its goal was to pair the detailed insights from qualitative research with the statistically valid data from the survey to develop a better understanding of the root causes behind some employee engagement issues. © 2013, Forrester Research, Inc. Reproduction Prohibited August 26, 2013
  12. 12. FOR CUSTOMER EXPERIENCE PROFESSIONALS Sharpen Customer Experience Focus With Employee Engagement 11 SUPPLEMENTAL MATERIAL Companies Interviewed For This Report Allianz Life Insurance Ingersoll-Rand Blue Cross Blue Shield of Michigan Penske System BMO Pitney Bowes CIBC Rogers Communications Cleveland Clinic Root easyJet RoundPegg FedEx Walker Information Ferrazzi Greenlight ENDNOTES 1 Source: Q4 2012 Global Customer Experience Peer Research Panel Online Survey. 2 Source: “2012 Global Workforce Study,” Towers Watson (http://www.towerswatson.com/Insights/IC-Types/ Survey-Research-Results/2012/07/2012-Towers-Watson-Global-Workforce-Study). 3 Net Promoter, Net Promoter Score, and NPS are registered trademarks of Bain, Fred Reichheld, and Satmetrix Systems. Source: Bain (http://www.bain.com/search.aspx?q=Net+Promoter); Satmetrix Systems (http://www.satmetrix.com/). 4 In the 2002 paper, “Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis,” Harter, Schmidt, and Hayes found strong linkages at the business-unit level between employee engagement and business outcomes like customer satisfaction, productivity, and profits. Source: James Harter, Frank Schmidt, and Theodore Hayes, “Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A metaanalysis,” American Psychological Association, April 2002 (http://psycnet.apa.org/index.cfm?fa=buy. optionToBuy&id=2002-12397-006). 5 Source: “2012 Global Workforce Study,” Towers Watson (http://www.towerswatson.com/Insights/IC-Types/ Survey-Research-Results/2012/07/2012-Towers-Watson-Global-Workforce-Study). 6 And the results indicate that their efforts are paying off. Overall patient satisfaction has improved from the 55th percentile among US hospitals to the 92nd percentile in the past five years. Employee engagement scores also improved significantly in that time frame. 7 And BCBSM was recently recognized with the Customer Experience Professional Association’s (CXPA) Innovation Awards and with one of Forrester’s Outside In Awards for customer experience excellence in the customer understanding discipline. © 2013, Forrester Research, Inc. Reproduction Prohibited August 26, 2013
  13. 13. FOR CUSTOMER EXPERIENCE PROFESSIONALS Sharpen Customer Experience Focus With Employee Engagement 12 8 “Presenteeism” is a neologism measuring lost productivity for employees who are at work but not working for a variety of reasons. 9 There are many consulting firms that help companies measure and improve employee engagement. Survey providers like Kenexa, Towers Watson, Gallup, and Bain also provide consulting services. Ferrazzi Greenlight is another consultant that has worked with a number of companies to improve employee engagement. © 2013, Forrester Research, Inc. Reproduction Prohibited August 26, 2013
  14. 14. About Forrester Global marketing and strategy leaders turn to Forrester to help them make the tough decisions necessary to capitalize on shifts in marketing, technology, and consumer behavior. We ensure your success by providing: Data-driven insight to understand the impact of changing consumer behavior. Forward-looking research and analysis to guide your decisions. Objective advice on tools and technologies to connect you with customers. Best practices for marketing and cross-channel strategy. FOR MORE INFORMATION To find out how Forrester Research can help you be successful every day, please contact the office nearest you, or visit us at www.forrester.com. For a complete list of worldwide locations, visit www.forrester.com/about. CLIENT SUPPORT For information on hard-copy or electronic reprints, please contact Client Support at +1 866.367.7378, +1 617.613.5730, or clientsupport@forrester.com. We offer quantity discounts and special pricing for academic and nonprofit institutions. Forrester Focuses On Customer Experience Professionals To improve the perceived quality of customer interactions with your company, you must leverage emerging digital technologies and lead enterprisewide customer experience transformations. Forrester helps you create forward-thinking strategies to justify decisions and optimize your individual, team, and corporate performance. « CARL ERICKSON, client persona representing Customer Experience Professionals Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 13 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 29 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more information, visit www.forrester.com. 101141

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