Customer Experience Improvement Momentum: Whitepaper


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Customer Experience Improvement Momentum: Whitepaper

  1. 1.              Customer Experience Improvement  Momentum  Engaging Employees for Sustained Profitability                              
  2. 2. Customer Experience Improvement Momentum   2009 Customer Experience Improvement Momentum Engaging Employees for Sustained Profitability  “What everyone in a company does can be reduced to one of two functions:  to serve the customer or serve someone who does.”       –  W. Edwards Deming   Momentum is essential for any long-term  Summary: initiative – particularly when a number of recent  Momentum of customer experience improvementinitiatives is in jeopardy. Lack of cross-functional distractions have occurred. No firm is exemptalignment and organization-wide employee from the global economic shocks that areengagement impede value to customers and changing the competitive landscape, customercompanies alike. Internal branding sustains 89% of firms view realities, organization structure and morale. customer experiencemomentum by overcoming inward focus throughsystems thinking, change management, As dramatic changes in customer perceptions, management as veryorganizational learning, and well- balanced metrics expectations and needs are underway, important or critical toand rewards. the firm’s strategy in heightened attention to customer experience 2009 monitoring and improvement is imperative.  Contents: Unique opportunities for customer experience  - Momentum for Initiatives differentiation exist in downturns while   - Business Case for CEM competitors are preoccupied with survival and   - Customer-Centricity Challenges internal politics.  - Internal Branding is a Way of Life   - Culture In Forrester Research’s February 2009 Obstacles   to Customer Experience Success report, 89% of - Motives & Shared Vision   firms view customer experience management - Systems Thinking   (CEM) as either very important or critical to the - Change Management   firm’s strategy in 2009. While 12% of firms - Organizational Learning   expect higher cuts in CEM spending this year, - Accountability 48% of firms expect lower cuts in CEM spending   - Holistic Processes relative to other programs. 80% of firms aim to   - Actionable Metrics differentiate customer experience, although more   - Motivation than half cite lack of cooperation across   - Balanced Incentives organizations as a momentum inhibitor.   - Self-Reporting Recognition   Engaging Employees for Sustained Profitability  Business Case for CEM Momentum   Aberdeen Group’s August 2008 Customer   Experience Management study demonstrated   significant advantages for best-in-class CEM   practitioners. The best firms enjoyed year-over-   year improvement compared to industry average   performers and laggards.    Lynn Hunsaker is head of ClearActionand author of these e-handbooks:- Customer Experience Improvement Momentum Metrics You Can Manage For Success    © 2009 ClearAction LLC.  All Rights Reserved.  2   
  3. 3. Customer Experience Improvement Momentum   2009 Customer-Centricity Challenges Gallup’s February 2009 article, BuildingCustomer-centricity weakness is a key reason Engagement in This Economic Crisis, reports thatwhy momentum is inhibited by lack of firms with high employee engagement levelscooperation across organizations, as seen in the have 12% higher customer advocacy, 18%CMO Council’s July 2007 Customer Affinity study. higher productivity, and 12% higher profitabilityWhile 12% of customers judge their vendors as than bottom-quartile business units. 46% of senior marketers admit high-extremely customer-centric, 56% of the vendors profile negativethink they are extremely customer-centric. Yet, high levels of employee engagement alone customer experienceWhen asked what qualities best characterize a will not guarantee customer experience has compromisedcustomer-centric company, customers reply: improvement. In the book Loyalty Myths by their brands- organizational, operational and cultural Keiningham et al, cause-and-effect is proven alignment around customers inconclusive between employee satisfaction or- empowerment of employees to address and loyalty and customer loyalty or business results. remedy customer problems “The role of employees in building customerThe biggest source of relationship issues from loyalty is far more complex than the mythscustomers’ viewpoint is overpromising and imply. … Employee satisfaction and employeeunder-delivering, causing substantial distrust. loyalty are only two of a myriad of factors that ultimately affect the loyalty of customers, and Employee satisfactionThe costs of such disconnects are evident in loyalty can still be had in the absence of either of and employee loyalty are only two of aHarris Interactive’s October 2008 Customer them.” myriad of factors thatExperience Impact Report: 84% of customers ultimately affect thewill register a complaint or tell others of a bad Corporate service intelligence (CSI), described in loyalty of customersexperience. This tendency is rising from 74% in the July 2007 AMA Marketing Management2007 and 67% in 2006. article, Service Smarts, broadens the paradigm of employee engagement and customer experienceIn CMO Council’s January 2009 Turning improvement. “The essence of CSI is in anCustomer Pain Into Competitive Gain study, 46% organization’s design, communications, policies,of senior marketers admit that high-profile and practices that clearly put service first. CSInegative customer experiences have looks at service quality as a corporate Frontline employeescompromised their brands. responsibility, not a service deliverer problem. are the last link to the CSI has frontline employees as the last link to customer in a very long chainHence, sustained profitability is at risk from lack the customer in a very long chain. CSI is high inof cross-organizational cooperation and companies that make service excellence a fact –alignment with customers, to empower a way of life – all along the chain. So, CSI isemployees for adequate resolution of customer how companies are organized and what theyproblems and to maintain brand promise actually do – not what they say they believe in.” Engaging Employees for Sustained Profitability integrity. Internal Branding is a Way of LifeEven among the best-in-class firms in the Internal branding is more than an ad campaign Internal brandingAberdeen Group study, top challenges are: focused on customer-facing employees. It’s a engages all- cross-channel CEM multi-faceted cultural initiative to guide executives and- organization-wide focus on customer service employees company-wide in managng their employees effectively in outside-in thinking differentiation personal impact on customer experience. and behaviors- commonly agreed-to metrics- 360-degree view of customers Internal branding engages all executives and employees effectively in outside-in thinking andEffective employee engagement is at the heart of behaviors. It differentiates primary motives andthese issues – including effective executive secondary motives as a basis for doing the rightengagement. thing for the company’s long-term well-being.© 2009 ClearAction LLC.  All Rights Reserved.  3   
  4. 4. Customer Experience Improvement Momentum   2009 Internal branding gets back to basics. If When the primary motive is pure, it’s moreexecution is broken, examine the foundation natural to overcome – and ultimately prevent –rather than fill potholes. Tendencies to focus on the stumbling blocks of execution, adaptability,IT solutions, statistics, simplified metrics, cooperation, organization-wide focus, commoncustomer acquisition, or isolated opportunities definitions, 360-degree perspectives, brandhave over-shadowed the realities of people and integrity and engagement.processes and culture as the most importantdeterminants of customer experience. Shared vision tools to establish a customer- centric primary motive include customer Systems thinking is a holistic view ofAfter all, hassles and disappointments are the personae, customer bill of rights, stories, games components of anprimary reasons customers leave a brand. The or a super-ordinate goal. Ideally, the shared entity in context ofCMO Council’s Customer Affinity study reports vision links external and internal goals company- relationships withthat distrust leads to 7% of customers no longer wide. To make the vision actionable, translate it each other and with other entities, ratherconsidering a brand for future purchases, 62% into function-specific and role-specific behaviors than in isolationscaling back existing engagements, and 30% and standards. Be creative and thorough.terminating the relationship. Distrust indicates Consistent emphasis in simple ways is a definingmisalignment of what is said and what is done, a factor in nurturing a customer-centric culture.symptom of an unhealthy culture that spills intothe customer experience. Systems Thinking: To revitalize people and processes and culture, aMotives & Shared Vision: systems thinking approach offers sustainableTo truly be customer-centric, a hierarchy of solutions. Every handoff may have a ripplemotives should be explicit. All parties within a effect on the customer or at least on thefirm must continually reinforce an outside-in customer-facing employee. In other words,primary motive such as making it easier and frontline employees are only as effective as thenicer for customers to get and use solutions. rest of the organization enables them to be.With a customer-centric primary motive firmlyguiding thinking and behaviors, Systems thinking is a holistic view of theacknowledgement of largely self-serving components of an entity in the context ofsecondary motives is appropriate: up-sell, cross- relationships with each other and with othersell, acquire customers, launch products, manage entities, rather than in isolation. Indeed, all ofcosts, and so forth. the studies cited earlier indicated that linkages are broken between: - functions’ and business units’ goals - survey results and business results - multiple voice of customer sources Engaging Employees for Sustained Profitability  - data and actions - incentives and desired behaviors - views of what customers want - brand promise and what’s delivered In the first four reports from The Conference Board’s CEO Challenge survey, customer loyalty and retention was priority number one. Recently that topic is superseded by execution, adaptability, economic performance and sustained growth. Lack of systems thinking may account for execution and adaptability hot buttons, as means to customer loyalty/retention.© 2009 ClearAction LLC.  All Rights Reserved.  4   
  5. 5. Customer Experience Improvement Momentum   2009 Change Management: Organizational Learning:Broken CEM linkages, weak execution and Employee engagement is a natural outcome ofemployee engagement can be addressed organizational learning principles:through systems thinking, embodied in the seven 1) Language – clearly spell out what’s meantchange management phases: by CEM objectives and approaches to create1) Address the need for change common language and frames of reference2) Describe future state and timeline 2) Post-mortem – at setbacks, study what3) Assess gap: vision versus current state went wrong, as well as the assumptions Never underestimate the value of returning4) Map transition: current to desired state that caused those actions to basic universal5) Deploy the change 3) Politics – when sharing best practices, shift tools; broken CEM6) Assess to stop, sustain or redirect focus on the lesson rather than specific linkages will be much7) Assure knowledge sharing organization achievement less likely if Quality tools are second 4) Knowledge – capture knowledge of key nature to everyoneNote that four major steps are necessary before personnel in online portals, training, servicedeploying a change. Stakeholder management is standards, and so forththe central principle for each phase. Conflicts 5) Proliferate – facilitate adoption of know-howare anticipated and tools enable rapid resolution. across the organization; create games orStakeholder diagrams, matrices, continuums, other means to engage employeesquestionnaires and other mechanisms are 6) Refine – scrutinize measures and modelsessential for planning and managing employee regularly to prevent misleading informationengagement, as well as customer engagement. Quality Tools. Never underestimate the value of returning to basic universal tools. Root cause analysis, fishbone diagrams, Pareto charts, critical path diagrams, force field analysis, matrix diagrams, and Gantt charts should be used in every functional area on an ongoing basis. Broken CEM linkages will be much less likely if Quality tools are second nature to everyone. Holistic Processes: Generally, a business process is deployed by several departments, creating a value chain of internal customers. Timeliness and quality of handoffs throughout this internal value chain snowball exponentially toward revenue- Engaging Employees for Sustained Profitability  generating customers. To be customer-centric rather than ethnocentric, employees throughout the organization need to be plugged into customer sentiment data streams. Through meaningful dispositioning of customer feedback,Change management is exceptionally valuable in each department can receive data that isdynamic environments, aiding speedy adaptation pertinent to their stewardship. This sharpensto ever-changing competitive scenarios and understanding of their impact on customercustomer expectations. experience, and ownership of customer experience improvement throughout the firm.© 2009 ClearAction LLC.  All Rights Reserved.  5   
  6. 6. Customer Experience Improvement Momentum   2009 Embrace Warning Signals. Adoption of a mantra 3) Predictive – emphasize actionable,– such as Good news is no news, no news is bad connected metrics with strong cause-and-news, bad news is good news – can make it effect to objectiveseasier for employees to accept customers’ 4) Sustained – setup the right environment forconstructive feedback. Treat customers’ predictive measures to keep producingcomplaints and negative ratings in a concerted strong resultsmanner similar to an RMA (returned materialsauthorization) process. Help departments take Connected. One of the biggest metrics mistakesownership for their specific impact on the is random selection. The best metrics start withcustomer experience by providing worksheets the big picture: We will know this is successful Adopt a mantra likeand reporting forms they can use to create and when we see X happen. Like a waterfall, the Good news is no news, no news is bad news,monitor action plans. Motivate follow-through overall goal is cascaded to each level of the bad news is good newsand ongoing momentum through management program or organization, to identify successive to make it easier forvisibility, recognition programs, and incentives contributions to the big-picture goal. In the book employees to acceptcriteria. What Customers Want, author Anthony Ulwick constructive feedback explains that customers automatically use 50 orInternal Handoffs. After characterizing each more metrics for any customer experience. Withdepartment’s ultimate objectives by their impact a focus on outcomes from the customeron the external customer experience perspective, one is reminded that products andspectrum, customer-centricity can be further services are simply means to helping customersimproved by emphasizing internal customer fulfill their needs – and needs are simplysatisfaction and internal supplier quality. For customers’ desired outcomes. The firm’sinternal supplier quality, a process owner can objective is to understand what jobs the targetcommunicate proactively with those who provide customer segments are trying to get done andinputs to their process. It’s surprising how often what outcomes indicate the job is well donethis seemingly simple step is not enacted. (i.e. customers’ measures of value or success).Effective handoffs typically result in smootherprocesses and fewer customer hassles. Actionable. Metrics at the lowest layer of an initiative or organization have the highest actionability. A focus on the most actionable metrics is essential for moving the needle of big- picture metrics. To identify actionable metrics, conduct root cause analysis by using the Five Why’s technique or a Fishbone (Ishikawa) Diagram. Validate selected root causes to make sure they are the malfunctioning issues that Engaging Employees for Sustained Profitability  clearly tie to the symptom or big-picture goal. Predictive. Not all actionable metrics areActionable Metrics: predictive of big-picture goals. Among the rootTo build momentum toward a shared vision, best causes identified, some may be inputs to aintentions need to be bolstered with four basic process and others may be critical juncturesprinciples that apply to any initiative, dashboard, within the process itself. Metrics relating tometric or incentive: process inputs and in-process control points tend1) Connected – make sure the focus is on to be predictive. The ability of a process to meet things with strong connections to overall its objectives is often determined by resources, objectives skills, stakeholder buy-in and cultural factors.2) Actionable – select strongly connected These are levers one might employ to improve success measures that allow one to control the process inputs and process control points. outcomes© 2009 ClearAction LLC.  All Rights Reserved.  6   
  7. 7. Customer Experience Improvement Momentum   2009 Sustained. With connected, actionable,predictive metrics, sustained momentum hingeson visibility, transparency, and the frequency andquality of management nurturing andintervention, guided by the principles of systemsthinking, change management, andorganizational learning.Dashboards and balanced scorecards are moreeffective when they include not only the big-picture metrics as process outcomes andconsequences, but also the layers of in-processcontrol points, inputs, and levers.Balanced Incentives: Its quite common for metrics to be mis-used,In tying compensation – as well as non-monetary mis-trusted and mis-managed. What getsrewards – to customer experience improvement, measured gets done, so improper use of metrics Dashboards,common pitfalls stem from disconnects with the can lead to unintended behaviors that may scorecards and negate the expected value of having metrics in incentives are morefour basic principles of actionable metrics: effective when theyconnected, actionable, predictive and sustained. the first place. For example, compensation tied include not only the heavily to survey ratings often leads to big-picture metrics asScrutinize employees’ perceived weightings of salespersons coaching customers on how to process outcomes reply to the survey – this not only skews the and consequences,performance metrics. It may be that the but also the layers ofbehaviors elicited by these perceptions are not validity of survey results, making it a waste of in-process controlthe behaviors that management intended to time and money, but it may also alienate points, inputs, andmotivate. The key to successful incentives is to customers. Avoid sub-optimization by balancing leverstrack things for which an employee can make metrics and incentives, and by double-checkingadjustments before stakeholders (i.e. customers, alignment with intended outcomes.investors, supervisors) see the results. When it’spossible make adjustments that will affect theoutcome of stakeholders care-abouts, then thefocus is on something thats manageable,predictive, and connected to the big picture. Engaging Employees for Sustained Profitability Some firms start by tying closed loopcommunication rates (not ratings) to rewards.Next, leading indicators may be included inincentives. If lagging indicators are included, Self-Reportingthey should always be weighted less than the Recognition:more actionable leading indicators. Successful employee© 2009 ClearAction LLC.  All Rights Reserved.  7   
  8. 8. Customer Experience Improvement Momentum   2009 Self-Reporting Team Recognition: SummarySuccessful employee engagement trends mirror Customer experience improvement momentum isthe Web 2.0 phenomenon of two-way vital to sustained market success. While stridesconversations enabled by technology, with have been made, customer-centricity tends to beanyone, anywhere, anytime. Typical recognition an elusive aspiration. Universal challenges When two-way conversationprograms are one-way communication from revolve around cross-functional and organization- elements aremanagement. A two-way communication wide cooperation and alignment. Principles of integrated within aprocess taps into employee perspectives about systems thinking, change management and recognition strategy,noteworthy achievements in addition to organizational learning present valid solutions to employees can be energized to reachmanagement viewpoints. Self-reporting address these challenges. Internal branding stretch goals andrecognition strategies enable real-time encompasses these principles to modify culture, make initiativesdocumentation of initiative progress, allowing processes and behaviors in accordance with successfulvarious management levels to have visibility and desired outcomes of customer experienceopportunities to provide constructive feedback to improvement initiatives.make the achievements even more significantand far-reaching. Management can nurture internal branding as a way of life through holistic processes, actionableWhen two-way conversation elements are metrics, balanced incentives, and self-reportingintegrated within a recognition strategy, recognition. These methodologies can payemployees can be energized to reach stretch excellent dividends in customer experiencegoals and make initiatives successful. Guidelines improvement momentum through superiorfor self-reporting can reinforce the customer employee engagement levels that heightenexperience shared vision and primary motives, customer-centricity and prevent customerand raise standards accordingly for the way hassles. As effective employee engagementemployees approach a challenge. Upward and increases, ownership of customer experience ishorizontal visibility foster organizational learning, adopted by employees organization-wide, leadingchange management and desirable cultural to lower employee costs and higher customerchanges. Self-reporting team recognition is an profitability as sustainable differentiators.excellent tool for employee engagement andcustomer experience improvement momentum. About ClearAction ClearAction LLC is a customer experience optimization consultancy. Through ClearAction mentoring you can improve your customer program ROI by ensuring youre setup for success to listen to the right customers in the right ways, engage all your employees in doing Engaging Employees for Sustained Profitability  their part to deliver your brand promises, establish criteria for customer-value focused strategic and tactical decisions, assess voice of the customer relative to the full customer experience, innovate for a differentiated end-to- end customer experience, reinforce customer behavior that builds profitability, create a seamless experience across points that touch a customer, and design or improve processes for hassle prevention & superior experiences. tel 1-877-CEM-ROI4© 2009 ClearAction LLC.  All Rights Reserved.  8