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  • 1. March 2011Delivering a World-Class Customer Experience:Transformation from the Outside Inby Susan McNeice, Vice President, smcneice@yankeegroup.com and Sheryl Kingstone, Director, skingstone@yankeegroup.comThe Bottom LineCustomers are better connected than ever before, and communications service providers (CSPs), device manufacturers, retailers and even app developers areunder fire to transform the way they envision, analyze and manage customer experience. The requirement is here and the recognition of the need is emerging,but evolving to the desired state is still a puzzle. Here’s a hint: It takes more than single department, process or software application.Executive SummaryCustomers of the communications industry’s services and wares • Ensure experiences are transparent and consistent while alsobuy more than just connectivity. They buy devices, support, service being dynamic.and feature combinations, third-party apps and even a provider’s • Develop the appropriate real-time information-sharingbrand. In short, what they acquire is the entire experience. To infrastructure across all the parties to the experience.date, however, most transformation efforts have been drivenlargely by internally focused cost reduction or time-to-market • Recognize the experience as one of the most powerful sourcesgoals. Clearly these have benefits, but customers see the entire of competitive advantage.experience, not just a speedy, efficient provider infrastructure.Transforming “from the outside in” means all parties to the Make no mistake: This transformation will be neither speedy norexperience, namely communications service providers (CSPs), simple, but the rewards will be significant for the long term.device makers, app developers and retailers, need to:• View the world through the customer’s eyes across all dimensions of product/service, company and brand, delivery and operations, and distribution channel. Table of Contents I. Defining and Understanding Customer Experience 2 II. Setting Sights on the Ideal Experience 4 III. Requirements for Transformation 5 IV. Conclusions and Recommendations 7 V. Further Reading 8© Copyright 2011. Yankee Group Research, Inc. All rights reserved.
  • 2. Delivering a World-Class Customer Experience: Transformation from the Outside InI. Defining and Understanding For the communications industry, Schmitt’s definition applies broadly. Customer Experience More specifically, the customer experience occurs across four dimensions representing broad categories of customer interactions:Every customer has an experience with a CSP, device maker,software application developer or some other member of the • Company and brand: This includes service provider publicindustry ecosystem. The question is: Is it the experience they reputation, as well as individual brand values and attributes.want? Is it what is intended? The communications industry is • Products and services: These are market-facing offersundergoing a fundamental transformation due to the availability of representing combinations of services, features, equipmentthe Anywhere Network® and the hyper-convergence of Internet, and third-party deliverables. These offers are surrounded bymobility, and new media and devices. The ability of CSPs and their business rules for eligibility, pricing, discounting and duration, toecosystem partners to drive customer loyalty and capitalize on name a few.new revenue opportunities beyond their traditional markets willhelp provide new revenue for growth in mature markets and new • Channel: This is the means by which service providers interactopportunities in emerging markets. However, a critical reality with their customers before, during and after the sale. Thischeck for service providers is to transform their strategies around includes direct sales teams, dealer networks, Web portals,their customers. There is a lot at stake: If service providers get it social networking sites and contact centers.wrong, they will continue to lose mind share, customer loyalty and • Delivery and operations: This includes the manufacture,revenue to competitors. assembly, delivery, maintenance and repair of the actual productsBefore one can transform the customer experience, it is useful and services. It is the “how” of the service providers’ world.to define what it entails—and what it does not. Much has been In each of these dimensions, service providers make decisions andwritten on the subject of customer experience as it applies to all subsequent investments to establish and maintain the experienceindustries. The seminal work by B. Joseph Pine II and James H. infrastructure. Likewise, connected users have points of view thatGilmore, “The Experience Economy,” proffered experience as a inform and govern their buying decisions. In an ideal setting, theseform of value for which a price may be charged in a post-agrarian opinion sets match. Where they don’t, there is an opportunity tosociety. Later, Columbia Business School Professor Bernd Schmitt change the experience (see Exhibit 1 on the next page).coined the term “Customer Experience Management,” or CEM,in his book “Customer Experience Management: A RevolutionaryApproach to Connecting with Your Customers.” He suggestedthat CEM “represents the discipline, methodology and/or processused to comprehensively manage a customer’s cross-channelexposure, interaction and transaction with a company, product,brand or service.”2 © Copyright 2011. Yankee Group Research, Inc. All rights reserved.
  • 3. March 2011Exhibit 1: Dimensions of the Connected ExperienceSource: Yankee Group, 2011 Dimension Connected User PoV Provider PoV Company and Brand Who is this provider? Who are we? Is its name connected with positive feelings? What do we stand for? Can I trust this provider? What do we want to accomplish? Does this provider deliver products and services How are we seen in the market? I value? What do our product brands represent to the buyer? Does this provider care about customers? Products and Services What can I buy from this provider? What do we sell? Does this provider have the right combinations Are our offers compelling? of services, equipment and pricing? Are they competitive? Do we have the right network of partner suppliers? How do our customers behave when they are using a certain offer? Channel How and where can I buy from this provider? What selling channels do we invoke, e.g., retail stores, Is there help available to make purchases? online sites, call centers, catalogs, direct vs. dealer? If I start a purchase on the Web, can I complete Do the channels have differing levels of support? it via the call center? Delivery and Operations How can I receive the products and services, How do we deliver and maintain what we sell? both initially and on an ongoing basis? Does the product work anywhere, anytime?None of these dimensions exists in a vacuum. They are highly the impetus to consider social networking sites as alternate channelsinteractive and depend on feedback for improvement (see Exhibit 2). for customer interaction. And of course, there must be alignmentFor example, handset-network incompatibilities that result in service between the way the company positions its brand in the market anddegradation must be captured and relayed to product managers for the way it actually delivers—arguably one of the biggest sources ofremedies or product changes. Similarly, analytical data captured by customer discontent in the market today.operational systems and reviewed by product managers may provideExhibit 2: The Connected Experience Fulfills and MaintainsIs Interactive, InformativeSource: Yankee Group, 2011 Delivery and Company and Operations Brand Sells To and Designs and Through Develops The Customer Channel Products and Services Manufactures and Assembles© Copyright 2011. Yankee Group Research, Inc. All rights reserved. 3
  • 4. Delivering a World-Class Customer Experience: Transformation from the Outside InOn a day-to-day operations basis, this means service providers • Transparent . The relationship should be evident and in plainrequire an information exchange infrastructure to facilitate sight at all times, but “fine print” restrictions and caveats areunderstanding across the dimensions, which in turn provides grist almost always present in customers’ experiences with theirfor the experience mill. service providers. Similarly, changes to accounts need to be presented in an easily digestible manner that is both professionalWhile all of this may seem a bit oversimplified, Yankee Group and respectful of the customer. Over the last 30 years, far toobelieves transformation requires a return to these grass-roots many telecom “deals” have been marred by service providersdiscussions to detect the gaps between the ideal state and the over-promising and under-delivering, and then hiding behind ancurrent user reality. Ongoing customer churn, angry Facebook endless list of user restrictions. Instead, service providers needposts and annual survey results are all proof of the need for to be forthright about the boundaries of the relationship. Billingthe communications industry to transform and stop generating is another huge source of connected user distress. In fact, inits current bottom-of-the-barrel statistics compared to other a recent Yankee Group survey of U.S. consumers, a majorityindustries. In fact, given the near ubiquity of basic transport said they would be willing to pay 10 percent more per month toservices and me-too nature of the telecom market, Yankee Group avoid billing surprises (see our 2011 US Consumer Survey, Wavebelieves the connected experience is one of the last remaining 1). Lastly, service providers’ bandwidth-shaping and restrictionopportunities for competitive differentiation. activities cannot be carried out surreptitiously. Remember the uproar that followed the revelation that North American cableII. Setting Sights on the Ideal Experience company Comcast was throttling bandwidth for BitTorrentThere is an abundance of research and anecdotal evidence pointing users? However necessary and important that may have been inthe communications industry toward the need to transform its Comcast’s view, the court of public opinion ruled against it. It isrelationship with connected users. Horror stories abound: Loyal fair to say that much of today’s push for Net neutrality, at leastcustomers are dropped by wireless CSPs for roaming in excess of in the U.S., was spurred by that event.allowable amounts; long-time customers experience connectivity • Consistent . When service providers promise customerslosses in urban centers due to aggressive sales of smartphones; and certain coverage, quality, pricing or availability, customersusers call contact centers after hours while using the provider Web expect consistent behavior from the network, customer care,site only to find out the contact center agent has no awareness billing, provisioning and all other touch points. This is certainlyof or visibility into what they have already tried because the Web difficult for service providers to ensure technically, owing tosite and agent desktop are disconnected. And this is not limited the infinite number of circumstances that can affect coverageto wireless. Provisioning cycles for bundled offers that stretch in a given location at a given moment. But, like it or not, that isout to 45 days, require multiple, expensive truck rolls and force their mandate. Consistency also applies to the multiple channelsconsumers to accommodate inflexible in-home service schedules available for interaction. When customers begin to learn aboutare equally common. The simple fact is the experience isn’t what it or buy offers via a service provider’s Web portal, they must beshould be. But what is the ideal connected experience? able to move seamlessly to other channels, such as the contactIt would be easy enough to dismiss the ideal experience as center or retail store, to learn more or finish their purchase.“whatever the customer wants” or as something that cannot The service provider’s contact center agents need to be able tobe defined, let alone managed or transformed. But Yankee assist with every customer transaction at any time customersGroup believes connected users expect their relationship with a ask for help, either via a “help” function on a Web portal orservice provider to possess three key attributes. They want their via phone service, which is still customers’ preferred means ofexperiences to be: getting help and support, according to our consumer survey.4 © Copyright 2011. Yankee Group Research, Inc. All rights reserved.
  • 5. March 2011• Dynamic. Service provider actions that affect the connected • They are too network-centric . A typical occupational experience must be rapid, personalized, immersive and hazard of service provider network teams and their providers, competitive. Connected users of all services look for real- this attempt to transform results when teams view most of the time or at least near-real-time delivery. They also expect world through the lens of network and QoS measurements. their services and capabilities to be tailored to their interests. These measures are too narrow and capture just one part of Immersive services serve connected users at work, at play and the experience. on the go, according to the multiple personas they adopt as they • They are too CRM- and customer-care centric. Another move through their day. This is already evident in the emergence function-specific, inside-out view, this attempt to transform of service plans that permit “hybrid accounts,” or those with tends to rely on internal measures of quality, such as average more than one account profile (e.g., employee and private) hold time and call abandonment rates. In reality, however, such associated with one device and service plan. Lastly, prices must measures have nothing to do with the overall experience; they be competitive. Connected users have demonstrated through simply measure service provider transaction response efficiency. their rapid adoption of premium-priced smartphones, tablets and other devices that they aren’t necessarily always looking • They are too service provider-centric. These for the lowest price overall. What they want is the lowest measurements see only those attributes controlled directly by price available for their desired combination of device, service, the service provider and do not include third-party capabilities features and guarantees. such as downloads, ring tones, interconnect handoffs, entertainment content and applications.The endgame for service providers, of course, is a differentiatedexperience that results in improved revenue and customer loyalty. No one of these is necessarily bad or wrong. They are merelyThis is no small matter, and the investment will not likely pay off in incomplete and internally focused. It is likely this trend willa time window short enough to please Wall Street. If it was simple, continue for some time as no real alternatives have beenevery service provider would have already done it! But now is presented and, arguably, there is still a lack of sufficient pain (read:the time to act: Begin the transformation process or watch your competition) to compel service providers to behave otherwise. Asmarket share and margins continue to thin. In this regard, Yankee service providers move to transform to customer-centric views,Group defines customer experience transformation (CET) as a they urgently need to not only address technology transformationcommitment to customer interactions that are consistent, dynamic around the customer experience, but also effectively manage andand transparent across all four dimensions of brand, products handle myriad complex partner relationships and products—alland services, channel, and delivery and operations. The goal is to of which play a pivotal role in the future customer experience.achieve competitive differentiation by viewing the world through Consider these fundamental requirements as input tothe eyes of one’s customers and modifying interactions of the transformation initiatives:experience accordingly. • Offer rationalization and clarification. Service providers have long been criticized for moving their own customer baseIII. Requirements for Transformation from offer to offer, driving additional cost and operationalHistorically, the communications industry thought of CEM as complexity as they continue to “sell to their own.” This is asimply the technology systems used to manage either customer signal the service provider may have too many offers in therelationships or network quality. To date, CEM solutions have market. It is wise to consider simplifying the number and type oftended to be point solutions for specific customer-facing functions, offers in major market segments to streamline market messagingsuch as sales force automation, customer analytics, network QoS and provide a platform to simplify operations. Likewise, offersor campaign management. communicated to current or prospective buyers require clarity about what is included (to meet transparency demands), as wellIn the industry today, we hear a consistent CEM drumbeat as as real-time alerts with upgrade options when limits are likely toservice providers struggle to transform their business and adopt be exceeded.the “Customer Is King” mantra. Unfortunately, these strugglessuffer from one or more of the following ailments:© Copyright 2011. Yankee Group Research, Inc. All rights reserved. 5
  • 6. Delivering a World-Class Customer Experience: Transformation from the Outside In• Cross-channel optimization. To achieve truly personalized • Strategic, predictive intelligence. With feedback from the cross-channel interactions, service providers must use a intelligence infrastructure as well as outside sources, service combination of the right tools that can accommodate individual providers must strategically apply insights to their business behaviors and preferences, integrate interactions across decisions around business model, offer construction, pricing multiple channels and easily learn from the outcomes of prior and the like. For example, marketing must be able to quickly communications to achieve business results. Customers today and dynamically define offers, promotions and pricing with expect companies to be able to interact with them through all intelligence and context around the 360-degree view of the channels, including retail stores, Web sites and contact centers. customer or customer segment based on psychographics and These channels—while still dominated by home telephone demographics, customer lifetime value, products and services. for customer service and support—also include SMS, e-mail, These promotions need to be adjusted based on channel online chat, Web self-service, voice self-service and social media interaction and usage. Service providers need to guide both channels. While many companies use Web-based channels the customer using a self-service channel and the CSR in the to give customers service choices that transcend traditional contact center with relevant products and services based on phone interactions, the reality is customer experience is needs analysis, policy and eligibility rules. Once an offer is still very fragmented. Customers may start with the Web to accepted, service providers must quickly identify relevant and research a new service or troubleshoot a problem, but then personalized additional products or services that add value to call the contact center to speak to an agent. They may place a the customer. By more accurately identifying trends on brand new order with an agent or go back to the Web site to place image and loyalty, service providers can create better marketing an order at a later date. There is no linear relationship to the programs and continually adjust them to meet changing overall customer experience, nor is there a clear direction for dynamics. A wealth of subscriber information can be used (with where the customer should turn when trying to get help for the customer’s permission) to understand and learn subscribers’ a product or service in today’s complex ecosystem (see the needs, interests and behaviors in real time. This ensures not October 2010 Yankee Group Report “The Hidden Jewel of only the delivery of personalized real-time offers, but also that Personalized Cross-Channel Interactions”). service experience doesn’t negatively affect brand.• Embedded, real-time, cross-functional intelligence • Consistent service quality. As service providers continue to infrastructure. Intelligent software will be the most important add more subscribers using newer, network-intensive devices, differentiator for service providers across the world as they network traffic patterns become more unpredictable and drive CET. To date, technology investments that create the challenging to manage. This means customers can sometimes essential backbone for delivering services to customers have experience inconsistent service availability and performance been designed to either drive out operational cost or manage due to network bottlenecks. These unpredictable turns of operations. Service provider systems use older technology event negatively impact not only the subscriber but also the architectures with bolted-on features that result in inflexible service provider, since it is unable to tie service performance Frankenstein-like systems that can’t meet the needs of today’s to individual customer experience. Unless real-time network complex world. Yankee Group sees a requirement for an data is mapped to subscriber identity and experience, service intelligence infrastructure that communicates across internal providers will find it impossible to quickly and proactively functions such as ordering, billing, care and network operations identify performance and connection issues that must be simultaneously, in real time, to make the experience more corrected. Addressing QoS issues for the consumers is one dynamic and responsive. This means applications must have thing, but service providers that deliver services to enterprises insight-gathering capability embedded in each major function, also run the risk of financial penalties and even significant be capable of communicating that insight to a master (or at revenue loss if they fail to meet stringent service-level least coordinating) function that accepts the input and places agreements (SLAs). it in context, alert appropriate sibling functions or business processes when action is required, and feed measurement systems for use by service providers to drive improvements in all functional areas.6 © Copyright 2011. Yankee Group Research, Inc. All rights reserved.
  • 7. March 2011• Social media integration. Contact centers want to IV. Conclusions and Recommendations improve care, marketing needs to create unique dialogues with customers and knowledge workers want to improve team The customer experience consists of multiple moments of truth collaboration. Customers want to be served, not sold, and they across all four dimensions of customer interactions. Any change in one want their voices heard. Social media can help answer all of dimension has the potential to change one or more of the others. these needs (see the July 2010 Yankee Group Report “Social At the same time, the right customer experience is crucial Media Is Changing the Face of Customer Service”). The social and is the key to boosting operational efficiencies, building media revolution has dramatically changed the way businesses customer loyalty and growing wallet share. The goal is to improve and service provider employees interact. Contact centers operations, lower costs, conquer new markets and generate new must support social connections. They must monitor, filter revenue streams, all while delivering the right experience that and respond proactively to resolve issues quickly before they keeps customers happy and the business profitable. To do this, turn into catastrophes because of the speed of information CET endeavors must focus on customer needs, sell on value and distribution—good or bad—in a social media setting. proactively provide care. The reality is an increasingly sophisticated• Network- and customer-focused policy. There is no lack world, with sophisticated expectations. Service providers must of attention being paid to the subject of network policy. Dozens make CET their reality. Yankee Group recommends the following. of vendors are busily installing network-centric bandwidth management products to allow service providers to optimize Recommendations for Service Providers performance in a resource-constrained environment. They also • Start now. There is no lack of pressure on service providers, generally acknowledge and provide the appropriate PCRF/PCEF especially due to the encroachment on their revenue by legacy- capabilities to enable real-time, customer-centric application free over-the-top (OTT) firms. Consider integrating customer of rules with interfaces to online charging systems (see the experience into current business and technology improvement October 2010 Yankee Group Report “4G B/OSS: Oxymoron initiatives. Also, recognize this is a multi-year, culture-changing or Mandate?”). This is a great start, but it’s not enough. endeavor. It won’t be easy and it won’t be swift. Transformation to a better customer experience requires delivery and enforcement of not just service provider-initiated • Clarify business models. Since the beginning of industry rules/policies but also those of the customer. Network- privatization nearly 30 years ago, the business of wholesale has embedded components must also communicate to repositories been relegated to second-class citizenship, owing to its origins of customer identity and preference so that user-defined offer as a regulatory mandate. At the same time, wholesale business components and consumption levels can be captured. unit leaders were saddled with the infrastructure, costs and measurements used in a retail environment. More recently,• Customer-centric performance measures. Evolving wholesalers have done a better job of catering to the needs of customer service from an operational cost center measured wholesale customers, and some have become wholesale-only solely by internal efficiency to a revenue producing center providers. The message is simply to decide on one’s business capable of fostering loyalty, repeat business and competitive model and then pursue that model with the appropriate differentiation necessitates a retooling of the measurements infrastructure, operations and measurements. We encourage or key performance indicators (KPIs) used by management. service providers to continue to clarify business models, Although previously used KPIs focusing on agent efficiencies and even consider spinoffs of wholesale divisions to mitigate remain important, a new set of KPIs emphasizing the customer continued internal competition between business units. experience and its effectiveness is essential. Many business managers believe in the maxim “What gets measured improves.” This may not always be true, but history and experience confirm that what gets measured certainly gets the most attention. Newer metrics from the voice of the customer must track externally driven social media mentions, as well as internal measures of call quality and first contact resolution (FCR) statistics.© Copyright 2011. Yankee Group Research, Inc. All rights reserved. 7
  • 8. Delivering a World-Class Customer Experience: Transformation from the Outside In• Identify a customer experience officer. Forward-thinking V. Further Reading service providers are charging certain members of the executive team with the customer advocacy role. While often this person Yankee Group Research comes from a customer care background, this is by no means the only choice. This person and their department must be “CSPs Need Proctive Subscriber Intelligence to Improve the endowed with the organizational clout, operational and market- Customer Experience,” December 2010 facing experience and leadership backing to ensure change is “The Hidden Jewel of Personalized Cross-Channel Interactions,” carried out with the customer experience as a leading, if not October 2010 sole, success measure. “4G B/OSS: Oxymoron or Mandate?” October 2010• Build customer-centric performance measures. Consider merging externally focused measures with internally focused “Social Media Is Changing the Face of Customer Service,” July 2010 measures, as well as “outside-in” measures such as Frederick Reichheld’s Net Promoter Score, third-party feedback and Yankee Group Data the voice of the customer. Insist on customer experience components in all KPIs and provide measurement feedback to all 2011 US Consumer Survey, Wave 1 employees on a consistent basis.• Reward progress. As a follow-on to customer experience performance measures, build incentives and employee performance rewards based on delivering optimal connected experience. Ensure top executives’ variable compensation is driven heavily by improvements in customer experience as part of an overall shift in behavior.• Coordinate investments with the customer in mind. Incorporate customer experience measures in all investment business cases, whether funded via capex or opex. Insist on cross- functional and cross-unit coordination of investments to ensure customer experience measures remain the driver for investment.8 © Copyright 2011. Yankee Group Research, Inc. All rights reserved.
  • 9. Yankee Group—the global connectivity experts The people of Yankee Group are the global connectivity experts—the leading source of insight and counsel trusted by builders, operators and drivers of connectivity solutions for 40 years. We are uniquely focused on the evolution of Anywhere, and chart the pace of technology change and its effect on networks, consumers and enterprises. For more information, visit http://www.yankeegroup.com Leverage qualitative research to make informed Research business decisions today and plan for the future. Gain quantitative insight into current markets and new Data opportunities via monitors, surveys and forecasts. Connect with analysts to gain deeper insight into Interaction research and trends.Yankee Group’s products and Get in-depth analysis and actionable recommendations Consultingservices provide clients the insight, tailored to your needs.analysis and tools to navigate the Access world-class events live and online with Eventsglobal connectivity revolution. industry leaders and Yankee Group experts. Susan McNeice, Vice President Susan McNeice is vice president of software research with Yankee Group’s Anywhere Network team, driving the company’s research in the areas of telecom marketing, operations and OSS/BSS software strategy. Her areas of expertise include OSS/BSS, subscriber and policy management, customer care, self-service, RT charging, dynamic cataloging, business intelligence/analytics, revenue assurance and service assurance. t ers q uar H ead Corporate European© Copyright 2011. Yankee Group Research, Inc. Yankee Group published this content for the One Liberty Square 30 Artillery Lanesole use of Yankee Group subscribers. It may not be duplicated, reproduced or retransmittedin whole or in part without the express permission of Yankee Group, One Liberty Square, 7th Floor LONDON E17LS7th Floor, Boston, MA 02109. All rights reserved. All opinions and estimates herein BOSTON, MASSACHUSETTS UNITED KINGDOMconstitute our judgment as of this date and are subject to change without notice. 617-598-7200 phone 44-20-7426-1050 phone 617-598-7400 fax 44-20-7426-1051 fax