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Customer experience strategy_clear_actionwhitepaper
1. Customer Experience Strategy 4 Overlooked Key Competencies for Sustainable Results
Customer Experience Strategy 2009Customer Experience Strategy4 Overlooked Key Competencies for Sustainable Results“What everyone in a company does can be reduced to one of two functions: to serve the customer or servesomeone who does.” – W. Edwards DemingWhile 80% of executives say they want to use Last year’s good news for the most improvedcustomer experience management (CEM) as a CEM competency was: employees fullyform of differentiation this year, only 11% would understand the attributes of our brand.1 Of 1call their CEM approach “very disciplined”. course this internal focus is necessary, but farThis mis-match of intentions and capabilities from sufficient.reveals a fundamental paradigm glitch about thepurpose of business. In reality, customer To develop an effective customer experience Customer experienceexperience dictates revenue streams which strategy, strive for strong performance in these dictates revenueenable all other initiatives, operations, and four often-overlooked CEM competencies:1 streams which enableaspirations of a firm. all other initiatives, 1) Shared Vision: Employees across the operations, andThis realization is reflected in Johnson & company share a consistent and vivid image aspirations of a firmJohnson’s credo: “We believe our first of target customers.responsibility is to the doctors, nurses andpatients, to mothers and fathers and all others 2) Sound Rationale: Decision-makingwho use our products and services. … We are processes systematically incorporate theresponsible to our employees. … We are needs of target customers.responsible to the communities in which weserve. … Our final responsibility is to our 3) Accountability: Quality of interactions withstockholders. … “ Hence, J&J subscribes to the target customers is closely monitored.philosophy that excellent customer experienceenables its initiatives, operations and aspirations. 4) Celebration: Employees across the company are recognized and rewarded forA disciplined approach includes processes and improving the experience.competencies guided by strategy. Half of 4 Overlooked Key Competencies for Sustainable Resultsbusinesses lack a customer experiencemanagement process,3 indicating significantopportunities within most industries to stand outfrom the crowd in customer experienceexcellence. Indeed, 81% of companies withstrong capabilities and competencies fordelivering customer experience excellence are 16outperforming their competition.Lack of customer experience strategy is reported 1) Share a Consistent & Vivid Image ofby executives as their biggest CEM weakness.1 Target Customers Company-wideIronically, if one believes that customer If you want to be a customer-centric company,experience dictates revenue streams, then a you must set yourself up for success in revolvingcustomer experience strategy would be viewed around the customer’s well-being. A thoroughas a foundation and guide for all other business understanding of the customer’s world is thestrategies. foundation for customer-centricity.© 2010 ClearAction LLC. All Rights Reserved. 2
Customer Experience Strategy 2009What is the Customer’s World? business processes, policies, and attitudes of allA clear understanding of the customer’s world other employees throughout the company allowgoes well beyond recommendation rates or them to be.features and benefits of your products andservices. The customer’s world is the larger Your Payroll Dollars are Made Possible bycontext of why and how they’re using your Satisfied Customersproducts and services: This message on my bi-weekly payroll stub, at semiconductor equipment-maker Applied• What are they trying to achieve? Materials, stood out to me as a stark reminder of• Are there different circumstances that the role of customers in my job. shape their processes and expected outcomes?• Are there other products and services, and The customer’s world internal elements that are combined with is the larger context yours as a solution to the overall objective? of why and how• What are their pressures, challenges, they’re using your frustrations and triumphs relating to that A wide array of sensitizers is necessary to keep products and services overall objective? the customer’s world front-and-center for• What are the customer’s work-arounds for executives and employees. Use every missing or complex elements of the opportunity to provide everyone with a solution? consistent and vivid image of your target• What does the customer consider to be customers: post customer stories as articles, excessive or unnecessary among the podcasts, and video on bulletin boards, intranet solution elements? sites, newsletters, executive messages, and in• How does the customer prioritize staff meetings. Make the customer’s world importance and frustration levels of the personal to employees by streaming relevant solution elements? voice-of-customer data to every corner of your organization. Conduct workshops to help allThe goal in exploring the customer’s world is to employees identify their jobs’ link to customers’discover opportunities for making it easier and well-being, and to involve them in ways to act onnicer for customers to get and use the solutions customer sentiment data streams.6they’re seeking. In fact, market segmentation bycustomer experience circumstances (why and When talking about core values at information 4 Overlooked Key Competencies for Sustainable Resultshow) has been adopted by companies such as infrastructure provider EMC, employees areGE Medical as far superior to traditional customer reminded that “most importantly, we live themsegmentation and persona development. out in all our customer interactions.” More than half the workforce at EMC is active in 160Keep Your Ear to the Ground internal communities, which have brought theirA thorough understanding of the customer’s brand values to life. By starting with internalworld is a moving target. Arrogance has been networks and blogs, employees becamethe undoing of many a leader. Despite comfortable with Web 2.0 tools, and becamecompelling evidence of customer retention’s connected with EMC strategy, culture, and fellowimpact on revenue and profit, nearly two-thirds employees. Employee experts now engage inof companies do not have a formal voice-of- customer communities and viral marketingcustomer program in place.4 So it’s no wonder efforts. These communities have helped increasethat 69% of companies have not provided revenue, develop products, improve service,customer-facing personnel with customer reduce support costs, and build relationships andinsights.5 Yet, customer-facing personnel can be loyalty.customer-centric only to the extent that your© 2010 ClearAction LLC. All Rights Reserved. 3
Customer Experience Strategy 20092) Emphasize the Customer’s Well-Being customer”. Throughout the meeting, the in All Decision-Making executives were compelled to include theDecision-making can be complex, with multiple customer in their thought process, and toconstituencies to consider: customers, consider their comments’ implications on theshareholders, competition, executives, peers, customer, as if “he/she” were present.10personal career path, etc. Hence, it’s all too easy This practice became a habit at Amazon, part ofto fall into the trap of compromising customer their corporate culture. CTO Werner Vogelsrelationship strength by favoring another explains: “It’s very important to have a cultureconstituency in tactical and/or strategic where everybody understands what the coredecisions, at all levels of the company. Only 60% values of the company are. New starters areof companies regularly consider how a proposed often surprised at how important focusing on theaction increases or decreases customer trust customer is to us and how good Amazon is atwhen making decisions despite widespread doing that. … We often have meetings where weagreement that customer trust is tied to the start off with a ‘customer voice’ — a success 4financial success of the business. In the U.S., a story, even sometimes a negative story, of a Only 60% of firmscompany’s reputation is impacted by customer’s experience of buying on Amazon — regularly considertransparency and trust as much as by product and use those stories to drive our services to how a proposedand service quality. 9 become better. … We want to be the most action increases or customer-centric company on the planet.”11 decreases customer trust when making Do Customers Confirm Your Customer-Centricity? decisions The elusiveness of true customer-focus is evident in several studies, such as Accenture’s Delivering the Promise study, where 75% of surveyed executives viewed their company’s customer service as above-average, while 59% of their customers reported their experience with these companies’ service as somewhat to extremely dissatisfying. Another example is CMO Council’s Customer Affinity study where half of companies said they’re extremely customer-centric, butThe primary reason for consistently putting when customers of those companies were asked,customers first is that they do indeed make only a tenth of them said those companies were 4 Overlooked Key Competencies for Sustainable Resultspayroll possible. Typically, when priorities are extremely customer-centric.aligned with customers first, and otherconstituencies secondarily, the intendedoutcomes for other constituencies follownaturally, and more healthily for all involved.Imagine Customer PresenceThere’s a common saying that applies tocustomer-centricity: out of sight, out of mind.What better way to transform your culture totruly customer-centric ways of thinking anddoing, than to invite your customer to attend all Weave Customer-focus into Your Cultureyour discussions? This has long been a practice To what extent do you emphasize customer-at Amazon, since founder Jeff Bezos once started focused decision-making in your processes foran executive meeting by announcing that an annual operating plans, operations reviews, staffempty chair at the table represented “the© 2010 ClearAction LLC. All Rights Reserved. 4
Customer Experience Strategy 2009meetings, performance reviews, and other rituals Monitor the Customer’s Worldin your company? Make a concerted effort to A customer satisfaction survey typically providesincorporate customer-first thinking and essential yet insufficient insight on the quality ofdiscussions in all of these business processes, customer interactions. Some surveys focus onand you’ll see a monumental increase in the overall relationship, while others measure thecustomer-focused employee engagement. Audit effectiveness of transactions. User groups andyour customer programs to identify what’s-in-it- advisory boards often focus on future offerings.for-me (WIIFM) from the customers’ perspective. There may be multiple influencers for purchaseCreate a ratio of WIIFM for your company versus decisions, and the sentiment of each influencerWIIFM for customers, both short-term and long- should be monitored, to paint the whole pictureterm, and make adjustments that strengthen the of your status with customers. Social mediacustomer relationship from the customer’s monitoring provides a window to customerperspective. interaction quality among those who are vocal. Call center logs and complaint lines are also very Customers apply 50 important sources of customer experience to 150 metrics to feedback, yet not often used company-wide. measure how well the job is getting done In nearly every case, these feedbackOngoing Customer-Centricity Journey mechanisms and forums are designed aroundAs Amazon exemplifies, building a customer- the company’s world, rather than the customer’sfocused culture is an ongoing journey. This world. “For any given job [i.e. purchase],journey is called internal branding, where customers collectively apply 50 to 150 metrics tooutside-in thinking is integrated into the job of measure how well the job is getting done”, sayseveryone company-wide, managing their Anthony Ulwick in his book, What Customerspersonal impact on customer experience. Top- Want. Hence, the best way to monitor theperforming companies in customer service, quality of customer interactions is to useaccording to BusinessWeek’s list of high- customers’ inherent measurements of goodnessperformers from JD Power & Associates’ recent rather than the company’s measures ofstudies, are: Amazon, USAA, Jaguar, Ritz goodness. The hardest thing for competitors toCarlton, Publix Super Markets, Zappos, Hewlett- copy is the customer experience you create.Packard, T Rowe Price, and Ace Hardware. Thesecompanies are well-respected on several Embrace Constructive Feedbackdimensions, demonstrating that it pays Many firms that measure customer satisfaction 4 Overlooked Key Competencies for Sustainable Resultswidespread dividends to put customers’ well- emphasize the positive and de-emphasize thebeing first. negative responses. Lack of processes and comfort levels for digesting and acting on3) Monitor Quality of Customer constructive feedback can leave a company Interactions vulnerable to severe consequences. One out ofWhile surveys have long been in place for most two companies (44%) acknowledge that high-companies, only 31% of marketing executives profile negative customer experiences have atreport that their company takes customer some time compromised their brand, yet onlylistening seriously, and just 38% of companies 29% have high ability to handle and resolveare gathering customer insight from customer customer complaints.4 12engagement situations. This means thatcompanies willing to adopt a disciplined Make it safe for executives and employees toapproach to customer experience management receive less than stellar results – as long as theymay enjoy significant competitive advantages by diligently improve. A motto such as this one maybeing first or best at monitoring and improving be useful in establishing curiosity rather thanthe quality of customer interactions. fear: Good news is no news; no news is bad© 2010 ClearAction LLC. All Rights Reserved. 5
Customer Experience Strategy 2009news; bad news is good news.13 Make it part of satisfaction, retention and profitability.15 Theseyour culture to look at negative feedback from low statistics indicate differentiationcustomers as early warning signals, and, as the opportunities for companies that decide to standold saying goes, turn lemons into lemonade. out from the crowd by implementing holistic, highly visible, and readily accessible measures of customer interaction quality. Focus on Leading Indicators Survey results measure what the customer already experienced, so they are laggingVirgin Mobile measures call center customer indicators.satisfaction on a five-point scale and looks at thetop-two box (4-5) and bottom-two box (1-2) Teams can improve the quality of customerscores, with emphasis on the latter. Dennis interactions only by focusing on metrics trackingWeikle, Vice President of Customer Care, the progress of their survey results action plans. Only 42% of firmsexplains: “When customers are satisfied, thats agree they can dogreat, and we certainly work to continue doing what is right forwhat were doing well. Weve found the bottom customers despitebox is indicative of churn and negative word-of- the pressure to makemouth, so we built a customer advisory group to current-periodlook at survey results on a real-time basis, hour financial numbersby hour, to identify what went wrong, and turnthe wrong into a right. We also categorizefeedback by call center skill issues and by These action plan metrics are leading indicatorsbusiness operations issues, and drive of customer sentiment and business resultsimprovements accordingly. We call customers to because they can be observed and constructivelyacknowledge the issue when a poor rating is managed by teams before customers have agiven, and find that people are surprised and chance to evaluate the results of the actionpleased with the personal attention and plans. Well-aligned leading indicators can becommitment to resolution. Were fortunate to predictive of future customer sentiment andhave good customer experience commitment market performance.across the business groups to take actionimmediately. We are consumer champions, and 4) Recognize Employees for Improving 4 Overlooked Key Competencies for Sustainable Resultsthats how we hire and orient employees, with Customer Experience Managementtops-down and bottoms-up walk-the-talk. We try Humans, as well as all living things, align theirin everything we do to anticipate impact on the behaviors with the rewards in their environment.customer, and over the past year weve seen the For example, only 42% of companies agree thatbottom-box volume shrink in half.”14 they can do what is right for customers despite the pressure to make current-period financialTransparency Spurs Employee Engagement numbers. Interestingly, the same number ofIt’s common for survey results to be shared with companies are actually using customer metrics toa select set of executives and employees. evaluate organizational performance.16 ToRemember, out of sight, out of mind. Let every engage executives and employees in customeremployee see their impact on customer experience management, walk the talk.experience. Only 42% of companies use adashboard of commonly-agreed-to metrics that You Get What You Rewarddefine success. And just 24% have created a Only 30% of companies are using customermulti-year set of agreed-to-metrics to assist metrics to evaluate individual performance. Theexecutives in measuring & monitoring customer same number of companies align incentive© 2010 ClearAction LLC. All Rights Reserved. 6
Customer Experience Strategy 2009compensation to customer metrics.16 Among The program is evaluated by company-widethose companies that do tie compensation to participation and participants’ satisfaction, withcustomer experience, employee behavior often continual improvement over the years, evolvingdoes not match what was intended. from a variety of problem resolution categories to exclusive focus on problem prevention forFor example, using customer satisfaction surveys superior customer experience.as a basis for the employee bonus program oftenleads employees to coach customers, asking Recognize Desired Behaviors Incessantlyfor help in getting their bonus by giving the To weave employee engagement for superioremployee a highly satisfied rating. When the customer experiences into the fabric of yoursurvey results are reported, how much culture, don’t wait for end-of-quarterconfidence can the company have that the opportunities to express gratitude for stellarsurvey is valid? Coaching negates the value of performance. Help your employees make CEM athe survey, and of the bonus program as well, habit by reinforcing what you like when you see 30% of companiesmaking them largely a waste of effort, time and it. Be sincere. Be creative in expressing your are using customermoney for all parties involved. Instead of tying appreciation. Involve employees in recognizing metrics to evaluatecompensation heavily to survey results, tie it their peers. Recognition can be contagious and individualprimarily to leading indicators: action plan buoyant. performanceprogress metrics. Many companies, including JetBlue, evaluateLet Employees Toot Their Own Horn their progress in engaging employees forAt Applied Materials I managed a self-reporting superior customer experiences. The companyteam recognition program, which guided asks crewmembers how likely they are toemployees in expressing their achievements recommend JetBlue as a good place to work, andaccording to established categories and criteria they ask customers how likely they are todesigned to strengthen customer focus in the recommend JetBlue to others. They correlate thecompany culture. Formal teams and grass-roots answers across employees and customers, andteams get constructive feedback from a panel of the results are trending upward for bothexecutives, which enriches their projects and measures of success.team satisfaction, and has resulted in thousandsof hours and millions of dollars in savings for the Although it is a service business, JetBlue believescompany and customers alike. An online user that only 10% of customers’ perception of theirinterface gives employees worldwide easy access brand is visible externally through customer 4 Overlooked Key Competencies for Sustainable Resultsand visibility to lessons learned for synergy and interactions. The other 90% of brand perceptionknowledge management. is impacted by management of people, processes, policies, and organization.2 JetBlue has been the top airline for 5 years in J.D. Power’s customer service survey. As a sign of strong customer engagement, they have 1.6 million followers on Twitter, more than any company except Whole Foods and Zappos. In 2009 JetBlue was profitable, expanding to 8 new cities and hiring 2,300 people. Engaged employees are the most dynamic and influential force in creating superior customer experiences.© 2010 ClearAction LLC. All Rights Reserved. 7
Customer Experience Strategy 2009Conclusion Footnotes: 1Companies that have increased investment in State of Customer Experience, Forrestercustomer experience in the past three years, Research, 2010. 2compared to those that have decreased their Creating an Army of Brand Ambassadors,investment, report satisfaction scores that are Marcus Evans Internal Branding Conference,60% higher. And they are 30% more likely to 2010. 8 3have attrition rates of 5% or less. Obstacles to Customer Experience Success, Forrester Research, 2008. 4Integrate these competencies in your business Giving Customer Voice More Volume, CMOstrategy to achieve sustainable results: Council, 2009. 5 Operationalizing Customer Intelligence in the1) Company-wide vivid image of customers Contact Center, Business Communications - What is the Customer’s World? Review, 2007. 6 - Keep Your Ear to the Ground Invisible Innovation: Process Improvement for - Payroll Made Possible by Customers Customer Experience, ClearAction, 2010. 7 Employment Branding & Employee Engagement2) Customer-focused decision-making in a Downturn & Connected World, Marcus Evans - Imagine Customer Presence Internal Branding Conference, 2010. 8 - Customers Confirm Customer-Centricity? Customer Experience Management Benchmark - Weave Customer Focus into Your Culture Study, Strativity Group, 2009. 9 - Customer-Centricity is a Journey Edelman Trust Barometer, 2010. 10 The Best Service is No Service – Updates &3) Monitoring of customer interaction quality New Evidence, IIR USA Customer Uninterrupted - Monitor the Customer’s World Conference, 2009. 11 - Embrace Constructive Feedback King of the Jungle, Business Management, - Transparency & Leading Indicators Issue 16, 2009. 12 Turning Customer Pain into Competitive Gain,4) Recognition for CEM improvements CMO Council, 2009. 13 - You Get What You Reward James C. Morgan, Chairman, Applied Materials. 14 - Let Employees Toot Their Own Horn Improve Customer Experience Results by - Recognize Desired Behaviors Incessantly Enhancing Operations, BlogTalkRadio Customer Experience Optimization, 2009. 15Make it hard for competitors to copy your Customer Experience Management, Aberdeen 4 Overlooked Key Competencies for Sustainable Resultsstrengths, by engaging your employees Group, 2008. 16enterprise-wide in designing and delivering Customer Experience Maturity Monitor, Pepperssuperior customer experience. & Rogers Group, 2009. ________________________________ Lynn Hunsaker is head of ClearAction customer experience consulting. She has developed and managed customer experience programs for more than half of her career, in executive roles such as Head of Corporate Quality andDirector of Marketing and Business Developmentat Fortune 250 companies. ClearActionseamlessly augments existing programs andidentifies opportunities to boost your CEM ROI,specializing in customer experience innovationand customer-centric employee engagement.1-877-CEM-ROI-4 www.ClearAction.biz© 2010 ClearAction LLC. All Rights Reserved. 8
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