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Customer Experience Management for Startups

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Dr. Bob E Hayes: I was invited to give a talk at Eastside Incubator on how startups can incorporate customer experience management into their companies. These are the slides. You can read my blog post …

Dr. Bob E Hayes: I was invited to give a talk at Eastside Incubator on how startups can incorporate customer experience management into their companies. These are the slides. You can read my blog post on this topic (http://businessoverbroadway.com/three-customer-experience-management-tips-for-startups) that are a good complement to these slides.

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  • 1. CUSTOMER EXPERIENCE MANAGEMENT FOR STARTUPS Bob E. Hayes, PhD CCO, TCELab.com President, businessoverbroadway.com @tcelab @bobehayes © 2012 TCELab LLC. All rights reserved. Unauthorized duplication or distribution is prohibited.
  • 2. Background • Bob E. Hayes is Chief Customer Officer of TCELab and President of Business Over Broadway (B.O.B.). Received PhD in industrial-organizational psychology. Conducts research and provided consultation on how companies can use customer data to drive business growth • Writes (e.g., books, blog, articles) on such topics as customer feedback program best practices, analytics, customer experience and customer loyalty measurement • Implements customer feedback programs and directs global customer feedback research projects for many enterprise companies:
  • 3. Overview • What is Customer Experience Management (CEM)? • Impact of the Customer Experience on Customer Loyalty • Building a World-class CEM program • The Key to Business Success is Customer Loyalty • What can startups do?
  • 4. Customer Experience Management (CEM) • Customer experience is the sum of all experiences a customer has with a supplier of goods/services • Customer Experience Management (CEM) is the process of understanding and managing your customers’ interactions with and perceptions of your brand / company
  • 5. Why Develop a CEM Strategy? • Customer experience impacts customer loyalty • Decreasing customer defections by 5% increases profits from 25% to 85%* * Reichheld, F. F., & Sasser, W. E. Zero defections: Quality comes to service. Harvard Business Review, Sept-Oct. 1990. 0% 25% 50% 75% 100% Auto-service chain Branch deposits Credit card Credit insurance Insurance brokerage Industrial distribution Industrial laundry Office building management Software PercentIncreaseinCustomerValue
  • 6. Customer Experience Management Program Strategy Overarching guidelines around the company’s mission and vision regarding the company objectives/goals Governance The guidelines and rules (how the program is directed); roles and responsibilities (how data are used and by whom ); and change requests (how changes to the program are made) Business Process Integration Integration of customer feedback program (including processes and data) into business operations and processes Method Data collection (social media, surveys, brand communities); Measurement (experience/ loyalty/sentiment) Reporting How customer feedback data are analyzed, summarized and disseminated throughout the company Research Systematic research using customer feedback data to gain additional customer insight
  • 7. Loyalty Leaders vs. Loyalty Laggards Adoption Rate Customer Feedback Program Component Loyalty Leaders1 Loyalty Laggards ∆ in Adoption Rate Strategy/Governance 89% 71% 18% Business Process Integration 86% 59% 27% Method 72% 60% 12% Reporting 70% 60% 10% Applied Research 80% 51% 31% 1 Loyalty Leaders defined as respondents who have customer loyalty percentile ranking of 70% or higher. Loyalty Laggards defined as respondents who have customer loyalty percentile ranking lower than 70%. Source: Hayes, B. E. (2009). Beyond the ultimate question: A systematic approach to improve customer loyalty. Quality Press. Milwaukee, WI.
  • 8. Strategy/Governance 40 50 60 70 80 Customer feedback results are as important as financial measures in making business decisions. Customer feedback is included in the company's strategic vision, mission and goals. Customer feedback results are used in executives' objectives and incentive compensation. A top executive (e.g., CEO, VP) is a champion of the customer feedback program. Customer feedback results are used in front-line employees' objectives and incentive compensation. Industry percentile ranking of customer loyalty Companies who Adopted Practice Companies who did not Adopt Practice 1. CF is as important as financial measures in making business decisions 2. Included in vision/mission/ goals 3. Executive incentive comp.
  • 9. Strategy/Governance • Incorporate customer feedback into vision, mission, and goals – Include in employee on-boarding process – Use in setting company goals • Include customer feedback in decision- making process – Executive reports customer results at executive meetings – Present customer feedback data in company meetings, official documents • Use customer feedback when setting executive’s objectives and incentives – Use key metrics (business areas, customer loyalty)
  • 10. Business Process Integration 40 50 60 70 80 Customer feedback results are included in the company/executive dashboards. Customer feedback program is integrated into business processes and technology (e.g., CRM system). All areas of the customer feedback program (e.g., process and goals) are communicated regularly to the entire company. The resolution of customer issues that are identified using the customer feedback program is integrated into the company's Customer… Industry percentile ranking of customer loyalty Companies who Adopted Practice Companies who did not Adopt Practice 1. CF included in executive dashboards 2. Program integrated into business process and technology 3. Program processes/ goals communicated to entire company
  • 11. Business Process Integration • Include results of customer feedback in executive dashboards – Track loyalty and customer experience • Communicate customer feedback program processes/ goals to entire company – Include in newsletters, emails – Develop customer-related employee portal on intranet site – Metrics/Methods used
  • 12. Method 40 50 60 70 80 Web surveys are used to collect customer… Paper and Pencil surveys are used to collect… Customer satisfaction surveys are conducted by… The survey delivery is an automated process. Multiple methods of collecting customer… In-person interviews are used to collect… Telephone surveys are used to collect customer… Customer contact management process… Industry percentile ranking of customer loyalty Companies who Adopted Practice Companies who did not Adopt Practice 1. Web surveys
  • 13. Reporting 40 50 60 70 80 Customer feedback results are shared throughout the company. Customer feedback results are benchmarked against competitors and industry averages. Web-based reporting tools are used to report customer feedback results to employees. Results of customer satisfaction research are presented externally (e.g., conferences, user… Results of customer satisfaction research are presented internally (through employee… Customer feedback results are shared only at executive/management level.* Industry percentile ranking of customer loyalty Companies who Adopted Practice Companies who did not Adopt Practice 1. CF results shared throughout company
  • 14. Method and Reporting • Use Web-based surveys to collect customer feedback – Facilitates communication through automation – Improves ease of integration with other business systems (e.g., CRM) • Share customer feedback results throughout the company – Keeps employees focused on customer- centric goals – Facilitates customer-centric culture
  • 15. Research 40 50 60 70 80 Statistical relationships are established between customer feedback data and operational metrics (e.g., turnaround time, hold time). Applied research using customer feedback data is regularly conducted. Statistical relationships are established between customer feedback data and other constituency metrics (e.g., employee satisfaction or partner… Existing information from customer databases is used to help segment customer feedback data. Statistical relationships are established between customer feedback data and business metrics (e.g., revenue, margin). Industry percentile ranking of customer loyalty Companies who Adopted Practice Companies who did not Adopt Practice 1. Operational linkage established 2. Applied research regularly conducted 3. Constituency attitude linkage established
  • 16. Research • Validate customer feedback program – Ensure results are reliable, valid and useful – One of first research projects that need to be conducted • Develop programmatic research around customer • Establish statistical relationships between customer feedback data and operational metrics (e.g., turnaround time, hold time) and other constituency metrics (e.g., employee satisfaction or partner satisfaction metrics) – Manage customer relationships using operational metrics – Expand customer ecosystem; manage all constituencies
  • 17. Summary of Best Practices • Loyalty leaders build a customer-centric culture by: 1. Using customer feedback to set vision and manage business 2. Integrating customer feedback into business processes 3. Communicating process, goals and results of all customer programs to entire company 4. Conducting in-depth customer research – Integrate different business data (operational, financial, customer feedback), to reveal deep customer insights
  • 18. What can startups do? • Start at the top – Executive education about CEM – Consider including in mission statement • Formalize customer feedback – Web site, Annual customer survey • CRD; see remaining slides • Surveygizmo.com, surveymonkey.com, limesurvey.org • Share feedback companywide
  • 19. Customer Loyalty and Growth • Business growth relies on three types of customer loyalty 0 1 2 3 4 5 6 7 CompanyProfit Frederick Reichheld. The Loyalty Effect. Harvard Business School Press, 1996 Base Profit Profit from increased purchases and higher balances Profit from reduced operating costs Profit from referrals Profit from price premium Customer acquisition cost Growth is all about: Retention Advocacy Purchasing Years
  • 20. Customer Loyalty and Business Growth • Different types of customer Loyalty Business Programs Marketing Sales Service Customer Development (cross/up-sell) Firm Value Customer Lifetime Value Customer Acquisition Customer Retention Business Programs Marketing Sales Service 2. New Customers (Acquire through Advocacy Loyalty) Firm Value Customer Lifetime Value 1. Customer Renews (Retention Loyalty) 3. Customer Buys More (cross/up-sell through Purchasing loyalty) Product development Infrastructure Read more about the RAPID loyalty approach Renew service agreement Buy from competitor Continue buying Recommend Buy more Buy different products Expand usage across company Retention Advocacy Purchasing
  • 21. Customer Relationship Diagnostic (CRD) • Measures critical components of the health of the customer relationship – Customer loyalty – Customer experience (e.g., product, ease, support, communication) • Quantifies the value of different types of customer loyalty – Annual revenue growth through word-of-mouth – Annual revenue growth through up/cross-selling – Annual revenue at risk due to churn • Identifies customer experience improvement solutions that will improve customer loyalty while maximizing ROI/Net revenue • Provides competitive benchmarking information - See where you rank against competitors
  • 22. CRD: Asks only essential questions • Loyalty-based survey with less than 20 questions • RAPID Loyalty Measurement – Retention Loyalty (1-2 questions) – Advocacy Loyalty (1-3 questions) – Purchasing Loyalty (1-2 questions) • Customer Experience Measures – 7 Business area questions (e.g., product quality, support, responsiveness) – 1-2 open-ended questions (e.g., what would you change?; one word to describe company) • Relative Performance Assessment - Competitive Benchmarking (C-PeRk) – 2-3 Questions • Company-specific questions – 5 Questions – Customer tenure, Decision influence, Job level, Job function
  • 23. Customer Relationship Diagnostic Customer Loyalty and Customer Experience Indices / Measures1 Addresses Business Growth Survey Questions Scores Retention Loyalty Index (RLI) Will your customers remain with / not leave you? Renew service contract, Use competitor* Scores can range from 0 (low retention loyalty) to 10 (high retention loyalty) Advocacy Loyalty Index (ALI) Will your customers promote you? Overall Satisfaction, Recommend, Continue purchasing / using Scores can range from 0 (low advocacy loyalty to 10 (high advocacy loyalty) Purchasing Loyalty Index (PLI) Will your customers invest in additional product / service offerings? Purchase additional services, Expand usage Scores can range from 0 (low purchasing loyalty) to 10 (high purchasing loyalty) 7 Customer Experience Measures Ease of doing business, Overall Product Quality, Responsiveness to Service Needs, Responsiveness to Technical Problems, Ability to Resolve Technical Problems, Communications from the Company, Future Product/Company Direction Are your customers receiving a great customer experience? Customers provide satisfaction rating for each of the 7 business areas. Scores can range from 0 (high dissatisfaction) to 10 (high satisfaction) Competitive Benchmarking Are you ahead of the competition? How does your company perform relative to the competition? Scores can range from 0 (low ranking) to 100 (high ranking)
  • 24. bob@tcelab.com bob@businessoverbroadway.com @tcelab @bobehayes

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