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Customer Experience Management for Startups


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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 ( that are a good complement to these slides.

Published in: Business

Customer Experience Management for Startups

  1. 1. CUSTOMEREXPERIENCEMANAGEMENTFOR STARTUPSBob E. Hayes, PhDCCO, TCELab.comPresident, @bobehayes © 2012 TCELab LLC. All rights reserved. Unauthorized duplication or distribution is prohibited.
  2. 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. 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. 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. 5. Why Develop a CEM Strategy?• Customer experience impacts customer loyalty• Decreasing customer defections by 5% increases profits from 25% to 85%* 100%Percent Increase in Customer Value 75% 50% 25% 0% Auto-service Branch Credit card Credit Insurance Industrial Industrial Office Software chain deposits insurance brokerage distribution laundry building management * Reichheld, F. F., & Sasser, W. E. Zero defections: Quality comes to service. Harvard Business Review, Sept-Oct. 1990.
  6. 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 Reporting Research Data collection (social How customer feedback data Systematic research using media, surveys, brand are analyzed, summarized customer feedback data to communities); Measurement and disseminated throughout gain additional customer (experience/ the company insight loyalty/sentiment)
  7. 7. Loyalty Leaders vs. Loyalty Laggards Adoption Rate ∆ inCustomer Feedback Loyalty Loyalty AdoptionProgram Component Leaders1 Laggards RateStrategy/Governance 89% 71% 18%Business ProcessIntegration 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. 8. Strategy/Governance Industry percentile ranking Companies who Adopted Practice of customer loyalty Companies who did not Adopt Practice 40 50 60 70 801. CF is as important as Customer feedback results are as important as financial measures infinancial measures in making business decisions. making business decisions Customer feedback is included in the companys2. Included vision, mission and goals. strategic in vision/mission/ goals feedback results are used in Customer executives objectives and incentive3. Executive incentive comp. 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.
  9. 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. 10. Business Process Integration Industry percentile ranking Companies who Adopted Practice of customer loyalty Companies who did not Adopt Practice 40 50 60 70 801. CF included in executive dashboards Customer feedback results are included in the company/executive dashboards.2. Program integrated Customer feedback program is integrated into into business process business processes and technology (e.g., CRM and technology system).3. All areas of the customer feedback program Program processes/ (e.g., process and goals) are communicated goalsregularly to the entire company. communicated to resolution ofcompany that are The entire customer issues identified using the customer feedback program is integrated into the companys Customer…
  11. 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. 12. Method Industry percentile ranking Companies who Adopted Practice of customer loyalty Companies who did not Adopt Practice 40 50 60 70 801. Web surveysto collect customer… Web surveys are used 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…
  13. 13. Reporting Industry percentile ranking Companies who Adopted Practice of customer loyalty Companies who did not Adopt Practice 40 50 60 70 801. CFCustomer feedback results are shared results shared throughout company 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.*
  14. 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. 15. Research Industry percentile ranking Companies who Adopted Practice of customer loyalty Companies who did not Adopt Practice 40 50 60 70 801. Operationalestablished between Statistical relationships are linkage established customer feedback data and operational metrics (e.g., turnaround time, hold time).2. Applied research regularlyApplied research using customer feedback data is conducted regularly conducted.3. Constituency attitude Statistical relationships are established between customer feedback data and other constituency linkage established 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).
  16. 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. 17. Summary of Best Practices• Loyalty leaders build a customer-centric culture by:1. Using customer feedback to set vision and manage business2. Integrating customer feedback into business processes3. Communicating process, goals and results of all customer programs to entire company4. Conducting in-depth customer research – Integrate different business data (operational, financial, customer feedback), to reveal deep customer insights
  18. 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 •,,• Share feedback companywide
  19. 19. Customer Loyalty and Growth• Business growth relies on three types of customer loyalty Growth is all about: Retention Profit from price premium Advocacy Profit from reduced Purchasing operating costs Company Profit Profit from referrals Profit from increased purchases and higher balances Base Profit 0 1 2 3 4 5 6 7 Customer acquisition cost Years Frederick Reichheld. The Loyalty Effect. Harvard Business School Press, 1996
  20. 20. Customer Loyalty and Business Growth 1. Customer Customer Business Renews Acquisition (Retention Loyalty) Programs Business Product Programs development 2. New Customer Customer Customers Firm Development Lifetime Marketing (Acquire through Value (cross/up-sell) Advocacy Loyalty) Value Sales Sales Service Service 3. Customer Customer Buys More Infrastructure Retention (cross/up-sell through Purchasing loyalty)• Different types of customer Loyalty Renew service agreement Buy from competitor Retention Continue buying Read more about the Recommend Advocacy RAPID loyalty approach Buy more Buy different products Purchasing Expand usage across company
  21. 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. 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. 23. Customer Relationship Diagnostic Customer Loyalty and Customer Addresses Business Survey Questions Scores Experience Indices / Measures1 GrowthRetention Loyalty Index (RLI) Will your customers remain Renew service contract, Scores can range from 0 (low with / not leave you? Use competitor* retention loyalty) to 10 (high retention loyalty)Advocacy Loyalty Index (ALI) Will your customers Overall Satisfaction, Scores can range from 0 (low promote you? Recommend, Continue advocacy loyalty to 10 (high purchasing / using advocacy loyalty)Purchasing Loyalty Index (PLI) Will your customers invest Purchase additional Scores can range from 0 (low in additional product / services, Expand usage purchasing loyalty) to 10 service offerings? (high purchasing loyalty)7 Customer Experience Measures Are your customers Customers provide Scores can range from 0 Ease of doing business, Overall Product receiving a great customer satisfaction rating for (high dissatisfaction) to 10 Quality, Responsiveness to Service Needs, experience? each of the 7 business (high satisfaction) Responsiveness to Technical Problems, areas. Ability to Resolve Technical Problems, Communications from the Company, Future Product/Company DirectionCompetitive Benchmarking Are you ahead of the How does your company Scores can range from 0 (low competition? perform relative to the ranking) to 100 (high competition? ranking)
  24. 24. @bobehayes