1. The document discusses best practices for customer experience management (CEM) programs, particularly for startups. It recommends that loyalty leaders build customer-centric cultures by using customer feedback to guide business strategy and goals, integrating feedback into business processes, communicating CEM program goals and results company-wide, and conducting in-depth customer research. 2. It also recommends that startups formalize customer feedback collection, share feedback results, and conduct a Customer Relationship Diagnostic survey to measure customer loyalty, experience, and competitive performance in order to identify improvement opportunities.

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