Action Items for Achieving the Customer Experience Edge
Businesses that cannot adapt to the new business
realities that demand customer centricity will be
faced at best with second-class status, and at worst
with defeat.
Reza Soudagar, Vinay Iyer, and Dr. Volker G. Hildebrand
CAN YOUR CUSTOMERS LIVE without you? This question (asked in Gallup customer engagement polls) is at the heart of the customer experience edge that we’ve discussed throughout this book. But while many companies are working to strengthen their customer experience, few are achieving the customer experience edge.
To recap, today’s business world is characterized by rampant commoditization, sluggish growth in mature markets, increasingly digital channels of interaction, democratization of information, and changing customer behavior. In this environment, business executives are coming to realize that a new approach to doing business is required. Their only hope for growth and survival is to differentiate themselves based not on traditional competitive factors like product features or pricing but by offering customers an experience that they value so much that they are eager to engage with the company and have no reason to turn to the competition.
This cannot be achieved simply through a new marketing initiative or an optimized call center. An improved customer experience requires a holistic strategy encompassing the entire enterprise, its ecosystem, and its customers. It requires a new approach to doing business that centers not on products, cost cutting, and efficiencies but on understanding, anticipating, and fulfilling customer needs. Research from Bloomberg Businessweek Research Services (BBRS) reveals that the four elements of the customer experience (CE) that customers value most highly are reliability, convenience, relevance, and responsiveness—what we call the four customer experience essentials. If you shape your customer experience around one or all of these essentials, you will establish a trusted relationship with your customers, building a bond that cannot be replicated by anyone else. Through this bond, you can begin to engage with customers in a whole different way, such as co-innovation, word-of-mouth evangelizing, and customer advocacy.
But to create a differentiating experience in a sustainable, scalable, and profitable way (the customer experience edge), companies need to rely on technology: a well-conceived foundation of integrated applications that can execute complete processes plus disruptive technologies that advance the game. Such a framework alone will help to ensure that processes operate reliably, customer needs are identified in real time, business decisions are based on accurate customer insights, the right insight is available to anyone who needs it, and customers receive a personalized, relevant experience that is consistent across all channels of interaction.
Just as there is no universal customer, there is no universal customer experience strategy. But a close look at the leading companies highlighted in this book reveals some common approaches that any reader of this book can apply to his own situation. We’ve summarized these into a list of action items that we hope will prove inspirational and perhaps even profitable for you.
Action Item 1: Define a Vision for a Customer Experience That Differentiates Your Company from the Competition
Companies can no longer compete on price and product alone; they need to develop services and experiences that truly matter to customers and that are difficult for their competitors to replicate. This is true even for companies that are performing well. Colmobil, Coop, CEMEX, Synopsys, Akbank, The LEGO Group, Cardinal Health, and many others discussed in these pages were leaders in their industries when they decided to aim for a customer experience edge.
In the words of Ven Bontha, customer experience management director for CEMEX USA, “Anyone can make cement or concrete. We wondered, How can we de-commoditize this? How can we make it easier for our customers to do business with us?”
Action Item 2: Earn Customer Trust with the Four Customer Experience Essentials
Trust is the glue that bonds any relationship, personal or business. Only when you have established customer trust can you begin to form the emotional bond—the “stickiness”—that cannot be replicated by anyone else. We have identified the building blocks of trust (which we’ve deemed the four CE essentials): reliability, convenience, responsiveness, and relevance. The companies highlighted throughout this book exemplify these four essentials, earning their customers’ trust.
Reliability (“Live Up to the Promise”)
Once CEMEX determined that on-time delivery was its customers’ top priority after quality, it set out to ensure that it could meet that expectation. This involved increasing the visibility of its delivery operations and streamlining its bill of lading process. Accomplishing this involved implementing an enterprise resource planning (ERP) and customer relationship management (CRM) system that reveals key pieces of data about process flows, installing cameras on its truck loading docks, and setting system alerts when delays are likely. Not only has this increased ontime delivery, but CEMEX also notifies customers proactively of delays and how it intends to resolve them.
Convenience (“Offer Choice, Consistency, and Timeliness”)
In Switzerland, stores close early in the evenings and are closed all day on Sundays. So, Swiss grocer Coop developed an iPhone-based shopping application that enabled customers to shop while commuting to or from work and allowed them to specify the delivery time within a 60-minute time window while they shopped. The iPhone was a good choice, as 13 percent of the country’s citizens owned one, and adoption is increasing rapidly.
Responsiveness (“Listen and Respond Quickly”)
When customers contact a call center, they want a quick resolution. At Cardinal Health, any agent is able to help any customer who calls, thanks to a CRM system that centralizes all pertinent customer information, no matter how it comes in, in a single interaction record. If the inquiry is related to a shipment, it is automatically sent to the right distribution center, enabling faster response times.
Relevance (“Ensure that Offerings and Interactions Are Personalized and Meaningful”)
Purchasing an automobile or dropping off your car for servicing is an inconvenience, and Colmobil took that into account when it transformed its organizational structure and processes to center around the customer. Many auto dealers simply add extra parking spaces, free coffee, or valet service. Colmobil looked more deeply into customer needs, enabling sales agents to offer special discounts to repeat customers, for instance, because the system gives them a full history of the customer’s previous interactions and lets them know whether the person is a high-value customer. Other elements of a personalized experience include simply welcoming customers back, knowing their names, and apologizing for any past issues. Colmobil also fitted new cars with radio frequency ID (RFID) tags and placed tag scanners at its entrance gates. When a customer arrives, reception agents can offer a personal greeting rather than a request for identification. When the customer leaves, the exit gate opens automatically, without further inquiry.
Action Item 3: Get Your Technology House in Order before Trying to Optimize the Customer Experience
You can have the most customer-centric culture and the highest levels of passion for customers, but if your technology is working against you—if it’s too complicated, too costly, or simply broken—you won’t be able to gain a sustainable and profitable customer experience edge.
Before you make a purchase decision on a new piece of technology, pause and think what implications it may have for your existing infrastructure. Is it going to easily coexist with and support your existing systems, or will it add another animal to the zoo? Across the board, the companies profiled in this book moved from a patchwork of disconnected business applications (with customer information spread across multiple systems) to one or a handful of connected systems that share customer and business information. These integrated systems provide a full view of the customer, visibility into front- and back-office operations, consistent information across channels, and the flexibility to respond to unexpected customer actions or needs. When a customer interaction triggers a process, such as placing an order, there’s a centralized way to orchestrate the many pieces of that process (including product selection, purchasing, fulfillment, logistics, distribution, billing, payment, product return, and after-sale support). In fact, the global BBRS survey conducted in December 2010 showed that respondents with a foundation of tightly connected systems and applications ranked their customer experience 20 percent higher than other respondents.
Profiled companies also made smart use of more “disruptive” technologies, including the mobile Web, social media monitoring and engagement, mobile applications, rich Internet applications, just-in-time information, voice analytics, and unified communications, to name a few. The choice of which technologies to implement was guided by the four customer experience essentials and the three pillars of customer experience: operational, interaction, and decision-making excellence. In other words, how does this technology turn insights into action and better decisions? How does it make every interaction count? Does it make my operations run more smoothly?
Action Item 4: Empower Employees with Flexible Processes, Accurate and Timely Information, and Easy-to-Use Tools
The customer experience edge requires a new focus on employee empowerment. In most cases, employees are motivated to satisfy customers’ needs and desires, but they often do not have the technology tools, data access, or organizational standing to do so. Businesses need to provide their employees with information, such as customer order status, customer financial history, and product inventory levels, and with the tools required to respond to customer requests. Answering customer questions and providing speedy access to relevant information is a clear customer experience priority.
Furthermore, companies need to introduce process flexibility so that employees can handle exceptions and make decisions in real time. Tools must be easy to use and must be the right match for employees’ jobs and roles.
At Synopsys, sales reps can alert customers to issues before those issues are even apparent to the customer. They can do this because the Synopsys field consultants set up notifications and subscriptions in the CRM system, so that the rep who is in charge of the account will know if an issue comes in via a different channel. For example, if three individuals from one customer have open issues, the sales rep might call the field application consultant to obtain relevant information about the account. As a result, Synopsys customers sometimes discover things they did not know about what their own colleagues on the other side of the world are doing.
Action Item 5: Adopt New Hiring and Training Practices for Support Personnel
An empowered workforce might require a different kind of employee, especially for customer-facing positions. Nearly any employee today can be an “agent of experience,” meaning that she fulfills customer expectations and can even be a prime source of insight that can be fed back into product development, marketing, and customer service.
At Zappos, new customer service employees take an intensive fourweek training course that immerses them in the company’s culture and processes. At the end of their training, they are offered a $3,000 bonus to quit that day, with the idea being that only those who are truly passionate about the company’s approach will stay. Synopsys staffs its customer call centers with electronics engineers, most of them with master’s degrees, who have done chip design work at other companies, rather than with traditional service representatives. “We look for designers who like the people side of the business and recruit them,” says Vito Mazzarino, vice president of field support operations. “It takes a special kind of person.” CEMEX also works hard to hire the right people. Recently, the customer care team interviewed 200 candidates before hiring two new people. “We’re looking for that service attitude,” says Bontha.
Action Item 6: Segment Your Customers and Deliver Differentiated Experiences
Many of the companies profiled also segmented their customers, categorizing them based on their particular relationship with the company or on other measures, including lifetime value. The idea is to focus resources on the customers in the top tiers while providing relevant experiences to each tier. You can also work to get closer to the highestvalue customers by learning about and even anticipating their needs. These customers are your most valuable, not only because they buy from you, but also because they value what you offer and think highly of your company. When you build trust with these customers over time, they become more likely to engage with you, tell you their needs, and even co-create innovative new products and services.
The LEGO Group has a fine-tuned customer segmentation strategy, and it engages with its “lead users” to incorporate the experiences and product features that these enthusiasts want to see into its new offerings. A select group of LEGO Ambassadors arranges events all over the world, attended by 2.5 million customers a year. In this way, the company’s “lead users” demonstrate the brand’s potential even more strongly than the company itself can.
Action Item 7: Ensure Multichannel Consistency
A dramatic shift for all companies has been the need to keep up with not just existing touch points, but also the new ones that are continually being created in digital channels. The customer experience edge requires an experience that is uniform across all channels—physical stores, the call center, the website, e-mail, chat, social media, social communities, and the like. These channels need to be synchronized with one another to ensure consistent data, such as pricing, product availability, and customer status information.
At Akbank, for instance, customers can visit an ATM, view an offer from the bank, learn more about the offer by clicking on a chat button, purchase the product, and receive a short message service (SMS) confirmation. In addition, if a customer walks into one of the bank’s branches to discuss a problem with a service specialist, that person can later determine the status of the issue through any of the integrated contact channels. Similarly, CEMEX customers who prefer self-service via the Web can see exactly the same information that customer care agents see, including order status, invoice status, tickets issued, last 15 interactions, and pending support issues.
Action Item 8: Develop and Use New, Outside-In Metrics
Measuring how well your customer experience efforts are paying off is at the very heart of being a customer-focused organization. Many of the old metrics used to measure company performance don’t tell you how you’re doing from the customer’s point of view. The key is to measure activities that drive customer value. The companies that we profiled are working to incorporate new metrics such as first-call resolution, number of unsolicited leads, and net promoter score.
At Cardinal Health, for instance, the CRM system itself measures key performance indicators such as “on-time delivery” and “ease of doing business with Cardinal,” so the company can track trends and make needed modifications quickly. Additionally, Zappos has developed an employee dashboard to show people how they’re doing from a cultural perspective and in terms of living up to the company’s 10 core values, such as an “obsession” with customer service and bringing passion, fun, and a sense of adventure to the job. The customer experience edge requires that employees be compensated for driving outcomes, not just fulfilling a set of prescribed tasks.
Action Item 9: Move beyond B2B and B2C to P2P, or Peer-to- Peer
Many people equate the customer experience with business-to-consumer (B2C) companies, such as Netflix, Best Buy, and Apple. However, we’ve profiled several business-to-business (B2B) companies (Synopsys, CEMEX, and Cardinal Health, for example) that have honed their customer experience edge. B2B companies, like their B2C brethren, can no longer compete on new product offerings and lower prices alone, and they are just as susceptible to commoditization. It’s just as important for these companies to become indispensable to their customer base; in fact, the impact of an inconsistent customer experience is potentially more damaging to them in terms of downstream implications. Consider the detrimental effects of mistimed deliveries, shipment delays, and incorrect quantities. Any time a supplier is unable to honor its contract commitments, this can lead to thousands of dollars in budget overruns because of labor costs, waste, or other avoidable costs.
Nearly everyone who uses a B2B product or service is also connected to the digital world. The ease of 24/7 information access has changed the dynamics between B2B companies and their customers. So, when it comes to the customer experience, there is less and less distinction between B2C and B2B. In fact, we should simply think in terms of P2P—people-topeople— or, as R. “Ray” Wang of Constellation Research calls it, peer-topeer.
Action Item 10: Gather Customer Intelligence from Numerous Sources and Incorporate These Data into Your Processes and Your Product or Service Offerings
There are many ways to obtain customer insights by capturing solicited and unsolicited feedback, including social media monitoring; analysis of your own internal data; transactional surveys; and analyzing customer e-mails, chat sessions, blog commentaries, and calls into the call center. Companies need to take a three-pronged approach: create the mechanisms to listen to actual customers, analyze this feedback, and act on it.
Continually refreshing your insights into your customers enables you to align your efforts with their needs and desires. The key is to discover everything possible about your customers—psychographics as well as demographics.
At Dell, two Social Media Listening Command Centers—one at headquarters and one in China—coordinate and manage the company’s response to 22,000 online customer conversations per day, in nine languages. Critical conversations are routed to one of the 7,000 social media–trained Dell employees, who have the technical expertise and language skills to respond. For example, an engineer who is designing laptop hinges can see conversations about hinge-related issues, while a shop floor manager might monitor conversations about the build quality of the products produced in his shop.
Action Item 11: Identify Your Customers’ Moments of Truth and Excel at Them
Part of being customer-centric is seeing your company the way your customers do.
What does a customer go through in buying from you, from researching what he needs, deciding to purchase it from you, placing an order, receiving it, paying for it, and obtaining post-sale service? There are hundreds of these touch points that make up a customer journey. At each of these points, the customer can have either a negative or a positive impression of your company.
Companies that have honed the customer experience edge work to identify the most important touch points, sometimes called “moments of truth” or “trigger points.” They then need to assess how well they perform during those key interactions and lay out a plan to fill the gaps and strengthen weak links. Classic examples are flight attendants handing out pizza during a delay on JetBlue Airways, which passengers continue to recount as a “moment of truth” that makes them think positively of the airline.
Once companies can consistently deliver a highly valuable, relevant, and cost-efficient experience at their high-impact touch points, they are on their way to establishing the customer experience edge. The rule of thumb is that for every two profoundly bad moments of truth, you need to outweigh them with three profoundly good ones.
Action Item 12: Design Processes from the Customer’s Perspective, Not for Internal Efficiencies
Companies with the customer experience edge have analyzed their processes from the customer’s perspective and redefined them with the customer in mind. They also realize that they can’t always predetermine customers’ behavior or train customers to take certain actions. For instance, even though they’ve developed a self-service component on their website, they still invest in their phone-based customer support, and vice versa.
Furthermore, they design their processes to accommodate things that go wrong. CEMEX, for instance, has a system that tracks abandoned calls and automatically generates a report that is routed to supervisors, who then call the person who hung up to see if they can help. Meanwhile, at Marriott, if a decline in a top-value customer’s total revenue or number of reservations is detected, an agent calls or e-mails that customer to see if there are issues that need to be resolved.
These companies realize that recognizing and fixing a problem can actually lead to a higher degree of loyalty than if the problem had never happened.
Action Item 13: Have Clearly Stated Financial Goals as a Prominent Part of the Customer Experience Strategy
Improving the customer experience involves creating wins for your customers, but behind those customer-focused wins need to be financial goals for your company. Financial drivers can range from reducing customer churn, to acquiring new customers, to reducing the cost of sales, to decreasing the sales cycle. “It has to be something you can point to and say, ‘We have moved the needle on either revenues or expenses,” says Lior Arussy, president of Strativity Group, a customer experience research, strategy design, and implementation firm.
For all the talk among CE advocates of passion, obsession, and devotion to customers, embarking on a CE program cannot be backed by the idea that “if you build it, they will come.” You need to have a clear sense of what your return is going to be.
Comcast, for instance, reduced its service calls by four million in the first four months of 2010 compared to 2009 as a result of its social media monitoring and follow-up response, which has translated into reduced operating expenses, according to the company. At Marriott, its repeat customers (Rewards members) account for half of the company’s revenue, and an even smaller subsegment of its top-value customers, called Platinum members, provide a significant revenue base, according to Marriott.
Meanwhile, Synopsys attributes many cost efficiencies to its customer experience edge, such as a reduction in the amount of time that application consultants spend on reactive support from 33 percent to 20 percent. This enables the company to shift support to more accessible channels and leverage a broader global talent pool. And at Akbank, within six months of launching a centralized CRM system to support its customer experience strategy, the company sold 500,000 new products and had an increase of 200,000 new customers, a €2.2 million gain in gross profits, and a savings of €3.5 million in service costs.
Action Item 14: Think “Personalization”
In the future, the customer experience will involve providing customers with personalized treatment, personalized service, and even customized products. In financial services, customers are designing their own products and services, such as designing the layout of their mobile banking graphical user interface. In insurance, Progressive Insurance offers customers the option to pick their own monthly premium cost and coverage. In hospitality, Marriott call center agents have at their fingertips enough information about top customers’ preferences that they can deliver a personalized experience. In the B2B world, CEMEX USA agents can identify incoming customer calls by their cell phone, home phone, and work phone. Customers are often routed automatically to the same agent that they spoke with in their last call, and Spanish speakers are routed to Spanish-speaking agents. “We want them to feel, ‘CEMEX is doing this for me,’” says Bontha.
Action Item 15: Select New Technologies to Raise the Customer Experience Bar
The companies profiled continue to sharpen their customer experience edge through the use of new and emerging technologies, particularly as customers in both the B2B and B2C worlds are increasingly expecting to use social networking and mobile devices to make buying decisions, initiate and complete transactions, obtain information, and interact with companies. In customer experience surveys, business executives increasingly agree that technology now underpins and shapes the entire customer experience.
Best Buy, for example, announced new initiatives in 2010 to expand its mobile strategy, including increasing its SMS initiative and making more product information, customer reviews, and ratings available via mobile, such as through quick response (QR) codes. It also launched a new mechanism for obtaining real-time customer feedback through store associates.
Similarly, The LEGO Group continues to fine-tune its customer experiences through technology. In addition to its in-depth and extensive customer interaction, The LEGO Group is also working to strengthen its online community, and future plans include making further use of sentiment analysis tools, as well as launching a Facebook page.
Surviving and growing in today’s business environment is not for the meek, and there is simply no room in the global economy for any business that is unwilling to take bold steps to outsmart the competition. With newly empowered consumers, the battle is no longer about price and product offerings; there is a new battlefield, and it’s all about the customer experience.
At the same time, there is little forgiveness for costly innovation that does not hold the promise of a measurable and profitable outcome. That is where smart technology choices come in. When you lay the right groundwork, you are freed from constantly having to ensure that the basics are operating correctly, so you can successfully make use of game-changing technologies to create a profitable, sustainable, flexible, and differentiating customer experience. That is the customer experience edge.
Businesses that cannot adapt to the new business realities that demand customer centricity will be faced at best with second-class status, and at worst with defeat. So, be bold—establish a strong vision, prepare your organization for constant change, execute iteratively, experiment as much as possible, and don’t be afraid of small failures. Every journey starts with one step, and any step toward the customer experience edge is a step toward your future business success.
To continue reading about customer experience and to join in the discussion, please visit us at http://www.thecustomerexperienceedge.com.
Notes
Quoted material that is not referenced is from personal interviews.
1. http://gmj.gallup.com/content/745/constant-customer.aspx.
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The author offers advice to companies that think they’ve committed to customer experience but haven’t.
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